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. 35 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 34 |X|
- --------------------------------------------------------------------------------
SELIGMAN MUNICIPAL FUND SERIES, INC.
(Exact name of registrant as specified in charter)
- --------------------------------------------------------------------------------
100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
- --------------------------------------------------------------------------------
Registrant's Telephone Number: 212-850-1864 or
Toll-Free 800-221-2450
- --------------------------------------------------------------------------------
THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective (check the
appropriate box).
<TABLE>
<S> <C>
|_| immediately upon filing pursuant to paragraph (b) |_| on (date) pursuant to paragraph (a)(1)
|X| on May 28, 1999 pursuant to paragraph (b) |_| 60 days after filing pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2) |_| on (date) pursuant to paragraph (a)(2).
</TABLE>
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
SELIGMAN
- -------------------------------
MUNICIPAL FUNDS
SELIGMAN MUNICIPAL FUND
SERIES, INC.
SELIGMAN MUNICIPAL
SERIES TRUST
SELIGMAN NEW JERSEY
MUNICIPAL FUND, INC.
SELIGMAN PENNSYLVANIA
MUNICIPAL FUND SERIES
The Securities and Exchange Commission has neither approved nor disapproved
these Funds, and it has not determined the prospectus to be accurate or
adequate. Any representation to the contrary is a criminal offense.
An investment in these Funds or any other fund cannot provide a complete
investment program. The suitability of an investment in a Fund should be
evaluated based on the investment objective, strategies and risks described
herein, considered in light of all of the other investments in your portfolio,
as well as your risk tolerance, financial goals, and time horizons. We recommend
that you consult your financial advisor to determine if one or more of these
Funds is suitable for you.
MUNI-1 6/99
[GRAPHIC OMITTED]
PROSPECTUS
JUNE 1, 1999
Seeking
Income
Exempt From
Regular
Income Tax
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Funds
A discussion of the investment strategies, risks, performance and expenses of
the Funds.
Overview of the Funds 1
National Fund 4
California High-Yield Fund 6
California Quality Fund 8
Colorado Fund 10
Florida Fund 12
Georgia Fund 14
Louisiana Fund 16
Maryland Fund 18
Massachusetts Fund 20
Michigan Fund 22
Minnesota Fund 24
Missouri Fund 26
New Jersey Fund 28
New York Fund 30
North Carolina Fund 32
Ohio Fund 34
Oregon Fund 36
Pennsylvania Fund 38
South Carolina Fund 40
Management of the Funds 42
Year 2000 43
Shareholder Information
Deciding Which Class of Shares
to Buy 44
Pricing of Fund Shares 46
Opening Your Account 46
How to Buy Additional Shares 47
How to Exchange Shares Among
the Seligman Mutual Funds 47
How to Sell Shares 48
Important Policies That May Affect
Your Account 49
Dividends and Capital Gain
Distributions 50
Taxes 50
Financial Highlights 51
How to Contact Us inside back cover
For More Information back cover
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Funds
OVERVIEW OF THE FUNDS
This Prospectus contains information about four separate funds, which together
offer 19 investment options:
Seligman Municipal Fund Series offers the following 13 series:
National Fund Massachusetts Fund New York Fund
Colorado Fund Michigan Fund Ohio Fund
Georgia Fund Minnesota Fund Oregon Fund
Louisiana Fund Missouri Fund South Carolina Fund
Maryland Fund
Seligman Municipal Series Trust offers the following four series:
California High-Yield Fund Florida Fund
California Quality Fund North Carolina Fund
Seligman New Jersey Municipal Fund, Inc. (New Jersey Fund)
Seligman Pennsylvania Municipal Fund Series (Pennsylvania Fund)
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
Each Fund has its own objectives, strategies and risks. You should read the
discussion of a particular Fund, in addition to the information below, before
making an investment decision about that Fund.
The Seligman Municipal Funds seek to provide income exempt from regular federal
income taxes and, as applicable, regular state and local personal income taxes.
The Funds are managed for total return, which means, in addition to income
considerations, the Funds (except the Pennsylvania Fund) look to enhance
portfolio returns by pursuing opportunities for capital appreciation. The
Pennsylvania Fund does not pursue capital appreciation as one of its objectives.
At all times, safety of principal is a primary concern of all of the Funds.
However, there is no assurance that the Funds will meet their objectives.
Each Fund normally invests at least 80% of its net assets in municipal
securities that pay interest that is exempt from regular federal income taxes
and (except the National Fund) regular personal income taxes in its respective
state. Income may be subject to the federal alternative minimum tax and, where
applicable, state alternative minimum tax.
Municipal securities are issued by state and local governments, their agencies
and authorities, as well as territories and possessions of the United States,
and the District of Columbia. Municipal bonds are issued to obtain funds to
finance various public or private projects, to meet general expenses, and to
refinance outstanding debt.
The Funds use a top-down method of selecting securities to purchase. This means
the investment manager analyzes the current interest rate environment and trends
in the municipal market to formulate investment strategy before selecting
individual securities for each Fund. The investment manager determines the
appropriate cash positions, quality parameters, market sectors, and bond
duration and then uses in-depth credit analysis to evaluate individual
securities considered for purchase.
Portfolio holdings are continually monitored to identify securities which should
be sold as a result of a deterioration in credit quality. A Fund may also sell a
security when there is a better investment opportunity available in the market.
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT):
A tax imposed on certain types of income to ensure that all taxpayers pay at
least a minimum amount of taxes.
- --------------------------------------------------------------------------------
The Funds (except the California High-Yield Fund) will purchase only investment
grade municipal securities, defined as those issues rated in the four highest
rating categories by independent rating agencies at the time of purchase. The
Funds may also purchase non-rated securities if, based on credit analysis, the
investment manager believes that they are of comparable quality to investment
grade securities.
1
<PAGE>
Under normal market conditions, the Funds will invest in longer maturity bonds
(typically, bonds with maturities in excess of ten years). However, a Fund may
shorten or lengthen maturities to achieve its objective.
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its objective.
PRINCIPAL RISKS
The value of your investment in a Fund will fluctuate with fluctuations in the
value of the Fund's investment portfolio. The principal factors that may affect
the value of a Fund's portfolio are changes in interest rates and the credit
worthiness of the Fund's portfolio holdings.
Interest rate risk. Changes in market interest rates will affect the value of a
Fund's investment portfolio. In general, the market value of a municipal bond
moves in the opposite direction of interest rates: the market value decreases
when interest rates rise and increases when interest rates decline. A Fund's net
asset value per share moves in the same direction as the market value of the
municipal securities held in its portfolio. Therefore, if interest rates rise,
you should expect a Fund's net asset value per share to fall, and if interest
rates decline, the Fund's net asset value per share should rise.
Additionally, longer maturity bonds (like those held by the Funds) are generally
more sensitive to changes in interest rates. Each Fund's strategy of investing
in longer maturity bonds could subject its portfolio holdings to a greater
degree of market price volatility.
Declining interest rates increase the risk that portfolio holdings which contain
call features could be redeemed by the issuer. Proceeds of called bonds may be
reinvested at lower yields, which could affect the level of income a Fund
generates.
Credit risk. A municipal bond issue could deteriorate in quality to the extent
that its rating is downgraded or its market value declines relative to
comparable municipal securities. Credit risk also includes the risk that an
issuer of a municipal bond would be unable to make interest and principal
payments.
The investment manager seeks to minimize the credit risk inherent in municipal
securities by performing its own in-depth credit analysis on every municipal
security before purchase and by continuing to monitor all securities while they
remain in the portfolio. Each Fund may purchase municipal bonds that are insured
as to the payment of principal and interest. However, the Funds view insurance
as an enhancement of quality, not as a substitute for it. A Fund and will not
purchase a bond unless the investment manager approves the underlying credit.
The Funds are also subject to the following risks:
Concentration risk. Each Fund (except the National Fund) invests in municipal
securities issued by a single state and its municipalities. Specific events or
factors affecting a particular state may have an impact on the municipal
securities of that state without affecting the municipal market in general. The
Funds seek to minimize this risk by diversifying investments within the state.
In addition, each Fund is subject to certain investment restrictions limiting
the amount of its assets that can be invested in the securities of a single
issuer.
Market risk. At times, market conditions could result in a lack of liquidity.
The municipal market is an over-the-counter market, which means that the Funds
purchase and sell portfolio holdings through municipal bond dealers. A Fund's
ability to sell securities held in its portfolio is dependent on the willingness
and ability of market participants to provide bids that reflect current market
levels. Adverse market conditions could result in a lack of liquidity by
reducing the number of ready buyers. Lower-rated securities may be less liquid
than higher-rated securities.
An investment in any of the Funds is not a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
2
<PAGE>
PAST PERFORMANCE
Each Fund offers three Classes of shares. The performance information presented
for each Fund provides some indication of the risks of investing in the Fund by
showing how the performance of Class A shares has varied year to year, as well
as how the performance of each Class (except Class C) compares to the Lehman
Brothers Municipal Bond Index, a widely-used measure of municipal bond
performance. Class Cis a new class of shares, effective June 1, 1999, so no
performance information is available. Although each Fund's fiscal year ends on
September 30, the performance information is provided on a calendar year basis
to assist you in comparing the returns of the Funds with the returns of other
mutual funds. How a Fund has performed in the past, however, is not necessarily
an indication of how the Fund will perform in the future. Total returns will
vary between each Fund's Class A and Class D shares due to their different fees
and expenses.
FEES AND EXPENSES
The fee and expense table provided for each Fund summarizes the fees and
expenses that you may pay as a shareholder of a Fund. Each Class of shares has
its own sales charge schedule and is subject to different ongoing fees.
Shareholder fees are charged directly to you. Annual fund operating expenses are
deducted from a Fund's assets and are therefore paid indirectly by you and other
Fund shareholders.
Accompanying each Fund's fee and expense table is an example intended to help
you compare the expenses of investing in that Fund with the expenses of
investing in other mutual funds.
Discussions of each Fund begin on page 4.
3
<PAGE>
NATIONAL FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The National Fund 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.
The National Fund uses the following strategies to pursue its objective:
The National Fund invests at least 80% of its net assets in municipal securities
of states, territories, and possessions of the United States, and the District
of Columbia, and their political subdivisions, agencies, and instrumentalities
that are rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The National Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
4
<PAGE>
NATIONAL FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 9.82
90 5.82
91 11.47
92 7.88
93 14.10
94 -9.95
95 20.10
96 3.33
97 10.38
98 5.67
Best calendar quarter return: 8.25% - quarter ended 3/31/95
Worst calendar return: -8.20% - quarter ended 3/31/94
Class A annual total return for the quater ended 3/31/99: 0.55%
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.61% 4.41% 7.07% --
Class D 3.60 n/a n/a 4.27%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) . 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less) .. none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- ------------------------
(as a percentage of average net assets)
Management Fees ........................ .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................. .09% 1.00% 1.00%
Other Expenses ......................... .21% .21% .21%
---- ---- ----
Total Annual Fund Operating Expenses ... .80% 1.71% 1.71%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 372 633 1,019 2,099
Class D 274 539 928 2,019
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------ ------ --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 272 633 1,019 2,099
Class D 174 539 928 2,019
5
<PAGE>
CALIFORNIA HIGH-YIELD FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The California High-Yield Fund 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.
The California High-Yield Fund uses the following strategies to pursue its
objective:
The California High-Yield Fund invests at least 80% of its net assets in
California municipal securities that are within any rating category, including
securities rated below investment grade or securities that are not rated.
In selecting securities to purchase, the investment manager may consider the
current market conditions, the availability of lower-rated securities, and
whether lower-rated securities offer yields high enough relative to yields on
investment grade securities to justify their higher risk.
The Fund generally invests in long-term municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The California High-Yield Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o Lower-rated municipal bonds are subject to a greater degree of credit risk
than higher-rated bonds. They generally involve greater price volatility
and risk of loss of principal and income than higher-rated bonds.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of California
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems, such
as the 1994 bankruptcy of Orange County.
6
<PAGE>
CALIFORNIA HIGH-YIELD FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 9.28
90 6.00
91 10.48
92 9.53
93 9.91
94 -2.79
95 14.55
96 5.52
97 8.72
98 6.18
Best calendar quarter return: 6.48% - quarter ended 3/31/95
Worst calendar quarter return: -2.30% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.71%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.16% 5.26% 7.13% --
Class D 4.21 n/a n/a 5.22%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price).... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .23% .23% .23%
----- ----- -----
Total Annual Fund Operating Expenses ..... .82% 1.73% 1.73%
===== ===== =====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 555 $ 724 $ 908 $1,440
Class C 374 639 1,029 2,121
Class D 276 545 939 2,041
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 555 $ 724 $ 908 $1,440
Class C 274 639 1,029 2,121
Class D 176 545 939 2,041
7
<PAGE>
CALIFORNIA QUALITY FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The California Quality Fund 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.
The California Quality Fund uses the following strategies to pursue its
objective:
The California Quality Fund invests at least 80% of its net assets in California
municipal securities that are within the three highest ratings of Moody's (Aaa,
Aa, or A) or S&P (AAA, AA, or A) on the date of purchase.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The California Quality Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of California
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems, such
as the 1994 bankruptcy of Orange County.
8
<PAGE>
CALIFORNIA QUALITY FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 9.77
90 6.57
91 11.22
92 8.49
93 12.61
94 -8.30
95 19.79
96 3.91
97 8.80
98 6.26
Best calendar quarter return: 8.97% - quarter ended 3/31/95
Worst calendar quarter return: -6.63% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.52%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.23% 4.69% 7.16% --
Class D 4.33 n/a n/a 4.54%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .18% .18% .18%
---- ---- ----
Total Annual Fund Operating Expenses ..... .77% 1.68% 1.68%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 550 $ 709 $ 883 $1,384
Class C 369 624 1,003 2,067
Class D 271 530 913 1,987
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 550 $ 709 $ 883 $1,384
Class C 269 624 1,003 2,067
Class D 171 530 913 1,987
9
<PAGE>
COLORADO FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Colorado Fund seeks to maximize income exempt from regular federal income
taxes and from Colorado personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
The Colorado Fund uses the following strategies to pursue its objective:
The Colorado Fund invests at least 80% of its net assets in Colorado municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Colorado Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Colorado issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Colorado's
largest trading partner is Japan, and the State is sensitive to national
and international business cycles. Turmoil in the world economy,
especially in Asia, has the potential to dramatically affect Colorado's
economy.
10
<PAGE>
COLORADO FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 10.04
90 5.05
91 9.40
92 7.67
93 11.11
94 -5.13
95 13.96
96 3.39
97 7.52
98 5.80
Best calendar quarter return: 6.34% - quarter ended 3/31/95
Worst calendar quarter return: -4.87% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.31%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.83% 3.91% 6.24% --
Class D 3.83 n/a n/a 3.71%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .10% 1.00% 1.00%
Other Expenses ........................... .30% .30% .30%
---- ---- ----
Total Annual Fund Operating Expenses..... .90% 1.80% 1.80%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 748 $ 950 $1,530
Class C 381 661 1,065 2,195
Class D 283 566 975 2,116
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 748 $ 950 $1,530
Class C 281 661 1,065 2,195
Class D 183 566 975 2,116
11
<PAGE>
FLORIDA FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Florida Fund seeks high income exempt from regular federal income taxes
consistent with preservation of capital and with consideration given to capital
gain.
The Florida Fund uses the following strategies to pursue its objective:
The Florida Fund invests at least 80% of its net assets in Florida municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Florida Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Florida issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. The lack of an
income tax in Florida exposes total tax collections to more volatility
than would otherwise be the case and, in the event of an economic
downturn, could affect the State's ability to pay principal and interest
in a timely manner. Florida's economy may be affected by foreign trade,
crop failures, and severe weather conditions and is sensitive to trends in
the tourism and construction industries.
12
<PAGE>
FLORIDA FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 11.35
90 6.46
91 10.62
92 9.07
93 13.52
94 -5.52
95 16.67
96 2.76
97 9.33
98 5.67
Best calendar quarter return: 7.49% - quarter ended 6/30/89
Worst calendar quarter return: -5.99% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.81%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.69% 4.51% 7.31% --
Class D 3.85 n/a n/a 4.59%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .23% 1.00% 1.00%
Other Expenses ........................... .27% .27% .27%
---- ---- ----
Total Annual Fund Operating Expenses ..... 1.00% 1.77% 1.77%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 572 $ 778 $1,001 $1,641
Class C 378 652 1,050 2,163
Class D 280 557 959 2,084
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 572 $ 778 $1,001 $1,641
Class C 278 652 1,050 2,163
Class D 180 557 959 2,084
13
<PAGE>
GEORGIA FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Georgia Fund seeks to maximize income exempt from regular federal income
taxes and from Georgia personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
The Georgia Fund uses the following strategies to pursue its objective:
The Georgia Fund invests at least 80% of its net assets in Georgia municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Georgia Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Georgia issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local policy changes, economics, natural
disasters, and the possibility of credit problems. Georgia's economy will
be affected by trends in the services, wholesale and retail trade,
manufacturing, and transportation industries, as these industries, along
with government, comprise the largest sources of employment within the
State.
14
<PAGE>
GEORGIA FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 9.87
90 7.01
91 10.97
92 9.00
93 12.21
94 -7.64
95 19.16
96 3.86
97 9.02
98 5.94
Best calendar quarter return: 7.71% - quarter ended 3/31/95
Worst calendar quarter return: -6.83% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.61%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.90% 4.70% 7.21% --
Class D 3.99 n/a n/a 4.67%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .30% .30% .30%
---- ---- ----
Total Annual Fund Operating Expenses ..... .89% 1.80% 1.80%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 381 661 1,065 2,195
Class D 283 566 975 2,116
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 281 661 1,065 2,195
Class D 183 566 975 2,116
15
<PAGE>
LOUISIANA FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Louisiana Fund seeks to maximize income exempt from regular federal income
taxes and from Louisiana personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
The Louisiana Fund uses the following strategies to pursue its objective:
The Louisiana Fund invests at least 80% of its net assets in Louisiana municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Louisiana Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Louisiana issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Louisiana's
economy is affected by trends in the oil and gas, tourism, and gaming
industries within the State.
16
<PAGE>
LOUISIANA FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 10.14
90 6.86
91 11.38
92 7.83
93 11.45
94 -5.89
95 17.10
96 3.49
97 8.45
98 5.93
Best calendar quarter return: 6.57% - quarter ended 3/31/95
Worst calendar quarter return: -5.38% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.43%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.87% 4.54% 6.99% --
Class D 3.86 n/a n/a 4.43%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .10% 1.00% 1.00%
Other Expenses ........................... .28% .28% .28%
---- ---- ----
Total Annual Fund Operating Expenses ..... .88% 1.78% 1.78%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 561 $ 742 $ 939 $1,508
Class C 379 655 1,055 2,174
Class D 281 560 964 2,095
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 561 $ 742 $ 939 $1,508
Class C 279 655 1,055 2,174
Class D 181 560 964 2,095
17
<PAGE>
MARYLAND FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Maryland Fund seeks to maximize income exempt from regular federal income
taxes and from Maryland personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
The Maryland Fund uses the following strategies to pursue its objective:
The Maryland Fund invests at least 80% of its net assets in Maryland municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Maryland Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Maryland issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Because the
Fund favors investing in revenue bonds, its performance may also be
affected by economic developments impacting a specific facility or type of
facility. The performance of general obligation bonds of the State of
Maryland may be affected by efforts to limit or reduce state or local
taxes.
18
<PAGE>
MARYLAND FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 10.49
90 6.15
91 10.47
92 8.24
93 11.93
94 -5.48
95 16.84
96 3.66
97 8.09
98 5.85
Best calendar quarter return: 6.96% - quarter ended 3/31/95
Worst calendar quarter return: -5.29% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 6.79%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.80% 4.52% 6.95% --
Class D 3.89 n/a n/a 4.42%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .30% .30% .30%
---- ---- ----
Total Annual Fund Operating Expenses ..... .89% 1.80% 1.80%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 381 661 1,065 2,195
Class D 283 566 975 2,116
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 281 661 1,065 2,195
Class D 183 566 975 2,116
19
<PAGE>
MASSACHUSETTS FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Massachusetts Fund seeks to maximize income exempt from regular federal
income taxes and from Massachusetts personal income taxes to the extent
consistent with preservation of capital and with consideration given to
opportunities for capital gain.
The Massachusetts Fund uses the following strategies to pursue its objective:
The Massachusetts Fund invests at least 80% of its net assets in Massachusetts
municipal securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Massachusetts Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Massachusetts
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems.
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 these financial difficulties could adversely
affect the market value and marketability of, or result in default
payments on, outstanding obligations issued by Massachusetts or its public
authorities or municipalities.
20
<PAGE>
MASSACHUSETTS FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 8.67
90 5.42
91 12.97
92 9.08
93 11.52
94 -4.43
95 15.20
96 4.14
97 8.68
98 6.55
Best calendar quarter return: 6.16% - quarter ended 3/31/95
Worst calendar quarter return: -4.69% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.61%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.49% 4.81% 7.13% --
Class D 4.59 n/a n/a 4.69%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .21% .21% .21%
---- ---- ----
Total Annual Fund Operating Expenses ..... .80% 1.71% 1.71%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 372 633 1,019 2,099
Class D 274 539 928 2,019
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 272 633 1,019 2,099
Class D 174 539 928 2,019
21
<PAGE>
MICHIGAN FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Michigan Fund seeks to maximize income exempt from regular federal income
taxes and from Michigan personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
The Michigan Fund uses the following strategies to pursue its objective:
The Michigan Fund invests at least 80% of its net assets in Michigan municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Michigan Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Michigan issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. The principal
sectors of Michigan's economy are manufacturing of durable goods
(including automobiles and components and office equipment), tourism, and
agriculture. The cyclical nature of these industries can adversely affect
the revenue stream of the State and its political subdivisions because it
may adversely impact tax sources, particularly sales taxes, income taxes
and single business taxes.
22
<PAGE>
MICHIGAN FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 10.71
90 5.85
91 12.01
92 9.31
93 11.48
94 -4.84
95 15.78
96 3.74
97 8.73
98 6.12
Best calendar quarter return: 6.57% - quarter ended 3/31/95
Worst calendar quarter return: -4.63% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.68%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.09% 4.66% 7.23% --
Class D 4.06 n/a n/a 4.51%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .20% .20% .20%
---- ---- ----
Total Annual Fund Operating Expenses ..... .79% 1.70% 1.70%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 552 $ 715 $ 893 $1,406
Class C 371 630 1,014 2,089
Class D 273 536 923 2,009
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 552 $ 715 $ 893 $1,406
Class C 271 630 1,014 2,089
Class D 173 536 923 2,009
23
<PAGE>
MINNESOTA FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Minnesota Fund seeks to maximize income exempt from regular federal income
taxes and from regular Minnesota personal income taxes to the extent consistent
with preservation of capital and with consideration given to opportunities for
capital gain.
The Minnesota Fund uses the following strategies to pursue its objective:
The Minnesota Fund invests at least 80% of its net assets in Minnesota municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Minnesota Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Minnesota issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Pursuant to
Minnesota legislation enacted in 1995, dividends that would otherwise be
exempt from Minnesota personal income tax in the case of individuals,
estates, and trusts, could become subject to the Minnesota personal income
tax if it were judicially determined that exempting such dividends would
discriminate against interstate commerce.
24
<PAGE>
MINNESOTA FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 9.89
90 6.52
91 7.53
92 7.67
93 13.49
94 -2.54
95 11.41
96 3.39
97 7.02
98 6.43
Best calendar quarter return: 6.01% - quarter ended 6/30/89
Worst calendar quarter return: -3.23% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.63%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.18% 3.97% 6.45% --
Class D 4.26 n/a n/a 3.89%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .22% .22% .22%
---- ---- ----
Total Annual Fund Operating Expenses ..... .81% 1.72% 1.72%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 554 $ 721 $ 903 $1,429
Class C 373 636 1,024 2,110
Class D 275 542 933 2,030
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 554 $ 721 $ 903 $1,429
Class C 273 636 1,024 2,110
Class D 175 542 933 2,030
25
<PAGE>
MISSOURI FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Missouri Fund seeks to maximize income exempt from regular federal income
taxes and from Missouri personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
The Missouri Fund uses the following strategies to pursue its objective:
The Missouri Fund invests at least 80% of its net assets in Missouri municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Missouri Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Missouri issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. The national
economic recession of the early 1980s had a disproportionately adverse
impact on Missouri's economy, and its unemployment levels. A return to a
pattern of high unemployment could adversely affect the Missouri debt
obligations acquired by the Fund. Defense related business plays an
important role in Missouri's economy. Negative trends in this industry or
relocations of major employers could have a negative impact on the economy
of the State and particularly on the economy of the St. Louis metropolitan
area.
26
<PAGE>
MISSOURI FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 9.44
90 6.93
91 11.37
92 7.25
93 11.40
94 -6.32
95 16.95
96 3.71
97 8.08
98 5.77
Best calendar quarter return: 7.31% - quarter ended 3/31/95
Worst calendar quarter return: -6.11% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.44%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.76% 4.34% 6.78% --
Class D 3.83 n/a n/a 4.20%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .10% 1.00% 1.00%
Other Expenses ........................... .29% .29% .29%
---- ---- ----
Total Annual Fund Operating Expenses ..... .89% 1.79% 1.79%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 380 658 1,060 2,184
Class D 282 563 970 2,105
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 280 658 1,060 2,184
Class D 182 563 970 2,105
27
<PAGE>
NEW JERSEY FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The New Jersey Fund seeks to maximize income exempt from regular federal income
tax and New Jersey gross income tax consistent with preservation of capital and
with consideration given to opportunities for capital gain.
The New Jersey Fund uses the following strategies to pursue its objective:
The New Jersey Fund invests at least 80% of its net assets in New Jersey
municipal securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The New Jersey Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of New Jersey
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems. New
Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction, and service industries, supplemented by rural
areas with selective commercial agriculture. New Jersey's economy will be
affected by trends in these sectors.
28
<PAGE>
NEW JERSEY FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 10.56
90 6.78
91 11.04
92 8.99
93 12.37
94 -6.15
95 15.57
96 3.40
97 8.93
98 6.00
Best calendar quarter return: 6.78% - quarter ended 3/31/95
Worst calendar quarter return: -5.63% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.67%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.96% 4.29% 7.07% --
Class D 4.03 n/a n/a 4.52%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .22% 1.00% 1.00%
Other Expenses ........................... .30% .30% .30%
---- ---- ----
Total Annual Fund Operating Expenses ..... 1.02% 1.80% 1.80%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 574 $ 784 $1,011 $1,664
Class C 381 661 1,065 2,195
Class D 283 566 975 2,116
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 574 $ 784 $1,011 $1,664
Class C 281 661 1,065 2,195
Class D 183 566 975 2,116
29
<PAGE>
NEW YORK FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The New York Fund seeks to maximize income exempt from regular federal income
taxes and from New York personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
The New York Fund uses the following strategies to pursue its objective:
The New York Fund invests at least 80% of its net assets in New York municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The New York Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of New York issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. New York City
and certain localities outside New York City have experienced financial
problems. These problems may affect the fiscal health of the State.
30
<PAGE>
NEW YORK FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 9.39
90 4.18
91 13.53
92 9.31
93 13.26
94 -7.93
95 19.31
96 3.83
97 10.04
98 6.86
Best calendar quarter return: 8.13% - quarter ended 3/31/95
Worst calendar quarter return: -6.61% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.50%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.73% 5.03% 7.42% --
Class D 4.90 n/a n/a 4.93%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .22% .22% .22%
---- ---- ----
Total Annual Fund Operating Expenses ..... .81% 1.72% 1.72%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 554 $ 721 $ 903 $1,429
Class C 373 636 1,024 2,110
Class D 275 542 933 2,030
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 554 $ 721 $ 903 $1,429
Class C 273 636 1,024 2,110
Class D 175 542 933 2,030
31
<PAGE>
NORTH CAROLINA FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The North Carolina Fund seeks high income exempt from regular federal income
taxes and North Carolina personal income taxes consistent with preservation of
capital and with consideration given to capital gain.
The North Carolina Fund uses the following strategies to pursue its objective:
The North Carolina Fund invests at least 80% of its net assets in North Carolina
municipal securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The North Carolina Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of North Carolina
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems.
North Carolina's total expenditures for each fiscal period covered by the
budget must not exceed total receipts during the period and the surplus in
the State Treasury at the beginning of the period. During the State's
1990-1991 fiscal year, it began facing a substantial budget shortfall
resulting from the failure of revenues received by the State to meet
projected levels. While the State was successful in dealing with the
problem, pressure on state revenues may be an ongoing problem.
32
<PAGE>
NORTH CAROLINA FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
90* 2.80
91 10.63
92 8.15
93 12.98
94 -7.35
95 19.56
96 2.71
97 8.75
98 5.81
* For the period 8/27/90 to 12/31/90
Best calendar quarter return: 8.72% - quarter ended 3/31/95
Worst calendar quarter return: -6.73% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.57%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.85% 4.53% 6.80% --
Class D 4.14 n/a -- 4.57%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.24(1) 6.09(2)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 8/31/90.
(2) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .23% 1.00% 1.00%
Other Expenses ........................... .32% .32% .32%
---- ---- ----
Total Annual Fund Operating Expenses ..... 1.05% 1.82% 1.82%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 577 $ 793 $1,027 $1,697
Class C 383 667 1,075 2,216
Class D 285 573 985 2,137
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 577 $ 793 $1,027 $1,697
Class C 283 667 1,075 2,216
Class D 185 573 985 2,137
33
<PAGE>
OHIO FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Ohio Fund seeks to maximize income exempt from regular federal income taxes
and from Ohio personal income taxes to the extent consistent with preservation
of capital and with consideration given to opportunities for capital gain.
The Ohio Fund uses the following strategies to pursue its objective:
The Ohio Fund invests at least 80% of its net assets in Ohio municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Ohio Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Ohio issuers, its
performance may be affected by local, state, and regional factors. These
may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Ohio's economy
relies 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 other
states and in the nation as a whole.
34
<PAGE>
OHIO FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 9.94
90 6.58
91 11.31
92 8.43
93 11.64
94 -4.91
95 15.23
96 3.77
97 8.39
98 5.89
Best calendar quarter return: 6.47% - quarter ended 3/31/95
Worst calendar quarter return: -4.89% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.68%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.85% 4.44% 6.97% --
Class D 3.94 n/a n/a 4.41%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .19% .19% .19%
---- ---- ----
Total Annual Fund Operating Expenses ..... .78% 1.69% 1.69%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 551 $ 712 $ 888 $1,395
Class C 370 627 1,009 2,078
Class D 272 533 918 1,998
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 551 $ 712 $ 888 $1,395
Class C 270 627 1,009 2,078
Class D 172 533 918 1,998
35
<PAGE>
OREGON FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The Oregon Fund seeks to maximize income exempt from regular federal income
taxes and from Oregon personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
The Oregon Fund uses the following strategies to pursue its objective:
The Oregon Fund invests at least 80% of its net assets in Oregon municipal
securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Oregon Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Oregon issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Oregon's
economy has been affected by the high technology manufacturing, forest
products, and agriculture industries, which have all been slowed by
declining exports to Asia.
36
<PAGE>
OREGON FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 10.44
90 6.50
91 10.82
92 7.78
93 10.90
94 -4.56
95 14.55
96 3.81
97 9.05
98 6.09
Best calendar quarter return: 6.49% - quarter ended 6/30/89
Worst calendar quarter return: -4.48% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.83%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.09% 4.57% 6.89% --
Class D 4.13 n/a n/a 4.53%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price).... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .29% .29% .29%
---- ---- ----
Total Annual Fund Operating Expenses ..... .88% 1.79% 1.79%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 561 $ 742 $ 939 $1,508
Class C 380 658 1,060 2,184
Class D 282 563 970 2,105
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 561 $ 742 $ 939 $1,508
Class C 280 658 1,060 2,184
Class D 182 563 970 2,105
37
<PAGE>
PENNSYLVANIA FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Pennsylvania Fund seeks high income exempt from regular federal income tax
and Pennsylvania income taxes consistent with preservation of capital.
The Pennsylvania Fund uses the following strategies to pursue its objective:
The Pennsylvania Fund invests at least 80% of its net assets in Pennsylvania
municipal securities rated investment grade when purchased. The Fund will
ordinarily hold securities with maturities in excess of one year.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The Pennsylvania Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of Pennsylvania
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems. From
time to time, Pennsylvania and various of its political subdivisions
(including particularly the City of Philadelphia and the City of Scranton)
have encountered financial difficulty due to slowdowns in the pace of
economic activity and to other factors.
38
<PAGE>
PENNSYLVANIA FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 10.24
90 5.35
91 11.29
92 9.32
93 12.91
94 -7.03
95 18.01
96 3.44
97 8.70
98 6.14
Best calendar quarter return: 7.59% - quarter ended 3/31/95
Worst calendar quarter return: -6.40% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.65%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.10% 4.53% 7.12% --
Class D 4.32 n/a n/a 4.49%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price).... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .22% 1.00% 1.00%
Other Expenses ........................... .47% .47% .47%
---- ---- ----
Total Annual Fund Operating Expenses ..... 1.19% 1.97% 1.97%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 591 $ 835 $1,098 $1,850
Class C 398 712 1,152 2,373
Class D 300 618 1,062 2,296
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 591 $ 835 $1,098 $1,850
Class C 298 712 1,152 2,373
Class D 200 618 1,062 2,296
39
<PAGE>
SOUTH CAROLINA FUND
INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES
The South Carolina Fund seeks to maximize income exempt from regular federal
income taxes and from South Carolina personal income taxes to the extent
consistent with preservation of capital and with consideration given to
opportunities for capital gain.
The South Carolina Fund uses the following strategies to pursue its objective:
The South Carolina Fund invests at least 80% of its net assets in South Carolina
municipal securities rated investment grade when purchased.
The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.
In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.
PRINCIPAL RISKS
The South Carolina Fund is subject to the following principal risks:
o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.
o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.
o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.
o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.
o Because the Fund invests primarily in the securities of South Carolina
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems.
While South Carolina has not defaulted on its bonded debt since 1879, the
State did experience certain budgeting difficulties over several recent
years through June 30, 1993. Such difficulties have not to date impacted
the State's ability to pay its indebtedness but did result in S&P lowering
its rating on South Carolina general obligation bonds in 1993. The rating
was restored to AAA in 1996.
40
<PAGE>
SOUTH CAROLINA FUND
PAST PERFORMANCE
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.
Class A Annual Total Returns
Calendar Years
[The following points were depicted as a bar chart in the printed material.]
89 10.61
90 6.01
91 11.52
92 8.39
93 11.71
94 -6.70
95 17.65
96 3.93
97 8.72
98 5.73
Best calendar quarter return: 7.23% - quarter ended 3/31/95
Worst calendar quarter return: -6.18% - quarter ended 3/31/94
Class A annual total return for the quarter ended 3/31/99: 0.51%.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98
CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.70% 4.54% 7.06% --
Class D 3.78 n/a n/a 4.46%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)
The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.
(1) From 1/31/94.
- --------------------------------------------------------------------------------
FEES AND EXPENSES
Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%
Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)
Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .21% .21% .21%
---- ---- ----
Total Annual Fund Operating Expenses ..... .80% 1.71% 1.71%
==== ==== ====
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
Example
This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 372 633 1,019 2,099
Class D 274 539 928 2,019
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 272 633 1,019 2,099
Class D 174 539 928 2,019
41
<PAGE>
MANAGEMENT OF THE FUNDS
A Board of Directors or Board of Trustees (as applicable) provides broad
supervision over the affairs of each Fund.
J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of each Fund. Seligman manages the investment of each
Fund's assets, including making purchases and sales of portfolio securities
consistent with each Fund's investment objective and strategies, and administers
each Fund's business and other affairs.
Established in 1864, Seligman currently serves as manager to 18 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $21.5 billion in assets as of April 30, 1999. Seligman also
provides investment management or advice to institutional or other accounts
having an aggregate value at April 30, 1999, of approximately $10.2 billion.
Each Fund pays Seligman a fee for its management services. The fee for each Fund
is equal to an annual rate of .50% of the Fund's average daily net assets.
- --------------------------------------------------------------------------------
Affiliates of Seligman:
Seligman Advisors, Inc.:
Each Fund's general distributor; responsible for accepting orders for purchases
and sales of Fund shares.
Seligman Services, Inc.:
A limited purpose broker/dealer; acts as the broker/dealer of record for
shareholder accounts that do not have a designated financial advisor.
Seligman Data Corp. (SDC):
Each Fund's shareholder service agent; provides shareholder account services to
the Fund at cost.
- --------------------------------------------------------------------------------
Portfolio Management
The Funds are managed by the Seligman Municipals Team, headed by Mr. Thomas G.
Moles. Mr. Moles, a Managing Director of Seligman, has been Vice President and
Portfolio Manager of each Fund since its inception. Mr. Moles is also President
and Portfolio Manager of Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc., two closed-end investment companies.
42
<PAGE>
YEAR 2000
As the millennium approaches, mutual funds, financial and business
organizations, and individuals could be adversely affected if their computer
systems do not properly process and calculate date-related information and data
on and after January 1, 2000. Like other mutual funds, the Funds rely upon
service providers and their computer systems for its day-to-day operations. Many
of the Funds' service providers in turn depend upon computer systems of their
vendors. Seligman and SDC, have established a year 2000 project team. The team's
purpose is to assess the state of readiness of Seligman and SDC and the Funds'
other service providers and vendors. The team is comprised of several
information technology and business professionals, as well as outside
consultants. The Project Manager of the team reports directly to the
Administrative Committee of Seligman. The Project Manager and other members of
the team also report to each Fund's Board and its Audit Committee.
The team has identified the service providers and vendors who furnish critical
services or software systems to the Funds, including securities firms that
execute portfolio transactions for the Funds and firms responsible for
shareholder account recordkeeping. The team is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Funds. The team will
assess the feasibility of their year 2000 plans. The team has made progress on
its year 2000 contingency plans -- recovery efforts the team will employ in the
event that year 2000 issues adversely affect the Funds. The team anticipates
finalizing these plans in the near future.
The Funds anticipate the team will have implemented all significant components
of the team's year 2000 plans by mid-1999, including appropriate testing of
critical systems and receipt of satisfactory assurances from critical service
providers and vendors regarding their year 2000 compliance. The Funds believe
that the critical systems on which they rely will function properly on and after
the year 2000, but this is not guaranteed. If these systems do not function
properly, or the Funds' critical service providers are not successful in
implementing their year 2000 plans, the Funds' operations may be adversely
affected, including pricing, securities trading and settlement, and the
provision of shareholder services.
In addition, the Funds hold securities issued by governmental or
quasi-governmental issuers, which, like other organizations, may be susceptible
to year 2000 concerns. Year 2000 issues may affect an issuer's operations,
creditworthiness, and ability to make timely payment on any indebtedness and
could have an adverse impact on the value of its securities. If a Fund holds
these securities, its performance could be negatively affected. Seligman seeks
to identify an issuer's state of year 2000 readiness as part of the research it
employs. However, the perception of an issuer's year 2000 preparedness is only
one of the many factors considered in determining whether to buy, sell, or
continue to hold a security. Information provided by issuers concerning their
state of readiness may or may not be accurate or readily available. Further, the
Funds may be adversely affected if the domestic or foreign exchanges, markets,
depositories, clearing agencies, or governments or third parties responsible for
infrastructure needs do not address their year 2000 issues in a satisfactory
manner.
SDC has informed the Funds that it does not expect the cost of its services to
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The Funds will not pay to remediate the
systems of Seligman or bear directly the costs to remediate the systems of any
other service providers or vendors, other than SDC.
43
<PAGE>
Shareholder Information
DECIDING WHICH CLASS OF SHARES TO BUY
Each Fund's Classes represent an interest in the same portfolio of investments.
However, each Class has its own sales charge schedule, and its ongoing 12b-1
fees may differ from other classes. When deciding which Class of shares to buy,
you should consider, among other things:
o The amount you plan to invest.
o How long you intend to remain invested in the Fund, or another Seligman
mutual fund.
o If you would prefer to pay an initial sales charge and lower ongoing 12b-1
fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
o Whether you may be eligible for reduced or no sales charges when you buy
or sell shares.
Your financial advisor will be able to help you decide which Class of
shares best meets your needs.
- --------------------------------------------------------------------------------
Class A
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
Sales Charge Regular Dealer
Sales Charge as a % Discount
as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
-------------------------- ---------------- ---------------- --------------
<S> <C> <C> <C>
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 and over(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund
shares; it includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or
more, but you will be subject to a 1% CDSC if you sell your
shares within 18 months.
o Annual 12b-1 fee (for shareholder services) of up to 0.25%.
o No sales charge on reinvested dividends or capital gain
distributions.
o Certain employer-sponsored defined contribution-type plans can
purchase shares with no initial sales charge.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Discount
as a % as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
-------------------------- ----------------- ----------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund
shares; it includes the initial sales charge.
(2) Your purchase of Class C shares must be for less than
$1,000,000 because if you invest $1,000,000 or more you will
pay less in fees and charges if you buy Class A shares.
o A 1% CDSC on shares sold within eighteen months of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of
1.00%.
o No automatic conversion to Class Ashares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
o No CDSC when you sell shares purchased with reinvested dividends
or capital gain distributions.
- --------------------------------------------------------------------------------
44
<PAGE>
- --------------------------------------------------------------------------------
Class D*
o No initial sales charge on purchases.
o A 1% CDSC on shares sold within one year of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of
1.00%.
o No CDSC when you sell shares purchased with reinvested dividends
or capital gain distributions.
*Class D shares are not available to all investors. Beginning June 1,
1999, you may purchase Class D shares only if (1) you already own Class D
shares of the Fund or another Seligman mutual fund, (2) if your financial
advisor of record maintains an omnibus account at SDC, or (3) pursuant
to a 401(k) or other retirement plan program for which Class D shares are
already available or for which the sponsor requests Class D shares because
the sales charge structure of Class D shares is comparable to the sales
charge structure of the other funds offered under the program.
- --------------------------------------------------------------------------------
Each Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940. The plan allows each Class to pay distribution and/or service fees for the
sale and distribution of its shares and/or for providing services to
shareholders.
Because 12b-1 fees are paid out of each Class's assets on an ongoing basis, over
time these fees will increase your investment expenses and may cost you more
than other types of sales charges.
The Board of Directors or Trustees, as applicable, believes that no conflict of
interest currently exists between a Fund's Class A, Class C and Class D shares.
On an ongoing basis, the Directors or Trustees, in the exercise of their
fiduciary duties under the Investment Company Act of 1940 and applicable state
law, will seek to ensure that no such conflict arises.
How CDSCs Are Calculated
To minimize the amount of the CDSC you may pay when you sell your shares, each
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of any Fund to buy shares of
the same class of any other Seligman mutual fund. For the purpose of calculating
the CDSC when you sell shares that you acquired by exchanging shares of a Fund,
it will be assumed that you held the shares since the date you purchased the
shares of that Fund.
45
<PAGE>
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be included in the purchase price for Class A shares. Purchase or
sale orders received by an authorized dealer or financial advisor by the close
of regular trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m.
Eastern time) and accepted by Seligman Advisors before the close of business
(5:00 p.m. Eastern time) on the same day will be executed at the Class's NAV
calculated as of the close of regular trading on the NYSE on that day. Your
broker/dealer or financial advisor is responsible for forwarding your order to
Seligman Advisors before the close of business.
If your buy or sell order is received by your broker/dealer or financial advisor
after the close of regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be executed at the Class's
NAV calculated as of the close of regular trading on the next NYSE trading day.
When you sell shares, you receive the Class's per share NAV, less any applicable
CDSC.
- --------------------------------------------------------------------------------
NAV:
Computed separately for each Class of a Fund by dividing that Class's share of
the value of the net assets of the Fund (i.e., its assets less liabilities) by
the total number of outstanding shares of the Class.
- --------------------------------------------------------------------------------
The NAV of a Fund's shares is determined each day, Monday through Friday, on
days that the NYSE is open for trading. Because of their higher 12b-1 fees, the
NAV of Class C shares and Class D shares will generally be lower than the NAV of
Class A shares of a Fund.
Securities owned by a Fund are valued at current market prices. If reliable
market prices are unavailable,securities are valued in accordance with
procedures approved by the Board of Directors or Trustees, as applicable.
OPENING YOUR ACCOUNT
The Funds' shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you. Class D shares are not available to all investors. For more information,
see "Deciding Which Class of Shares to Buy-Class D."
To make your initial investment in a Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares.
The required minimum initial investments are:
o Regular (non-retirement) accounts: $1,000
o For accounts opened concurrently with Invest-A-Check(R):
$100 to open if you will be making monthly investments
$250 to open if you will be making quarterly investments
If you buy shares by check and subsequently sell the shares, SDC will not send
your proceeds until your check clears, which could take up to 15 calendar days
from the date of your purchase.
You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in the Fund and the other Seligman funds
you own under the same account number. Duplicate account statements will be sent
to you 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 per year, per
account, with a maximum charge of $150 per account request. Send your request
and a check for the fee to SDC.
IF YOU WANT TO BE ABLE TO BUY, SELL, OR EXCHANGE SHARES BY TELEPHONE, YOU SHOULD
COMPLETE AN APPLICATION WHEN YOU OPEN YOUR ACCOUNT. THIS WILL PREVENT YOU FROM
HAVING TO COMPLETE A SUPPLEMENTAL ELECTION FORM (WHICH MAY REQUIRE A SIGNATURE
GUARANTEE) AT A LATER DATE.
46
<PAGE>
HOW TO BUY ADDITIONAL SHARES
After you have made your initial investment, there are many options available to
make additional purchases of Fund shares. Subsequent purchases must be for $100
or more.
Shares may be purchased through your authorized broker/ dealer or financial
advisor, or you may send a check directly to SDC. Please provide either an
investment slip or a note that provides your name(s), Fund name, and account
number. Your investment will be made in the Class you already own.
Send investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
Invest-a-Check(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
Automatic Dollar-Cost-Averaging. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of any Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares, or Class C
shares, you may pay an initial sales charge to buy shares.
Automatic CD Transfer. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
Dividends From Other Investments. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name and Class of shares.)
Direct Deposit. You may buy Fund shares electronically with funds from your
employer, the IRS or any other institution that provides direct deposit. Call
SDC for more information.
Seligman Time Horizon MatrixSM. (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.
Seligman Harvester. If you are a retiree or nearing retirement, this program is
designed to help you establish an investment strategy that seeks to meet your
income needs throughout your retirement. The strategy is customized to your
personal financial situation by allocating your assets to seek to address your
income requirements, and prioritizing your expenses and establishing a prudent
withdrawal schedule.
HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares or
Class C shares of Seligman Cash Management Fund to buy shares of the same class
of a Fund or another Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.
If you exchange into a new fund, you must exchange enough to meet the new fund's
required minimum initial investment.
Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es). You should read and understand a fund's
prospectus before investing. Some funds may not offer all classes of shares.
47
<PAGE>
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction; however, the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.
You may always send a written request to sell shares of any Fund. It may take
longer to get your money if you send your request by mail.
As an additional measure to protect you and the Fund, SDCmay confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be paid
to an alternate payee or sent to an address other than the address of record,
with you or your financial advisor by telephone before sending your money. This
will not effect the date on which your redemption request is actually processed.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than all account owners, or
(3) mailed to other than your address of record.
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE:
PROTECTS YOU AND THE FUNDS FROM FRAUD. IT GUARANTEES THAT A SIGNATURE IS
GENUINE. A GUARANTEE MUST BE OBTAINED FROM AN ELIGIBLE FINANCIAL INSTITUTION.
NOTARIZATION BY A NOTARY PUBLIC IS NOT AN ACCEPTABLE GUARANTEE.
- --------------------------------------------------------------------------------
You may need to provide additional documents to sell shares if you are:
o a corporation;
o an executor or administrator;
o a trustee or custodian; or
o in a retirement plan.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.
You may also use the following account services to sell shares:
Systematic Withdrawal Plan. If you have at least $5,000 in a Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class C shares and Class D shares
and reinvest your dividends and capital gain distri butions, you may annually
withdraw 10%, respectively, of the value of your Fund account (at the time of
election) without a CDSC.
Check Redemption Service. If you have at least $25,000 in a Fund, you ask SDCto
provide checks which may be drawn against your account in amounts of $500 or
more. You may elect this service on your initial application or contact SDC for
the appropriate forms to establish this service. If you own Class A shares that
were bought at NAV because of the size of your purchase, or if you own Class B
shares, check redemptions may be subject to a CDSC. If you own Class D or Class
C shares, you may use this service only with respect to shares that you have
held for at least one year or eighteen months, respectively.
48
<PAGE>
IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT
To protect you and other shareholders, each Fund reserves the right to:
o Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month
period;
2. the amount you wish to exchange equals the lesser of
$1,000,000 or 1% of a Fund's net assets; or
3. you or your financial advisor have been advised that previous
patterns of purchases and sales or exchanges have been
considered excessive.
o Refuse any request to buy Fund shares;
o Reject any request received by telephone;
o Suspend or terminate telephone services;
o Reject a signature guarantee that SDC believes may be fraudulent;
o Close your fund account if its value falls below $500;
o Close your account if it does not have a certified taxpayer
identification number.
Telephone Services
You and your broker/dealer or financial representative or advisor will be able
to place the following requests by telephone, unless you indicate on your
account application that you do not want telephone services:
o Sell uncertificated shares (up to $50,000 per day, payable to
account owner(s) and mailed to address of record);
o Exchange shares between funds;
o Change dividend and/or capital gain distribution options;
o Change your address;
o Establish systematic withdrawals to address of record.
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form (which may
require a signature guarantee).
Restrictions apply to certain types of accounts:
o Trust accounts on which the current trustee is not listed may not
sell Fund shares by phone.
o Corporations may not sell Fund shares by phone.
o IRAs may only exchange Fund shares or request address changes by
phone.
o Group retirement plans may not sell Fund shares by phone; plans that
allow participants to exchange by phone must provide a letter of
authorization signed by the plan custodian or trustee and provide a
supple mental election form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative or financial advisor may not establish
telephone services without your written authorization. SDC will send written
confirmation to the address of record when telephone services are added or
terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of shares. In this case, you may need to
write, and it may take longer for your request to be processed. A Fund's NAV may
fluctuate during this time.
The Funds and SDC will not be liable for processing requests received by phone
as long as it was reasonable to believe that the request was genuine.
Reinstatement Privilege
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the same Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.
49
<PAGE>
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Each Fund generally declares any dividends from net investment income daily and
pays dividends on the 17th of each month. If the 17th day of a month falls on a
weekend or on a NYSE holiday, the dividend will be distributed on the previous
business day. The Funds distribute net capital gains realized on investments
annually. It is expected that the Funds' distri butions will be primarily income
dividends.
You may elect to:
(1) reinvest both dividends and capital gain distributions;
(2) receive dividends in cash and reinvest capital gain distributions; or
(3) receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise.
If you want to change your election, you may write SDC at the address listed on
the back cover of this prospectus, or, if you have telephone services, you or
your financial advisor may call SDC. Your request must be received by SDC before
the record date to be effective for that dividend or capital gain distribution.
- --------------------------------------------------------------------------------
Dividend:
A payment by a mutual fund, usually derived from the fund's net investment
income (dividends and interest earned on portfolio securities less expenses).
Capital Gain Distribution:
A payment to mutual fund shareholders which represents profits realized on the
sale of securities in a Fund's portfolio.
Ex-dividend Date:
The day on which any declared distributions (dividends or capital gains) are
deducted from the Fund's assets before it calculates its NAV.
- --------------------------------------------------------------------------------
Cash dividends or capital gain distributions will be sent by check to your
address of record or, if you have current ACH bank information on file, directly
deposited into your pre designated bank account within 3-4 business days from
the payable date.
Dividends and capital gain distributions are reinvested to buy additional shares
on the payable date using the NAV of the payable date.
Dividends on Class C shares and Class D shares will be lower than the dividends
on Class A shares as a result of their higher 12b-1 fees. Capital gain
distributions, if any, will be paid in the same amount for each Class.
TAXES
The Funds intend to pay dividends that are exempt from regular income tax. A
Fund may invest a portion of its assets in securities that generate income that
is not exempt from federal or state income tax. Income exempt from federal tax
may be subject to state and local tax. If you wish more specific information on
the possible tax consequences of investing in a particular Fund, you should read
that Fund's Statement of Additional Information.
Dividends paid by the Funds are taxable to you as ordinary income. Any capital
gains distributed by a Fund may be taxable, whether you take them in cash or
reinvest them to buy additional Fund shares. Capital gains may be taxed at
different rates depending on the length of time the Fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
50
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand the financial performance
of each Fund's Classes for the past five and one-half years or, if less than
five and one-half years, the period of the Class's operations. Class C is a new
Class, effective June 1, 1999, so financial highlights are not available.
Certain information reflects financial results for a single share of a Class
that was held throughout the periods shown. "Total return" shows the rate that
you would have earned (or lost) on an investment in the Fund, assuming you
reinvested all your dividends and capital gain distributions. Total returns do
not reflect any sales charges. Deloitte & Touche LLP, independent auditors, have
audited this information for each Fund. Their reports, along with the financial
statements, are included in each Fund's Annual and Mid-Year Reports, which are
available upon request.
<TABLE>
<CAPTION>
NATIONAL FUND
CLASS A
-------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.32 $ 8.01 $ 7.70 $ 7.58 $ 7.18 $ 8.72
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.39 0.39 0.40 0.40 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.15) 0.31 0.31 0.12 0.40 (1.04)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.04 0.70 0.70 0.52 0.80 (0.63)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.39) (0.39) (0.40) (0.40) (0.41)
Distributions (from capital gains).. -- -- -- -- -- (0.50)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.19) (0.39) (0.39) (0.40) (0.40) (0.91)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.17 $ 8.32 $ 8.01 $ 7.70 $ 7.58 $ 7.18
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.51% 9.00% 9.40% 6.97% 11.48% (7.83)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 100,557 $ 101,909 $ 97,481 $ 98,767 $ 104,184 $ 111,374
Ratio of expenses to average
net assets ....................... 0.83%(3) 0.80% 0.84% 0.80% 0.86% 0.85%
Ratio of net income to
average net assets ............... 4.71%(3) 4.82% 5.05% 5.19% 5.46% 5.30%
Portfolio turnover rate ............ 2.76% 18.00% 20.63% 33.99% 24.91% 24.86%
<CAPTION>
NATIONAL FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- --------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.31 $ 8.02 $ 7.70 $ 7.57 $ 7.18 $ 8.20
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.32 0.32 0.33 0.32 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.15) 0.29 0.32 0.13 0.39 (1.02)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.01 0.61 0.64 0.46 0.71 (0.80)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.32) (0.32) (0.33) (0.32) (0.22)
Distributions (from capital gains).. -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.16) (0.32) (0.32) (0.33) (0.32) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.16 $ 8.31 $ 8.02 $ 7.70 $ 7.57 $ 7.18
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.08% 7.76% 8.56% 6.13% 10.17% (9.96)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 7,968 $ 7,392 $ 2,279 $ 4,826 $ 1,215 $ 446
Ratio of expenses to average
net assets ....................... 1.73%(3) 1.71% 1.75% 1.67% 1.95% 1.76%(3)
Ratio of net income to
average net assets ............... 3.81%(3) 3.91% 4.15% 4.27% 4.40% 4.37%(3)
Portfolio turnover rate ............ 2.76% 18.00% 20.63% 33.99% 24.91% 24.86%(4)
</TABLE>
- ----------
See footnotes on page 60.
51
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD FUND
CLASS A
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ----------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 6.80 $ 6.61 $ 6.50 $ 6.47 $ 6.30 $ 6.73
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.32 0.34 0.36 0.37 0.37
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.22 0.20 0.05 0.17 (0.34)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.54 0.54 0.41 0.54 0.03
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.32) (0.34) (0.36) (0.37) (0.37)
Distributions (from capital gains).. (0.02) (0.03) (0.09) (0.02) -- (0.09)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.18) (0.35) (0.43) (0.38) (0.37) (0.46)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 6.68 $ 6.80 $ 6.61 $ 6.50 $ 6.47 $ 6.30
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.89% 8.45% 8.74% 6.49% 8.85% 0.41%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 58,337 $ 58,374 $ 52,883 $ 50,264 $ 51,504 $ 48,007
Ratio of expenses to average
net assets ....................... 0.86%(3) 0.82% 0.87% 0.84% 0.90% 0.85%
Ratio of net income to
average net assets ............... 4.64%(3) 4.81% 5.26% 5.49% 5.84% 5.74%
Portfolio turnover rate ............ 1.86% 10.75% 22.42% 34.75% 17.64% 8.36%
<CAPTION>
CALIFORNIA QUALITY FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.21 $ 6.99 $ 6.75 $ 6.65 $ 6.39 $ 7.28
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.33 0.34 0.35 0.34 0.35
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.25 0.24 0.11 0.32 (0.73)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.58 0.58 0.46 0.66 (0.38)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.33) (0.34) (0.35) (0.34) (0.35)
Distributions (from capital gains).. (0.23) (0.03) -- (0.01) (0.06) (0.16)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.39) (0.36) (0.34) (0.36) (0.40) (0.51)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 6.88 $ 7.21 $ 6.99 $ 6.75 $ 6.65 $ 6.39
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.81% 8.67% 8.87% 7.00% 10.85% (5.46)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 83,857 $ 87,522 $ 86,992 $ 95,560 $ 94,947 $ 99,020
Ratio of expenses to average
net assets ....................... 0.81%(3) 0.77% 0.82% 0.79% 0.89% 0.81%
Ratio of net income to
average net assets ............... 4.49%(3) 4.75% 4.99% 5.11% 5.34% 5.20%
Portfolio turnover rate ............ 13.30% 30.82% 12.16% 12.84% 11.24% 22.16%
<CAPTION>
CALIFORNIA HIGH-YIELD FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 6.80 $ 6.61 $ 6.51 $ 6.48 $ 6.31 $ 6.67
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.13 0.26 0.28 0.30 0.31 0.21
Net gains or losses on securities
(both realized and unrealized) . (0.09) 0.22 0.19 0.05 0.17 (0.36)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.04 0.48 0.47 0.35 0.48 (0.15)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.13) (0.26) (0.28) (0.30) (0.31) (0.21)
Distributions (from capital gains).. (0.02) (0.03) (0.09) (0.02) -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.15) (0.29) (0.37) (0.32) (0.31) (0.21)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 6.69 $ 6.80 $ 6.61 $ 6.51 $ 6.48 $ 6.31
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.59% 7.47% 7.60% 5.53% 7.78% (2.47)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 8,286 $ 6,393 $ 3,320 $ 1,919 $ 1,277 $ 650
Ratio of expenses to average
net assets ....................... 1.76%(3) 1.73% 1.77% 1.74% 1.91% 1.74%(3)
Ratio of net income to
average net assets ............... 3.74%(3) 3.90% 4.36% 4.59% 4.84% 4.73%(3)
Portfolio turnover rate ............ 1.86% 10.75% 22.42% 34.75% 17.64% 8.36%(4)
<CAPTION>
CALIFORNIA QUALITY FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.19 $ 6.97 $ 6.74 $ 6.63 $ 6.38 $ 7.13
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.12 0.27 0.28 0.28 0.28 0.19
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.25 0.23 0.12 0.31 (0.75)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.02 0.52 0.51 0.40 0.59 (0.56)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.12) (0.27) (0.28) (0.28) (0.28) (0.19)
Distributions (from capital gains).. (0.23) (0.03) -- (0.01) (0.06) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.35) (0.30) (0.28) (0.29) (0.34) (0.19)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 6.86 $ 7.19 $ 6.97 $ 6.74 $ 6.63 $ 6.38
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.36% 7.71% 7.75% 6.20% 9.61% (8.01)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 5,604 $ 2,302 $ 1,677 $ 1,645 $ 863 $ 812
Ratio of expenses to average
net assets ....................... 1.71%(3) 1.68% 1.72% 1.69% 1.88% 1.77%(3)
Ratio of net income to
average net assets ............... 3.59%(3) 3.84% 4.09% 4.21% 4.36% 4.39%(3)
Portfolio turnover rate ............ 13.30% 30.82% 12.16% 12.84% 11.24% 22.16%(4)
</TABLE>
- ----------
See footnotes on page 60.
52
<PAGE>
<TABLE>
<CAPTION>
COLORADO FUND
CLASS A
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.64 $ 7.42 $ 7.27 $ 7.30 $ 7.09 $ 7.76
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.17 0.36 0.37 0.37 0.38 0.37
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.22 0.15 (0.03) 0.21 (0.59)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.05 0.58 0.52 0.34 0.59 (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.36) (0.37) (0.37) (0.38) (0.37)
Distributions (from capital gains).. -- -- -- -- -- (0.08)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.17) (0.36) (0.37) (0.37) (0.38) (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.52 $ 7.64 $ 7.42 $ 7.27 $ 7.30 $ 7.09
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.65% 8.03% 7.30% 4.76% 8.56% (2.92)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 46,896 $ 45,583 $ 49,780 $ 52,295 $ 54,858 $ 58,197
Ratio of expenses to average
net assets ....................... 0.90%(3) 0.90% 0.90% 0.85% 0.93% 0.86%
Ratio of net income to
average net assets ............... 4.52%(3) 4.80% 5.01% 5.07% 5.31% 5.06%
Portfolio turnover rate ............ 2.55% 28.66% 3.99% 12.39% 14.70% 10.07%
<CAPTION>
FLORIDA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.07 $ 7.80 $ 7.67 $ 7.71 $ 7.34 $ 8.20
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.17 0.35 0.36 0.38 0.40 0.42
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.34 0.23 0.04 0.37 (0.74)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.69 0.59 0.42 0.77 (0.32)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.35) (0.36) (0.38) (0.40) (0.42)
Distributions (from capital gains).. (0.05) (0.07) (0.10) (0.08) -- (0.12)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.22) (0.42) (0.46) (0.46) (0.40) (0.54)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.91 $ 8.07 $ 7.80 $ 7.67 $ 7.71 $ 7.34
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.75% 9.16% 8.01% 5.54% 10.87% (3.99)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 43,231 $ 42,464 $ 42,024 $ 45,200 $ 49,030 $ 49,897
Ratio of expenses to average
net assets** ..................... 1.02%(3) 1.00% 1.04% 0.97% 0.72% 0.42%
Ratio of net income to
average net assets** ............. 4.27%(3) 4.45% 4.70% 4.90% 5.38% 5.49%
Portfolio turnover rate ............ 2.93% 6.73% 33.68% 18.53% 11.82% 6.17%
<CAPTION>
COLORADO FUND
CLASS D
--------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- --------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.63 $ 7.42 $ 7.27 $ 7.29 $ 7.09 $ 7.72
----------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income ............ 0.14 0.29 0.30 0.31 0.30 0.20
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.21 0.15 (0.02) 0.20 (0.63)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations ... 0.03 0.50 0.45 0.29 0.50 (0.43)
----------- ----------- ----------- ----------- ----------- ----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.30) (0.31) (0.30) (0.20)
Distributions (from capital gains).. -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------
Total distributions ................ (0.14) (0.29) (0.30) (0.31) (0.30) (0.20)
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period ..... $ 7.52 $ 7.63 $ 7.42 $ 7.27 $ 7.29 $ 7.09
=========== =========== =========== =========== =========== ==========
Total Return: ...................... 0.33% 6.90% 6.34% 3.95% 7.26% (5.73)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 884 $ 344 $ 238 $ 255 $ 193 $ 96
Ratio of expenses to average
net assets ....................... 1.80%(3) 1.80% 1.81% 1.75% 2.02% 1.78%(3)
Ratio of net income to
average net assets ............... 3.62%(3) 3.90% 4.10% 4.17% 4.23% 4.05%(3)
Portfolio turnover rate ............ 2.55% 28.66% 3.99% 12.39% 14.70% 10.07%(4)
<CAPTION>
FLORIDA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.08 $ 7.81 $ 7.68 $ 7.72 $ 7.34 $ 8.10
----------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income** .......... 0.14 0.29 0.30 0.32 0.34 0.24
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.34 0.23 0.04 0.38 (0.76)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations ... 0.04 0.63 0.53 0.36 0.72 (0.52)
----------- ----------- ----------- ----------- ----------- ----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.30) (0.32) (0.34) (0.24)
Distributions (from capital gains).. (0.05) (0.07) (0.10) (0.08) -- --
----------- ----------- ----------- ----------- ----------- ----------
Total distributions ................ (0.19) (0.36) (0.40) (0.40) (0.34) (0.24)
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period ..... $ 7.93 $ 8.08 $ 7.81 $ 7.68 $ 7.72 $ 7.34
=========== =========== =========== =========== =========== ==========
Total Return: ...................... 0.50% 8.32% 7.18% 4.74% 10.07% (6.64)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,244 $ 1,940 $ 1,678 $ 1,277 $ 603 $ 244
Ratio of expenses to average
net assets** ..................... 1.77%(3) 1.77% 1.81% 1.73% 1.66% 1.29%(3)
Ratio of net income to
average net assets** ............. 3.52%(3) 3.68% 3.93% 4.14% 4.53% 4.61%(3)
Portfolio turnover rate ............ 2.93% 6.73% 33.68% 18.53% 11.82% 6.17%(4)
</TABLE>
- ----------
See footnotes on page 60.
53
<PAGE>
<TABLE>
<CAPTION>
GEORGIA FUND
CLASS A
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.38 $ 8.12 $ 7.87 $ 7.81 $ 7.48 $ 8.43
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.18 0.38 0.38 0.39 0.39 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.29 0.28 0.11 0.43 (0.86)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.08 0.67 0.66 0.50 0.82 (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.18) (0.38) (0.38) (0.39) (0.39) (0.41)
Distributions (from capital gains).. (0.05) (0.03) (0.03) (0.05) (0.10) (0.09)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.23) (0.41) (0.41) (0.44) (0.49) (0.50)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.23 $ 8.38 $ 8.12 $ 7.87 $ 7.81 $ 7.48
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.94% 8.44% 8.65% 6.56% 11.66% (5.52)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 47,043 $ 48,424 $ 50,614 $ 50,995 $ 57,678 $ 61,466
Ratio of expenses to average
net assets** ..................... 0.89%(3) 0.89% 0.89% 0.83% 0.91% 0.73%
Ratio of net income to
average net assets** ............. 4.45%(3) 4.57% 4.82% 4.94% 5.26% 5.21%
Portfolio turnover rate ............ -- 2.92% 12.28% 16.24% 3.36% 19.34%
<CAPTION>
LOUISIANA FUND
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.51 $ 8.28 $ 8.16 $ 8.14 $ 7.94 $ 8.79
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.41 0.41 0.42 0.43 0.44
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.24 0.23 0.08 0.34 (0.77)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.07 0.65 0.64 0.50 0.77 (0.33)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.41) (0.41) (0.42) (0.43) (0.44)
Distributions (from capital gains).. (0.11) (0.01) (0.11) (0.06) (0.14) (0.08)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.30) (0.42) (0.52) (0.48) (0.57) (0.52)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.28 $ 8.51 $ 8.28 $ 8.16 $ 8.14 $ 7.94
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.91% 8.08% 8.17% 6.32% 10.30% (3.83)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 54,587 $ 56,308 $ 56,199 $ 57,264 $ 61,988 $ 61,441
Ratio of expenses to average
net assets ....................... 0.87%(3) 0.88% 0.86% 0.82% 0.89% 0.87%
Ratio of net income to
average net assets ............... 4.67%(3) 4.86% 5.08% 5.15% 5.44% 5.31%
Portfolio turnover rate ............ 5.31% 15.72% 16.08% 10.08% 4.82% 17.16%
<CAPTION>
GEORGIA FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.40 $ 8.13 $ 7.88 $ 7.82 $ 7.49 $ 8.33
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.15 0.30 0.31 0.32 0.32 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.30 0.28 0.11 0.43 (0.84)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.05 0.60 0.59 0.43 0.75 (0.62)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.30) (0.31) (0.32) (0.32) (0.22)
Distributions (from capital gains).. (0.05) (0.03) (0.03) (0.05) (0.10) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.20) (0.33) (0.34) (0.37) (0.42) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.25 $ 8.40 $ 8.13 $ 7.88 $ 7.82 $ 7.49
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.50% 7.59% 7.67% 5.60% 10.58% (7.57)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,678 $ 2,809 $ 2,640 $ 2,327 $ 2,079 $ 849
Ratio of expenses to average
net assets** ..................... 1.79%(3) 1.80 1.79% 1.73% 1.90% 1.76%(3)
Ratio of net income to
average net assets** ............. 3.55%(3) 3.66 3.92% 4.03% 4.28% 4.28%(3)
Portfolio turnover rate ............ -- 2.92% 12.28% 16.24% 3.36% 19.34%(4)
<CAPTION>
LOUISIANA FUND
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.50 $ 8.27 $ 8.16 $ 8.14 $ 7.94 $ 8.73
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.33 0.34 0.35 0.35 0.24
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.24 0.22 0.08 0.34 (0.79)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.05 0.57 0.56 0.43 0.69 (0.55)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.33) (0.34) (0.35) (0.35) (0.24)
Distributions (from capital gains).. (0.11) (0.01) (0.11) (0.06) (0.14) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.27) (0.34) (0.45) (0.41) (0.49) (0.24)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.28 $ 8.50 $ 8.27 $ 8.16 $ 8.14 $ 7.94
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.58% 7.11% 7.07% 5.37% 9.17% (6.45)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 762 $ 837 $ 509 $ 389 $ 465 $ 704
Ratio of expenses to average
net assets ....................... 1.78%(3) 1.78% 1.76% 1.72% 1.91% 1.78%(3)
Ratio of net income to
average net assets ............... 3.76%(3) 3.96% 4.18% 4.25% 4.41% 4.33%(3)
Portfolio turnover rate ............ 5.31% 15.72% 16.08% 10.08% 4.82% 17.16%(4)
</TABLE>
- ----------
See footnotes on page 60.
54
<PAGE>
<TABLE>
<CAPTION>
MARYLAND FUND
CLASS A
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.32 $ 8.14 $ 7.99 $ 7.96 $ 7.71 $ 8.64
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.40 0.40 0.40 0.41 0.42
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.23 0.19 0.06 0.38 (0.76)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.11 0.63 0.59 0.46 0.79 (0.34)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.40) (0.40) (0.40) (0.41) (0.42)
Distributions (from capital gains).. (0.03) (0.05) (0.04) (0.03) (0.13) (0.17)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.22) (0.45) (0.44) (0.43) (0.54) (0.59)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.21 $ 8.32 $ 8.14 $ 7.99 $ 7.96 $ 7.71
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 1.31% 7.89% 7.64% 6.00% 10.90% (4.08)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 53,490 $ 54,891 $ 52,549 $ 54,041 $ 56,290 $ 57,263
Ratio of expenses to average
net assets ....................... 0.89%(3) 0.89% 0.90% 0.84% 0.96% 0.92%
Ratio of net income to
average net assets ............... 4.64%(3) 4.82% 4.99% 5.05% 5.31% 5.17%
Portfolio turnover rate ............ 0.06% 7.59% 14.79% 5.56% 3.63% 17.68%
<CAPTION>
MASSACHUSETTS FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.27 $ 7.99 $ 7.85 $ 7.91 $ 7.66 $ 8.54
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.18 0.38 0.40 0.41 0.42 0.44
Net gains or losses on securities
(both realized and unrealized) . (0.14) 0.37 0.22 0.05 0.28 (0.67)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.04 0.75 0.62 0.46 0.70 (0.23)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.18) (0.38) (0.40) (0.41) (0.42) (0.44)
Distributions (from capital gains).. (0.05) (0.09) (0.08) (0.11) (0.03) (0.21)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.23) (0.47) (0.48) (0.52) (0.45) (0.65)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.08 $ 8.27 $ 7.99 $ 7.85 $ 7.91 $ 7.66
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.51% 9.80% 8.11% 5.97% 9.58% (2.94)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 103,400 $ 109,328 $ 110,011 $ 109,872 $ 115,711 $ 120,149
Ratio of expenses to average
net assets ....................... 0.83%(3) 0.80% 0.84% 0.80% 0.86% 0.85%
Ratio of net income to
average net assets ............... 4.47%(3) 4.72% 5.06% 5.24% 5.51% 5.46%
Portfolio turnover rate ............ 4.45% 13.41% 29.26% 26.30% 16.68% 12.44%
<CAPTION>
MARYLAND FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.33 $ 8.15 $ 7.99 $ 7.97 $ 7.72 $ 8.46
----------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income ............ 0.15 0.32 0.33 0.33 0.33 0.23
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.23 0.20 0.05 0.38 (0.74)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations ... 0.07 0.55 0.53 0.38 0.71 (0.51)
----------- ----------- ----------- ----------- ----------- ----------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.32) (0.33) (0.33) (0.33) (0.23)
Distributions (from capital gains). (0.03) (0.05) (0.04) (0.03) (0.13) --
----------- ----------- ----------- ----------- ----------- ----------
Total distributions ................ (0.18) (0.37) (0.37) (0.36) (0.46) (0.23)
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period ..... $ 8.22 $ 8.33 $ 8.15 $ 7.99 $ 7.97 $ 7.72
=========== =========== =========== =========== =========== ==========
Total Return: ...................... 0.86% 6.91% 6.80% 4.91% 9.75% (6.21)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 3,052 $ 3,128 $ 2,063 $ 2,047 $ 630 $ 424
Ratio of expenses to average
net assets ....................... 1.79%(3) 1.80% 1.81% 1.72% 2.02% 1.80%(3)
Ratio of net income to
average net assets ............... 3.74%(3) 3.91% 4.08% 4.14% 4.27% 4.26%(3)
Portfolio turnover rate ............ 0.06% 7.59% 14.79% 5.56% 3.63% 17.68%(4)
<CAPTION>
MASSACHUSETTS FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.26 $ 7.99 $ 7.84 $ 7.90 $ 7.66 $ 8.33
----------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income ............ 0.14 0.31 0.33 0.34 0.34 0.24
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.36 0.23 0.05 0.27 (0.67)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations ... 0.01 0.67 0.56 0.39 0.61 (0.43)
----------- ----------- ----------- ----------- ----------- ----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.31) (0.33) (0.34) (0.34) (0.24)
Distributions (from capital gains). (0.05) (0.09) (0.08) (0.11) (0.03) --
----------- ----------- ----------- ----------- ----------- ----------
Total distributions ................ (0.19) (0.40) (0.41) (0.45) (0.37) (0.24)
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period ..... $ 8.08 $ 8.26 $ 7.99 $ 7.84 $ 7.90 $ 7.66
=========== =========== =========== =========== =========== ==========
Total Return: ...................... 0.18% 8.68% 7.29% 5.01% 8.33% (5.34)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,374 $ 1,468 $ 1,245 $ 1,405 $ 809 $ 1,099
Ratio of expenses to average
net assets ....................... 1.73%(3) 1.71% 1.74% 1.70% 1.95% 1.78%(3)
Ratio of net income to
average net assets ............... 3.57%(3) 3.81% 4.16% 4.32% 4.47% 4.52%(3)
Portfolio turnover rate ............ 4.45% 13.41% 29.26% 26.30% 16.68% 12.44%(4)
</TABLE>
- ----------
See footnotes on page 60.
55
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN FUND
CLASS A
-------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.83 $ 8.60 $ 8.46 $ 8.54 $ 8.28 $ 9.08
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.20 0.41 0.43 0.45 0.46 0.46
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.30 0.23 0.06 0.30 (0.71)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.08 0.71 0.66 0.51 0.76 (0.25)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.20) (0.41) (0.43) (0.45) (0.46) (0.46)
Distributions (from capital gains).. (0.16) (0.07) (0.09) (0.14) (0.04) (0.09)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.36) (0.48) (0.52) (0.59) (0.50) (0.55)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.55 $ 8.83 $ 8.60 $ 8.46 $ 8.54 $ 8.28
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.90% 8.63% 8.16% 6.16% 9.56% (2.90)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 138,558 $ 144,161 $ 143,370 $ 148,178 $ 151,589 $ 151,095
Ratio of expenses to average
net assets ....................... 0.81%(3) 0.79% 0.81% 0.78% 0.87% 0.84%
Ratio of net income to
average net assets ............... 4.65%(3) 4.78% 5.13% 5.29% 5.50% 5.32%
Portfolio turnover rate ............ 3.62% 23.60% 10.98% 19.62% 20.48% 10.06%
MINNESOTA FUND
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.98 $ 7.79 $ 7.68 $ 7.82 $ 7.72 $ 8.28
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.18 0.38 0.40 0.42 0.45 0.45
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.20 0.11 (0.12) 0.11 (0.44)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.10 0.58 0.51 0.30 0.56 0.01
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.18) (0.38) (0.40) (0.42) (0.45) (0.45)
Distributions (from capital gains).. (0.10) (0.01) -- (0.02) (0.01) (0.12)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.28) (0.39) (0.40) (0.44) (0.46) (0.57)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.80 $ 7.98 $ 7.79 $ 7.68 $ 7.82 $ 7.72
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 1.27% 7.68% 6.85% 3.99% 7.61% 0.12%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 118,743 $ 121,374 $ 121,674 $ 126,173 $ 132,716 $ 134,990
Ratio of expenses to average
net assets ....................... 0.84%(3) 0.81% 0.85% 0.81% 0.87% 0.85%
Ratio of net income to
average net assets ............... 4.64%(3) 4.87% 5.21% 5.47% 5.89% 5.70%
Portfolio turnover rate ............ 4.65% 21.86% 6.88% 26.89% 5.57% 3.30%
<CAPTION>
MICHIGAN FUND
CLASS D
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ----------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.82 $ 8.59 $ 8.45 $ 8.54 $ 8.28 $ 9.01
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income ............ 0.16 0.33 0.36 0.37 0.37 0.25
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.30 0.23 0.05 0.30 (0.73)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.04 0.63 0.59 0.42 0.67 (0.48)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.33) (0.36) (0.37) (0.37) (0.25)
Distributions (from capital gains). (0.16) (0.07) (0.09) (0.14) (0.04) --
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.32) (0.40) (0.45) (0.51) (0.41) (0.25)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 8.54 $ 8.82 $ 8.59 $ 8.45 $ 8.54 $ 8.28
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.45% 7.66% 7.19% 5.09% 8.36% (5.47)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,642 $ 1,841 $ 1,845 $ 1,486 $ 1,172 $ 671
Ratio of expenses to average
net assets ....................... 1.71%(3) 1.70% 1.71% 1.68% 2.01% 1.75%(3)
Ratio of net income to
average net assets ............... 3.75%(3) 3.87% 4.23% 4.39% 4.40% 4.40%(3)
Portfolio turnover rate ............ 3.62% 23.60% 10.98% 19.62% 20.48% 10.06%(4)
MINNESOTA FUND
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.98 $ 7.79 $ 7.68 $ 7.82 $ 7.73 $ 8.22
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income ............ 0.15 0.31 0.33 0.35 0.38 0.25
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.20 0.11 (0.12) 0.10 (0.49)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.07 0.51 0.44 0.23 0.48 (0.24)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.31) (0.33) (0.35) (0.38) (0.25)
Distributions (from capital gains). (0.10) (0.01) -- (0.02) (0.01) --
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.25) (0.32) (0.33) (0.37) (0.39) (0.25)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 7.80 $ 7.98 $ 7.79 $ 7.68 $ 7.82 $ 7.73
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.82% 6.71% 5.89% 3.06% 6.45% (3.08)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,113 $ 2,103 $ 1,799 $ 2,036 $ 2,237 $ 1,649
Ratio of expenses to average
net assets ....................... 1.74%(3) 1.72% 1.75% 1.71% 1.85% 1.74%(3)
Ratio of net income to
average net assets ............... 3.74%(3) 3.96% 4.31% 4.57% 4.92% 4.68%(3)
Portfolio turnover rate ............ 4.65% 21.86% 6.88% 26.89% 5.57% 3.30%(4)
</TABLE>
- ----------
See footnotes on page 60.
56
<PAGE>
<TABLE>
<CAPTION>
MISSOURI FUND
CLASS A
------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.03 $ 7.82 $ 7.71 $ 7.70 $ 7.41 $ 8.31
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.17 0.36 0.38 0.39 0.40 0.40
Net gains or losses on securities
(both realized and unrealized) . (0.14) 0.28 0.19 0.08 0.36 (0.79)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.03 0.64 0.57 0.47 0.76 (0.39)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.36) (0.38) (0.39) (0.40) (0.40)
Distributions (from capital gains).. (0.12) (0.07) (0.08) (0.07) (0.07) (0.11)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.29) (0.43) (0.46) (0.46) (0.47) (0.51)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.77 $ 8.03 $ 7.82 $ 7.71 $ 7.70 $ 7.41
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.38% 8.41% 7.70% 6.27% 10.67% (4.85)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 48,944 $ 49,949 $ 52,766 $ 49,941 $ 51,169 $ 52,621
Ratio of expenses to average
net assets** ..................... 0.90%(3) 0.89% 0.89% 0.86% 0.88% 0.74%
Ratio of net income to
average net assets** ............. 4.39%(3) 4.59% 4.93% 5.03% 5.31% 5.18%
Portfolio turnover rate ............ 1.49% 21.26% 6.47% 8.04% 3.88% 14.33%
<CAPTION>
NEW JERSEY FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.78 $ 7.56 $ 7.60 $ 7.59 $ 7.40 $ 8.24
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.16 0.35 0.36 0.39 0.39 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.30 0.21 0.01 0.29 (0.74)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.65 0.57 0.40 0.68 (0.33)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.35) (0.36) (0.39) (0.39) (0.41)
Distributions (from capital gains).. (0.10) (0.08) (0.25) -- (0.10) (0.10)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.26) (0.43) (0.61) (0.39) (0.49) (0.51)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.58 $ 7.78 $ 7.56 $ 7.60 $ 7.59 $ 7.40
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.77% 8.87% 7.96% 5.37% 9.77% (4.25)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 57,861 $ 61,739 $ 62,597 $ 66,293 $ 73,561 $ 73,942
Ratio of expenses to average
net assets** ..................... 1.07%(3) 1.02% 1.06% 1.02% 1.01% 0.90%
Ratio of net income to
average net assets** ............. 4.27%(3) 4.54% 4.90% 5.06% 5.29% 5.24%
Portfolio turnover rate ............ -- 23.37% 20.22% 25.65% 4.66% 12.13%
<CAPTION>
MISSOURI FUND
CLASS D
----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ----------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.03 $ 7.82 $ 7.72 $ 7.70 $ 7.41 $ 8.20
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.14 0.29 0.31 0.32 0.32 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.14) 0.28 0.18 0.09 0.36 (0.79)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... -- 0.57 0.49 0.41 0.68 (0.57)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.31) (0.32) (0.32) (0.22)
Distributions (from capital gains).. (0.12) (0.07) (0.08) (0.07) (0.07) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.26) (0.36) (0.39) (0.39) (0.39) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.77 $ 8.03 $ 7.82 $ 7.72 $ 7.70 $ 7.41
=========== =========== =========== =========== =========== ===========
Total Return: ...................... (0.07)% 7.45% 6.60% 5.46% 9.49% (7.16)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 626 $ 418 $ 474 $ 565 $ 515 $ 350
Ratio of expenses to average
net assets** ..................... 1.80%(3) 1.79% 1.80% 1.76% 1.98% 1.70%(3)
Ratio of net income to
average net assets** ............. 3.49%(3) 3.69% 4.02% 4.13% 4.23% 4.27%(3)
Portfolio turnover rate ............ 1.49% 21.26% 6.47% 8.04% 3.88% 14.33%(4)
<CAPTION>
NEW JERSEY FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.86 $ 7.64 $ 7.68 $ 7.67 $ 7.48 $ 8.14
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.14 0.29 0.31 0.33 0.33 0.23
Net gains or losses on securities
(both realized and unrealized) . (0.09) 0.30 0.21 0.01 0.29 (0.66)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.05 0.59 0.52 0.34 0.62 (0.43)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.31) (0.33) (0.33) (0.23)
Distributions (from capital gains).. (0.10) (0.08) (0.25) -- (0.10) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.24) (0.37) (0.56) (0.33) (0.43) (0.23)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.67 $ 7.86 $ 7.64 $ 7.68 $ 7.67 $ 7.48
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.54% 7.97% 7.10% 4.56% 8.79% (5.47)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 1,795 $ 1,582 $ 1,282 $ 1,152 $ 1,190 $ 986
Ratio of expenses to average
net assets** ..................... 1.82%(3) 1.80% 1.83% 1.79% 1.89% 1.75%(3)
Ratio of net income to
average net assets** ............. 3.52%(3) 3.76% 4.13% 4.29% 4.45% 4.37%(3)
Portfolio turnover rate ............ -- 23.37% 20.22% 25.65% 4.66% 12.13%(4)
</TABLE>
- ----------
See footnotes on page 60.
57
<PAGE>
<TABLE>
<CAPTION>
NEW YORK FUND
CLASS A
------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- --------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.60 $ 8.28 $ 7.98 $ 7.86 $ 7.67 $ 8.75
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.40 0.41 0.42 0.42 0.43
Net gains or losses on securities
(both realized and unrealized) . (0.15) 0.40 0.32 0.12 0.36 (0.88)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.04 0.80 0.73 0.54 0.78 (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.40) (0.41) (0.42) (0.42) (0.43)
Distributions (from capital gains).. (0.21) (0.08) (0.02) -- (0.17) (0.20)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.40) (0.48) (0.43) (0.42) (0.59) (0.63)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.24 $ 8.60 $ 8.28 $ 7.98 $ 7.86 $ 7.67
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.42% 10.02% 9.45% 6.97% 10.93% (5.37)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 84,971 $ 84,822 $ 83,528 $ 82,719 $ 83,980 $ 90,914
Ratio of expenses to average
net assets ....................... 0.82%(3) 0.81% 0.82% 0.77% 0.88% 0.87%
Ratio of net income to
average net assets ............... 4.51%(3) 4.74% 5.09% 5.24% 5.52% 5.31%
Portfolio turnover rate ............ 4.57% 39.85% 23.83% 25.88% 34.05% 28.19%
<CAPTION>
NORTH CAROLINA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.30 $ 8.05 $ 7.84 $ 7.74 $ 7.30 $ 8.22
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.17 0.36 0.37 0.37 0.39 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.31 0.24 0.11 0.45 (0.87)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.67 0.61 0.48 0.84 (0.46)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.36) (0.37) (0.37) (0.39) (0.41)
Distributions (from capital gains).. (0.12) (0.06) (0.03) (0.01) (0.01) (0.05)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.29) (0.42) (0.40) (0.38) (0.40) (0.46)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.07 $ 8.30 $ 8.05 $ 7.84 $ 7.74 $ 7.30
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.74% 8.60% 8.01% 6.39% 11.92% (5.80)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 30,819 $ 32,358 $ 32,684 $ 35,934 $ 37,446 $ 38,920
Ratio of expenses to average
net assets** ..................... 1.08%(3) 1.05% 1.09% 1.05% 0.82% 0.44%
Ratio of net income to
average net assets** ............. 4.28%(3) 4.41% 4.66% 4.75% 5.21% 5.29%
Portfolio turnover rate ............ -- 20.37% 13.04% 15.12% 4.38% 15.61%
<CAPTION>
CLASS D
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- -----------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.60 $ 8.29 $ 7.98 $ 7.87 $ 7.67 $ 8.55
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income ............ 0.15 0.32 0.34 0.34 0.34 0.23
Net gains or losses on securities
(both realized and unrealized) . (0.14) 0.39 0.33 0.11 0.37 (0.88)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.01 0.71 0.67 0.45 0.71 (0.65)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.32) (0.34) (0.34) (0.34) (0.23)
Distributions (from capital gains).. (0.21) (0.08) (0.02) -- (0.17) --
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.36) (0.40) (0.36) (0.34) (0.51) (0.23)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 8.25 $ 8.60 $ 8.29 $ 7.98 $ 7.87 $ 7.67
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.09% 8.88% 8.60% 5.86% 9.87% (7.73)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 3.297 $ 2,182 $ 1,572 $ 1,152 $ 885 $ 476
Ratio of expenses to average
net assets ....................... 1.72%(3) 1.72% 1.73% 1.68% 1.96% 1.81%(3)
Ratio of net income to
average net assets ............... 3.61%(3) 3.83% 4.18% 4.33% 4.42% 4.39%(3)
Portfolio turnover rate ............ 4.57% 39.85% 23.83% 25.88% 34.05% 28.19%(4)
<CAPTION>
NORTH CAROLINA FUND
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.30 $ 8.05 $ 7.83 $ 7.74 $ 7.29 $ 8.17
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income** .......... 0.14 0.30 0.31 0.31 0.33 0.23
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.31 0.25 0.10 0.46 (0.88)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.02 0.61 0.56 0.41 0.79 (0.65)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.30) (0.31) (0.31) (0.33) (0.23)
Distributions (from capital gains).. (0.12) (0.06) (0.03) (0.01) (0.01) --
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.26) (0.36) (0.34) (0.32) (0.34) (0.23)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 8.06 $ 8.30 $ 8.05 $ 7.83 $ 7.74 $ 7.29
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.24% 7.77% 7.33% 5.45% 11.19% (8.15)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 1,529 $ 1,456 $ 1,217 $ 1,232 $ 1,257 $ 1,282
Ratio of expenses to average
net assets** ..................... 1.83%(3) 1.82% 1.85% 1.81% 1.64% 1.27%(3)
Ratio of net income to
average net assets** ............. 3.53%(3) 3.64% 3.90% 3.99% 4.42% 4.49%(3)
Portfolio turnover rate ............ -- 20.37% 13.04% 15.12% 4.38% 15.61%(4)
</TABLE>
- ----------
See footnotes on page 60.
58
<PAGE>
<TABLE>
<CAPTION>
OHIO FUND
CLASS A
------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.37 $ 8.19 $ 8.09 $ 8.11 $ 7.90 $ 8.77
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income ............ 0.19 0.40 0.42 0.43 0.44 0.44
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.29 0.17 0.02 0.28 (0.70)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.06 0.69 0.59 0.45 0.72 (0.26)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.40) (0.42) (0.43) (0.44) (0.44)
Distributions (from capital gains).. (0.13) (0.11) (0.07) (0.04) (0.07) (0.17)
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.32) (0.51) (0.49) (0.47) (0.51) (0.61)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 8.11 $ 8.37 $ 8.19 $ 8.09 $ 8.11 $ 7.90
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.80% 8.77% 7.54% 5.68% 9.59% (3.08)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 149,197 $ 153,126 $ 154,419 $ 162,243 $ 170,191 $ 171,469
Ratio of expenses to average
net assets ....................... 0.81%(3) 0.78% 0.81% 0.77% 0.84% 0.84%
Ratio of net income to
average net assets ............... 4.73%(3) 4.92% 5.19% 5.32% 5.56% 5.34%
Portfolio turnover rate ............ 0.68% 24.74% 11.76% 12.90% 2.96% 9.37%
OREGON FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.05 $ 7.87 $ 7.65 $ 7.66 $ 7.43 $ 8.08
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income** .......... 0.17 0.36 0.38 0.40 0.40 0.40
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.28 0.26 -- 0.25 (0.59)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.09 0.64 0.64 0.40 0.65 (0.19)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.36) (0.38) (0.40) (0.40) (0.40)
Distributions (from capital gains).. (0.05) (0.10) (0.04) (0.01) (0.02) (0.06)
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.22) (0.46) (0.42) (0.41) (0.42) (0.46)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 7.92 $ 8.05 $ 7.87 $ 7.65 $ 7.66 $ 7.43
=========== =========== =========== =========== =========== =========
Total Return: ...................... 1.18% 8.48% 8.60% 5.27% 9.05% (2.38)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 57,957 $ 57,601 $ 55,239 $ 57,345 $ 59,549 $ 59,884
Ratio of expenses to average
net assets** ..................... 0.88%(3) 0.88% 0.90% 0.86% 0.86% 0.78%
Ratio of net income to
average net assets** ............. 4.41%(3) 4.60% 4.88% 5.18% 5.40% 5.20%
Portfolio turnover rate ............ 6.76% 12.62% 19.46% 28.65% 2.47% 9.43%
<CAPTION>
OHIO FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.41 $ 8.23 $ 8.13 $ 8.15 $ 7.92 $ 8.61
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.33 0.35 0.36 0.36 0.24
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.29 0.17 0.02 0.30 (0.69)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.03 0.62 0.52 0.38 0.66 (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.33) (0.35) (0.36) (0.36) (0.24)
Distributions (from capital gains).. (0.13) (0.11) (0.07) (0.04) (0.07) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.29) (0.44) (0.42) (0.40) (0.43) (0.24)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.15 $ 8.41 $ 8.23 $ 8.13 $ 8.15 $ 7.92
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.36% 7.78% 6.57% 4.74% 8.67% (5.36)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 1,649 $ 1,103 $ 1,160 $ 1,011 $ 660 $ 324
Ratio of expenses to average
net assets ....................... 1.71%(3) 1.69% 1.71% 1.67% 1.93% 1.78%(3)
Ratio of net income to
average net assets ............... 3.83%(3) 4.01% 4.29% 4.42% 4.48% 4.41%(3)
Portfolio turnover rate ............ 0.68% 24.74% 11.76% 12.90% 2.96% 9.37%(4)
<CAPTION>
OREGON FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.04 $ 7.87 $ 7.64 $ 7.65 $ 7.43 $ 8.02
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.14 0.29 0.31 0.33 0.33 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.27 0.27 -- 0.24 (0.59)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.56 0.58 0.33 0.57 (0.37)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.31) (0.33) (0.33) (0.22)
Distributions (from capital gains).. (0.05) (0.10) (0.04) (0.01) (0.02) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.19) (0.39) (0.35) (0.34) (0.35) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.91 $ 8.04 $ 7.87 $ 7.64 $ 7.65 $ 7.43
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.73% 7.37% 7.77% 4.33% 7.86% (4.76)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,778 $ 2,650 $ 1,678 $ 1,540 $ 1,495 $ 843
Ratio of expenses to average
net assets** ..................... 1.78%(3) 1.79% 1.80% 1.76% 1.83% 1.72%(3)
Ratio of net income to
average net assets** ............. 3.51%(3) 3.69% 3.98% 4.28% 4.41% 4.32%(3)
Portfolio turnover rate ............ 6.76% 12.62% 19.46% 28.65% 2.47% 9.43%(4)
</TABLE>
- ----------
See footnotes on page 60.
59
<PAGE>
<TABLE>
<CAPTION>
PENNSYLVANIA FUND
CLASS A
------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- --------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.24 $ 7.96 $ 7.82 $ 7.79 $ 7.55 $ 8.61
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.17 0.35 0.36 0.38 0.38 0.39
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.36 0.24 0.12 0.37 (0.80)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.71 0.60 0.50 0.75 (0.41)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.35) (0.36) (0.38) (0.38) (0.39)
Distributions (from capital gains).. (0.15) (0.08) (0.10) (0.09) (0.13) (0.26)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.32) (0.43) (0.46) (0.47) (0.51) (0.65)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.98 $ 8.24 $ 7.96 $ 7.82 $ 7.79 $ 7.55
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.68% 9.20% 7.89% 6.57% 10.55% (5.00)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 28,151 $ 29,582 $ 30,092 $ 31,139 $ 33,251 $ 34,943
Ratio of expenses to average
net assets ....................... 1.23%(3) 1.19% 1.19% 1.11% 1.21% 1.16%
Ratio of net income to
average net assets ............... 4.14%(3) 4.34% 4.60% 4.82% 5.05% 4.91%
Portfolio turnover rate ............ 3.19% 13.05% 32.99% 4.56% 11.78% 7.71%
<CAPTION>
SOUTH CAROLINA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.38 $ 8.16 $ 8.07 $ 7.97 $ 7.61 $ 8.52
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.39 0.40 0.41 0.41 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.29 0.22 0.12 0.37 (0.79)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.68 0.62 0.53 0.78 (0.38)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.39) (0.40) (0.41) (0.41) (0.41)
Distributions (from capital gains).. (0.07) (0.07) (0.13) (0.02) (0.01) (0.12)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.26) (0.46) (0.53) (0.43) (0.42) (0.53)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.18 $ 8.38 $ 8.16 $ 8.07 $ 7.97 $ 7.61
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.63% 8.66% 7.99% 6.82% 10.69% (4.61)%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 104,543 $ 106,328 $ 101,018 $ 108,163 $ 112,421 $ 115,133
Ratio of expenses to average
net assets ....................... 0.83%(3) 0.80% 0.84% 0.80% 0.88% 0.83%
Ratio of net income to
average net assets ............... 4.53%(3) 4.74% 5.04% 5.15% 5.38% 5.12%
Portfolio turnover rate ............ 1.50% 16.63% -- 20.66% 4.13% 1.81%
<CAPTION>
PENNSYLVANIA FUND
CLASS D
----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ----------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ 8.23 $ 7.95 $ 7.81 $ 7.78 $ 7.54 $ 8.37
---------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.14 0.29 0.30 0.32 0.31 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.36 0.24 0.12 0.37 (0.83)
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.03 0.65 0.54 0.44 0.68 (0.61)
---------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.30) (0.32) (0.31) (0.22)
Distributions (from capital gains).. (0.15) (0.08) (0.10) (0.09) (0.13) --
---------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.29) (0.37) (0.40) (0.41) (0.44) (0.22)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... 7.97 $ 8.23 $ 7.95 $ 7.81 $ 7.78 $ 7.54
========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.30% 8.36% 7.07% 5.76% 9.53% (7.50)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... 937 $ 607 $ 816 $ 876 $ 426 $ 43
Ratio of expenses to average
net assets ....................... 1.98%(3) 1.97% 1.96% 1.88% 2.23% 2.00%(3)
Ratio of net income to
average net assets ............... 3.39%(3) 3.56% 3.83% 4.05% 4.10% 4.20%(3)
Portfolio turnover rate ............ 3.19% 13.05% 32.99% 4.56% 11.78% 7.71%(4)
<CAPTION>
SOUTH CAROLINA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ 8.38 $ 8.16 $ 8.06 $ 7.97 $ 7.61 $ 8.42
---------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.15 0.31 0.33 0.34 0.34 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.29 0.23 0.11 0.37 (0.81)
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.02 0.60 0.56 0.45 0.71 (0.59)
---------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.31) (0.33) (0.34) (0.34) (0.22)
Distributions (from capital gains).. (0.07) (0.07) (0.13) (0.02) (0.01) --
---------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.22) (0.38) (0.46) (0.36) (0.35) (0.22)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... 8.18 $ 8.38 $ 8.16 $ 8.06 $ 7.97 $ 7.61
========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.18% 7.68% 7.15% 5.73% 9.63% (7.14)%(2)
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... 6,481 $ 5,594 $ 3,663 $ 2,714 $ 1,704 $ 1,478
Ratio of expenses to average
net assets ....................... 1.73%(3) 1.71% 1.75% 1.70% 1.85% 1.74%(3)
Ratio of net income to
average net assets ............... 3.63%(3) 3.83% 4.13% 4.25% 4.40% 4.29%(3)
Portfolio turnover rate ............ 1.50% 16.63% -- 20.66% 4.13% 1.81%(4)
</TABLE>
- ----------
* Per share amounts are based on average shares outstanding.
** For periods prior to 1996 (1997 for the Florida Fund and the North
Carolina Fund), Seligman voluntarily waived a portion of its management
fee. These amounts reflect the effect of the waivers.
(1) Commencement of offering of Class D shares.
(2) Not annualized.
(3) Annualized.
(4) For the year ended September 30, 1994.
60
<PAGE>
How to Contact Us
The Fund Write: Corporate Communications/
Investor Relations Department
J. & W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US
Website: http://www.seligman.com
Your Regular
(Non-Retirement)
Account Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US
Website: http://www.seligman.com
- --------------------------------------------------------------------------------
24-hour telephone access is available by dialing (800) 622-4597 on a touchtone
telephone. You will have instant access to price, yield, account balance, most
recent transaction, and other information.
- --------------------------------------------------------------------------------
<PAGE>
For More Information
- --------------------------------------------------------------------------------
The following information is available without charge upon request: Call
toll-free (800) 221-2450 in the US or (212) 682-7600 outside the US.
Statement of Additional Information (SAI) contains additional information about
the Fund. It is on file with the Securities and Exchange Commission (SEC) and is
incorporated by reference into (is legally part of) this prospectus.
Annual/Semi-Annual Reports contain additional information about the Fund's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
- --------------------------------------------------------------------------------
SELIGMAN ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (800) SEC-0330. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing: Public Reference Section of the SEC, Washington, DC 20549-6009.
SEC FILE NUMBERS: Seligman Municipal Fund Series, Inc.: 811-3828
Seligman Municipal Series Trust: 811-4250
Seligman New Jersey Municipal Fund, Inc.: 811-5126
Seligman Pennsylvania Municipal Fund Series: 811-4666
<PAGE>
SELIGMAN MUNICIPAL FUND SERIES, INC.
National Fund, Colorado Fund, Georgia Fund, Louisiana Fund, Maryland Fund,
Massachusetts Fund, Michigan Fund, Minnesota Fund, Missouri Fund, New York Fund,
Ohio Fund, Oregon Fund, South Carolina Fund
Statement of Additional Information
June 1, 1999
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus of Seligman Municipal Funds,
dated June 1, 1999. This SAI, although not in itself a prospectus, is
incorporated by reference into the Prospectus in its entirety. It should be read
in conjunction with the Prospectus, which may be obtained by writing or calling
the Funds at the above address or telephone numbers.
The financial statements and notes included in the Funds' Annual Report and
Mid-Year Report, and the Independent Auditors' Reports thereon, are incorporated
herein by reference. The Annual Report and Mid-Year Report will be furnished to
you without charge if you request a copy of this SAI.
Table of Contents
Fund History ......................................................... 2
Description of the Funds and Their Investments and Risks ............. 2
Management of the Funds .............................................. 7
Control Persons and Principal Holders of Securities................... 12
Investment Advisory and Other Services ............................... 13
Brokerage Allocation and Other Practices ............................. 21
Capital Stock and Other Securities ................................... 22
Purchase, Redemption, and Pricing of Shares .......................... 22
Taxation of the Funds ................................................ 28
Underwriters.......................................................... 37
Calculation of Performance Data ...................................... 39
Financial Statements.................................................. 47
General Information................................................... 47
Appendix A ........................................................... 47
Appendix B............................................................ 51
Appendix C............................................................ 90
<PAGE>
Fund History
Seligman Municipal Fund Series, Inc. was incorporated in Maryland on August 8,
1983.
Description of the Funds and Their Investments and Risks
Classification
Seligman Municipal Fund Series, Inc. is a non-diversified, open-end management
investment company, or mutual fund. It consists of thirteen separate series:
National Municipal Series (National Fund)
Colorado Municipal Series (Colorado Fund)
Georgia Municipal Series (Georgia Fund)
Louisiana Municipal Series (Louisiana Fund)
Maryland Municipal Series (Maryland Fund)
Massachusetts Municipal Series (Massachusetts Fund)
Michigan Municipal Series (Michigan Fund)
Minnesota Municipal Series (Minnesota Fund)
Missouri Municipal Series (Missouri Fund)
New York Municipal Series (New York Fund)
Ohio Municipal Series (Ohio Fund)
Oregon Municipal Series (Oregon Fund)
South Carolina Municipal Series (South Carolina Fund)
Investment Strategies and Risks
The following information regarding the Funds' investments and risks supplements
the information contained in the Prospectus.
The Funds seek to provide income exempt from regular federal income taxes and,
as applicable, regular state and local income taxes, to the extent consistent
with the preservation of capital and with consideration given to opportunities
for capital gain.
Each Fund is expected to invest principally, without percentage limitations, in
municipal securities which on the date of purchase are rated within the four
highest rating categories of Moody's Investors Service (Moody's) or Standard &
Poor's Corporation (S&P). Municipal Securities rated in these categories are
commonly referred to as investment grade. Each Fund may invest in municipal
securities that are not rated, or which do not fall into the credit ratings
noted above if, based upon credit analysis, it is believed that such securities
are of comparable quality. In determining suitability of investment in a lower
rated or unrated security, a Fund 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.
2
<PAGE>
A description of the credit rating categories is contained in Appendix A to this
SAI.
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 a Fund's investment objectives
and structure might be necessary in the future due to market conditions that may
result from future changes in the tax laws.
Municipal Securities. Municipal securities include 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, agencies, and instrumentalities, the interest
on which is exempt from regular federal income taxes and in certain instances,
applicable state or local income taxes. Municipal securities are traded
primarily in the over-the-counter market. A Fund 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.
Under the Investment Company Act of 1940, as amended (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 only the assets and revenues of the
non-governmental user back the bond, the non-governmental 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.
The Funds invest principally in long-term municipal bonds. 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 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.
Each Fund, with respect to 75% of its assets, will not purchase any revenue
bonds if as a result of such purchase more than 5% of such Fund's assets would
be invested in the revenue bonds of a single issuer.
The Funds may also invest in municipal notes. Municipal notes generally are used
to provide for short-term capital needs and generally have maturities of five
years or less. Municipal Notes include:
1. Tax Anticipation Notes and Revenue Anticipation Notes. Tax
anticipation notes and revenue anticipation notes are issued to
finance short-term working capital needs of political subdivisions.
Generally, tax anticipation notes are issued in anticipation of
various tax revenues, such as income, sales and real property taxes,
and are payable from these specific future taxes. Revenue anticipation
notes are issued in expectation of receipt of other kinds of revenue,
such as grant or project revenues. Usually political subdivisions
issue notes combining the qualities of
3
<PAGE>
both tax and revenue anticipation notes.
2. Bond Anticipation Notes. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most
cases, the long-term bonds then provide the money for the repayment of
the notes.
Issues of municipal Commercial Paper typically represent short-term, unsecured,
negotiable promissory notes. In most cases, municipal commercial paper is backed
by letters of credit, lending agreements, note repurchase agreements or other
credit facility agreements offered by banks or other institutions.
Variable and Floating Rate Securities. A Fund may purchase floating or variable
rate securities, including participation interests therein. Investments in
floating or variable rate securities provide that the rate of interest is either
pegged to money market rates or set as a specific percentage of a designated
base rate, such as rates on Treasury Bonds or Treasury Bills or the prime rate
of a major commercial bank. A floating rate or variable rate security generally
provides that a Fund can demand payment of the obligation on short notice (daily
or weekly, depending on the terms of the obligation) at an amount equal to par
(face value) plus accrued interest. In unusual circumstances, the amount
received may be more or less than the amount the Fund paid for the securities.
Variable rate securities provide for a specified periodic adjustment in the
interest rate, while floating rate securities have an interest rate which
changes whenever there is a change in the designated base interest rate.
Frequently such securities are secured by letters of credit or other credit
support arrangements provided by banks. The quality of the underlying creditor
or of the bank or insurer, as the case may be, must be equivalent to the
standards set forth with respect to taxable investments below.
The maturity of variable or floating rate obligations (including participation
interests therein) is deemed to be the longer of (1) the notice period required
before a Fund is entitled to receive payment of the obligation upon demand, or
(2) the period remaining until the obligation's next interest rate adjustment.
If the Fund does not redeem the obligation through the demand feature, the
obligation will mature on a specific date, which may range up to thirty years
from the date of its issuance.
Participation Interests. From time to time, a Fund may purchase from banks,
participation interests in all or part of specific holdings of municipal
securities. A participation interest gives the Fund an undivided interest in the
municipal security in the proportion that the Fund's participation interest
bears to the total principal amount of the municipal security and provides the
demand repurchase feature described above. Participations are frequently backed
by an irrevocable letter of credit or guarantee of a bank that the Fund has
determined meets its prescribed quality standards. A Fund has the right to sell
the instrument back to the bank and draw on the letter of credit on demand, on
short notice, for all or any part of the Fund's participation interest in the
municipal security, plus accrued interest. Each Fund 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 Fund. 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 the Fund. The Funds currently do not
purchase participation interests and have no current intention of doing so.
When-Issued Securities. Each Fund may purchase municipal securities on a
"when-issued" basis, which means that delivery of and payment for securities
normally take place in less than 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 of such
securities may be higher or lower on the date the securities are actually
delivered to the buyer. A Fund will generally purchase a municipal security sold
on a when-issued basis with the intention of actually acquiring the securities
on the settlement date. A separate account consisting of cash or high-grade
liquid debt securities equal to the amount of outstanding purchase
4
<PAGE>
commitments is established with the Fund's custodian in connection with any
purchase of when-issued securities. The account is marked to market daily, with
additional cash or liquid high-grade debt securities added when necessary. A
Fund meets in respective obligation to purchase when-issued securities from
outstanding cash balances, sale of other securities or, although it would not
normally expect to do so, from the sale of the when-issued securities themselves
(which may have a market value greater or lesser than the Fund's payment
obligations).
Municipal securities purchased on a when-issued basis and the other securities
held in each Fund 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 Fund 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 the Fund's 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 purchased on a when-issued basis.
Illiquid Securities. The Fund 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 (1933 Act)) and
other securities that are not readily marketable. The Fund may purchase
restricted securities that can be offered and sold to "qualified institutional
buyers" under Rule 144A of the 1933 Act, and the Fund's Board of Directors, may
determine, when appropriate, that specific Rule 144A securities are liquid and
not subject to the 15% limitation on illiquid securities. Should the Board of
Directors make this determination, it will carefully monitor the security
(focusing on such factors, among 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 the Fund, if and to the extent that
qualified institutional buyers become for a time uninterested in purchasing Rule
144A securities.
Borrowing. Each Fund 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. The Fund will not purchase additional portfolio
securities if the Fund has outstanding borrowings in excess of 5% of the value
of its total assets.
Taxable Investments. Under normal market conditions, each 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 (except for the National Fund) regular, personal
income tax of its designated state. Such interest, however, may be subject to
the federal alternative minimum tax and any applicable state alternative minimum
tax.
Under normal market conditions, temporary investments in taxable securities will
be limited as a matter of fundamental policy to 20% of the value of a Fund's net
assets.
Except as otherwise specifically noted above, the Fund's investment strategies
are not fundamental and a Fund, with the approval of the Board of Directors, may
change such strategies without the vote of shareholders.
Fund Policies
Each Fund is subject to fundamental policies that place restrictions on certain
types of investments. These policies cannot be changed except by vote of a
majority of the outstanding voting securities of a Fund.
5
<PAGE>
Under these policies, a Fund 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 Fund 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 US 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 US
Government or its agencies or instrumentalities);
- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or
for the purpose of hedging the Fund's obligations under the Deferred
Compensation Plan for Directors;
- - 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
- - 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. No Fund has a present
intention of entering into repurchase agreements.
A Fund also may not change its investment objective without shareholder
approval.
Under the 1940 Act, a "vote of a majority of the outstanding voting securities"
of a Fund means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund or (2) 67% or more of the shares of the Fund
present at a shareholders' meeting if more than 50% of the outstanding shares of
the Fund are represented at the meeting in person or by proxy.
Temporary Defensive Position
In abnormal market conditions, if, in the judgment of a Fund, municipal
securities satisfying a Fund's investment objectives may not be purchased, a
Fund may, for defensive purposes, temporarily invest in instruments the interest
on which is exempt from regular federal income taxes, but not regular state
personal income taxes. Such securities would include those described under
"Municipal Securities" above that would otherwise meet the Fund's objectives.
6
<PAGE>
Also, in abnormal market conditions, a Fund 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 the 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 Aa3 or better by Moody's or AA- or better by
S&P); prime commercial paper (rated P-1 by Moody's or A-1+/A-1 by S&P); and
certificates of deposit of the 100 largest domestic banks in terms of assets
which are subject to regulatory supervision by the US 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 US 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.
Portfolio Turnover
Portfolio transactions will be undertaken principally to accomplish a Fund's
objective in relation to anticipated movements in the general level of interest
rates but a Fund may also engage in short-term trading consistent with its
objective. Securities may be sold in anticipation of a market decline (a rise in
interest rates) or purchased in anticipation of a market rise (a decline in
interest rates) and later sold. In addition, a security may be sold and another
purchased at approximately the same time to take advantage of what the
investment manager believes to be a temporary disparity in the normal yield
relationship between the two securities.
A Fund's 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 Fund for the fiscal years ended September 30, 1998 and 1997 were: National
- - 18.00% and 20.63%; Colorado - 28.66% and 3.99%; Georgia - 2.92% and 12.28%;
Louisiana - 15.72%and 16.08%; Maryland - 7.59% and 14.79%, Massachusetts -
13.41% and 29.26%, Michigan - 23.60% and 10.98%; Minnesota - 21.86% and 6.88%;
Missouri - 21.26% and 6.47%; New York - 39.85% and 23.83%; Ohio - 24.74% and
11.76%; Oregon - 12.62% and 19.46%; and South Carolina - 16.63% and 0.00%. The
fluctuation in portfolio turnover rates of certain Funds in fiscal years 1998
and 1997 resulted from conditions in the specific state and/or the market in
general. A Fund's portfolio turnover rate will not be a limiting factor when a
Fund deems it desirable to sell or purchase securities.
Management of the Funds
Board of Directors
The Board of Directors provides broad supervision over the affairs of the Funds.
Management Information
Directors and officers of the Funds, 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 Funds, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
7
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
William C. Morris* Director, Chairman of the Chairman, J. & W. Seligman & Co. Incorporated,
(61) Board, Chief Executive Chairman and Chief Executive Officer, the Seligman
Officer and Chairman of the Group of investment companies; Chairman, Seligman
Executive Committee Advisors, Inc, Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas
industry; and Director, Seligman Data Corp.,
Kerr-McGee Corporation, diversified energy company.
Formerly, Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.
Brian T. Zino* Director, President and Director and President, J. & W. Seligman & Co.
(46) Member of the Executive Incorporated; President (with the exception of
Committee Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.) and Director or Trustee,
the Seligman Group of investment companies; Member of
the Board of Governors of the Investment Company
Institute and Director, ICI Mutual Insurance Company;
Chairman, Seligman Data Corp.; and Director, Seligman
Advisors, Inc. and Seligman Services, Inc.
Richard R. Schmaltz* Director and Member of the Director and Managing Director, Director of
(58) Executive Committee Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of investment
companies (except Seligman Cash Management Fund, Inc.);
Director, Seligman Henderson Co., and Trustee Emeritus
of Colby College. Formerly, Director, Investment
Research at Neuberger & Berman from May 1993 to
September 1996.
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts
(69) University; Director or Trustee, the Seligman Group
Tufts University of investment companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; Governor of the Center for
Medford, MA 02155 Creative Leadership; Director; Raytheon Co.,
electronics; National Defense University; and the
Institute for Defense Analysis. Formerly, Director,
USLIFE Corporation, life insurance; 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.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director or
(64) Trustee, the Seligman Group of investment companies;
18 Highland Circle Trustee, the Committee for Economic Development; and
Bronxville, NY 10708 Chairman, The Rockefeller Foundation, charitable
foundation. Formerly, Trustee, The Markle Foundation,
philanthropic organization; and Director, New York
Telephone Company and International Research and
Exchange Board, intellectual exchanges.
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of
(66) Kerr-McGee Corporation; Director or Trustee, the
2601 Northwest Expressway, Seligman Group of investment companies; Director,
Suite 805E Kimberly-Clark Corporation, consumer products; Bank
Oklahoma City, OK 73112 of Oklahoma Holding Company; Baptist Medical Center;
Oklahoma Chapter of the Nature Conservancy; Oklahoma
Medical Research Foundation; and National Boys and
Girls Clubs of America; and Member of the Business
Roundtable and National Petroleum Council. Formerly,
Chairman, Oklahoma City Public Schools Foundation;
and Director, Federal Reserve System's Kansas City
Reserve Bank and the Oklahoma City Chamber of
Commerce.
John E. Merow Director Retired Chairman and Senior Partner, Sullivan &
(69) Cromwell, law firm; Director or Trustee, the Seligman
125 Broad Street, Group of investment companies; Director, Commonwealth
New York, NY 10004 Industries, Inc., manufacturers of aluminum sheet
products; the Foreign Policy Association; Municipal Art
Society of New York; the U.S. Council for International
Business; and New York Presbyterian Hospital; Chairman,
American Australian Association; and New York
Presbyterian Healthcare Network, Inc.; Vice-Chairman,
the U.S.-New Zealand Council; and Member of the
American Law Institute and Council on Foreign
Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of
(56) investment companies; Trustee, The Geraldine R. Dodge
P.O. Box 449 Foundation, charitable foundation; and Chairman of
Gladstone, NJ 07934 the Board of Trustees of St. George's School
(Newport, RI). Formerly, Director, the National
Association of Independent Schools (Washington, DC).
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(72) firm; Director or Trustee, the Seligman Group of
Park Avenue at Morris investment companies. Formerly, Director, Public
County, P.O. Box 1945, Service Enterprise Group, public utility.
Morristown, NJ 07962
James Q. Riordan Director Director or Trustee, the Seligman Group of investment
(71) companies; Director, The Houston Exploration Company;
675 Third Avenue, The Brooklyn Museum, KeySpan Energy Corporation; and
Suite 3004 Public Broadcasting Service; and Trustee, the
New York, NY 10017 Committee for Economic Development. Formerly,
Co-Chairman of the Policy Council of the Tax
Foundation; Director, Tesoro Petroleum Companies,
Inc. and Dow Jones & Company, Inc.; Director and
President, Bekaert Corporation; and Co-Chairman,
Mobil Corporation.
Robert L. Shafer Director Retired Vice President, Pfizer Inc.; Director or
(66) Trustee, the Seligman Group of investment companies.
96 Evergreen Avenue, Formerly, Director, USLIFE Corporation.
Rye, NY 10580
James N. Whitson Director Director and Consultant, Sammons Enterprises, Inc.;
(64) Director or Trustee, the Seligman Group of investment
6606 Forestshire Drive companies; Director, C-SPAN and CommScope, Inc.,
Dallas, TX 75230 manufacturer of coaxial cables. Formerly, Executive
Vice President, Chief Operating Officer, Sammons
Enterprises, Inc.; and Director, Red Man Pipe and
Supply Company, piping and other materials.
Thomas G. Moles Vice President and Senior Director and Managing Director, J. & W. Seligman &
(56) Portfolio Manager Co. Incorporated; Vice President and Senior Portfolio
Manager, three other open-end investment companies in
the Seligman Group of investment companies; President
and Senior Portfolio Manager, Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc., closed-end investment companies; and
Director, Seligman Advisors, Inc. and Seligman
Services, Inc.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman &
(42) Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman Group
of investment companies, and Seligman Services, Inc.;
and Vice President and Treasurer, Seligman
International, Inc.; and Treasurer, Seligman Henderson
Co.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(34) Regulation and Corporate Secretary, J. & W. Seligman
& Co. Incorporated; Secretary, the Seligman Group of
investment companies, Seligman Advisors, Inc.,
Seligman Henderson Co., Seligman Services, Inc.,
Seligman International, Inc. and Seligman Data Corp.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies
(41) and Seligman Data Corp.
</TABLE>
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 Funds for
which no market valuation is available, and to elect or appoint officers of the
Funds to serve until the next meeting of the Board.
Directors and officers of the Funds are also directors and officers of some or
all of the other investment companies in the Seligman Group.
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Funds and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Funds from Funds (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
John R. Galvin, Director $8,728 N/A $77,000
Alice S. Ilchman, Director 7,793 N/A 70,000
Frank A. McPherson, Director 8,451 N/A 75,000
John E. Merow, Director 8,324 N/A 74,000
Betsy S. Michel, Director 8,728 N/A 77,000
James C. Pitney, Director 8,059 N/A 72,000
James Q. Riordan, Director 8,059 N/A 72,000
Robert L. Shafer, Director 8,059 N/A 72,000
James N. Whitson, Director 8,728(d) N/A 77,000(d)
</TABLE>
- ----------
(1) For the Funds' fiscal year ended September 30, 1998. Effective January 16,
1998, the per meeting fee for Directors was increased by $1,000, which is
allocated among all funds in the Fund Complex.
(2) The Seligman Group of investment companies consists of eighteen investment
companies.
(d) Deferred.
Seligman Municipal Fund Series, Inc. has a compensation arrangement under which
outside directors may elect to defer receiving their fees. Seligman Municipal
Fund Series, Inc. has adopted a Deferred Compensation Plan under which a
director who has elected deferral of his or her fees may choose a rate of return
equal to either (1) the interest rate on short-term Treasury bills, or (2) the
rate of return on the shares of any of the investment companies advised by J. &
W. Seligman & Co. Incorporated, as designated by the director. The cost of such
fees and earnings is included in directors' fees and expenses, and the
accumulated balance thereof is included in other liabilities in the Funds'
financial statements. The total amount of deferred compensation (including
earnings) payable in respect of the Funds to Mr. Whitson as of September 30,
1998 was $35,007.
11
<PAGE>
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation in the amounts of $70,305 and $51,035,
respectively, as of September 30, 1998.
Each Fund may, but is not obligated to, purchase shares of the Seligman Group of
investment companies to hedge its obligations in connection with the Deferred
Compensation Plan.
Sales Charges
Class A shares of each Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Funds, the other investment companies in the Seligman Group, and J. & W.
Seligman & Co. Incorporated and its affiliates. Family members are defined to
include lineal descendents 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 for such persons and to
any investment advisory, custodial, trust or other fiduciary account managed or
advised by J. & W. Seligman & Co. Incorporated or any affiliate. These sales may
be made for investment purposes only, and shares may be resold only to a Fund.
Class A shares 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.
Control Persons and Principal Holders of Securities
Control Persons
As of May 14, 1999, there was no person or persons who controlled any of the
Funds, either through significant ownership of Fund shares or any other means of
control.
Principal Holders
As of May 14, 1999, the following entities owned of record more than 5% of the
outstanding shares of a class of the following Funds:
<TABLE>
<CAPTION>
Percentage of Total
Outstanding Fund
Name and Address Fund Class Shares Held
- ---------------- ---- ----- -----------
<S> <C> <C> <C>
MLPF&S for Sole Benefit of National A 5.04%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
PaineWebber for Benefit of National D 6.92%
Ralph and Linda Gaden JTWROS,
3817 Gillon, Dallas, TX 75205
PaineWebber for Benefit of National D 41.31%
Victor Warren TRUAD for
Victor Warren Trust, 724 s.
Garfield, Hinsdale, IL 60521
MLPF&S for Sole Benefit of National D 19.62%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
NFSC FEBO Special Acct Colorado A 6.39%
David Lanoha,
5250 E. Arapahoe Road,
Littleton, Co 80122
MLPF&S for Sole Benefit of Colorado A 6.46%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
John and Betty Thompson JTTEN Colorado D 9.86%
1447 S. Fairfax St.
Denver, CO 80222
MLPF&S for Sole Benefit of Colorado D 71.99%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of Georgia A 19.96%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Percentage of Total
Outstanding Fund
Name and Address Fund Class Shares Held
- ---------------- ---- ----- -----------
<S> <C> <C> <C>
Wachovia Securities Inc Georgia D 11.85%
FBO Accounts
PO Box 1220
Charlotte, NC 28201-1220
MLPF&S for Sole Benefit of Georgia D 31.11%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of Louisiana A 23.63%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
Prudential Securities Inc Louisiana D 12.55%
FBO Dr. Avery Cook
3405 Holly Hill Rd.
Lake Charles, LA 70605-1318
Post & Co FBO Account Louisiana D 11.49%
c/o Bank of New York
Attn: Mutual Fund/Reorg
Dept., PO Box 1066 Wall St.
Station, New York, NY 10268
HIBFUND FBO Account Louisiana D 8.90%
C/o Marshall and Ilsley Trust
Co, PO Box 2977
Milwaukee, WI 5301
Ralph Balentine Louisiana D 11.59%
PO Box 3640
Shreveport, LA 7113-3640
MLPF&S for Sole Benefit of Louisiana D 53.55%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of Maryland A 10.05%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
Harry Headley TTEE Harry Maryland D 16.44%
Headley REV TRUST
21041 Goshen Road
Gaithersburg, MD 20882-4226
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Percentage of Total
Outstanding Fund
Name and Address Fund Class Shares Held
- ---------------- ---- ----- -----------
<S> <C> <C> <C>
MLPF&S for Sole Benefit of Maryland D 18.04%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
Maurice Hurwitz TTEE Maurice Massachusetts D 32.97%
Hurwitz REV TRUST, 7 Ellis
Drive
Worcester, MA 01609-1438
MLPF&S for Sole Benefit of Massachusetts D 23.93%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of Michigan A 6.11%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
Mark and Lynn Olree JTTEN Michigan D 6.97%
4330 E. Cleveland St.
Coopersville, MI 49404
Mark and Robert Olree JTTEN, Michigan D 6.77%
4330 E. Cleveland St.,
Coopersville, MI 49404
PaineWebber for Benefit of Michigan D 7.83%
Joseph Leone TTEE Joseph
Leone REF LVG TRUST, 6040
Mariner Sands,
Stuart, FL, 34997
MLPF&S for Sole Benefit of Michigan D 24.19%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
Alvin and Kathleen Burmaster Minnesota D 5.15%
JTTEN, 514 Prospect Avenue
Cloquet, MN 55720-2333
Hilmer and Ethel Nelson Minnesota D 5.97%
TTEES Bradley Nelson, 4 North
Mallard Road, North Oaks, MN
55127
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Percentage of Total
Outstanding Fund
Name and Address Fund Class Shares Held
- ---------------- ---- ----- -----------
<S> <C> <C> <C>
Dain Rauscher Incorporated Minnesota D 7.18%
FBO Curtis and Josephine
Johnson TTEES Josephine
Johnson TRUST, 2529 Lydia
Avenue West, St. Paul, MN
55113
Alice Bisgaard TTEE Alice Minnesota D 6.52%
Bisgaard REVTR c/o Carol
Davis, 8707 Gaines Avenue,
Orangevale, CA 95662
NorWest Investment Services, Minnesota D 7.01%
Inc. FBO Account
Northstar Building East
608 Second Avenue, South
Minneapolis, MN 55479-0162
MLPF&S for Sole Benefit of Minnesota D 25.58%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of Missouri A 15.47%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
CIBC World Markets Corp. Missouri D 5.49%
FBO Account, PO Box 3484
Church Street Station
New York, NY 10008-3484
BHC Securities Inc. FAO Missouri D 8.39%
Attn Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite
1200, Philadelphia, PA 19103
BHC Securities Inc. FAO Missouri D 8.36%
Attn Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite
1200, Philadelphia, PA 19103
NFSC FEBO ACCOUNTS Missouri D 9.88%
Scott and Christine Huchinson
12843 Westledge Lane
St. Louis, MO 63131
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Percentage of Total
Outstanding Fund
Name and Address Fund Class Shares Held
- ---------------- ---- ----- -----------
<S> <C> <C> <C>
MLPF&S for Sole Benefit of Missouri D 18.98%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
John and Sharon Churma JT Missouri D 6.37%
TEN, 7 Briar Patch Drive
Defiance, MO 63341
Lee Tempel Missouri D 13.17%
2226 Hickory
St. Louis, MO 63141
MLPF&S for Sole Benefit of New York A 5.33%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
CIBC World Markets Corp. New York D 8.16%
FBO Account, PO Box 3484
Church Street Station
New York, NY 10008-3484
PaineWebber for Benefit of New York D 24.20%
Diana Riklis,
1020 Park Avenue,
New York, NY, 10028
PaineWebber for Benefit of New York D 5.02%
Nathan and Vivian Lorman
JTWROS, 130 East 63rd Street,
New York, NY 10021
MLPF&S for Sole Benefit of New York D 31.57%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of Ohio A 5.05%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
Raymond James & Assoc Inc Ohio D 15.43%
For Daniel Gunn TTEE FBO
D.M. Gunn, 844 Hampton Ridge
Drive, Akron, OH 44122
Key Clearing Corp Ohio D 6.19%
4900 Tiedeman Road
Brooklyn, OH 44122
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Percentage of Total
Outstanding Fund
Name and Address Fund Class Shares Held
- ---------------- ---- ----- -----------
<S> <C> <C> <C>
Richard Rice Ohio D 8.23%
12700 Lake Avenue
Lakewood, OH 44107
MLPF&S for Sole Benefit of Ohio D 21.58%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of Oregon D 27.58%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of Oregon D 12.11%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of South Carolina A 12.85%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
MLPF&S for Sole Benefit of South Carolina D 28.76%
Customers Attn Fund
Administration, 4800 Deer
Lake Drive East
Jacksonville, FL 32246
</TABLE>
Management Ownership
Directors and officers of the Funds as a group owned less than 1% of the Class A
and Class D capital stock of the Funds as of May 14, 1999 with the exception of
the New York Municipal Fund for which Directors and officers as a group owned
1.88% of the outstanding Class A shares of capital stock.
17
<PAGE>
Investment Advisory and Other Services
Investment Manager
J. & W. Seligman & Co. Incorporated (Seligman) manages the Funds. Seligman 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 outstanding voting
securities of Seligman was purchased by Mr. William C. Morris and a simultaneous
recapitalization of Seligman occurred. See Appendix C for further history of
Seligman.
All of the officers of the Funds listed above are officers or employees of
Seligman. Their affiliations with the Funds and with Seligman are provided under
their principal business occupations.
The Funds pay Seligman a management fee for its services, calculated daily and
payable monthly. The management fee is equal to .50% per annum of each Fund's
average daily net assets. The following chart indicates the management fees paid
by each Fund as well as the percentage such fees represents of each Fund's
average daily net assets for the fiscal years ended September 30, 1998, 1997,
and 1996.
Percentage of
Fiscal Year Management Average Daily
Fund Ended Fee Paid( $) Net Assets (%)
---- ----- ------------ --------------
National 9/30/98 $522,358 .50%
9/30/97 506,520 .50
9/30/96 523,545 .50
Colorado 9/30/98 $236,819 .50
9/30/97 254,781 .50
9/30/96 267,392 .50
Georgia 9/30/98 $253,187 .50
9/30/97 261,126 .50
9/30/96 285,693 .50
Louisiana 9/30/98 $283,699 .50
9/30/97 283,702 .50
9/30/96 301,833 .50
Maryland 9/30/98 $276,179 .50
9/30/97 275,393 .50
9/30/96 283,435 .50
Massachusetts 9/30/98 $545,891 .50
9/30/97 551,726 .50
9/30/96 571,658 .50
Michigan 9/30/98 $726,553 .50
9/30/97 731,198 .50
9/30/96 759,311 .50
Minnesota 9/30/98 $614,405 .50
9/30/97 629,693 .50
9/30/96 659,120 .50
Missouri 9/30/98 $260,574 .50
9/30/97 262,926 .50
9/30/96 254,770 .50
18
<PAGE>
Percentage of
Fiscal Year Management Average Daily
Fund Ended Fee Paid( $) Net Assets (%)
---- ----- ------------ --------------
New York 9/30/98 $426,872 .50%
9/30/97 416,749 .50
9/30/96 423,159 .50
Ohio 9/30/98 $768,368 .50
9/30/97 787,121 .50
9/30/96 839,336 .50
Oregon 9/30/98 $287,757 .50
9/30/97 285,086 .50
9/30/96 301,447 .50
South Carolina 9/30/98 $539,515 .50
9/30/97 535,390 .50
9/30/96 567,668 .50
The Funds pay all of their expenses other than those assumed by Seligman,
including brokerage commissions, if any, shareholder services and distribution
fees, fees and expenses of independent attorneys and auditors, taxes and
governmental fees, including fees and expenses of qualifying the Funds and their
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 record keeping and shareholder account services,
fees and disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of directors of the Funds not
employed by or serving as a director of Seligman or its affiliates, insurance
premiums and extraordinary expenses such as litigation expenses. These expenses
are allocated between the Funds in a manner determined by the Board of Directors
to be fair and equitable.
The Management Agreement also provides that Seligman will not be liable to the
Funds 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 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
Fund 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 Fund 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)
Seligman shall not have notified a 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 Fund, without penalty, on 60 days' written notice to Seligman
and will terminate automatically in the event of its assignment. Seligman
Municipal Fund Series, Inc. 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 Seligman's business.
Officers, directors and employees of Seligman are permitted to engage in
personal securities transactions, subject to Seligman's Code of Ethics. The Code
of Ethics 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 Seligman's Compliance Officer,
and sets forth a procedure of identifying, for disciplinary action, those
individuals who violate the Code of Ethics. The Code of Ethics prohibits each of
the officers, directors and employees (including all portfolio managers)
19
<PAGE>
of Seligman from purchasing or selling any security that the officer, director,
or employee knows or believes (1) was recommended by Seligman for purchase or
sale by any client, including the Fund, within the preceding two weeks, (2) has
been reviewed by Seligman for possible purchase or sale within the preceding two
weeks, (3) is being purchased or sold by any client, (4) is being considered by
a research analyst, (5) is being acquired in a private placement, unless prior
approval has been obtained from Seligman's Compliance Officer, or (6) is being
acquired during an initial or secondary public offering. The Code of Ethics 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 Code of Ethics also prohibits (1) 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 (2) 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 Seligman'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.
Principal Underwriter
Seligman Advisors, Inc. (Seligman Advisors), an affiliate of Seligman, 100 Park
Avenue, New York, New York 10017, acts as general distributor of the shares of
each Fund and of the other mutual funds in the Seligman Group. Seligman Advisors
is an "affiliated person" (as defined in the 1940 Act) of Seligman, which is
itself an affiliated person of the Funds. Those individuals identified above
under "Management Information" as directors or officers of both the Funds and
Seligman Advisors are affiliated persons of both entities.
Services Provided by the Investment Manager
Under the Management Agreement, dated December 29, 1988, subject to the control
of the Board of Directors, Seligman manages the investment of the assets of each
Fund, including making purchases and sales of portfolio securities consistent
with each Fund's investment objectives and policies, and administers their
business and other affairs. Seligman provides the Funds with such office space,
administrative and other services and executive and other personnel as are
necessary for Fund operations. Seligman pays all of the compensation of
directors of the Funds who are employees or consultants of Seligman and of the
officers and employees of the Funds. Seligman also provides senior management
for Seligman Data Corp., the Funds' shareholder service agent.
Service Agreements
There are no other management-related service contracts under which services are
provided to any of the Funds.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman,
regularly advise any Fund with respect to its investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares and Class C shares of each Fund, as set forth below:
20
<PAGE>
Class A shares:
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering 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 and over(2) 0 0 0
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more, but you
will be subject to a 1% CDSC if you sell your shares within 18 months.
Class C shares:
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0 0 0
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
(2) Your purchase of Class C shares must be for less than $1,000,000 because if
you invest $1,000,000 or more, you will pay less in fees and charges if you
buy Class A shares.
Seligman Services, Inc. (Seligman Services), an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares. For the Funds' fiscal years ended
September 30, 1998, 1997, and 1996, Seligman Services received commissions in
the following amounts:
Fund Commissions Paid to
---- -------------------
Seligman Services
-----------------
1998 1997 1996
---- ---- ----
National $ 192 $ 456 $ 1,736
Colorado 2,216 4,678 4,437
Georgia 1,654 283 525
Louisiana 117 21 0
Maryland 366 523 1,251
Massachusetts 718 1,865 689
Michigan 219 515 1,315
Minnesota 1,344 594 1,717
Missouri 405 1,220 1,754
New York 3,453 2,889 2,144
Ohio 4,159 1,485 2,276
Oregon 45 24 763
South Carolina 19,615 2,582 2,229
21
<PAGE>
Rule 12b-1 Plan
Seligman Municipal Fund Series, Inc. has adopted an Administration, Shareholder
Services and Distribution Plan (12b-1 Plan) in accordance with Section 12(b) of
the 1940 Act and Rule 12b-1 thereunder.
Under the 12b-1 Plan, each Fund may pay to Seligman Advisors an administration,
shareholder services and distribution fee in respect of the Fund's Class A,
Class C, and Class D shares. Payments under the 12b-1 Plan may include, but are
not limited to: (1) compensation to securities dealers and other organizations
(Service Organizations) for providing distribution assistance with respect to
assets invested in the Fund; (2) compensation to Service Organizations for
providing administration, accounting and other shareholder services with respect
to Fund shareholders; and (3) otherwise promoting the sale of shares of the
Fund, 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 Seligman Advisors' costs incurred in
connection with its marketing efforts with respect to shares of the Fund.
Seligman, in its sole discretion, may also make similar payments to Seligman
Advisors from its own resources, which may include the management fee that
Seligman receives from each Fund. Payments made by each Fund under its Rule
12b-1 Plan are intended to be used to encourage sales of such Fund, as well as
to discourage redemptions.
Fees paid by each Fund under its 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class or
any other Seligman fund. Expenses attributable to more than one class of a Fund
are allocated between the classes in accordance with a methodology approved by
the Funds' Board of Directors. Each Fund may participate in joint distribution
activities with other Seligman funds, and the expenses of such activities will
be allocated among the applicable funds based on relative sales, in accordance
with a methodology approved by the Board.
Class A
Under the 12b-1 Plan, each Fund, with respect to Class A shares, is permitted to
pay quarterly to Seligman Advisors a service fee at an annual rate of up to .25%
of the average daily net asset value of the Class A shares. These fees are used
by Seligman Advisors exclusively to make payments to Service Organizations which
have entered into agreements with Seligman Advisors. Such Service Organizations
currently receive from Seligman Advisors a continuing service fee of up to .10%
on an annual basis, payable quarterly, of the average daily net assets of Class
A shares attributable to the particular Service Organization for providing
personal service and/or maintenance of shareholder accounts. The fee payable to
Service Organizations from time to time shall, within such limits, be determined
by the Directors and may not be increased from .10% without approval of the
Directors. The Funds are not obligated to pay Seligman Advisors for any such
costs it incurs in excess of the fee described above. No expenses incurred in
one fiscal year by Seligman Advisors with respect to Class A shares of a Fund
may be paid from Class A 12b-1 fees received from that Fund in any other fiscal
year. If the 12b-1 Plan is terminated in respect of Class A shares of any Fund,
no amounts (other than amounts accrued but not yet paid) would be owed by that
Fund to Seligman Advisors with respect to Class A shares. The total amount paid
by each Fund to Seligman Advisors in respect of Class A shares for the fiscal
year ended September 30, 1998 was as follows:
Total % of Average
Fund Fees Paid Net Assets
---- --------- ----------
National $ 87,412 .09%
Colorado 45,621 .10
Georgia 44,562 .09
Louisiana 54,359 .10
Maryland 47,718 .09
Massachusetts 102,371 .09
Michigan 135,906 .09
Minnesota 115,933 .09
22
<PAGE>
Total % of Average
Fund Fees Paid Net Assets
---- --------- ----------
Missouri $ 52,242 .10%
New York 74,294 .09
Ohio 140,954 .09
Oregon 51,836 .09
South Carolina 98,768 .09
Class C
Under the 12b-1 Plan, each Fund, with respect to Class C shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class C shares. The fee is used by Seligman Advisors as
follows: During the first year following the sale of Class C shares, a
distribution fee of .75% of the average daily net assets attributable to Class C
shares is used, along with any CDSC proceeds during the first eighteen months,
to (1) reimburse Seligman Advisors for its payment at the time of sale of Class
C shares of a 1.25% sales commission to Service Organizations, and (2) pay for
other distribution expenses, 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 other marketing costs of
Seligman Advisors. In addition, during the first year following the sale of
Class C shares, a service fee of up to .25% of the average daily net assets
attributable to such Class C shares is used to reimburse Seligman Advisors for
its prepayment to Service Organizations at the time of sale of Class C shares of
a service fee of .25% of the net asset value of the Class C shares sold (for
shareholder services to be provided to Class C shareholders over the course of
the one year immediately following the sale). The payment of service fees to
Seligman Advisors is limited to amounts Seligman Advisors actually paid to
Service Organizations at the time of sale as service fees. After the initial
one-year period following a sale of Class C shares, the entire 12b-1 fee
attributable to such Class C shares is paid to Service Organizations for
providing continuing shareholder services and distribution assistance in respect
of the Funds. The Funds do not pay any 12b-1 fees in respect of Class C shares
for the fiscal year ended September 30, 1998 because no Class C shares were
issued or outstanding during such period.
Class D
Under the 12b-1 Plan, each Fund, with respect to Class D shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of Class D shares. This fee is used by Seligman Advisors, as
follows: During the first year following the sale of Class D shares, a
distribution fee of .75% of the average daily net assets attributable to such
Class D shares is used, along with any CDSC proceeds, to (1) reimburse Seligman
Advisors for its payment at the time of sale of Class D shares of a .75% sales
commission to Service Organizations, and (2) pay for other distribution
expenses, 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 other marketing costs of Seligman
Advisors. In addition, during the first year following the sale of Class D
shares, a service fee of up to .25% of the average daily net assets attributable
to such Class D shares is used to reimburse Seligman Advisors for its prepayment
to Service Organizations at the time of sale of Class D shares of a service fee
of .25% of the net asset value of the Class D shares sold (for shareholder
services to be provided to Class D shareholders over the course of the one year
immediately following the sale). The payment of service fees to Seligman
Advisors is limited to amounts Seligman Advisors actually paid to Service
Organizations at the time of sale as service fees. After the initial one-year
period following a sale of Class D shares, the entire 12b-1 fee attributable to
such Class D shares is paid to Service Organizations for providing continuing
shareholder services and distribution assistance in respect of each Fund. The
total amount paid by each Fund in respect of Class D shares for the fiscal year
ended September 30, 1998 was equal to 1% per annum of the average daily net
assets of Class D shares as follows:
23
<PAGE>
Total
Fund Fees Paid
---- ---------
National $ 56,655
Colorado 2,667
Georgia 27,815
Louisiana 5,826
Maryland 25,679
Massachusetts 13,706
Michigan 17,325
Minnesota 18,896
Missouri 3,940
New York 17,902
Ohio 11,760
Oregon 19,824
South Carolina 44,114
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of a Fund may exceed the 12b-1 fees paid by the Fund in that year. The
Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect of
Class D shares in one fiscal year to be paid from Class D 12b-1 fees received
from that Fund in any other fiscal year; however, in any fiscal year the Funds
are not obligated to pay any 12b-1 fees in excess of the fees described above.
As of September 30, 1998, Seligman Advisors has incurred the following amounts
of unreimbursed expenses in respect of each Fund's Class D shares:
Amount of Unreimbursed
Expenses Incurred % of the Net Assets
With Respect of Class D at
Fund to Class D Shares September 30, 1998
---- ----------------- ------------------
National $ 0 --%
Colorado 1,873 .54
Georgia 8,301 .30
Louisiana 5,680 .68
Maryland 12,681 .41
Massachusetts 11,762 .80
Michigan 4,436 .24
Minnesota 12,380 .59
Missouri 1,811 .43
New York 1,819 .08
Ohio 1,905 .17
Oregon 11,496 .43
South Carolina 17,616 .31
If the 12b-1 Plan is terminated in respect of Class D shares of a Fund, no
amounts (other than amounts accrued but not yet paid) would be owed by that Fund
to Seligman Advisors with respect to Class D shares.
Payments made by the Funds under the 12b-1 Plan for fiscal year ended September
30, 1998, were spent on the following activities in the following amounts (no
Class C shares were outstanding during such fiscal year):
24
<PAGE>
Compensation Compensation
To to
Fund/Class Underwriters Broker/Dealers
---------- ------------ --------------
National/A $ 87,412
National/D $ 7,602 49,053
Colorado/A 45,621
Colorado/D 632 2,035
Georgia/A 44,562
Georgia/D 9,911 17,904
Louisiana/A 54,359
Louisiana/D 1,674 4,152
Maryland/A 47,718
Maryland/D 8,180 17,499
Massachusetts/A 102,371
Massachusetts/D 2,964 10,742
Michigan/A 135,906
Michigan/D 5,825 11,500
Minnesota/A 115,933
Minnesota/D 2,554 16,342
Missouri/A 52,242
Missouri/D 583 3,357
New York/A 74,294
New York/D 4,716 13,186
Ohio/A 140,954
Ohio/D 2,925 8,835
Oregon/A 51,836
Oregon/D 6,629 13,195
South Carolina/A 98,768
South Carolina/D 15,564 28,550
The 12b-1 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 Funds and who have no direct or indirect financial interest in
the operation of the 12b-1 Plan or in any agreement related to the 12b-1 Plan
(the "Qualified Directors") and was approved by shareholders of the Funds on
November 23, 1992. The 12b-1 Plan became effective on January 1, 1993.
Amendments to the 12b-1 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 12b-1 Plan was approved in respect of Class C shares on May 20,
1999 by the Directors, including a majority of the Qualified Directors, and
became effective in respect of the Class C shares on June 1, 1999. The 12b-1
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, cast in person
25
<PAGE>
at a meeting called for the purpose of voting on such approval. The 12b-1 Plan
may not be amended to increase materially the amounts payable under the terms of
the 12b-1 Plan without the approval of a majority of the outstanding voting
securities of each Fund and no material amendment to the 12b-1 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 12b-1 Plan requires that the Treasurer of the Funds 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 12b-1 Plan. Rule
12b-1 also requires that the selection and nomination of Directors who are not
"interested persons" of the Funds be made by such disinterested Directors.
Seligman Services acts as a broker/dealer of record for shareholder accounts
that do not have a designated financial advisor and receives compensation from
the Funds pursuant to the 12b-1 Plan for providing personal services and account
maintenance to such accounts and other distribution services. For the fiscal
years ended September 30, 1998, 1997, and 1996, Seligman Services received
distribution and service fees from the Funds pursuant to the 12b-1 Plan as
follows:
Distribution and Service Fees Paid to
Seligman Services
-----------------
Fund 1998 1997 1996
---- ---- ---- ----
National $ 7,528 $ 6,388 $ 6,257
Colorado 2,599 2,918 2,997
Georgia 918 988 667
Louisiana 1,112 685 647
Maryland 1,572 1,425 1,399
Massachusetts 2,105 2,080 2,555
Michigan 2,822 2,537 2,656
Minnesota 2,335 2,087 2,122
Missouri 3,410 3,261 3,149
New York 13,359 12,398 8,922
Ohio 3,900 3,132 2,929
Oregon 1,682 1,417 797
South Carolina 4,498 1,576 1,484
Brokerage Allocation and Other Practices
Brokerage Transactions
For the fiscal years ended September 30, 1998, 1997, and 1996, no brokerage
commissions were paid by any Fund. When two or more of the investment companies
in the Seligman Group or other investment advisory clients of Seligman desire to
buy or sell the same security at the same time, the securities purchased or sold
are allocated by Seligman 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.
In over-the-counter markets, the Funds deal with responsible primary market
makers unless a more favorable execution or price is believed to be obtainable.
Each Fund may buy securities from or sell securities to dealers acting as
principal, except dealers with which its directors and/or officers are
affiliated.
Commissions
For the fiscal years ended September 30, 1998, 1997, and 1996, the Funds did not
execute any portfolio transactions with, and therefore did not pay any
commissions to, any broker affiliated with either the Funds, Seligman, or
Seligman Advisors.
26
<PAGE>
Regular Broker-Dealers
During the Funds' fiscal year ended September 30, 1998, none of the Funds
acquired securities of its regular brokers or dealers (as defined in Rule 10b-1
under the 1940 Act) or of their parents.
Capital Stock and Other Securities
Capital Stock
Seligman Municipal Fund Series, Inc. is authorized to issue 1,300,000,000 shares
of capital stock, each with a par value of $.001 each, divided into thirteen
different series (which represent each of the Funds). Each Fund has three
classes, designated Class A common stock, Class C common stock, and Class D
common stock. Each share of a Fund's Class A, Class C, and Class D common stock
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 Maryland law. Seligman
Municipal Fund Series has adopted a multiclass plan pursuant to Rule 18f-3 under
the 1940 Act permitting the issuance and sale of multiple classes. In accordance
with the Articles of Incorporation, the Board of Directors may authorize the
creation of additional classes of common stock 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. Each outstanding
share is fully paid and non-assessable, and each is freely transferable. There
are no liquidation, conversion, or preemptive rights.
Other Securities
Seligman Municipal Fund Series, Inc. has no authorized securities other than
common stock.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Class A
Class A shares may be purchased at a price equal to the next determined net
asset value per share, plus an initial sales charge.
Purchases of Class A shares by a "single person" (as defined below under
"Persons Entitled to Reductions") may be eligible for the following reductions
in initial sales charges:
Volume Discounts are provided if the total amount being invested in Class A
shares of a Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales charge, reaches
levels indicated in the sales charge 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 Fund and shares of the other Seligman mutual
funds sold with an initial sales charge with the total net asset value of shares
of those mutual funds already owned that were sold with an initial sales charge
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 charge at the time of purchase to determine
reduced sales charges in accordance with the schedule in the prospectus. 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 was an initial sales charge at the time of purchase will be
taken into account in orders placed through a dealer, however, only if Seligman
Advisors is notified by an investor or a dealer of the amount owned by the
investor at the time the purchase is made and is furnished sufficient
information to permit confirmation.
27
<PAGE>
A Letter of Intent allows an investor to purchase Class A shares over a 13-month
period at reduced initial sales charges in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with an initial sales charge 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 charge at the time of
purchase. Reduced sales charges 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.
Persons Entitled To Reductions. Reductions in initial sales charges 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; 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, organizations tax exempt under Section 501(c)(3) or (13) of the
Internal Revenue 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 a Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
Prospectus, 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 charges in the Prospectus
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans" which have
at least (1) $500,000 invested in the Seligman Group of mutual funds or (2) 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 Funds' shareholder service agent.
"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. 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 member of
eligible employees.
Such sales are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted to Seligman Data
Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from financial advisors or Seligman
Advisors.
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge in the following instances:
(1) to any registered unit investment trust which is the issuer of periodic
payment plan certificates, the net proceeds of which are invested in Fund
shares;
(2) to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;
28
<PAGE>
(3) to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors;
(4) to financial institution trust departments;
(5) to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Fund shares;
(6) to accounts of financial institutions or broker/dealers that charge account
management fees, provided Seligman or one of its affiliates has entered
into an agreement with respect to such accounts;
(7) 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;
(8) to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside directors;
(9) to certain "eligible employee benefit plans" as discussed above;
(10) to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by Seligman, or to their directors or
trustees; and
(11) in connection with sales pursuant to a 401(k) alliance program which has an
agreement with Seligman Advisors.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge in accordance with the sales charge schedule in the Funds'
Prospectus, or pursuant to a Volume Discount, Right of Accumulation, or Letter
of Intent are subject to a CDSC of 1% on redemptions of such shares within
eighteen months of purchase. Employee benefit plans eligible for net asset value
sales (as described below) may be subject to a CDSC of 1% for terminations at
the plan level only, on redemptions of shares purchased within eighteen months
prior to plan termination. The 1% CDSC will be waived on shares that were
purchased through Morgan Stanley Dean Witter & Co. by certain Chilean
institutional investors (i.e. pension plans, insurance companies, and mutual
funds). Upon redemption of such shares within an eighteen-month period, Morgan
Stanley Dean Witter will reimburse Seligman Advisors a pro rata portion of the
fee it received from Seligman Advisors at the time of sale of such shares.
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
Class C
Class C shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. Purchases of Class C shares by a
"single person" may be eligible for the reductions in initial sales charges
described above for Class A shares. Class C shares are subject to a CDSC of 1%
if the shares are redeemed within eighteen months of purchase, charged as a
percentage of the current net asset value or the original purchase price,
whichever is less.
Class D
Class D shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class D shares are
subject to a CDSC of 1% if the shares are redeemed within one year of purchase,
charged as a percentage of the current net asset value or the original purchase
price, whichever is less.
29
<PAGE>
Systematic Withdrawals. Class C and Class D shareholders who reinvest both their
dividends and capital gain distributions to purchase additional shares of a
Fund, may use the Funds' Systematic Withdrawal Plan to withdraw up to 10% and
10%, respectively, of the value of their accounts per year without the
imposition of a CDSC. Account value is determined as of the date the systematic
withdrawals begin.
CDSC Waivers. The CDSC on Class C shares and Class D shares (and certain Class A
shares, as discussed above) will be waived or reduced in the following
instances:
(1) on redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder or beneficial
owner;
(2) in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue 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), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, minimum distribution requirements after attainment of age 70
1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;
(3) in whole or in part, in connection with shares sold to current and retired
Directors of the Funds;
(4) 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 any registered investment
management company;
(5) in whole or in part, in connection with systematic withdrawals;
(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.
If, with respect to a redemption of any Class A, Class C or Class D shares sold
by a dealer, the CDSC is waived because the redemption qualifies for a waiver as
set forth above, the dealer shall remit to Seligman Advisors promptly upon
notice, an amount equal to the payment or a portion of the payment made by
Seligman Advisors at the time of sale of such shares.
Fund Reorganizations
Class A and Class C shares may be issued without an initial sales charge in
connection with the acquisition of cash and securities owned by other investment
companies. Any CDSC will be waived in connection with the redemption of shares
of a Fund if the Fund is combined with another Seligman mutual fund, or in
connection with a similar reorganization transaction.
Payment in Securities. In addition to cash, the Funds may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales charge), although the Funds do not presently
intend to accept securities in payment for Fund shares. Generally, a Fund will
only consider accepting securities (l) to increase its holdings in a portfolio
security, or (2) if Seligman determines that the offered securities are a
suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that a Fund
would not accept securities with a value of less than $100,000 per issue in
payment for shares. A Fund may reject in whole or in part offers to pay for Fund
shares with securities, may require partial payment in cash for applicable sales
charges, and may discontinue accepting securities as payment for Fund shares at
any time without notice. The Funds will not accept restricted securities in
payment for shares. The Funds will value accepted securities in the manner
provided for valuing portfolio securities.
Offering Price
30
<PAGE>
When you buy or sell Fund shares, you do so at the Class's net asset value (NAV)
next calculated after Seligman Advisors accepts your request. Any applicable
sales charge will be added to the purchase price for Class A shares and Class C
shares.
NAV per share of each class of a Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time), on
each day that the NYSE is open for business. The NYSE is 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. A Fund
will also determine NAV for each class on each day in which there is a
sufficient degree of trading in the Fund's portfolio securities that the NAV of
Fund shares might be materially affected. NAV per share for a class is computed
by dividing such class's share of the value of the net assets of the Fund (i.e.,
the value of its assets less liabilities) by the total number of outstanding
shares of such class. All expenses of the Fund, including the management fee,
are accrued daily and taken into account for the purpose of determining NAV. The
NAV of Class C shares and Class D shares will generally be lower than the NAV of
Class A shares as a result of the higher 12b-1 fees with respect to such 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 Funds invest 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. 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, US 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 a Fund's shares
are computed as of such times.
Specimen Price Make-Up
Under the current distribution arrangements between the Funds and Seligman
Advisors, Class A shares and Class C shares are sold with a maximum initial
sales charge of 4.75% and 1.00%(1), respectively, and Class D shares are sold at
NAV(2). Using each Class's NAV at March 31, 1999, (except Class C shares, which
commences operations effective June 1, 1999) the maximum offering price of the
Funds' shares is as follows:
Class A shares
--------------
NAV + Maximum Sales Charge = Offering Price
Fund Per Share (4.75% of Offering Price) to Public
- ---- --------- ------------------------- ---------
National $8.17 $.41 $8.58
Colorado 7.52 .38 7.90
Georgia 8.23 .41 8.64
Louisiana 8.28 .41 8.69
Maryland 8.21 .41 8.62
Massachusetts 8.08 .40 8.48
Michigan 8.55 .43 8.98
Minnesota 7.80 .39 8.19
Missouri 7.77 .39 8.16
New York 8.24 .41 8.65
Ohio 8.11 .40 8.51
Oregon 7.92 .39 8.31
South Carolina 8.18 .41 8.59
31
<PAGE>
Class D shares
--------------
NAV and Offering
Fund Price Per Share(2)
---- -----------------
National $8.16
Colorado 7.52
Georgia 8.25
Louisiana 8.28
Maryland 8.22
Massachusetts 8.08
Michigan 8.54
Minnesota 7.80
Missouri 7.77
New York 8.25
Ohio 8.15
Oregon 7.91
South Carolina 8.18
- ----------
(1) In addition to the 1.00% front-end sales charge, Class C shares are subject
to a 1% CDSC if you redeem your shares within eighteen months of purchase.
(2) Class D shares are subject to a 1% CDSC if you redeem your shares within
one year of purchase.
Redemption in Kind
The procedures for selling 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 NYSE during periods of emergency, or such other
periods as ordered by the Securities and Exchange Commission. Under these
circumstances, redemption proceeds may be made in securities. If payment is made
in securities, a shareholder may incur brokerage expenses in converting these
securities to cash.
Taxation of the Funds
Each of the Funds is 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 Fund.
Each of the Funds is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. For each
year so qualified, a Fund will not be subject to federal income taxes on its net
investment income and capital gains, if any, realized during any taxable year,
which it distributes to its shareholders, provided that at least 90% of its net
investment income and net short-term capital gains are distributed to
shareholders each year.
Qualification as a regulated investment company under the Internal Revenue Code
requires among other things, that (1) at least 90% of the annual gross income of
a Fund 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; (2) and a Fund 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 Fund's assets is represented by cash, US Government
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's 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 US Government
securities).
32
<PAGE>
Federal Income Taxes
If, at the end of each quarter of its taxable year, at least 50% of a Fund's
total assets is invested in obligations exempt from regular federal income tax,
the Fund will be eligible to pay dividends that are excludable by shareholders
from gross income for regular federal income tax purposes. The total amount of
such exempt interest dividends paid by a Fund cannot exceed the amount of
federally tax-exempt interest received by the Fund during the year less any
expenses allocable to the Fund.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long the shares have been held by a shareholder, 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 tax on distributions of net capital
gains at a maximum rate of 20% if designated as derived from the Fund's capital
gains from property held for more than one year. Net Capital gain of a corporate
shareholder is taxed at the same rate as ordinary income. Distributions from a
Fund's other investment income (other than exempt interest dividends) or from
net realized short-term gain will taxable to shareholders as ordinary income,
whether received in cash or invested in additional shares. Distributions
generally will not be eligible for the dividends received deduction allowed to
corporate shareholders. Shareholders receiving distributions in the form of
additional shares issued by a Fund 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 Fund will not be deductible for federal income tax purposes to the extent
that the Fund's distributions are exempt from federal income tax.
Any gain or loss realized upon a sale or redemption of shares in a Fund by a
shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. Individual shareholders
will be subject to federal income tax on net capital gains at a maximum rate of
20% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. 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. In addition, no loss
will be allowed on the sale or other disposition of shares of a Fund 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 (including shares acquired
through dividend reinvestment) securities that are substantially identical to
the shares of the Fund.
In determining gain or loss on shares of a Fund 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 charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales charge 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 person" of substantial users) of
facilities financed by industrial development bonds or private activity bonds
should consult the tax advisors before purchasing shares of any Fund.
33
<PAGE>
Colorado Taxes
In the opinion of Ireland Stapleton Pryor Pascoe, P.C., Colorado tax counsel to
the Colorado Fund, individuals, trusts, estates and corporations who are holders
of the Colorado Fund 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 Fund dividends to the extent that such dividends qualify as
exempt-interest dividends of a regulated investment company under Section
852(b)(5) of the Internal Revenue Code, which are derived from interest income
received by the Colorado Fund 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 under the laws of the State of Colorado authorizing the issuance
of such obligations; (b) obligations of the United States or its possessions to
the extent included in federal taxable income; or (c) obligations of territories
or possessions of the United States to the extent federal law exempts interest
on such obligations from taxation by the states (collectively, "Colorado
Obligations"). To the extent that Colorado Fund 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 Fund are exempt
from Colorado property taxes.
The Colorado Fund 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.
Georgia Taxes
In the opinion of King & Spalding, Georgia tax counsel to the Georgia Fund,
under existing Georgia law, shareholders of the Georgia Fund will not be subject
to Georgia income taxes on dividends with respect to shares of the Georgia Fund
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 Fund.
Dividends, if any, derived from capital gains or other sources generally will be
taxable to shareholders of the Georgia Fund for Georgia income tax purposes.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Georgia Fund, at least 80% of the value of the net assets of
the Georgia Fund will be maintained in debt obligations which are exempt from
regular federal income tax and Georgia income taxes.
The Georgia Fund 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 Louisiana Fund,
based upon a private ruling obtained from the Louisiana Department of Revenue,
and subject to the current policies of the Louisiana Department of Revenue,
shareholders of the Louisiana Fund 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
Fund 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 governmental agencies, or instrumentalities.
To the extent that distributions on the Louisiana Fund 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 Fund
dividends.
34
<PAGE>
Except during temporary defensive periods or when acceptable investments are
unavailable to the Louisiana Fund, the Municipal Fund will maintain at least 80%
of the value of the net assets of the Louisiana Fund in debt obligations which
are exempt from federal income tax and exempt from Louisiana income tax.
The Louisiana Fund 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
Maryland Fund, as long as dividends paid by the Maryland Fund qualify as
interest excludable under Section 103 of the Internal Revenue Code and the
Maryland Fund qualifies as a regulated investment company under the Internal
Revenue Code, the portion of exempt-interest dividends that represents interest
received by the Maryland Fund 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 shareholder of the Maryland Fund.
Gain realized by the Maryland Fund 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 Fund are attributable to
sources other than those described in the preceding sentences, such as interest
received by the Maryland Fund 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 Fund 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 Fund to purchase or carry shares of the Maryland Fund 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 Fund, at least 80% of the value of the net assets of
the Maryland Fund 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 Fund 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 Massachusetts
Fund, assuming that the Municipal Fund gives the notices described at the end of
this section, holders of the Massachusetts Fund who are subject to the
Massachusetts personal income tax will not be subject to tax on distributions
from the Massachusetts Fund to the extent that these distributions qualify as
exempt-interest dividends of a regulated investment company under Section
852(b)(5) of the Internal Revenue Code which are directly attributable to
interest on obligations issued by the Commonwealth of Massachusetts, its
instrumentalities or its political subdivisions or by the government of Puerto
Rico or by its authority, by the government of Guam or by its authority, or by
the government of the Virgin Islands or its authority (collectively,
"Massachusetts Obligations"). Except to the extent excluded as capital gain,
distributions of income to Massachusetts holders of the Massachusetts Fund 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 Fund. 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
35
<PAGE>
obligation from Massachusetts income taxation. Distributions which qualify as
capital gain dividends under Section 852(b)(3)(C) of the Internal Revenue Code
and which are includable in Federal gross income will be includable in the
Massachusetts income of a holder of the Massachusetts Fund as capital gain.
Massachusetts Fund 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 Fund, the Municipal
Fund will maintain at least 80% of the value of the net assets of the
Massachusetts Fund in debt obligations which are exempt from regular federal
income tax and Massachusetts personal income tax.
The Massachusetts Fund 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 PLLC, 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. To the extent that 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 Minnesota
Fund, provided that the Minnesota Fund qualifies as a regulated investment
company under the Internal Revenue Code, and subject to the discussion in the
paragraph below, shareholders of the Minnesota Fund 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 Fund
dividends to the extent that such distributions qualify as exempt-interest
dividends of a regulated investment company under Section 852(b)(5) of the
Internal Revenue 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 Fund. If the 95% test is not met, all exempt-interest
dividends that are paid by the Minnesota Fund generally 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 Fund are
not derived from the Minnesota Sources described in the first sentence of this
paragraph, such dividends generally will be subject to the regular Minnesota
personal income tax. Other distributions of the Minnesota Fund,
36
<PAGE>
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
Internal Revenue 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 generally
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 Fund, including all of those that are
derived from the Minnesota Sources described above, generally will be subject to
the Minnesota alternative minimum tax, in the case of shareholders of the
Minnesota Fund who are individuals, estates or trusts.
Subject to certain limitations that are set forth in the Minnesota rules,
Minnesota Fund 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 Fund who are individuals, estates, or trusts.
Minnesota Fund 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
Fund 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 Fund, at least 80% of the value of the net assets
of the Minnesota Fund 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
Fund will invest so that the 95% test described above is met.
37
<PAGE>
The Minnesota Fund 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 Bryon Cave LLP, Missouri tax counsel to the Missouri Fund,
dividends distributed to individual shareholders of the Missouri Fund 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 Internal Revenue 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 Internal Revenue Code, distributable by the Missouri
Fund to individual resident shareholders of the Missouri Fund, to the extent
includable in federal adjusted gross income, will be subject to Missouri income
taxation. Shares in the Missouri Fund are not subject to Missouri personal
property taxes.
Dividends paid by the Missouri Fund, if any, that do not qualify as tax exempt
dividends under Section 852 (b)(5) of the Internal Revenue 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 Fund
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 Fund, at least 80% of the value of the net assets of
the Missouri Fund will be maintained in debt obligations which are exempt from
regular federal income tax and Missouri personal income tax.
The Missouri Fund 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 York State and City Taxes
In the opinion of Sullivan & Cromwell, counsel to the Funds, holders of shares
of the New York Fund 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
Fund dividends to the extent that such distributions qualify as exempt-interest
dividends under Section 852(b)(5) of the Internal Revenue 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 Fund 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 Fund 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 Fund, the Municipal Fund will maintain at least 80%
of the value of the net assets of the New York Fund in debt obligations which
are exempt from regular federal income tax and New York State and City personal
income taxes.
The Fund 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.
38
<PAGE>
Ohio Taxes
In the opinion of Squire, Sanders & Dempsey L.L.P., Ohio tax counsel to the Ohio
Fund, holders of the Ohio Fund 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 Fund ("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 Fund 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 Fund 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 Fund 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 Fund 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 Fund is not subject to the Ohio personal income tax or municipal income
or school district taxes in Ohio. The Ohio Fund is not subject to corporation
franchise tax or the Ohio dealers in intangibles tax, provided that, if the Ohio
Fund 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 Fund, the Municipal Fund will maintain at least 80% of
the value of the net assets of the Ohio Fund 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 Fund 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 Fund.
Oregon Taxes
In the opinion of Schwabe Williamson & Wyatt P.C., Oregon tax counsel to the
Oregon Fund, under present law, individual shareholders of the Oregon Fund will
not be subject to Oregon personal income taxes on distributions received from
the Oregon Fund to the extent that such distributions (1) qualify as
exempt-interest dividends under Section 852 (b)(5) of the Internal Revenue 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 Fund is exempt from Oregon excise
tax on corporations. However, shares of the Oregon Fund are not subject to
Oregon property tax.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Oregon Fund, at least 80% of the value of the net assets of
the Oregon Fund will be maintained in debt obligations, the interest payments of
which are exempt from regular federal income tax and Oregon
39
<PAGE>
personal income taxes.
The Oregon Fund 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.
South Carolina Taxes
In the opinion of Sinkler & Boyd, P.A., South Carolina tax counsel to the South
Carolina Fund, shareholders of the South Carolina Fund who are subject to South
Carolina individual or corporate income taxes will not be subject to such taxes
on South Carolina Fund dividends to the extent that such dividends qualify as
either (1) exempt-interest dividends of a regulated investment company under
Section 852(b)(5) of the Internal Revenue 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 on obligations
of the United States and its possessions or on obligations of any authority or
commission of the United States, the interest from which is exempt from state
income taxes under the laws of the United States (collectively, "South Carolina
Obligations"). To the extent that South Carolina Fund 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 Fund, at least 80% of the value of the net
assets of the South Carolina Fund will be maintained in debt obligations which
are exempt from regular federal income tax and South Carolina income tax.
The South Carolina Fund 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 Fund may be taxable to investors under state and local law
even though all or a part of such distributions may be derived from federally
tax-exempt sources or from obligations which, if received directly, would be
exempt from such income tax. In some states, shareholders of the National Fund
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 Fund 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.
Unless a shareholder includes a certified taxpayer identification number (social
security number for individuals) on the account application and certifies that
the shareholder is not subject to backup withholding, the Funds are required to
withhold and remit to the US Treasury a portion of 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 $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed, the 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. The Funds also reserve the right to
close any account which does not have a certified taxpayer identification
number.
40
<PAGE>
Underwriters
Distribution of Securities
Seligman Municipal Fund Series, Inc. and Seligman Advisors are parties to a
Distributing Agreement dated January 1, 1993 under which Seligman Advisors acts
as the exclusive agent for distribution of shares of the Funds. Seligman
Advisors accepts orders for the purchase of Fund shares, which are offered
continuously. As general distributor of the Funds' capital stock, Seligman
Advisors allows reallowances to all dealers on sales of Class A shares, as set
forth above under "Dealer Reallowances." Seligman Advisors retains the balance
of sales charges and any CDSCs paid by investors.
Total initial sales charges paid by shareholders of Class A shares of the Funds
for the fiscal years ended September 30, 1998, 1997, and 1996 are shown below.
Also shown are the amounts of Class A sales charges that were retained by
Seligman Advisors. No Class C shares of each Fund were issued or outstanding
during such fiscal years:
1998
----
Total Sales Charges Paid Amount of Class A Sales
by Shareholders Charges Retained by
Fund on Class A Shares Seligman Advisors
---- ----------------- -----------------
National $ 86,018 $10,617
Colorado 43,452 5,093
Georgia 59,294 6,978
Louisiana 57,466 6,743
Maryland 91,833 10,969
Massachusetts 74,981 9,068
Michigan 176,876 21,176
Minnesota 133,181 16,223
Missouri 60,625 7,654
New York 65,655 7,561
Ohio 142,209 17,244
Oregon 136,965 15,346
South Carolina 195,034 23,670
1997
----
Total Sales Charges Paid Amount of Class A Sales
by Shareholders Charges Retained by
Fund on Class A Shares Seligman Advisors
---- ----------------- -----------------
National $ 69,538 $ 8,749
Colorado 41,233 4,828
Georgia 64,812 7,820
Louisiana 56,078 6,792
Maryland 60,270 7,366
Massachusetts 84,784 10,093
Michigan 159,889 18,739
Minnesota 85,887 9,979
Missouri 40,582 4,557
New York 95,889 11,532
Ohio 141,687 16,992
Oregon 84,700 9,740
South Carolina 151,171 17,715
41
<PAGE>
1996
----
Total Sales Charges Paid Amount of Class A Sales
by Shareholders Charges Retained by
Fund on Class A Shares Seligman Advisors
---- ----------------- -----------------
National $135,664 $15,618
Colorado 57,503 6,810
Georgia 93,430 10,864
Louisiana 96,977 11,649
Maryland 83,829 10,368
Massachusetts 107,245 13,360
Michigan 183,950 21,956
Minnesota 191,620 22,738
Missouri 69,466 7,979
New York 97,996 11,497
Ohio 170,880 20,073
Oregon 114,025 13,323
South Carolina 270,513 32,649
Compensation
Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliated person of the Funds, received the following commissions and other
compensation from the Funds during it's the fiscal year ended September 30,
1998:
<TABLE>
<CAPTION>
Compensation on
Net Underwriting Redemptions and
Discounts and Repurchases
Commissions (CDSC on Class A
(Class A Sales and Class D Brokerage Other
Fund Charge Retained) Retained) Commissions Compensation
- ---- ---------------- --------- ----------- ------------
<S> <C> <C> <C> <C>
National $10,617 $ 3,560 $0 $0
Colorado 5,093 219 0 0
Georgia 6,978 26,175 0 0
Louisiana 6,743 0 0 0
Maryland 10,969 445 0 0
Massachusetts 9,068 267 0 0
Michigan 21,176 397 0 0
Minnesota 16,223 47 0 0
Missouri 7,654 35 0 0
New York 7,561 1,310 0 0
Ohio 17,244 1,259 0 0
Oregon 15,346 40 0 0
South Carolina 23,670 2,648 0 0
</TABLE>
Other Payments
Seligman Advisors shall pay broker/dealers, from its own resources, a fee on
purchases of Class A shares of $1,000,000 or more (NAV sales), calculated as
follows: 1.00% of NAV 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," 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
42
<PAGE>
purchases made on behalf of any other fiduciary or individual account.
Seligman Advisors shall also pay broker/dealers, from its own resources, a fee
on assets of certain investments in Class A shares of the Seligman mutual funds
participating in an "eligible employee benefit plan" that are attributable to
the particular broker/dealer. The shares eligible for the fee are those on which
an initial sales charge was not paid because either the participating eligible
employee benefit plan has at least (1) $500,000 invested in the Seligman mutual
funds or (2) 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.
Seligman Advisors 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 Seligman mutual funds. Seligman Advisors 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 registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other mutual
funds managed by Seligman 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 Seligman Advisors of such promotional activities and payments shall be
consistent with the rules of the National Association of Securities Dealers,
Inc., as then in effect.
Calculation of Performance Data
Class A
The annualized yield for the 30-day period ended September 30, 1998 for each
Fund's Class A shares was as follows: National - 3.86%, Colorado - 3.80%,
Georgia - 3.69%, Louisiana - 3.82%, Maryland - 3.86%, Massachusetts - 3.72%,
Michigan - 3.76%, Minnesota - 4.01%, Missouri - 3.74%, New York - 3.91%, Ohio -
3.83%, Oregon - 3.73%, and South Carolina - 3.82%. The annualized yield was
computed by dividing a Fund's 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, 1998, which was the last day of this period. The average number of Class A
shares per Fund was: National - 12,345,093, Colorado - 5,976,398, Georgia -
5,776,456, Louisiana - 6,616,889, Maryland - 6,600,859, Massachusetts
- -13,276,652, Michigan - 16,362,624, Minnesota - 15,225,703, Missouri -
6,226,343, New York - 9,889,969, Ohio - 18,322,861, Oregon - 7,159,525, and
South Carolina - 12,644,590, 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.
The tax equivalent annualized yield for the 30-day period ended September 30,
1998 for each Fund's Class A shares was as follows: National - 6.39%, Colorado -
6.62%, Georgia - 6.50%, Louisiana 6.73%, Maryland 6.72%, Massachusetts 7.00%,
Michigan - 6.51%, Minnesota 7.26%, Missouri 6.59%, New York - 6.95%, Ohio -
6.80%, Oregon 6.79%, and South Carolina - 6.80%. 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%,
43
<PAGE>
Maryland - 42.5%4, Massachusetts - 46.85%, Michigan - 42.26%, Minnesota -
44.73%, Missouri - 43.22%, New York - 43.74%, Ohio - 43.71%, 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 Funds except the National Fund) 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
assumed maximum federal income tax rate for individual taxpayers). These two
calculations were then added to the portion of the Class A shares' yield, if
any, that was attributable to securities the income of which was not tax-
exempt.
The average annual total return for the one-year period ended September 30, 1998
for each Fund's Class A shares was as follows: National - 3.81%, Colorado -
2.89%, Georgia - 3.35%, Louisiana - 2.98%, Maryland - 2.72%, Massachusetts -
4.56%, Michigan - 3.45%, Minnesota - 2.54%, Missouri - 3.26%, New York - 4.83%,
Ohio - 3.59%, Oregon - 3.36%, and South Carolina - 3.46%. The average annual
total return for the five-year period ended September 30, 1998 for each Fund's
Class A shares was as follows: National - 4.55%, Colorado - 4.03%, Georgia -
4.76%, Louisiana - 4.66%, Maryland - 4.52%, Massachusetts - 4.96%, Michigan -
4.80%, Minnesota - 4.19%, Missouri - 4.48%, New York - 5.18%, Ohio - 4.57%,
Oregon - 4.70%, and South Carolina - 4.75%. The average annual total return for
the ten-year period ended September 30, 1998 for each Fund's Class A shares was
as follows: National - 7.37%, Colorado - 6.52%, Georgia - 7.55%, Louisiana -
7.17%, Maryland - 7.15%, Massachusetts - 7.35%, Michigan - 7.47%, Minnesota -
6.64%, Missouri - 7.13%, New York - 7.73%, Ohio - 7.22%, Oregon - 7.17%, and
South Carolina - 7.36%. These returns were computed by assuming a hypothetical
initial payment of $1,000 in Class A shares of each Fund. 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 each Fund's
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 Fund, the entire amount was redeemed. The average annual
total return was then calculated by determining 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).
Class D
The annualized yield for the 30-day period ended September 30, 1998 for each
Series' Class D shares was as follows: National - 3.16%, Colorado - 3.09%,
Georgia - 2.99%, Louisiana - 3.11%, Maryland - 3.15%, Massachusetts - 3.02%,
Michigan - 3.06%, Minnesota - 3.33%, Missouri - 3.04%, New York - 3.23%, Ohio -
3.14%, Oregon - 3.02%, and South Carolina - 3.12%. The annualized yield was
computed as for Class A shares by dividing a Fund's 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, 1998 which was the last day of this
period. The average number of Class D shares were: National - 879,234, Colorado
- - 45,005, Georgia - 333,545, Louisiana - 98,330, Maryland - 374,876,
Massachusetts - 172,695, Michigan - 202,890, Minnesota - 274,979, Missouri -
51,945, New York - 244,975, Ohio - 129,309, Oregon - 321,651, and South Carolina
- - 625,506, 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.
The tax equivalent annualized yield for the 30-day period ended September 30,
1998 for each Fund's Class D shares was as follows: National - 5.23%, Colorado -
5.39%, Georgia - 5.27%, Louisiana - 5.48%, Maryland - 5.48%, Massachusetts -
5.68%, Michigan - 5.30%, Minnesota - 6.02%, Missouri - 5.35%, New York - 5.74%,
Ohio - 5.58%, Oregon - 5.49%, and South Carolina - 5.55%. 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, 1998
for each Fund's Class D shares was as follows: National - 6.76%, Colorado -
5.90%, Georgia - 6.59%, Louisiana - 6.11%, Maryland - 5.91%, Massachusetts -
7.68%, Michigan - 6.66%, Minnesota - 5.71%, Missouri - 6.45%, New York - 7.88%,
Ohio - 6.78%, Oregon - 6.37%, and South Carolina - 6.68%. The average annual
total return for the period since inception through September 30, 1998 for each
Fund's Class D shares was as follows: National - 4.57%, Colorado - 3.89%,
Georgia - 4.90%, Louisiana - 4.61%, Maryland - 4.59%, Massachusetts - 5.00%,
Michigan - 4.76%, Minnesota - 4.01%, Missouri - 4.50%,
44
<PAGE>
New York - 5.24%, Ohio - 4.67%, Oregon - 4.72%, and South Carolina - 4.76%.
These returns were computed by assuming a hypothetical initial payment of $1,000
in Class D shares of each Fund and that all of the dividends and distributions
by each Fund's Class D shares over the relevant time period were reinvested. It
was then assumed that at the end of the one-year period and the period since
inception of each Fund, the entire amount was redeemed, subtracting the 1% CDSC,
if applicable.
Class C shares are a new class, effective June 1, 1999, so no performance data
is presented.
The tables below illustrate the total returns on a $1,000 investment in each of
the Fund's Class A and Class D shares for the ten years ended September 30, 1998
or from a Class's inception through September 30, 1998, assuming investment of
all dividends and capital gain distributions. The results shown below should not
be considered a representation of the dividend income or gain or loss in capital
value which may be realized from an investment made in a class of shares of a
Fund today.
Class A
-------
<TABLE>
<CAPTION>
Fund/ Value of Value of Total Value
Year Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
National
9/30/89 $ 964 $ 3 $ 68 $1,035
9/30/90 927 15 135 1,077
9/30/91 985 27 218 1,230
9/30/92 1,006 32 301 1,339
9/30/93 1,088 58 408 1,554
9/30/94 896 127 409 1,432
9/30/95 945 134 517 1,596
9/30/96 960 137 611 1,708
9/30/97 999 142 727 1,868
9/30/98 1,037 148 851 2,036 103.63%
Colorado
9/30/89 $ 979 $ -- $ 66 $1,045
9/30/90 958 -- 133 1,091
9/30/91 1,002 -- 211 1,213
9/30/92 1,019 -- 288 1,307
9/30/93 1,076 14 380 1,470
9/30/94 983 27 417 1,427
9/30/95 1,013 28 509 1,550
9/30/96 1,008 28 587 1,623
9/30/97 1,030 28 684 1,742
9/30/98 1,059 29 793 1,881 88.14%
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Fund/ Value of Value of Total Value
Year Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Georgia
9/30/89 $ 982 $ 1 $ 67 $1,050
9/30/90 965 3 136 1,104
9/30/91 1,025 5 221 1,251
9/30/92 1,056 10 306 1,372
9/30/93 1,133 19 411 1,563
9/30/94 1,005 32 440 1,477
9/30/95 1,050 56 543 1,649
9/30/96 1,058 68 631 1,757
9/30/97 1,091 77 741 1,909
9/30/98 1,126 87 857 2,070 107.02%
Louisiana
9/30/89 $ 963 $ 7 $ 68 $1,038
9/30/90 941 15 136 1,092
9/30/91 1,000 19 221 1,240
9/30/92 1,025 25 303 1,353
9/30/93 1,075 44 398 1,517
9/30/94 971 53 435 1,459
9/30/95 996 83 530 1,609
9/30/96 997 96 617 1,710
9/30/97 1,012 120 718 1,850
9/30/98 1,041 127 832 2,000 99.95%
Maryland
9/30/89 $ 978 $ -- $ 64 $1,042
9/30/90 960 -- 129 1,089
9/30/91 1,023 -- 210 1,233
9/30/92 1,050 5 291 1,346
9/30/93 1,113 24 387 1,524
9/30/94 994 50 418 1,462
9/30/95 1,026 80 515 1,621
9/30/96 1,029 87 602 1,718
9/30/97 1,049 98 703 1,850
9/30/98 1,072 111 812 1,995 99.55%
Massachusetts
9/30/89 $ 955 $ 7 $ 68 $1,030
9/30/90 907 17 132 1,056
9/30/91 982 21 220 1,223
9/30/92 1,008 28 307 1,343
9/30/93 1,068 43 409 1,520
9/30/94 957 73 445 1,475
9/30/95 988 82 546 1,616
9/30/96 982 103 628 1,713
9/30/97 999 122 731 1,852
9/30/98 1,034 149 850 2,033 103.28%
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Fund/ Value of Value of Total Value
Year Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Michigan
9/30/89 $ 976 $ 3 $ 67 $1,046
9/30/90 946 15 133 1,094
9/30/91 1,005 18 217 1,240
9/30/92 1,041 26 304 1,371
9/30/93 1,089 60 400 1,549
9/30/94 993 69 442 1,504
9/30/95 1,024 80 543 1,647
9/30/96 1,014 107 628 1,749
9/30/97 1,031 128 733 1,892
9/30/98 1,059 148 848 2,055 105.48%
Minnesota
9/30/89 $ 962 $ 3 $ 66 $1,031
9/30/90 948 11 132 1,091
9/30/91 989 12 211 1,212
9/30/92 998 14 293 1,305
9/30/93 1,048 36 392 1,476
9/30/94 977 54 447 1,478
9/30/95 990 57 543 1,590
9/30/96 972 60 621 1,653
9/30/97 986 61 719 1,766
9/30/98 1,010 65 827 1,902 90.22%
Missouri
9/30/89 $ 977 $ -- $ 65 $1,042
9/30/90 969 -- 130 1,099
9/30/91 1,037 -- 212 1,249
9/30/92 1,047 11 289 1,347
9/30/93 1,115 22 387 1,524
9/30/94 994 38 418 1,450
9/30/95 1,033 55 517 1,605
9/30/96 1,036 70 600 1,706
9/30/97 1,050 90 697 1,837
9/30/98 1,078 109 805 1,992 99.15%
New York
9/30/89 $ 970 $ 3 $ 68 $1,041
9/30/90 930 10 134 1,074
9/30/91 999 10 222 1,231
9/30/92 1,023 22 307 1,352
9/30/93 1,101 45 412 1,558
9/30/94 965 72 437 1,474
9/30/95 989 111 535 1,635
9/30/96 1,004 113 632 1,749
9/30/97 1,042 122 751 1,915
9/30/98 1,082 147 877 2,106 110.61%
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
Fund/ Value of Value of Total Value
Year Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Ohio
9/30/89 $ 964 $ 2 $ 69 $1,035
9/30/90 942 15 137 1,094
9/30/91 996 18 222 1,236
9/30/92 1,023 25 307 1,355
9/30/93 1,084 38 407 1,529
9/30/94 977 62 443 1,482
9/30/95 1,003 79 542 1,624
9/30/96 1,000 87 629 1,716
9/30/97 1,012 103 730 1,845
9/30/98 1,034 131 842 2,007 100.73%
Oregon
9/30/89 $ 983 $ -- $ 64 $1,047
9/30/90 971 -- 129 1,100
9/30/91 1,034 -- 211 1,245
9/30/92 1,060 -- 289 1,349
9/30/93 1,127 -- 387 1,514
9/30/94 1,036 11 431 1,478
9/30/95 1,068 16 528 1,612
9/30/96 1,067 17 613 1,697
9/30/97 1,098 27 718 1,843
9/30/98 1,123 52 824 1,999 99.91%
South Carolina
9/30/89 $ 975 $ 1 $ 66 $1,042
9/30/90 956 1 132 1,089
9/30/91 1,019 7 215 1,241
9/30/92 1,057 10 299 1,366
9/30/93 1,126 14 397 1,537
9/30/94 1,006 33 427 1,466
9/30/95 1,052 38 532 1,622
9/30/96 1,066 42 625 1,733
9/30/97 1,078 69 724 1,871
9/30/98 1,107 89 837 2,033 103.34%
</TABLE>
48
<PAGE>
Class D
-------
<TABLE>
<CAPTION>
Fund/ Value of Value of Total Value
Year Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
National
9/30/94 $ 875 $ -- $ 25 $ 900
9/30/95 923 -- 69 992
9/30/96 939 -- 114 1,053
9/30/97 978 -- 165 1,143
9/30/98 1,013 -- 218 1,231 23.15%
Colorado
9/30/94 $ 919 $ -- $ 24 $ 943
9/30/95 944 -- 67 1,011
9/30/96 942 -- 109 1,051
9/30/97 961 -- 157 1,118
9/30/98 988 -- 207 1,195 19.49%
Georgia
9/30/94 $ 899 $ -- $ 25 $ 924
9/30/95 938 15 69 1,022
9/30/96 945 22 112 1,079
9/30/97 976 26 160 1,162
9/30/98 1,008 32 210 1,250 25.01%
Louisiana
9/30/94 $ 909 $ -- $ 26 $ 935
9/30/95 933 18 70 1,021
9/30/96 935 30 111 1,076
9/30/97 947 45 160 1,152
9/30/98 974 48 212 1,234 23.41%
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
9/30/98 984 37 212 1,233 23.30%
Massachusetts
9/30/94 $ 920 $ -- $ 27 $ 947
9/30/95 948 4 73 1,025
9/30/96 942 18 117 1,077
9/30/97 959 29 167 1,155
9/30/98 991 45 219 1,255 25.55%
Michigan
9/30/94 $ 919 $ -- $ 26 $ 945
9/30/95 947 9 68 1,024
9/30/96 937 26 113 1,076
9/30/97 954 38 162 1,154
9/30/98 979 49 214 1,242 24.23%
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Fund/ Value of Value of Total Value
Year Initial Capital Gain Value 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
9/30/95 952 2 78 1,032
9/30/96 934 4 125 1,063
9/30/97 948 4 174 1,126
9/30/98 970 6 225 1,201 20.15%
Missouri
9/30/94 $ 903 $ -- $ 25 $ 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
9/30/98 980 42 206 1,228 22.78%
New York
9/30/94 $ 897 $ -- $ 26 $ 923
9/30/95 921 23 70 1,014
9/30/96 933 24 116 1,073
9/30/97 970 28 168 1,166
9/30/98 1,006 41 222 1,269 26.91%
Ohio
9/30/94 $ 920 $ -- $ 26 $ 946
9/30/95 946 10 72 1,028
9/30/96 944 15 118 1,077
9/30/97 956 24 168 1,148
9/30/98 977 40 220 1,237 23.73%
Oregon
9/30/94 $ 926 $ -- $ 26 $ 952
9/30/95 953 3 71 1,027
9/30/96 952 4 116 1,072
9/30/97 981 10 164 1,155
9/30/98 1,002 25 213 1,240 24.02%
South Carolina
9/30/94 $ 904 $ -- $ 25 $ 929
9/30/95 946 2 70 1,018
9/30/96 957 4 115 1,076
9/30/97 969 21 163 1,153
9/30/98 995 33 214 1,242 24.20%
</TABLE>
- ----------
(1) For the ten-year period ended September 30, 1998 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 of the maximum sales charge and CDSC, 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 CDSC, if applicable, and assumes investment of all dividends
and capital gain distributions.
(3) Total return for each Class of a Fund is calculated by assuming a
hypothetical initial investment of $1,000 at the beginning of the period
specified, subtracting the maximum sales load or CDSC, 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.
50
<PAGE>
Seligman waived its fees and reimbursed certain expenses during some of the
periods above, which positively affected the performance results presented.
A Fund's total returns and average annual total returns for Class A shares
quoted above do not reflect the deduction of 12b-1 fees for periods prior to
January 1, 1993, because the 12b-1 Plan was implemented on that date. If these
fees were reflected, the performance results presented would have been lower.
Financial Statements
The Annual Report to Shareholders for the fiscal year ended September 30, 1998
and the Mid-Year Report to Shareholders fiscal six-month period ended March 31,
1999, contain a schedule of the investments of the Funds as of September 30,
1998 and March 31, 1999, respectively, as well as certain other financial
information. The financial statements and notes included in the Annual Report
and Mid-Year Report, and the Independent Auditors' Reports thereon, are
incorporated herein by reference. The Annual Report and Mid-Year Report will be
furnished, without charge, to investors who request copies of this SAI.
General Information
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 Seligman Municipal Fund Series 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 Funds. It also maintains, under the
general supervision of Seligman, the accounting records and determines the net
asset value for the Funds.
Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Funds. Their address is Two World Financial Center, New York, NY
10281.
51
<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
52
<PAGE>
for refinancing. Loans bearing the designation MIG 2 are of high quality, with
margins of protection ample although not so large as in the preceding group.
Loans bearing the designation MIG 3 are of favorable quality, with all security
elements accounted for but lacking the undeniable strength of the preceding
grades. Market access for refinancing in particular, is likely to be less well
established. Notes bearing the designation MIG 4 are judged to be of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
Commercial Paper
Moody's Commercial Paper Ratings are opinions of the ability of issuers to
repay punctually promissory senior debt obligations not having an original
maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the
highest quality repayment capacity of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
capacity for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
Issues rated "Not Prime" do not fall within any of the Prime rating
categories.
Standard & Poor's Corporation ("S&P")
Municipal Bonds
AAA: Municipal bonds rated AAA are the 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.
53
<PAGE>
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
Municipal Notes
SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
Commercial Paper
S&P Commercial Paper ratings are current assessments of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
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.
54
<PAGE>
Appendix B
RISK FACTORS AFFECTING THE FUNDS
Risk Factors Affecting the Colorado Fund
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 state agencies and other instrumentalities of the state
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.
The state constitution does allow local governments and other subdivisions of
the state to issue general obligation debt, subject to certain requirements in
the constitution as well as debt limits imposed by statute. As of 1995, Colorado
contained more than 1,900 units of local government, 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 incur indebtedness and levy taxes. Also as of 1995, public debt in Colorado
totaled approximately $16.9 billion, up 33% from 1990. Of that total, local
government debt accounted for $14.1 billion. (Report of the State Auditor:
Government Debt in Colorado, Special Study Fiscal Years 1994 through 1995.)
The major sources of revenue for repayment of public indebtedness are the ad
valorem property tax, sales tax and use and consumption fees. The ad valorem
property tax is presently imposed and collected solely at the local level,
although the state also has authority to do so. Total revenue from property
taxes in Colorado in 1997 was $3.03 billion, an increase from $2.78 billion in
1996. The total assessed value of all taxable property, real and personal, in
the state in 1997 was $38.54 billion, an increase of 14.7% over 1996.
(Department of Local Affairs, 27th Annual Report to the Governor and the General
Assembly) With two exceptions, property in Colorado is assessed at 29% of its
actual value. Residential real property was assessed at 9.74% of actual value in
1997, although this rate varies according to a formula specified in the
constitution. Producing mines and oil and gas properties are assessed at 87.5%
of primary recovery and 75% of secondary recovery. The state constitution
imposes limits on the mill levy of taxes for state purposes.
Colorado has two other, especially significant constitutional provisions
affecting government finance. One is a balanced-budget requirement. The second
is known as Amendment 1 or as the Taxpayer's Bill of Rights ("TABOR"), adopted
by Colorado voters in 1992. TABOR imposes strict limitations on government
revenue, debt, and spending. 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. TABOR provides that,
without voter approval, state and local government revenue may grow only to
account for inflation and increases in population. TABOR also requires voter
approval prior to the creation of any multiple-fiscal year debt or financial
obligations without present cash reserves pledged irrevocably and held for
payments in all future fiscal years. Its provisions generally apply to the state
and any local government but not to "enterprises". An enterprise is a
government-owned business authorized to issue its own revenue bonds and
receiving under 10% of its annual revenue in grants from all Colorado state and
local governments combined.
State revenues exceeded the TABOR limit for the first time in fiscal year
1996-97. The revenue limit was $6.509 billion. Excess revenue totaled $139
million, which TABOR requires to be refunded to taxpayers. The state legislature
voted to refund the excess by way of a credit against income taxes due for 1997.
For fiscal year 1997-98, the revenue limit grew (because of population growth
and inflation) to $6.872 billion, but state revenues again exceeded the TABOR
limit, this time by $563 million. (Report of the State Auditor: Schedule of
TABOR Revenue September 1998) Taxpayers will receive the refund by way of a
credit against income taxes due for 1998. In the November 1998 general election,
Colorado voters rejected a ballot proposal that would have allowed the state to
retain $200 million of excess revenue in fiscal year 1997-98 and in each of the
next four fiscal years to be used for
55
<PAGE>
transportation and school construction. The State is considering various means
of reducng revenue through tax cuts and of refunding excess revenue through tax
credits to comply with TABOR limits.
Both the Colorado Legislative Council (Focus Colorado: Economic & Revenue
Forecast 1998-2004, September 1998) and the Office of State Planning and
Budgeting (Colorado Economic Perspective, December 20, 1998) predict state
revenues will exceed the TABOR limits into the foreseeable future. Both
organizations predict that population growth and inflation will cause the limit
on state revenues to grow by more than 4% in each of the next six fiscal years
but that actual state revenues will continue to exceed the limit by hundreds of
millions of dollars each year. The Office of State Planning and Budgeting
predicts excess revenue of $655.3 million in fiscal year 1998-99, with gradual
decreases in excess revenue each year through 2003. That office predicts a total
of $2.96 billion in excess revenue from fiscal year 1998-99 through 2003-04. The
Colorado Legislative Council predicts revenue will exceed the TABOR limit by
$533.2 million in fiscal year 1998-99, with excess revenue greater than $500
million each fiscal year through 2003-04. The Council predicts that state
revenue will exceed the spending limit by a total of $3.3 billion from fiscal
year 1998-99 through 2003-04. Unless voters approve retention of any such funds,
all such funds would have to be refunded to taxpayers.
In addition to normal sources of revenue, the state government expects to
receive $2.88 billion over the next 25 years from the settlement of a lawsuit
against several tobacco companies. An initial payment of $32.9 million is
anticipated in 1999 or 2000. (Press Release by Attorney General's office,
11/17/98) There is disagreement whether these funds will be subject to the TABOR
revenue limits.
The factors outlined below are generally indicative of the current economic
status of Colorado. Statistics and forecasts cited here are compiled from the
following economic reports prepared by government and private sector economists
and other reports as noted: Office of State Budget and Planning, Colorado
Economic Perspective, June 20 and December 20, 1998 ("Colorado Economic
Perspective"); Colorado Legislative Council, Focus Colorado: Economic & Revenue
Forecast, 1998-2004, September 1998 ("Focus Colorado"); Dr. Tucker Hart Adams,
US Bank 1999 Economic Forecast ("US Bank"); Colorado Business Economic Outlook
Forum 1999 ("Colorado Outlook"). 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 Fund or the ability of the respective obligors to pay the debt service
on such obligations.
Colorado's population topped 4 million in 1998. Colorado economists forecast the
rate of population growth will remain consistent through 1999 at between
1.8-2.2% per year, fueled by economists predictions that net migration into
Colorado will continue through 1999 at the rate of approximately 45,000-55,000
people per year.
Economists expect growth in non-agricultural employment to slow in Colorado. Job
growth in 1997 was 4.0%. Estimates for 1998 range from 3.5-3.9%, and forecasts
for 1999 predict job growth of between 2.3-2.8%. According to Colorado Outlook,
the construction and services sectors will have the highest growth rate in 1999,
with all job sectors except oil, gas and mining showing some growth. The
unemployment rate for 1998 was estimated between 3.1-3.5%. That rate is expected
to increase in 1999, with predictions of 3.7-3.8%. US Bank forecasts that the
labor shortage faced by many Colorado companies will continue into 1999.
An increase for personal income in 1998 is estimated by Colorado economists in
the range of 6.7-7.6%. The forecast for 1999 is for an increase in personal
income in the range of 6.0-7.4%. In 1998, the Denver-Boulder metropolitan area's
inflation rate, projected to be 2.5-3.0% again outpaced nationwide inflation of
1.6-1.7%. Colorado economists forecast the Denver-Boulder metropolitan area's
inflation rate for 1999 at between 2.9-3.3%, as compared to an inflation rate
forecast of between 2.4-2.6% for the nation. Retail sales in Colorado rose
between 6.0-7.5% in 1998, according to estimates, as compared to an increase of
5.6-6.8% in 1997. Projections by Colorado economists are for retail sales growth
in 1999 of between 5.8-6.4%.
Colorado's construction industry showed strong growth in the early 1990's, but
that growth has slowed and, according to US Bank, may experience a "modest
recession" in 1999. Growth in housing permits
56
<PAGE>
slowed to 1.0-1.2% in 1997. Residential construction showed strong growth in
1998 of 8.6-13.8%, according to estimates. For 1999, all but one of the reports
reviewed predict a significant decrease in the number of housing permits,
dropping 9.6-10.6% from 1998 numbers. Non-residential construction may also be
slowing from the boom of the mid-1990's. Growth in this sector has been slowing
since 1996, when local economists say the value of non-residential building
contracts rose over the previous year by as much as 34%. For 1998, Colorado
economists agree that non-residential construction fell, with estimates of the
decline varying from 11.5-35.6%. The outlook for 1999 is mixed, with predictions
ranging from a continued slide of 12.0% to strong growth of up to 12.0%. The
Focus Colorado report states that the non-residential construction sector is the
only weakness in the state's economy. In contrast, Colorado Outlook predicts
that residential construction will maintain approximately the same level of
activity in 1999 as in 1998 and that non-residential construction should grow by
12.0% in 1999. This report states that large projects, such as the Pepsi Center
sports facility and school construction will fuel the growth. Another large
project slated to get underway in 1999 is the construction of a new football
stadium for the Denver Broncos financed by the team and by a sales tax.
Colorado economists concur that the state's economic expansion of the early
1990's is decelerating and that approaching the turn of the century, the state
will experience much more modest growth. Additionally, the economists point out
that the troubles in the world economy, especially Asia, have the potential to
dramatically affect Colorado's economy. According to the Colorado Economic
Perspective report, Colorado exports totaled $5.6 billion in 1997, up 5% over
1996. That report also notes that Japan is Colorado's largest trading partner,
exports to which dropped by 6% in 1997. Colorado is sensitive to the national
and international business cycles, and the state's economy may be far less
healthy than forecast to the extent it is affected by those external pressures.
Risk Factors Affecting the Georgia Fund
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 10 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 5.05% of fiscal year 1998 estimated
receipts.
The Georgia Constitution also permits the State to incur public debt to supply a
temporary deficit in the state treasury in any fiscal year created by a delay in
collecting the taxes of that year. Such debt must not exceed, in the aggregate,
5% of the total revenue receipts, less refunds, of the state treasury in the
fiscal year immediately preceding the year in which such debt is incurred. The
debt incurred must be repaid on or before the last day of the fiscal year in
which it is to be incurred out of the taxes levied for that fiscal year. No such
debt may be incurred in any fiscal year if there is then outstanding unpaid debt
from any previous fiscal year which was incurred to supply a temporary deficit
in the state treasury. No such short-term debt has been incurred under this
provision since the inception of the constitutional authority
57
<PAGE>
referred to in this paragraph.
The obligations held from time-to-time in the Georgia Fund 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 1998" refers to the year ended June 30, 1998.
Based on data issued by the State of Georgia for the fiscal year 1998, income
tax receipts and sales tax receipts of the State for fiscal year 1998 comprised
approximately 48.9% and 32.1%, respectively of the State tax receipts. Further,
such data shows that total State Treasury Receipts for fiscal 1998
($12,478,602,944) increased by approximately 4.8% over such State Treasury
Receipts in fiscal 1997. As of December 1998, the State estimates Tax Receipts
for 1999 at $12,671,603,880.
The average annual unemployment rate of the civilian labor force in the State
for June 1998 was 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 Fund, 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 Fund 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.
Risk Factors Affecting the Louisiana Fund
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 Fund 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
58
<PAGE>
obligations secured by the full faith and credit of the State if the amount of
authorized but unissued debt plus the amount of outstanding debt exceeds twice
the average annual revenues of the Bond Security and Redemption Fund for the
last three fiscal years completed prior to such authorization. This debt
limitation is not applicable to or shall not include the authorization of
refunding bonds secured by the full faith and credit of the State, to authorized
or outstanding bond anticipation notes, or to the issuance of revenue
anticipation notes. Bond anticipation notes are issued in anticipation of the
sale of duly authorized bonds or to fund capital improvements. The State Bond
Commission may not issue general obligation bonds or other general obligations
secured by the full faith and credit of the State at any time when the highest
annual debt service requirement for the current or any subsequent fiscal years
for such debt, including the debt service on such bonds or other obligations
then proposed to be sold by the State Bond Commission, exceeds 10% of the
average annual revenues of the Bond Security and Redemption Fund for the last
three fiscal years completed prior to such issuance. This debt limitation is not
applicable to the issuance or sale by the State Bond Commission of refunding
bonds secured by the full faith and credit of the State of Louisiana or to bond
anticipation notes.
A new limitation on State borrowing has been established as a result of a
constitutional amendment passed by the voters of Louisiana in October 1993. As a
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 a small surplus for the 1997-98
fiscal year. This would be the sixth consecutive year of budget surplus.
A statewide referendum on the legality of video poker, riverboat gambling, and
land based gaming resulted in a continuation of all three forms of gaming as
well as three Indian casinos and off track racehorse betting parlors near the
major urban areas of Louisiana (Shreveport, Lake Charles, Baton Rouge, Lafayette
and New Orleans). The Harrah's Casino in New Orleans has emerged from Chapter 11
bankruptcy. It is now current on the required $100 million tax payment to the
State of Louisiana, lease obligations to the City of New Orleans and has
restarted construction of the New Orleans gaming facility. The casino is
expected to be open for operation by November of 1999 with an annual $100
billion tax obligation to the State of Louisiana.
The continuation of general fund surpluses does not assure the revenues for
bonds not entitled to the full
59
<PAGE>
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 21,000 jobs from October 1997 to October 1998. The 1.13% rate
of job growth caused a decrease in the statewide unemployment rate to 5.0% from
5.7% in October 1997. 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 penny temporary sales taxes originally enacted in 1986, however this tax
can be reinstated by a vote of the legislature. The recent reductions in oil
prices have begun to cause administrative job reductions in integrated oil
production firms. These layoffs have not yet spread to production and
construction firms in the oil services industry, however a continuation of oil
prices below $14 per barrel could result in further job reductions.
As of December 1998 there are still 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 industry expansion.
Labor has been drawn to Louisiana from other states and internationally during
1998 but this trend of increased net immigration could change during 1999.
Risk Factors Affecting the Maryland Fund
Some of the significant financial and other considerations relating to the
investments of the Maryland Fund are summarized below. This information is
derived principally from official statements released on or before February 24,
1999, relating to issues of State of Maryland general obligations and does not
purport to be a complete description.
The State of Maryland has a population of approximately 5.1 million, with
employment based largely in services, trade, and government. Those sectors,
along with finance, insurance, and real estate, were the largest contributors to
the gross state product, according to the most recent Census. Population is
concentrated around the Baltimore and Washington, DC PMSAs, a proximity to
Washington, DC influences the above average percentage of employees in
government. Manufacturing, on the other hand, is a much smaller proportion of
employment than for the nation as a whole. Annual unemployment rates have been
below those of the national average for each of the last 20 years except 1979
and 1998. The State's person income per capital is the 5th highest in the nation
in 1997, according to the U.S. Department of Commerce, Bureau of Economic
Analysis, at 113.3% of the national average.
The State's total expenditures as shown in summary financial statements for the
fiscal years ending June 30, 1996, June 30, 1997 and June 30, 1998 were $12.824
billion, $13.385 billion, and $13.566 billion, respectively. The State
Constitution mandates a balanced budget. The State enacts it budget annually.
Revenues are derived largely from certain broad-based taxes, including statewide
income, sales, motor vehicle, and property taxes. Non-tax revenues are largely
from the federal government for transportation, health care, welfare and other
social programs. General fund revenues on a budgetary basis realized in the
State's fiscal year ended June 30, 1998, exceeded estimates by about $105.1
million, or 1.3%. The State ended fiscal 1998 with a $419.8 million general fund
balance on a budgetary basis of which $302.7 million was designated to fund
fiscal year 1999 operations; this balance reflects a $391.9 million increase
compared to the balance projected at the time the 1998 budget was enacted. In
addition, there was a balance in the Revenue Stabilization Account of $617.9
million. On a GAAP basis, the fiscal
60
<PAGE>
1998 unreserved general fund balance was $230.2 million, compared with $49.2
million at the end of fiscal 1997. The total GAAP fund balance for fiscal year
1998 was $1,595.2 million compared with a total fund balance of $1,059.1 million
for fiscal year 1997.
The public indebtedness of Maryland and its instrumentalities is divided into
three basic types. The State and its political subdivisions issue general
obligation bonds for capital improvements and for various State or local
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" 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. 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.
There can, of course, be no assurance that the ratings and other factors
mentioned above will remain unchanged or that particular bond issues may not be
adversely affected by changes in the state or local economic or political
conditions. Because the Maryland Fund favors investing in revenue bonds, it
performance may be affected by economic developments and local legislation and
policy changes impacting a specific facility or type of facility not described
above.
Risk Factors Affecting the Massachusetts Fund
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 by the Commonwealth 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 $19.002 billion and total revenues and other sources totaled
approximately $19.223 billion. The budgeted operating funds ended fiscal 1997
with an excess of revenues and other sources over expenditures and other uses of
$221 million, and with positive fund balances of approximately $1.394 billion.
Total expenditures and other uses for fiscal 1998 totaled approximately $20.607
billion and total revenues and other sources totaled
61
<PAGE>
approximately $21.405 billion. The budgeted operating funds ended fiscal 1998
with an excess of revenues and other sources over expenditures and other uses of
$798 million, and with positive fund balances of approximately $2.192 billion.
The fiscal 1999 budget is based on estimated total revenues and other sources of
approximately $20.765 billion. Total expenditures and other uses for fiscal 1999
are currently estimated at approximately $21.232 billion. The fiscal 1999 budget
proposes that the $468 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 1999, to produce estimated ending fund
balances for fiscal 1999 of approximately $1.724 billion. The fiscal 1999 budget
is based upon numerous spending and revenue estimates, the achievement of which
cannot be assured.
On January 27, 1999, the governor submitted his fiscal 2000 budget
recommendations to the legislature which provided for budgeted expenditures and
other uses approximately $20.556 billion. In May, 1999, the Massachusetts House
approved a fiscal 2000 budget which provides for somewhat higher levels of
expenditures. The Massachusetts Senate is now considering the budget which is,
of course, subject to further legislative consideration.
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 each fiscal year
from 1993 through 1998 and is expected to increase again in fiscal 1999.
Limitations on state tax revenues have been established by legislation approved
by the Governor on October 23, 1986 and by an initiative petition approved by
the voters on November 4, 1986. The two measures are inconsistent in several
respects, including the methods of calculating the limits and the exclusions
from the limits. The initiative petition, unlike its legislative counterpart,
contains no exclusion for debt service on Commonwealth bonds and notes. Under
both measures, excess revenues are returned to taxpayers in the form of lower
taxes. It is not yet clear how differences between the two measures will be
resolved. State tax revenues in fiscal 1987 did exceed the tax limit imposed by
the initiative petition by an estimated $29.2 million. This amount was returned
to the taxpayers in the form of a tax credit against calendar year 1987 personal
income tax liability pursuant to the provisions of the initiative petition.
State tax revenues since fiscal 1988, have not exceeded the limit imposed by
either the initiative petition or the legislative enactment.
The Commonwealth maintains financial information on a budgetary basis. Since
fiscal year 1986, the Comptroller also has prepared annual financial statements
in accordance with generally accepted accounting principles (GAAP) as defined by
the Government Accounting Standards Board. GAAP basis financial statements
indicate that the Commonwealth ended fiscal 1993 and 1994 with fund deficits of
approximately $184.1 million and $72 million, respectively. GAAP basis financial
statements indicated that the Commonwealth ended fiscal 1995, 1996, 1997 and
1998 with fund equities of approximately $287.4 million, $709.2 million, $1.096
billion and $1.841 billion, respectively.
62
<PAGE>
Risk Factors Affecting the Michigan Fund
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
1997-98 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.
In 1977, the State enacted legislation which created the Counter-Cyclical Budget
and Economic Stabilization Fund ("BSF"). The BSF is designed to accumulate
balances during years of significant economic growth which may be utilized in
years when the State's economy experiences cyclical downturns or unforeseen
fiscal emergencies. General Fund surplus during 1992-98 was transferred, as
required by statute, to the BSF. Calculated on an accrual basis, the unreserved
ending accrued balances of the BSF were $987.9 million at September 30, 1995,
$614.5 million at September 30, 1996, $579.8 million at September 30, 1997, and
$1.000.5 million at September 30, 1998. The balance is net of a reserve for
future education spending of $529.1 million at September 30, 1996 and $572.6
million on September 30, 1997. 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 increases 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 monetary damages were owed to the 84 school
districts involved in Durant and over 400 other Michigan school districts and
legislation has been enacted to pay such damages from the BSF over a 15 year
period. Similar constitutional challenges to the funding of special education
services and transportation have been filed by over 100 school districts in a
new matter (Durant II) that was remanded to the Michigan Court of Appeals in
September 1998. The ultimate resolution of those claims is not presently
determinable.
The State has developed a risk management program to identify risks faced by the
State concerning year 2000 operability. The State has identified computer
applications, primarily within the executive branch, that are critical to
conducting the State's operations and that need to be year 2000 compliant. The
State's year 2000 remediation efforts have been aimed primarily at ensuring
unimpeded and uninterrupted operation, including tax collections, investment
activities, and timely payment of its obligations. As of March 31, 1999, the
State had validated and tested 97% of the critical computer applications. The
remaining 3% of the critical applications were n other stages of completion.
Because
63
<PAGE>
of the unprecedented nature of the year 2000 issue, its effect and the success
of the related remediation efforts cannot be fully determinable until the year
2000 and thereafter.
Currently, the State's general obligation bonds are rated Aa1 by Moody's and AA+
by Standard & Poor's, following rating increases announced in 1998. To the
extent that the portfolio of Michigan obligations is comprised of revenue or
general obligations of local governments or authorities, rather than general
obligations of the State of Michigan, ratings on such Michigan obligations will
be different from those given to the State of Michigan and their value may be
independently affected by economic matters not directly impacting the State.
Risk Factors Affecting the Minnesota Fund
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 Fund, and does not purport to
be a complete description.
The State of Minnesota has experienced certain budgeting and financial problems
since 1980. However, in recent years, Accounting General Fund Balances have been
positive.
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% 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% 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
64
<PAGE>
the budget reserve be increased to $500 million. He estimated that if current
laws and policies continued unchanged, revenue would grow 7.7% and expenditures
6.0% in the 1995-1997 biennium.
A March 1994 forecast projected an Accounting General Fund balance at June 30,
1995, at $623 million, principally due to a projected $235 million increase in
revenues to $16.6 billion for the biennium. The balance at June 30, 1997, was
estimated to be $247 million.
The 1994 Legislature provided for a $500 million budget reserve; appropriated to
school districts $172 million to allow the districts, for purposes of state aid
calculations, to reduce the portion of property tax collections that the school
districts must recognize in the fiscal year during which they receive the
property taxes; increased expenditures $184 million; and increased expected
revenues $4 million.
Of the $184 million in increased expenditures, criminal justice initiatives
totaled $45 million, elementary and higher education $31 million, environment
and flood relief $18 million, property tax relief $55 million, and transit $11
million. A six-year strategic capital budget plan was adopted with $450 million
in projects financed by bonds supported by the Accounting General Fund. Other
expenditure increases totaled $16.5 million.
Included in the expected revenue increase of $4 million were conformity with
federal tax changes to increase revenues $27.5 million, a sales tax phase down
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%, 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% more spending for elementary and secondary
education in the 1995-1997 biennium than in 1993-1995, 0.9% more in local
government aids, 14.2% more for health and human services, 2.3% more for higher
education, and 25.1% 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
65
<PAGE>
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% 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%
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 0% to 7%, 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 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% 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%, 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% more spending for elementary and secondary
education spending in the
66
<PAGE>
1997-1999 biennium than in 1995-1997, 17.6% more for health and human services,
12.5% more in local government aids, 10.7% more for higher education, and 0.3%
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.
A February 1998 forecast projected an Accounting General Fund balance at June
30, 1999, at $1.045 billion, due to a $507 million increase in projected
revenues, a $90 million decrease in expenditures, and a $5 million increase in
dedicated reserves. The balance at June 30, 2001 was projected at $2.137
billion.
The 1998 Legislature increased spending $125 million for K-12 education aids,
$90 million to reduce the school property tax recognition shift percentage to
zero, $73 million for higher education, and $148 million for all other
operations. The Legislature also approved $999 million in capital improvements,
to be funded by $509 million in bonds and $502 million in appropriations.
After the Legislature adjourned in April 1998, the Commissioner of Finance
estimated the Accounting General Fund balance at June 30, 1999, at $35 million.
The Commissioner of Finance, in a November 1998 forecast, estimated the
Accounting General Fund balance at June 30, 1999, at $953 million, due to an
$803 million increase in non-tobacco revenues, the receipt of $461 million in
tobacco settlement revenues, and a $262 million reduction in expenditures. A
total of $609 million of the $1.562 billion of estimated available revenues is
statutorily dedicated to reserves, tax reduction, and to replace bonding.
The Commissioner of Finance in November 1998 estimated the structural balance at
June 30, 2001, at $821 million.
The State of Minnesota has no obligation to pay any bonds of its political or
governmental subdivisions, municipalities, governmental agencies, or
instrumentalities. The creditworthiness of local general obligation bonds is
dependent upon the financial condition of the local government issuer, and the
creditworthiness of revenue bonds is dependent upon the availability of
particular designated revenue sources or the financial conditions of the
underlying obligors. Although most of the bonds owned by the Minnesota Fund are
expected to be obligations other than general obligations of the State of
Minnesota itself, there can be no assurance that the same factors that adversely
affect the economy of the State generally will not also affect adversely the
market value or marketability of such other obligations, or the ability of the
obligors to pay the principal of or interest on such obligations.
At the local level, the property tax base has recovered after its growth was
slowed in many communities
67
<PAGE>
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 Fund, 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 Fund might be adversely affected, and the value of
the shares of the Minnesota Fund might also be adversely affected.
The Department of Finance acknowledged in 1995 that the State of Minnesota's
accounting system was not Year 2000 (Y2K) compliant and that the systems vendor
would deliver a compliant version upgrade in the future. In mid-1997, State of
Minnesota technical staff, along with the systems vendor, began a $6.5 million
project to install the new compliant version of the accounting software.
According to the most recent Official Statement, the State of Minnesota and the
systems vendor were finishing up the remediation and testing stages of the
project, and expected to implement the new software version on November 30,
1998. There can, however, be no assurance that such implementation will be done
in a timely manner. Further, even if the State of Minnesota successfully
addresses its Year 2000 compliance there can be no assurance that any other
organization or governmental agency with which the State of Minnesota
electronically interacts, including vendors and the federal government, will be
Year 2000 compliant. In the event of any such occurrences, the State of
Minnesota may face material adverse consequences with respect to its revenues
and operations. Local issuers in the State of Minnesota may face similar
problems.
The State's bond ratings in October 1998 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 Fund or the ability of respective obligors to make timely
payment of the principal and interest on such obligations.
Risk Factors Affecting the Missouri Fund
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. During the
period following the1980 to 1983 recession periods until the mid-1990's,
Missouri unemployment levels generally approximated or slightly exceeded the
national average; however, in the second half of the 1990's, Missouri
unemployement levels have returned to generally being equal to or lower than the
national average. A return to a pattern of high unemployment could adversely
affect the Missouri debt obligations acquired by the Fund and,
68
<PAGE>
consequently, the value of the shares in the Fund.
The Missouri portions of the St. Louis and Kansas City metropolitan areas
collectively contain over 50% of Missouri's estimated 1998 population census of
approximately 5,438,559. 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. In addition, aircraft and related
businesses in Missouri are the recipients of substantial annual dollar volumes
of defense contract awards. 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 or foreign governments purchasing military equipment manufactured in
the State, Missouri could be disproportionately affected. It is impossible to
determine what effect, if any, continued consolidation in defense related
industries, including the acquisition of McDonnell Douglas Corporation by The
Boeing Company, will have on the economy of the State. On May 13, 1999, The
Boeing Company announced it would reduce its St. Louis based workforce 6,500 to
7,000 jobs by mid-2001 as a result of the Government of Greece cancelling a
military aircraft order.. This or any additional shift or loss of production
operations now conducted in Missouri could have a negative impact on the economy
of the State.
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,
$274 million in fiscal 1996 and $227 million for fiscal 1997. This expense
accounts for approximately 7% of total state General Revenue Fund spending in
fiscal 1994 and 1995, to 5% in fiscal 1996, and approximately 6% for fiscal
1997. The State has entered into a settlement agreement with espect to the
Kansas City desegregation lawsuit pursuant to which the State will cease
additional desegregation payments to the Kansas City Misosuri School Distsrict
after fiscal 2000.
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 1%, 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
69
<PAGE>
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.
Risk Factors Affecting the New York Fund
The following information is a summary of special factors affecting the New York
Municipal Series. Such information is derived from public official documents
relating to securities offerings of New York issuers which are generally
available to investors. The Fund has no reason to believe that any of the
statements in such public official documents are untrue but has not
independently verified such statements. The following information constitutes
only a brief summary of the information in such public official documents and
does not purport to be a complete description of all considerations regarding
investment in New York municipal securities.
Economic Outlook
New York (the "State") is the third most populous state in the nation and has a
relatively high level of personal wealth. The State's economy is diverse with a
comparatively large share of the nation's finance, insurance, transportation,
communications and services employment, and a very small share of the nation's
farming and mining activity. The State's location, air transport facilities and
natural harbors have made it an important link in international commerce. Travel
and tourism constitute an important part of the economy. Like the rest of the
nation, New York has a declining proportion of its workforce engaged in
manufacturing and an increasing proportion engaged in service industries.
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 accurately the timing and magnitude of changes in the national and the
State economies. Many uncertainties exist in forecasts of both the national and
State economies particularly in light of the recent volatility in the
international economy and domestic financial markets. Consumer attitudes toward
spending, the extent of corporate and governmental restructuring, federal fiscal
and monetary policies, the level of interest rates, and the condition of the
world economy, could have an adverse effect on the State. The timing and impact
of changes in economic conditions are difficult to estimate with a high degree
of accuracy. Unforeseeable events may occur. The actual rate of change of the
concepts forecasted may differ from the outlook described herein. There can be
no assurance that the State economy will not experience results in the current
fiscal year that are worse than predicted, with corresponding material and
adverse effects on the State's projections of receipts and disbursements.
Continued growth is projected in 1999 and 2000 for employment, wages, and
personal income, although the growth is expected to moderate from the 1998 pace.
However, a continuation of international financial and economic turmoil may
result in a sharper slowdown than currently projected. Personal income is
estimated to have grown by 4.9% in 1998, fueled in part by a continued large
increase in financial sector bonus payments at the beginning of the year, and is
projected to grow by 4.2% in 1999 and 4.0% in 2000. Increases in bonus payments
in 1999 and 2000 are projected to be modest, a distinct shift from the torrid
rate of the last few years. Overall employment growth is anticipated to continue
at a modest rate, reflecting the slowing growth in the national economy,
continued spending restraint in government, and restructuring in the
manufacturing, health care, social service, and banking sectors.
Economic growth nationally during both 1999 and 2000 is expected to be slower
than it was during 1998. The financial and economic turmoil which started in
Asia and has spread to other parts of the world is
70
<PAGE>
expected to continue to negatively affect U.S. trade balances throughout most of
1999 and could reduce U.S. economic growth even more than projected. In
addition, growth in domestic consumption, which has been a major driving force
behind the nation's strong economic performance in recent years, is forecasted
to slow in 1999 as consumer confidence retreats from historic heights and stock
market gains cease to provide massive amounts of extra discretionary income.
However, the lower short-term interest rates which are projected to be in force
during 1999 are expected to help prevent a more severe drop in overall economic
growth.
The revised forecast projects real Gross Domestic Product ("GDP") growth of 2.4%
in 1999, well below the projected 1998 growth rate of 3.7%. In 2000, real GDP
growth is expected to continue at a similar pace, increasing by 2.3%. The growth
of nominal GDP is projected to decline from 4.8% in 1998 to 3.6% in 1999, then
rise somewhat to 4.0% in 2000. Inflation is expected to exceed the extremely low
rate of 1998, but still stay well controlled, with price increases of slightly
over 2% in both 1999 and 2000. The annual rate of job growth is expected to
decrease from 2.6% in 1998 to 2.0% in 1999 and 1.5% in 2000. Growth in both
personal income and wages is also expected to slow somewhat in 1999 and again in
2000, while corporate profits are projected to continue the lackluster
performance which began in 1998.
1999-2000 Fiscal Year (Executive Budget Forecast)
The State's current fiscal year commenced on April 1, 1999, and ends on March
31, 2000, and is referred to herein as the State's 1999-2000 fiscal year.
The Governor presented his 1999-2000 Executive Budget to the Legislature on
January 27, 1999. The Executive Budget contains financial projections for the
State's 1998-99 through 2001-02 fiscal years, and a proposed Capital Program and
Financing Plan for the 1999-2000 through 2003-04 fiscal years. The Governor will
prepare amendments to his Executive Budget, as permitted under law. These
amendments will be reflected in a revised Financial Plan that will be released
on or before February 26, 1999. There can be no assurance that the Legislature
will enact into law the Executive Budget as proposed by the Governor, or that
the State's adopted budget projections will not differ materially and adversely
from the projections set forth in this Update.
The 1999-2000 Financial Plan is projected to have receipts in excess of
disbursements on a cash basis in the General Fund, after accounting for the
transfer of available receipts from 1998-99 to 1999-2000. Total General Fund
receipts, including transfers from other funds, are projected to be $38.66
billion, an increase of $1.88 billion over projected receipts in 1998-99.
General Fund disbursements, including transfer to other funds, are recommended
to grow by 1.3% to $37.10 billion, an increase of $482 million over 1998-99.
State Funds spending is projected to total $49.33 billion, an increase of $867
million or 1.8% from the 1998-99 fiscal year. Under the Governor's
recommendations, spending from All Governmental Funds is also expected to grow
by 1.8%, increasing by $1.25 billion to $72.66 billion.
The State is projected to close the 1999-2000 fiscal year with a General Fund
balance of $2.36 billion. The balance is comprised of $1.79 billion that the
Governor is proposing to set aside as a tax reduction reserve, $473 million in
the Tax Stabilization Reserve Fund and $100 million in the Contingency Reserve
Fund. The entire $226 million balance in the Community Projects Fund is expected
to be used in 1999-2000, with $80 million spent to pay for existing projects and
the remaining balance of $146 million, against which there are currently no
appropriations as a result of the Governor's 1998 vetoes, used to fund other
expenditures in 1999-2000.
The four governmental fund types that comprise the State Financial Plan are the
General Fund, the Special Revenue Funds, the Capital Projects Funds, and the
Debt Service Funds. This fund structure adheres to accounting standards of the
Governmental Accounting Standards Board. The General Fund is the principal
operating fund of the State and is used to account for all financial
transactions, except those required to be accounted for in another fund. It is
the State's largest fund and receives almost all State taxes and other resources
not dedicated to particular purposes. General Fund moneys are also transferred
to other funds, primarily to support certain capital projects and debt service
payments in other fund types.
71
<PAGE>
General Fund Receipts
The 1999-2000 Financial Plan projects General Fund receipts (including transfers
from other funds) of $38.66 billion, an increase of $1.88 billion over the
estimated 1998-99 level. After adjusting for tax law and administrative changes,
recurring growth in the General Fund tax base is projected to be approximately
3% during 1999-2000.
The forecast of General Fund receipts in 1999-2000 reflects the next stage of
the School Tax Relief (STAR) property tax reduction program, which has an
incremental cost of $638 million in 1999-2000, as well as the continuing impact
of earlier tax reductions totaling approximately $2 billion. In addition, the
Executive Budget reflects several new tax reduction proposals that are projected
to have only a modest impact on receipts in 1999-2000 and 2000-01, but are
expected to reduce receipts by $1.04 billion annually when fully phased in at
the end of 2003-04.
The largest new tax cut proposals call for the further reductions in the
personal income tax to benefit middle income taxpayers. These proposals increase
the income threshold where the top tax rate of 6.85% applies and doubles the
value of the dependent exemption to $2,000. The fully effective annual cost of
these proposals is $600 million in fiscal year 2003-04. In addition, the
Executive Budget includes several other targeted tax cut proposals, including:
reducing certain energy taxes; lowering the alternative minimum tax on
corporations from 3% to 2.5%; extending the business tax rate reductions enacted
for general corporations last year to banks and insurance companies; creating a
New York Capital Asset Exclusion for investments in a New York business;
creating a new credit for job creation in cities; expanding the Qualified
Emerging Technology Credit; conforming the estate tax to recent federal changes;
eliminating several nuisance taxes and fees, including minimum taxes imposed on
petroleum and aviation businesses; and expanding the income tax credit benefits
provided to farmers to ease school property tax burdens. Together, these
targeted reductions will have a full annual value of approximately $440 million.
Personal income tax collections for 1999-2000 are projected to reach $22.83
billion, an increase of $2.65 billion (13.2%) over 1998-99. This increase is due
in part to refund reserve transactions which serve to increase reported
1999-2000 personal income tax receipts by $1.77 billion. Collections also
benefit from the estimated increase in income tax liability of 13.5% in 1998 and
5.3% in 1999. The large increases in liability in recent years have been
supported by the continued surge in taxable capital gains realizations. This
activity is related at least partially to recent changes in the federal tax
treatment of such income. The growth in capital gains income is expected to
plateau in 1999. Growth in 1999-2000 personal income tax receipts is partially
offset by the diversion of such receipts into the School Tax Relief Fund, which
finances the STAR tax reduction program. For 1999-2000, $1.22 billion will be
deposited into this fund, an increase of $638 million.
User tax and fees are projected at $7.16 billion in 1999-2000, a decrease of $72
million from 1998-99. The decline in this category reflects the incremental
impact of already-enacted tax reductions, and the diversion of $30 million of
additional motor vehicle registration fees to the Dedicated Highway and Bridge
Trust Fund. Adjusted for these changes, the underlying growth of user taxes and
fees is projected at 2.5%. The largest source of receipts in this category is
the sales and use tax, which accounts for nearly 80% of projected receipts. The
continuing base of the sales tax is projected to grow 4.4% in the coming year,
and assumes the Legislature will not enact additional "sales-tax free" weeks
that would affect receipts before December 1, 1999, when the sales and use tax
on clothing and footwear under $110 is eliminated.
Business tax receipts are expected to total $4.53 billion in 1999-2000, $267
million below 1998-99 estimated results. The impact of tax reductions scheduled
in law, as well as slower growth in the underlying tax base, explain the decline
in this category of the Financial Plan.
Receipts from other taxes, which are comprised primarily of receipts from estate
and gift taxes and pari-mutuel taxes on wagering, are expected to decline $119
million to $980 million in 1999-2000. The ongoing effect of tax cuts already in
law is the main reason for the decline. In addition, this category
72
<PAGE>
formerly included receipts from the real property gains tax that was repealed in
1996, and receipts from the real property transfer tax that, since 1996, have
been earmarked to support various environmental programs.
Miscellaneous receipts includes license revenues, income from fees and fines,
abandoned property proceeds, investment income, and a portion of the assessments
levied on medical providers. Miscellaneous receipts are expected to total $1.24
billion in 1999-2000, a decline of $292 million from 1998-99. Roughly $165
million of this decline is attributable to the ongoing phase-out of medical
provider assessments. In addition, the Executive Budget proposes eliminating
medical provider assessments on April 1, 1999, one year earlier than planned,
which accounts for another $26 million of the year-to-year decline in
miscellaneous receipts (the remainder of the provider assessment savings is
reflected in lower General Fund disbursements).
Transfers to the General Fund consist primarily of tax revenues in excess of
debt service requirements. State sales tax proceeds in excess of amounts needed
to support debt service payments for LGAC account for 82% of the 1999-2000
receipts in this category. Transfers to the General Fund decline $63 million in
1999-2000, reflecting lower projected receipts from the real estate transfer
tax.
General Fund Disbursements
The 1999-2000 Financial Plan projects General Fund disbursements and transfers
to capital, debt service and other funds of $37.10 billion, an increase of $482
million over projected spending for 1998-99. Nearly one-half of the growth is
for educational purposes, reflecting increased support for public schools,
special education programs and the State and City university systems. The
remaining increase is primarily for Medicaid, mental hygiene, and other health
and social welfare programs, including children and family services.
Grants to Local Governments is the largest category of General Fund
disbursements and includes financial assistance to local governments and
not-for-profit corporations, as well as entitlement benefits to individuals.
Disbursements in this category are projected to decrease $87 million to $24.81
billion in 1999-2000.
General Fund spending for school aid is projected at $9.99 billion on a State
fiscal year basis, an increase of $292 million (3.0%) from 1998-99. The
Executive Budget recommends additional funding for operating aid, building aid,
and textbook and computer aids. It also funds the remainder of aid payable for
the 1998-99 school year. These increases are partially offset by the elimination
of categorical grants, reductions in BOCES aid, and other formula modifications.
A new Educational Improvement block grant replaces categorical programs such as
pre-kindergarten and minor maintenance to give school districts greater
flexibility in meeting locally-determined needs.
Medicaid costs are estimated at $5.50 billion in 1999-2000, a modest decline of
$87 million from 1998-99. Spending on welfare is projected at $1.49 billion, a
decline of $41 million (2.7%) from 1998-99. Since 1994-95, State spending on
welfare has fallen by $709 million, or 32%, driven by significant welfare
changes initiated at the State and federal levels and a large, steady decline in
the number of people receiving benefits. Local assistance spending for Children
and Families Services is projected at $864 million in 1999-2000, down $42
million (4.7%) from 1998-99. In Mental Health, the State projects spending of
$619 million in 1999-2000, an increase of $40 million (7%) over 1998-99,
including $23 million in additional funding for the Community Reinvestment
Program. Spending for all other local assistance programs will total $5.72
billion in 1999-2000, a decline of $266 million from 1998-99.
State operations spending reflects the costs of running the Executive,
Legislative and Judicial branches of government. Spending in this category is
projected to increase $225 million above 1998-99 and reflect the annualized cost
of 1998-99 collective bargaining agreements, the decline in federal receipts
that offset General Fund spending for mental hygiene programs, the costs of
staffing a new State prison, and growth in the Legislative and Judiciary
budgets. The State's overall workforce is projected to remain stable at
approximately 191,200 persons.
73
<PAGE>
Personal service costs are projected to be $5.01 billion, an increase of $128
million from 1998-99. No funding is included in the Financial Plan for
incremental costs from new collective bargaining agreements after the current
labor contracts expire on April 1, 1999. Nonpersonal service is projected to be
$1.87 billion, with the increase of $97 million used primarily to fund Year 2000
compliance and related activities in the Office for Technology.
General State charges account primarily for the costs of providing fringe
benefits for State employees, including contributions to pension systems, the
employer's share of social security contributions, employer contributions toward
the cost of health insurance, and the costs of providing worker's compensation
and unemployment insurance benefits. This category also reflects certain fixed
costs such as payments in lieu of taxes, and payments of judgments against the
State or its public officers.
Total spending for general State charges is projected to grow by $47 million
(2.1%) in 1999-2000. The increase is comprised of higher payments for health
insurance, Court of Claims settlements and taxes on State-owned lands, offset by
decreases for pension contributions and higher reimbursements for fringe benefit
costs charged to positions financed by non-General funds, which lower General
Fund expenses.
Transfers in support of debt service are projected to grow approximately $185
million or 9% in 1999-2000, from $2.10 billion to $2.29 billion. The
reclassification of SUNY community college debt service ($36 million) from local
assistance accounts for a portion of this annual increase. The remainder
reflects annualized costs from prior borrowings and a portion of the Governor's
proposed debt reduction program, which has the effect of increasing costs in the
short-term in order to reduce outstanding debt more rapidly. Transfers in
support of capital projects for 1999-2000 are estimated to total $438 million
and are comprised of $188 million for direct capital spending to finance a
variety of recreational, education and cultural projects and $250 million as the
second annual deposit to the Debt Reduction Reserve Fund (DRRF) that was created
in 1998-99. Other transfers decline by $71 million from 1998-99, as the one-time
transfers in 1998-99 for the Lottery and Oil Spill Funds do not recur in
1999-2000.
General Fund Balance
The State is projected to close the 1999-2000 fiscal year with a General Fund
balance of $2.36 billion. The balance is comprised of the $1.79 billion tax
reduction reserve for future needs, $473 million in the Tax Stabilization
Reserve Fund, and $100 million in the Contingency Reserve Fund. The entire $226
million balance in the Community Projects Fund is expected to be used in
1999-2000, with $80 million spent to pay for existing projects and the remaining
balance of $146 million, against which there are currently no appropriations as
a result of the Governor's 1998 vetoes, used to fund other expenditures in
1999-2000.
Special Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific revenue
sources such as federal grants that are legally restricted, either by the
Legislature or outside parties, to expenditures for specified purposes. For
1999-2000 projected disbursements in this fund type total $30.54 billion, an
increase of $537 million (1.8%) over 1998-99 levels. Disbursements from federal
funds, primarily the federal share of Medicaid and other social services
programs, are projected to total $21.93 billion in the 1999-2000 fiscal year.
Remaining growth in federal funds is primarily due to increases in federal
contributions for Children and Family Assistance ($123 million), education ($170
million), labor ($89 million) and the expanded Child Health Plus program ($96
million), offset by a decrease in welfare ($259 million). State special revenue
spending is projected to be $8.61 billion, an increase of $315 million from
1998-99.
Capital Project Funds
Capital Projects Funds account for the financial resources used for the
acquisition, construction, or rehabilitation of major State capital facilities
and for capital assistance grants to certain local governments or public
authorities. This fund type consists of the Capital Projects Fund, which is
supported by tax
74
<PAGE>
receipts transferred from the General Fund, and various other capital funds
established to distinguish specific capital construction purposes supported by
other revenues.
Capital Projects Funds spending in fiscal year 1999-2000 is projected at $4.41
billion, an increase of $145 million from 1998-99. The major components of this
expected growth are transportation and environmental programs, including
continued increased spending for 1996 Clean Water/Clean Air Bond Act projects
and higher projected disbursements from the Environmental Protection Fund (EPF).
Another significant component of this projected increase is in the area of
public protection, primarily for facility rehabilitation and construction of
additional prison capacity.
Debt Service Funds
Debt Service Funds are used to account for the payment of principal of, and
interest on long-term debt of the State and to meet commitments under
lease-purchase and other contractual-obligation financing arrangements. Receipts
in these funds in excess of debt service requirements may be transferred to the
General Fund and Special Revenue Funds, pursuant to law.
Total disbursements from the Debt Service Fund type are estimated at $3.68
billion in 1999-2000, an increase of $384 million from 1997-98 levels. Of the
increase, $131 million is for transportation purposes, including debt service on
bonds issued for State and local highway and bridge programs financed through
the New York State Thruway Authority and supported by the Dedicated Highway and
Bridge Trust Fund. Another $80 million is for education purposes, including
State and City University programs financed through the Dormitory Authority of
the State of New York (DASNY). The remainder is for a variety of programs in
such areas as mental health and corrections, and for general obligation
financings. Disbursements on bonds for SUNY's upstate community colleges,
previously appropriated as local aid, have now been reclassified as debt service
spending.
Out-Year Projections of Receipts and Disbursements
The Division of the Budget projects budget gaps of $1.11 billion in 2000-01 and
$2.08 billion in 2001-02. These estimates assume that the Legislature will enact
the 1999-2000 Executive Budget and accompanying legislation in its entirety. The
gaps also include $500 million in unspecified annual spending efficiencies,
which is comparable to the Governor's Executive Budget assumptions in previous
fiscal years. Future Financial Plans are also likely to count on savings from
efficiencies, workforce management efforts, aggressive efforts to maximize
federal and other non-General Fund resources, and other efforts to control State
spending. Nearly all the actions proposed by the Governor to balance the
1999-2000 Financial Plan recur and grow in value in future years. The Division
of the Budget projects that, if the projected budget gap for 2000-01 is closed
with recurring actions, the 2001-02 budget gap would be reduced to $963 million
under current projections.
The Executive Budget assumes the use of the $1.79 billion tax reduction reserve
to offset the incremental loss in tax receipts resulting from previously enacted
and proposed tax reductions beginning in 2000-01. The Financial Plan currently
assumes that $589 million of the reserves (about one-third of the amount
available) will be applied in 2000-01, with the remaining $1.2 billion used in
2001-02. The State may alter how it apportions the reserves across the three
years of the projection period.
The Governor is required by law to propose a balanced budget each year and will
propose steps necessary to address any potential remaining budget gaps in
subsequent budgets. The Division of the Budget estimates that the State has
closed projected budget gaps of $5.0 billion, $3.9 billion and $2.3 billion in
its 1995-96, 1996-97 and 1997-98 fiscal years, respectively, and ended each of
these years with a cash surplus.
Receipts
General Fund receipts fall to an estimated $35.99 billion in 2000-01 reflecting
the incremental impact of already enacted tax reductions, the impact of prior
tax refund reserve transactions and the earmarking of receipts for dedicated
highway purposes. Receipts are projected to grow modestly to $36.20 billion in
75
<PAGE>
2001-02, again reflecting the impact of enacted tax cuts on normal receipts
growth, as well as the incremental impact of tax reductions recommended with the
Executive Budget.
Personal income tax receipts are projected to decline to $20.72 billion in
2000-01. The decline from 1999-2000 reflects the positive impact of tax refund
reserve transactions on 1999-2000 receipts and reduced growth in underlying
liability.
Receipts from user taxes and fees are estimated to total $6.88 billion in
2000-01, a decline of $281 million from 1999-2000. This decline results, in
part, from the dedication of an increased portion of motor fuel tax receipts to
the Dedicated Highway and Bridge Trust Fund.
Business tax receipts are estimated to decline to $4.33 billion in 2000-01 as
the impact of recently enacted tax reductions begin to take effect. Receipts are
projected to fall to $4.19 billion in 2001-02, reflecting the ongoing effect of
business tax reductions and the recommended changes associated with energy tax
reform and reduction, as well as other business tax reductions proposed in the
1999-2000 Executive Budget.
Other taxes are projected to decline to $813 million in 2001-01 as the impact of
estate tax reductions and the elimination of the gift tax begin to affect
receipts.
Miscellaneous receipts are estimated to total $1.20 billion in 2000-01, a
decline of $38 million from the prior year. Receipts in this category are
projected to reach $1.17 billion in 2001-02.
Transfers from other funds are estimated to grow to $2.04 billion in 2000-01,
including the transfer back to the General Fund or Capital Projects Fund
resources. Transfers fall slightly in 2001-02 as normal growth in LGAC transfers
associated with the sales tax is offset by declines in other transfers.
Disbursements
The State currently projects spending to grow by $1.09 billion (2.9%) in 2000-01
and an additional $1.8 billion (4.7%) in 2001-02. General Fund spending
increases at a higher rate in 2001-02 than in 2000-01, driven primarily by
higher growth rates for Medicaid, welfare, Children and Families Services, and
Mental Retardation, as well as the loss of federal money that offsets General
Fund spending.
Local assistance spending accounts for most of the projected growth in General
Fund spending in the outyears, increasing by $1.04 billion in 2000-01 and $1.46
billion in 2001-02. School aid, which accounts for the largest share of General
Fund spending, is projected to grow by $612 million (6.1%) in 2000-01 and $578
million (5.5%) in 2001-02.
Medicaid is the next largest General Fund program. Spending is expected to grow
by $313 million (5.7%) in 2000-01 and $452 million (7.8%) in 2001-02. Consistent
with national trends, underlying growth in health care costs is projected at
6.5% over the projection period. The State expects proposed cost containment and
managed care to reduce the Medicaid program's spending base, but not to alter
the underlying forces driving the rise in health care costs. In welfare,
spending is expected to increase by less than 3% in 2000-01, but grow at 6% in
2001-02 as caseloads stabilize and federal work participation rules require
additional State resources. Spending on Children and Families Services is
expected to increase rapidly in both 2000-01 and 2001-02, reflecting
welfare-to-work investments and the loss of federal money in 2001-02 that is
currently used to offset General Fund spending. Mental hygiene programs continue
to grow faster than inflation because of recently enacted community investment
commitments, as well as the continued loss of federal offsets. Most other
programs are expected to grow at historical rates, generally around inflation.
State operations costs are projected to increase by $179 million (2.6%) in
2000-01 and $171 million (2.4%) in 2001-02. Most of this increase reflects the
costs of staffing additional correctional facilities, the loss of federal money
used to offset General Fund spending in mental hygiene agencies, modest
76
<PAGE>
inflationary increases in non-personal service costs, and additional spending
for computer systems and technology initiatives.
General State charges are projected to increase by $95 million in 2000-01 and
$76 million in 2001-02. The growth reflects inflationary increases for health
insurance and other benefits for State employees. The projections do not assume
any changes in existing benefits.
Capital project transfers are expected to increase as a result of the Governor's
proposed debt reduction initiatives that drive higher pay-as-you-go spending in
the future. Other transfers show little change in the outyears.
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 TRANs. A
national recession, followed by the lingering economic slowdown in the New York
and the regional economy, resulted in repeated shortfalls in receipts and three
budget deficits during those years. During its last six fiscal years, the State
has recorded balanced budgets on a cash basis, with positive fund balances as
described below.
1997-98 Fiscal Year
The State ended its 1997-98 fiscal year in balance on a cash basis, with a
General Fund operating surplus of $1.56 billion. As a result, the State reported
an accumulated surplus of $567 million in the General Fund for the first time
since it began reporting its operations on a generally accepted accounting
principals (GAAP) basis. The 1997-98 fiscal year operating surplus resulted in
part from higher-than-anticipated personal income tax receipts, an increase in
taxes receivable of $681 million, an increase in other assets of $195 million
and a decrease in pension liabilities of $144 million. These gains were
partially offset by an increase in payables to local governments of $270 million
and tax refunds payable of $147 million.
The General Fund had a closing balance of $638 million, an increase of $205
million from the prior fiscal year. The balance is held in three accounts within
the General Fund: the Tax Stabilization Reserve Fund (TSRF), the Contingency
Reserve Fund (CRF) and the Community Projects Fund (CPF). The TSRF closing
balance was $400 million, following a required deposit of $15 million (repaying
a transfer made in 1991-92) and an extraordinary deposit of $68 million made
from the 1997-98 surplus. The CRF closing balance was $68 million, following a
$27 million deposit from the surplus. The CPF, which finances legislative
initiatives, closed the fiscal year with a balance of $170 million, an increase
of $95 million. The General Fund closing balance did not include $2.39 billion
in the tax refund reserve account, of which $521 million was made available as a
result of the Local Government Assistance Corporation (LGAC) financing program
and was required to be on deposit on March 31, 1998.
General Fund receipts and transfers from other funds for the 1997-98 fiscal year
(including net tax refund reserve account activity) totaled $34.55 billion, an
annual increase of $1.51 billion, or 4.57% over 1996-97. General Fund
disbursements and transfers to other funds were $34.35 billion, an annual
increase of $1.45 billion or 4.41%.
1996-97 Fiscal Year
The State ended its 1996-97 fiscal year on March 31, 1997 in balance on a cash
basis, with a General Fund cash surplus as reported by DOB of approximately
$1.42 billion. The cash surplus was derived primarily from higher-than-expected
receipts and lower-than-expected spending for social services programs.
The General Fund closing balance was $433 million, an increase of $146 million
from the 1995-96 fiscal year. The balance included $317 million in the TSRF,
after a required deposit of $15 million and an additional deposit of $65 million
in 1996-97. In addition, $41 million remained on deposit in the CRF.
77
<PAGE>
The remaining $75 million reflected amounts then on deposit in the Community
Projects Fund. The General Fund closing balance did not include $1.86 billion in
the tax refund reserve account, of which $521 million was made available as a
result of the LGAC financing program and was required to be on deposit as of
March 31, 1997.
General Fund receipts and transfers from other funds for the 1996-97 fiscal year
totaled $33.04 billion, an increase of 0.7% from the previous fiscal year
(including net tax refund reserve account activity). General Fund disbursements
and transfers to other funds totaled $32.90 billion for the 1996-97 fiscal year,
an increase of 0.7% from the 1995-96 fiscal year.
1995-96 Fiscal Year
The State ended its 1995-96 fiscal year on March 31, 1996 with a General Fund
cash surplus, as reported by DOB, of $445 million. The cash surplus was derived
from higher-than-expected receipts, savings generated through agency cost
controls, and lower-than-expected welfare spending.
The General Fund closing fund balance was $287 million, an increase of $129
million from 1994-95 levels. The $129 million change in fund balance is
attributable to a $65 million voluntary deposit to the TSRF, a $15 million
required deposit to the TSRF, a $40 million deposit to the CRF, and a $9 million
deposit to the Revenue Accumulation Fund. The closing fund balance included $237
million on deposit in the TSRF. In addition, $41 million was on deposit in the
CRF. The remaining $9 million reflected amounts then on deposit in the Revenue
Accumulation Fund. The General Fund closing balance did not include $678 million
in the tax refund reserve account of which $521 million was made available as a
result of the LGAC financing program and was required to be on deposit as of
March 31, 1996.
General Fund receipts and transfers from other funds (including net refund
reserve account activity) totaled $32.81 billion, a decrease of 1.1% from
1994-95 levels. General Fund disbursements and transfers to other funds totaled
$32.68 billion for the 1995-96 fiscal year, a decrease of 2.2% from 1994-95
levels.
Year 2000 Compliance
New York State is currently addressing "Year 2000" data processing compliance
issues. The Year 2000 compliance issue ("Y2K") arises because most computer
software programs allocate two digits to the data field for "year" on the
assumption that the first two digits will be "19". Such programs will thus
interpret the year 2000 as the year 1900 absent reprogramming. Y2K could impact
both the ability to enter data into computer programs and the ability of such
programs to correctly process data.
In 1996, the State created the Office for Technology (OFT) to help address
statewide technology issues, including the Year 2000 issue. OFT has estimated
that investments of at least $140 million will be required to bring
approximately 350 State mission-critical and high-priority computer systems not
otherwise scheduled for replacement into Year 2000 compliance. Mission-critical
computer applications are those which impact the health, safety and welfare of
the State and its citizens, and for which failure to be in Y2K compliance could
have a material and adverse impact upon State operations. High-priority computer
applications are those that are critical for a State agency to fulfill its
mission and delivery services. The State allocated over $117 million in
centralized Year 2000 funding in 1998-99 to those agencies that maintain
mission-critical and high-priority systems. Agencies are also expending funds
from their capital budgets to address the Year 2000 compliance issue. The State
is planning to spend an additional $19 million in 1999-2000 for Year 2000
embedded chip compliance, and is also making a contingent appropriation
available for unforseen emergencies. The Year 2000 compliance effort may require
additional funding above amounts assumed in the State Financial Plan, but those
amounts are not assumed to be material.
OFT is monitoring compliance progress for the State's mission-critical and
high-priority systems and is reporting compliance progress to the Governor's
office on a quarterly basis. As of December 1998, the State had completed 93% of
overall compliance effort for its mission-critical systems; 18 systems are now
Year 2000 compliant and the remaining systems are on schedule to be compliant by
the first quarter
78
<PAGE>
of 1999. As of December 1998, the State has completed 70% of overall compliance
effort on the high-priority systems; 168 systems are now Year 2000 compliant and
the remaining systems are on schedule to be compliant by the second quarter of
1999. Compliance testing is expected to be completed by the end of calendar
1999.
The State is also addressing a number of issues related to bringing its mission
critical systems into compliance, including: testing throughout 1999 of over 800
data exchange interfaces with federal, state, local and private data partners;
completion of an inventory of priority equipment and systems that may depend on
embedded chips and may therefore need remediation in 1999; and contacting
critical vendors and supply partners to obtain Year 2000 compliance status
information and assurances.
Since problems could be identified during the compliance testing phase that
could produce compliance delays, the State is also requiring its agencies to
complete contingency plans for priority systems and business processes by the
first quarter of 1999. These plans will be integrated into the State Emergency
Response Plan and coordinated by the State Emergency Management Office. In
addition, the State Public Service Commission has ordered that all State
regulated utilities complete Year 2000 activities for mission-critical systems,
including contingency plans, by July 1, 1999. The State has also been working
with local governments since December 1996 to raise awareness, promote action
and provide assistance with Year 2000 compliance.
While New York State is taking what it believes to be appropriate action to
address Year 2000 compliance, there can be no guarantee that all of the State's
systems and equipment will be Year 2000 compliant and that there will not be an
adverse impact upon State operations or finances as a result. Since Year 2000
compliance by outside parties is beyond the State's control to remediate, the
failure of outside parties to achieve Year 2000 compliance could have an adverse
impact on State operations or finances as well.
Certain Litigation
The legal proceedings noted below involve State finances and programs and
miscellaneous civil rights, real property, contract and other tort claims in
which the State is a defendant and the potential monetary claims sought against
the State are substantial, generally in excess of $100 million. These
proceedings could adversely affect the financial condition of the State in the
1999-2000 fiscal year or thereafter.
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-d of the
Public Health Law, which impose a tax on the gross receipts hospitals and
residential health care facilities receive from all patient care services; (iv)
alleged responsibility of New York officials to assist in remedying racial
segregation in the City of Yonkers; (v) challenges to the regulations
promulgated by the Superintendent of Insurance that established excess medical
malpractice premium rates; (vi) a case challenging the shelter allowance granted
to recipients of public assistance as insufficient for proper housing; (vii) an
action against the Governor of the State of New York challenging the Governor's
application of his constitutional line item veto authority to certain portions
of budget bills; and (viii) 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 receive 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 may also be affected by
the ability of the City and certain entities issuing debt for the benefit of the
City to market their securities successfully in the public credit markets.
79
<PAGE>
The City has achieved balanced operating results for each of its fiscal years
since 1981 as measured by the GAAP standards in force at that time. The City
prepares a four-year financial plan ("Financial Plan") annually and updates it
periodically, and prepares a comprehensive annual financial report describing
its most recent fiscal year each October. For current information on the City's
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 for Public Finance.
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
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 organizations
which receive or may receive moneys from the City directly, indirectly or
contingently) operate under the Financial Plan. The City's Financial Plan
summarizes 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. Unforseen
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. In 1997, the
State created the New York City Transitional Finance Authority (TFA) to finance
a portion of the City's capital program because the City was approaching its
State Constitutional general debt limit. Without the additional financing
capacity of the TFA, projected contracts for City capital projects would have
exceeded the City's debt limit during City fiscal year 1997-98. Despite this
additional financing mechanism, the City currently projects that, if no further
action is taken, it will reach its debt limit in City fiscal year 1999-2000. On
June 2, 1997, an action was commenced seeking a declaratory judgment declaring
the legislation establishing the TFA to be unconstitutional. On November 25,
1997 the State Supreme Court found the legislation establishing the TFA to be
constitutional and granted the defendants' motion for summary judgment. The
plaintiffs have appealed the decision. On July 30, 1998, the Appellate Division,
Third Department, affirmed the Supreme Court decision. Plaintiffs filed a notice
of appeal with the New York Court of Appeals asserting an appeal as of right of
the Appellate Division order. That appeal was dismissed on September 22, 1998.
Plaintiffs subsequently filed a motion for leave to appeal to the Court of
Appeals. That motion was denied on December 22, 1998. Future developments
concerning the City or entities issuing debt for the benefit of the City, and
public discussion of such developments, as well as prevailing market conditions
and securities credit ratings, may affect the ability or cost to sell securities
issued by the City or such entities and may also affect the market for their
outstanding securities.
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 cities of Yonkers and Troy have operated under
State-ordered control agencies. On June 30, 1998, the City of Yonkers satisfied
the statutory conditions for ending the supervision of its finances by a State-
ordered control board. Pursuant to State law, the control board's powers over
City finances lapsed six months after the satisfaction of these conditions, on
December 31, 1998. The potential impact on the State of any future
80
<PAGE>
requests by localities for additional oversight or financial assistance is not
included in the projections of the State's receipts and disbursements for the
State's 1999-2000 fiscal year.
Eighteen municipalities received extraordinary assistance during the 1996
legislative session through $50 million in special appropriations targeted for
distressed cities and twenty-eight municipalities received more than $32 million
in targeted unrestricted aid in the 1997-98 budget. Both of these emergency aid
packages were largely continued through the 1998-99 budget. The State also
dispersed an additional $21 million among all cities, towns and villages after
enacting a 3.9% increase in General Purpose State Aid in 1997-98 and continued
this increase in 1998-99.
The 1998-99 budget included an additional $29.4 million in unrestricted aid
targeted to 57 municipalities across the State. Other assistance for
municipalities with special needs totals more than $25.6 million. Twelve upstate
cities will receive $24.2 million in one-time assistance from a cash flow
acceleration of State aid.
The appropriation and allocation of general purpose local government aid among
localities, including New York City, is currently the subject of investigation
by a State commission. While the distribution of general purpose local
government aid was originally based on a statutory formula, in recent years both
the total amount appropriated and the amounts appropriated to localities have
been determined by the Legislature. A State commission was established to study
the distribution and amounts of general purpose local government aid and
recommend a new formula by June 30, 1999, which may change the way aid is
allocated.
Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1996, the total indebtedness of all localities in the
State other than New York City was approximately $20.0 billion. A small portion
(approximately $77.2 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. Twenty-one
localities had outstanding indebtedness for deficit financing at the close of
their fiscal year ending in 1996.
Like the State, local governments must respond to changing political, economic
and financial influences over which they have little or no control. Such changes
may adversely affect the financial condition of certain local governments. For
example, the federal government may reduce (or in some cases eliminate) federal
funding of some local programs which, in turn, may require local governments to
fund these expenditures from their own resources. It is also possible that the
State, New York City, or any of their respective public authorities may suffer
serious financial difficulties that could jeopardize local access to the public
credit markets, which may adversely affect the marketability of notes and bonds
issued by localities within the State. Localities may also face unanticipated
problems resulting from certain pending litigation, judicial decisions and
long-range economic trends. Other large-scale potential problems, such as
declining urban populations, increasing expenditures, and the loss of skilled
manufacturing jobs, may also adversely affect localities and necessitate State
assistance.
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 that apply to the State itself and may
issue bonds and notes within the amounts and restrictions set forth in
legislative authorization. The State's access to the public credit markets could
be impaired and the market price of its outstanding debt may be materially and
adversely affected if any of its public authorities default on their respective
obligations, particularly those using the financing techniques referred to as
State-supported or State-related debt. As of December 31, 1997, there were 17
public authorities that had outstanding debt of $100 million or more, and the
aggregate outstanding debt, including refunding bonds, of all State Public
Authorities was $84 billion, only a portion of which constitutes State-supported
or State-related debt.
81
<PAGE>
Beginning in 1998, the Long Island Power Authority (the "LIPA") assumed
responsibility for the provision of electric utility services previously
provided by Long Island Lighting Company for Nassau, Suffolk and a portion of
Queen Counties, as part of an estimated $7 billion financing plan. As of the
date of this AIS, LIPA has issued over $5 billion in bonds secured solely by
ratepayer charges. LIPA's debt is not considered either State-supported or
State-related debt.
The Metropolitan Transit Authority (the "MTA") 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 on, and will continue to
depend on, operating support from the State, local governments and TBTA,
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% 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% 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 1998-99 State fiscal
year, total State assistance to the MTA is projected to total approximately $1.3
billion, an increase of $133 million over the 1997-98 fiscal year.
State legislation accompanying the 1996-97 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
(the "CPRB") approved the 1995-99 Capital Program (subsequently amended in
August 1997), which supercedes 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 $5.2 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 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
causes fare revenues to decline, the MTA's ability to meet its operating
expenses without additional assistance could be impaired.
Risk Factors Affecting the Ohio Fund
As described above under "Ohio Taxes" and except to the extent investments are
in temporary investments, the Ohio Fund 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
82
<PAGE>
the State, or agencies or instrumentalities of the State or its political
subdivisions (Ohio Obligations). The Ohio Fund 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.
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 1997 is 11,186,000.
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, in recent
years, the State rates were below the national rates (4.2%versus 4.5%in 1998).
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 Fund 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
83
<PAGE>
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.
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 went 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 and, the $263 million balance to a State income tax
reduction fund.
The GRF Appropriations Act for the 1998-99 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. Subsequent legislation increased the
fiscal 1999 GRF appropriation level for elementary and secondary education, with
the increase to be funded in part by mandated small percentage reductions in
State appropriations for various State agencies and institutions. Expressly
exempt from those reductions are all appropriations for debt service, including
lease rental payments.
The BSF had a May 5, 1999 balance of over $906 million.
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 15 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 May 5, 1999 , almost $1.11 billion
(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 ($23.9 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 (over $1 billion
outstanding) and (c) up to $200 million in general obligation bonds for parks,
recreation and natural resources purposes which may be
84
<PAGE>
outstanding at any one time ($82.7 million 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 $5.2 billion of which
were outstanding or awaiting delivery at May 5, 1999.
The General Assembly has placed on the November 1999 general election ballot a
proposed consitutional amendment relating to State debt. If approved by the
voters, it will authorize State general obligation debt to pay costs of
facilities for a system of common schools throughout the State and facilities
for state supported and assisted institutions of higher education. That, and
other debt represented by direct obligations of the State (such as that
authorized by the Ohio Public Facilities Commission and Ohio Building Authority,
and some authorized by the Treasurer), may not be issued if further FY total
debt service on those direct obligations to be paid from the GRF or net lottery
proceeds exceeds 5% of total estimated revenues of the State for the GRF and
from net State lottery proceeds during the FY of issuance.
Aggregate FY 1998 rental payments under various capital lease and lease purchase
agreements were approximately $9.1 million. In recent years, State agencies have
also participated in transportation and office building projects that may have
some local as well as State use and benefit, in connection with which the State
enters into lease purchase agreements with terms ranging from 7 to 20 years.
Certificates of participation, or special obligation bonds of the State or local
agency, are issued that represent fractionalized interests in or are payable
from the State's anticipated payments. The State estimates highest future FY
payments under those agreements (as of May 5, 1999) to be approximately $25.8
million (of which $22 million is payable from sources other than the GRF, such
as federal highway money distributions). State payments under all those
agreements are subject to biennial appropriations, with the lease terms being
two years subject to renewal if appropriations are made.
A 1990 constitutional amendment authorizes greater State and political
subdivision participation (including financing) in the provision of housing. The
General Assembly may for that purpose authorize the issuance of State
obligations secured by a pledge of all or such portion as it authorizes of State
revenues or receipts (but not by a pledge of the State's full faith and credit).
A 1994 constitutional amendment pledges the full faith and credit and taxing
power of the State to meeting certain guarantees under the State's tuition
credit program which provides for purchase of tuition credits, for the benefit
of State residents, guaranteed to cover a specified amount when applied to the
cost of higher education tuition. (A 1965 constitutional provision that
authorized student loan guarantees payable from available State moneys has never
been implemented, apart from a "guarantee fund" approach funded essentially from
program revenues).
State and local agencies issue obligations that are payable from revenues from
or relating to certain facilities (but not from taxes). By judicial
interpretation, these obligations are not "debt" within constitutional
provisions. In general, payment obligations under lease-purchase agreements of
Ohio public agencies (in which certificates of participation may be issued) are
limited in duration to the agency's fiscal period, and are renewable only upon
appropriations being made available for the subsequent fiscal period.
Debt Rating. State tax-supported bonds are currently rated (uninsured) "Aa1 by
Moody's, "AAA"
85
<PAGE>
(highway obligations) and "AA+" by S&P, and "AA+" by Fitch, and outstanding
uninsured State bonds issued by the Ohio Public Facilities Commission 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 46% in recent years) of their
operating moneys from State subsidies, but are dependent on local property
taxes, and in approximately 123 districts as of May 5, 1999 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
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 to permit time for responsive corrective actions. After a further
hearing, the trial court has decided that steps taken to date by the State to
enhance school funding have not met the requirements of the Supreme Court
decision; the State has filed a notice of appeal with the Supreme Court, and a
trial court has issued a stay, pending appeal, of the implementation of much of
its order. 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 FY $71.1 million for 29 districts
in FY 1995 (including $29.5 million for one), $87.2 million for 20 districts in
FY 1996 (including $42.1 million for one), $113 million for 12 districts in
FY1997 (including $90 million to one for restructuring its prior loans), and
$23.4 million for 10 districts in FY 1998
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
26 cities and villages; for 20 of them the fiscal situation was resolved and the
procedures terminated (two cities are in preliminary "fiscal watch" status). As
of May 5, 1999 a school district "fiscal emergency" provision was applied to
nine districts, and 10 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.
Risk Factors Effecting the Oregon Fund
The following information is a summary of special factors affecting the Oregon
Fund. It does not purport to be a complete description and is based in part on
(i) the March 1999 Oregon Economic and Revenue Forecast prepared by the Oregon
Department of Administrative Services, and (ii) a February 24, 1999 Official
Statement prepared by the Oregon State Department of Consumer and Business
Services for the issue of General Obligation Alternative Energy Project Bonds,
1999 Series A (Private Activity - AMT).
86
<PAGE>
Oregon Economic Review and Forecast
Summary of Recent Trends
Oregon's economy picked up modestly in the fourth quarter, following a very weak
third quarter. Similar to the nation as a whole, consumers are the primary
catalysts for growth in the state. Oregon's manufacturing and resource
industries are still clearly feeling the effects of falling exports to Asia.
The Oregon Employment Department conducts an annual revision of employment data.
This revision updates previous monthly estimates. The preliminary figures put
state job growth at 2.7% for 1998. The new 1998-benchmarked employment figures
show job growth of 2.0%. This revised figure is much lower than the 3.5% growth
in 1997.
The revised 1998 job growth figure is lower than the growth for the U.S. as a
whole. As a result, 1998 ends a run where Oregon's job growth surpassed that of
the nation as a whole.
Jobs grew 2.3% in the fourth quarter. This followed a 1.1% increase in the prior
quarter. The vast bulk of the increase occurred in three sectors: local
government, services, and communication and utilities. Retail trade grew close
to the overall average at 2.2%.
The slower job growth in Oregon is attributable to the disproportionate impact
of declining exports to Asia. This can be seen by looking at job growth rankings
for major sectors. Oregon ranks relatively high in employment growth for
government, services and trade. These sectors are closely linked to consumer
income and spending. They are only indirectly tied to exports. Manufacturing
employment trends are much more indicative of the Asian impact. Oregon ranks
40th in manufacturing job growth over the past year. Based on the bench marked
data, Oregon is likely ranked lower than 9th among states. The rankings by
sector would still show the relative strengths and weaknesses.
Another factor slowing the Oregon economy is the maturation of the construction
sector. This sector grew very rapidly throughout most of the 1990s. The growth
occurred in both residential and nonresidential construction. Job growth has
flattened out over the past year. Construction employment inched up at 0.6%
annual rate in the fourth quarter. Oregon now ranks 38th among the states in
construction job growth for the twelve months ending in November.
Based on preliminary estimates, housing starts totaled 25,100 in Oregon for
1998. This is down slightly from 25,600 in 1997.
Local government employment jumped 11.9% (annual rate) in the fourth quarter.
Some of this gain is due to temporary hiring of election workers in November.
Data for December provides a more accurate picture of the trend. Local
government jobs have grown 4.6% over the 12-month period ending in December.
This represents an increase of 7,700. Public education employment accounts for
3,200 of the increase. Other local government rose 4,200. Tribal employment also
included in this category, rose 300.
Service employment increased at a strong 5.2% annual rate in the fourth quarter.
This sector accounted for 14,600 of the 22,700 increase in Oregon payroll
employment between December 1997 and December 1998. Within this category, the
largest gains have come in health services (3,400), social services (2,800),
private education (2,500), and business services (2,000).
Oregon consumers have benefited from the same factors that are influencing the
rest of the nation. These factors are low inflation, capital gains from the
stock market, and low interest rates. Oregon's December unemployment rate was
5.5%. This compares to 4.3% for the nation. Nonetheless, the state's labor
markets are relatively strong, especially in the metropolitan areas. Retail
trade employment data indicates a moderately strong Christmas season. Retail
trade rose at a 2.2% rate. December retail trade jobs were 3,500 more than the
previous December.
87
<PAGE>
A different picture emerges from data on state exports and manufacturing
activity. Third quarter exports were 14.9% below the same period in 1997. Oregon
exporters continue to suffer from declining sales to Japan. Japanese exports
fell 15.9% in the third quarter compared to the third quarter of 1997. Exports
to Canada, Oregon's largest market, only grew by 1.5%, much slower than the
double digit year over year increases in the previous six quarters.
Manufacturing employment declined at a 4.4% annual rate in the fourth quarter.
This follows a decline of 5.9% in the third quarter. Declining forest product
exports helped push lumber and wood products jobs down 3.3% for the fourth
quarter. Weak agricultural markets contributed to an 8.4% decline in food
processing jobs. The losses were broad based, with durable goods producers
cutting back at a 4.8% rate and nondurable goods industries decreasing 3.3%.
Weak world markets and general excess capacity have been major factors forcing
job reductions in Oregon's high technology manufacturing sector. Declines
continued in the fourth quarter. The electronics industry (including
semiconductors) fell at an 8.8% annual rate. Nonelectrical machinery, a
combination of high technology and traditional industries, fell at a 9.9% annual
rate in the fourth quarter. Scientific instrument manufacturing jobs decreased
at an 8.6% annual rate.
As was the case in the third quarter, the only major manufacturing industry in
the state to post sizeable gains was transportation equipment. This sector was
benefited from strong heavy truck and recreational vehicle demand. These
industries are not closely linked to Asian markets. The Aerospace component of
the industry does have strong ties to Asia, but layoffs in this industry have
not yet shown up in the data.
The December forecast projected job growth of 1.4% in the fourth quarter. The
1998-benchmarked actual rate of growth was 2.3%. Local government employment
growth of 11.9% exceeded the forecast growth of 6.4%. Service employment growth
of 5.2% is over the forecast of 2.9%. Retail trade employment growth of 2.2%
about matched the forecast of 2.1%. On the other hand, manufacturing employment
growth declined 4.4%, lower than the forecast decline of 2.0%.
Short-Term Outlook
Overview. The economy appears to have bottomed out in the second half of 1998.
The Office of Economic Analysis (OEA) forecasts continued sluggishness for the
Oregon economy through the first quarter of 1999. A modest acceleration is
anticipated for the rest of the year. Higher growth is expected for 2000. Oregon
manufacturers and farmers face soft, though moderately improving, demand through
much of 1999. An Asian rebound, expected in the second half of 1999, should
bring recovery to Oregon's goods producing sectors in 2000. Industries with
strong links to the consumer sector should continue to grow through 2000, though
the rate of increase is expected to slow.
OEA projects job growth of 1.9% for Oregon in 1999. This compares with 1.5%
growth projected for the nation as a whole. Oregon's projected job growth rate
would be the lowest since 1992, the slow growth year after the last national
recession of 1991. State employment growth is expected to pick up to 2.3% in
2000.
The impetus for continued growth in Oregon will be local and national consumer
spending. Both are expected to slow from the rapid pace of 1998. Nonetheless,
spending should continue to rise faster than the projected low inflation rate.
Local consumer spending will fuel job growth in the state's retain and service
sectors. National consumer demand, particularly from California, should cushion
the effects of soft world demand on Oregon's manufacturers.
The preliminary estimate for 1998 personal income growth in Oregon is 4.7%,
slower than the national estimate of 5.0%. Oregon's growth rate is projected to
be 4.9% in 1999. This is higher than the U.S. forecast of 4.6%. However, on a
per capita basis, Oregon income growth is projected to be 3.4% compared to 3.7%
for the U.S. Oregon's higher population growth projection accounts for the
difference.
88
<PAGE>
Forecast Changes. The Oregon forecast is little changed from December.
Employment is essentially unchanged in 1999, but the comparison of levels is
distorted by the revised benchmark data for 1998. The slightly higher forecast
for 1999 is a modest increase compared to 1998, primarily due to the stronger
fourth quarter numbers.
After 1999, employment levels are slightly higher than the December projection.
This primarily reflects an expected upturn in the national job forecast.
The personal income forecast for 1999 and 2000 is up modestly compared to
December. This reflects a stronger national income forecast. Inflation adjusted
income is 0.4 and 1.0% higher than the previous forecast for 1999 and 2000,
respectively.
The state housing outlook is stronger than the previous forecast. Housing starts
are projected to be 24,400 for 1999. This is 5.8% higher than the December
forecast. The new forecast reflects the continued impact of rising home
affordability. Housing price inflation in the state is finally slowing.
Preliminary figures for the Repeat Purchase Housing Index show prices rose only
4.2% in 1998. They are forecast to increase 4.4% in 1999.
Personal Income Components. The third and final installment of the minimum wage
increase occurred on January 1, 1999. Minimum wages are now $6.50, the highest
in the nation. Because of this increase, wages are expected to increase 3.8% in
1999, slightly faster than in 1998. Manufacturing wages increased an estimated
5.2% in 1998. They are forecast to grow 4.2% in 1999. The slowdown in growth is
due to lower profits for the states' major high-tech employers which should
result in smaller bonus payments to workers. Labor markets in this sector should
also soften with the cutbacks in employment.
Service sector wages are expected to rebound in 1999, growing 4.0%. Part of the
rebound is due to the increase in the minimum wage. In addition, consumer
spending is now driving the economy. As a result, rapid growth in this sector
will continue to push wages higher as employers compete for workers. Strength in
the housing markets will keep construction jobs at high levels, also pushing up
wages in this category.
Total wage and salary income is forecast to grow 5.7% in 1999, the same rate as
the nation. This compares with 5.6% growth in 1998. Wage growth is expected to
increase further in 2000.
Nonfarm proprietor's income is forecast to slow to 4.9% in 1999. This is the
result of the slowing economy. Farm proprietor's income is expected to rise in
1999. The increase is based upon assumptions about increasing commodity prices.
Income in this sector has been at very depressed levels in recent years.
Dividend, interest, and rent income grew only 3.0% in 1998. It is forecast to
rise 3.6% in 1999. This is the result of low short term interest rates. While
lower interest rates stimulate the economy, they also reduce income flows from
savings. With regard to income, retirees tend to be the group most impacted by
changes in interest rates.
Goods-Producing Sectors. The declines in Oregon's high technology and timber
industry will reduce employment in the manufacturing sector by 2,800 in 1999.
This is a decline of 1.1%. A mild strengthening is forecast for 2000.
High tech employment will decline by 1.3% in 1999. This year over year decline
is due to weakened demand and over-capacity in the industry. However, the
industry bottomed out at the end of 1998. A recovery in the 2nd quarter and
through the rest of 1999 will not bring employment back to early 1998 levels.
Thus, while we see a decline on a yearly basis, high tech should increase
employment by 300 jobs in 1999.
89
<PAGE>
Low demand and price competition continues to depress Oregon's timber industry.
The sector is forecast to shrink an additional 2.3% in 1999 and 0.7% in 2000.
This will lower the number of jobs in the industry from 50,300 in 1998 to 48,800
in 2000.
Job losses are also forecast for the metals industry and food products
industries. Similar to high tech, the food products industries will see modest
employment gains in 1999. The one manufacturing sector continuing to expand is
transportation equipment. A gain of 900 jobs is forecast for 1999.
Service-Producing Sectors. The driving force behind Oregon's economy in 1999
will be the consumer. In 1999, consumer spending is expected to slow from the
very high rate of 1998. It is expected to grow at about the same pace as income.
As a result, service sector jobs are forecast to increase 4.5% in 1999. This is
on top of 3.5% gains in 1998. Most of the growth will be in the non-health
service industries, which will increase 4.8% in 1999.
Jobs in the state's trade industry are expected to rise at the same pace as
overall employment in the state. Wholesale trade employment will increase 1.4%
in 1999. Retail trade jobs will increase 1.8%.
Finance, insurance and real estate jobs will increase 1.0% in 1999. This sector
was essentially flat in 1998.
OEA forecasts a 1.9% increase in overall government employment in 1999. Local
governments, the largest component of government jobs in the state, will
increase payrolls by 3,200, a 1.9% increase. A large reason for this increase is
the expansion in tribal government employment. State jobs will increase 3.6%.
Federal government jobs are expected to decline slightly.
Forecast Risks. The major risk to the forecast is a change in consumer spending
patterns. A high level of capital gains income and high consumer confidence has
fueled the recent surge in spending. If the stock market experiences a sharp
correction or consumer confidence is shaken, spending habits could suddenly
change. Since consumers are the driving force behind economic growth in the U.S.
and in Oregon, the impact on the economy would be pronounced. In Oregon this
would impact both goods producers selling to the national market and local
retailers. A second risk is further turmoil in world economic markets. If the
troubles in Brazil spread, then demand for Oregon products could be reduced. If
Asian markets experience further financial problems or take significantly longer
to recover than expected, this would have a negative impact on Oregon's
manufacturing industry.
Extended Outlook. Oregon's economy has grown relatively faster than the nation
throughout the 1990s. OEA expects Oregon to remain a high growth state in the
future. The state is forecast to increase from 1.14% of the U.S. in 1998 to
1.23% in 2005.
The key factors that will fuel the state's growth long term are:
1. Export Rebound: The Asian countries are expected to begin to grow again in
late 1999 and 2000. This will fuel demand for Oregon products. The trend toward
a lower dollar will benefit Oregon exporters as well.
2. Recovery in the semiconductor industry: Increasing demand for computers and
an increase in orders should eliminate the excess capacity in the industry by
late 1999. The strength in the industry will allow previously announced
investment plans in the state to be carried out in the 2000-2005 period.
3. Rising commodity prices: Agricultural and timber producers in the state will
benefit from a turn-around in commodity prices. This will spur higher income and
job growth for these large sectors of the economy.
Litigation
90
<PAGE>
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.
Refund of Workers' Compensation Moneys from the General Fund:
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 1998 by Workers'
Compensation policyholders insured by the State Accident Insurance Fund
Corporation ("SAIF"). The plaintiffs sought damages based on the Oregon
Legislative Assembly's 1983 transfer of $81 million in surplus reserves from the
Industrial Accident Fund to the State general fund under Oregon laws 1982
(Special Session 3) chapter 2. Because both cases were brought on behalf of the
same class of employer-policyholders, the combined maximum claims in both cases
could not exceed $81 million, plus interest and attorney fees.
On November 19, 1993, the Oregon Supreme Court issued on 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 indicate that the amount of principal and
interest owing under the court's ruling will be approximately $280 million.
The parties drafted a proposal 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 and an additional $80
million will be payable 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 Federal Retiree Pension Benefits. On June 18, 1998, in Vogl v. Dept.
of Rev., 327 Or 193 (1998), the Oregon Supreme Court decided several cases on
appeals from cases filed in the Tax Court and Multnomah County Circuit Court.
The federal retiree plaintiffs in those consolidated cases claimed that the
benefits paid to State retirees under Oregon laws 1995, Chapter 569, were, in
effect, tax rebates and discriminatory in violation of the U.S. Supreme Court's
ruling in Davis v. Michigan Dept. of Treasury under principles of
intergovernmental tax immunity.
In Vogl, the court held that Oregon Laws 1995, Chapter 569, provides a benefit
increase to PERS retirees that "generally replicates the effect of a tax rebate"
and that, under principles of intergovernmental tax immunity, the federal
retirees are entitled to an equivalent tax benefit. The Vogl court expressly
declined to overrule its earlier decision in Ragsdale v. Dept. of Rev., 321 Or
216, cert denied, 516 US 1011 (1995) (Ragsdale II), which denied a federal
retiree's tax refund claim based on payment of benefits to PERS recipients,
pursuant to Oregon Laws 1991, Chapter 796. The court distinguished the 1991 and
1995 benefit payments, concluding that the 1991 benefits were less closely
connected with the tax paid by the State retirees than were the 1995 benefits.
The Oregon Department of Revenue estimates that the amount of General Fund tax
money to be paid eventually to federal retirees pursuant to the court's decision
in Vogl, as reported to the State Economist in October 1998, could be as much as
$410 million.
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 the medical services for the Oregon
91
<PAGE>
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. The plaintiffs have appealed the trial court's
decision to the Ninth Circuit Court of Appeals. The Court of Appeals heard oral
arguments on September 15, 1998.
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 minimum
operations, the company intended to dig a huge pit for which a wastewater
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 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 the 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 plaintiff will not receive any damages based
upon the EQC's denial of the permit. The case was argued before the Court of
Appeals in May of 1998.
Young v. State. 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. Initial estimates placed the State's potential liability
exposure between $1 million and $5 million, but 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 status 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
Legislative Assembly 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. The state circuit court for Marion County ruled in favor
of the State on its motion for summary judgment. The plaintiffs have appealed
the decision to the Oregon Court of Appeals.
Taxation on Timber Harvest. Two cases have been filed in the Oregon Tax Court
challenging the constitutionality of the state's privilege tax on the harvesting
of timber. The state imposes a harvest tax at one rate for timber cut east of
the Cascade mountains and imposes a higher rate for timber cut west of the
Cascade mountains. Plaintiff contend (i) that the difference between the eastern
and western tax rates is unconstitutionally discriminatory and (ii) that the
harvest privilege tax is in reality a form of property tax that should be
subject to constitutional limits placed on the amount of property taxes. If the
plaintiffs prevail, the State would be required to refund the unconstitutional
amount of tax paid from the year in which the complaint was filed to the date of
the decision declaring the tax unconstitutional. The State estimates that it
would take approximately three years for both cases to be decided by the Oregon
Tax Court and the Oregon Supreme Court. Therefore, in the event of an adverse
ruling, the State would be potentially liable for three years of refund. If the
required refund amount were for the entire amount of the tax, initial estimates
are that the refund amount would range between $34 to $37 million per year. The
State believes it is unlikely that the entire amount of the tax would be
required to be refunded. If the court declares only the part of the western tax
that exceeds the eastern tax to be unconstitutional, initial estimates are that
the refund liability would range between $14 to $15 million per year. If the
court declares the tax subject to the constitutional property tax limitations,
initial estimates are that the refund liability would range between $19 and $21
million per year. The plaintiffs filed an amended complaint
92
<PAGE>
and a motion for summary judgment. The State filed a cross-motion for summary
judgment. The Tax Court heard arguments on the motions in November of 1998.
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. The Department of Administrative Services is not at this time a
party to any litigation which would have a material adverse effect on the
ability of the State to appropriate Available Funds under the Loan Agreement to
pay the 1998 Series A Certificates.
Risk Factors Affecting the South Carolina Fund
The State of South Carolina has the power to issue general obligation bonds
based on the full faith and credit of the State. Political subdivisions are also
empowered to issue general obligation bonds, which are backed only by the full
faith and credit of that political subdivision, and not by the resources of the
State of South Carolina or any other political subdivision. Political
subdivisions are empowered to levy ad valorem property taxes on real property
and certain personal property to raise funds for the payment of general
obligation bonds. General obligation debt may be incurred only for a public
purpose which is also a corporate purpose of the applicable political
subdivision.
Under Article X of the Constitution of the State of South Carolina, the State
may issue general obligation debt without either a referendum or a supermajority
of the General Assembly, within limits defined by reference to anticipated
sources of revenue for bonds issued for particular purposes. A referendum or
supermajority of the General Assembly may authorize additional general
obligation debt. Article X further requires the levy and collection of an ad
valorem tax if debt service payments on general obligation debt are not made.
Under Article X of the Constitution of the State of South Carolina, political
subdivisions are empowered to issue aggregate general obligation indebtedness up
to 8% of the assessed value of taxable property within the political subdivision
(exclusive of debt incurred before the effective date of Article X with respect
to such subdivisions) without a referendum. A referendum may authorize
additional general obligation debt. The ordinance or resolution authorizing
bonded debt of a political subdivision also directs the levy and collection of
ad valorem taxes to pay the debt. In addition, Article X of the South Carolina
Constitution provides for withholding by the State Treasurer of any state
appropriations to a political subdivision which has failed to make punctual
payment of general obligation bonds. Such withheld appropriations, to the extent
available, may be applied to the bonded debt. 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.
93
<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.
94
<PAGE>
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, 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.
95
<PAGE>
SELIGMAN
- ----------------
MUNICIPAL FUND
SERIES, INC.
[GRAPHIC OMITTED]
MID-YEAR REPORT
MARCH 31, 1999
-------
PROVIDING
INCOME EXEMPT
FROM REGULAR
INCOME
TAX
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
[PICTURE OMITTED]
JAMES, JESSE, AND JOSEPH SELIGMAN, 1870
Seligman -- Times Change...Values Endure
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
TIMES CHANGE...
Established in 1864, Seligman has a history of providing financial services
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 135 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including equity funds that specialize in small companies,
technology, or international securities, and bond funds that focus on high-yield
issuers, US government bonds, or municipal securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
TABLE OF CONTENTS
To the Shareholders ................................. 1
Interview With Your Portfolio Manager ............... 2
Performance Overview and
Portfolio Summary ................................. 4
Portfolios of Investments ........................... 12
Statements of Assets and Liabilities ................ 32
Statements of Operations ............................ 34
Statements of Changes in Net Assets ................. 36
Notes to Financial Statements ....................... 40
Financial Highlights ................................ 45
Report of Independent Auditors ...................... 58
Board of Directors .................................. 59
Executive Officers AND For More Information ......... 60
Glossary of Financial Terms ......................... 61
<PAGE>
TO THE SHAREHOLDERS
During Seligman Municipal Fund Series' six-month reporting period ended March
31, 1999, the US economy remained strong. In fact, the economy grew faster than
almost anyone had predicted.
At the Fund's fiscal year-end in September 1998, the consensus was that the US
economy would slow, possibly to recessionary levels, in the face of worldwide
financial disorder brought on by the Asian economic crisis. However, US consumer
strength was widely underestimated, and consumer confidence and the strong
consumer demand that accompanied it remained a powerful economic force. Not only
did the economy continue to surprise on the upside, it did so without signs of
rising inflation, a common side effect of prolonged and robust growth.
Despite evidence that inflation remained under control, the unexpected
acceleration in economic activity earlier this year caused bond-market
participants to worry that inflation posed a possible threat. This concern
pushed Treasury yields significantly higher. During these six months, Treasury
bond yields fluctuated within a wide range of 98 basis points. In contrast, the
municipal market remained relatively stable, with yields fluctuating within a
much narrower range of 32 basis points.
At the Fund's fiscal year-end in September 1998, the yield spread between
municipal bonds and Treasuries was unprecedentedly narrow. Recently, however, a
slowdown in the supply of new municipal bond issues and rising Treasury yields
caused the yield spread between municipal bonds and Treasury bonds to widen to a
more historically normal range. We believe that this trend will continue and, as
it does, the performance of the municipal market should improve relative to the
Treasury market.
The ongoing economic expansion in the US continued to benefit the municipal bond
market. Municipal bond issuers have been able to improve their financial
situations and, for the fourth year in a row, there were more credit-rating
upgrades than downgrades. We expect that this positive trend will continue.
The Fund's manager, J. & W. Seligman & Co. Incorporated, continues to work to
ensure that all of its operations are prepared for the challenges posed by the
Year 2000 (Y2K) computer issue. We are confident that there will be no
disruption in the investment and shareholder services provided by the Fund as a
result of Y2K. In addition, your portfolio management team considers the
potential ramifications of Y2K when making decisions on which securities should
be held by the Fund.
We appreciate your confidence in Seligman Municipal Fund Series and look forward
to serving your investment needs for many years to come. A discussion with your
Portfolio Manager and the Fund's portfolios of investments follow this letter.
By order of the Board of Directors,
/s/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
------------------
Brian T. Zino
President
April 30, 1999
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
THOMAS G. MOLES
Q: WHAT ECONOMIC AND MARKET FACTORS INFLUENCED SELIGMAN MUNICIPAL FUND SERIES
IN THE LAST SIX MONTHS?
A: During the past six months, the outlook for the US and global economies has
improved dramatically. At fiscal year-end in September 1998, economies
around the world were struggling with financial crises that threatened to
drag the US into recession. In response, the Federal Reserve Board took
immediate defensive action by lowering the federal funds rate three times
last fall.
However, the outlook for the US economy brightened as economies around the
world began to show signs of recovery and as strong US consumer demand
continued to drive economic growth.
While ending on a positive note, the last six months were nonetheless
volatile for equity markets, and thus for the US Treasury market, as
investors rushed to buy Treasury bonds during periods of market uncertainty.
This "flight to quality" was the primary cause of the sharp swings in
Treasury yields that were experienced during the period. The yield on the
30-year US Treasury bond fluctuated by more than 98 basis points during this
time.
In contrast to the volatility of the Treasury market, the municipal market
remained relatively stable throughout the period. Long-term municipal
interest rates fluctuated within a much narrower trading range of
approximately 32 basis points.
The historically low interest-rate environment led to a surge in municipal
new issue volume during 1998. The increase in municipal supply caused the
yield spread between municipal bonds and Treasury bonds to narrow, making
municipals particularly attractive. For a brief period in October, long-term
municipal yields actually exceeded long-term Treasury yields, an unusual
occurrence given the tax advantages of municipal ownership.
This situation has now begun to reverse itself. Year-to-date, new issue
volume has slowed from its robust pace, causing the yield spread between
municipal bonds and Treasury bonds to widen to a historically normal range.
[PICTURE OMITTED]
SELIGMAN MUNICIPALS TEAMS: (STANDING FROM LEFT) AUDREY KUCHTYAK, THERESA BARION,
DEBRA MCGUINNESS, (SEATED) EILEEN COMERFORD, THOMAS G. MOLES (PORTFOLIO MANAGER)
A TEAM APPROACH
Seligman Municipal Fund Series is managed by the Seligman Municipals Team,
headed by Thomas G. Moles. Mr. Moles is assisted in the management of the Fund
by a group of seasoned professionals who are responsible for research and
trading consistent with the Fund's investment objective.
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
THOMAS G. MOLES
The continued strength of the US economy, which is now in its ninth year of
economic expansion, has allowed the financial condition of the nation's
states, cities, and municipalities to steadily improve. For the fourth year
in a row, credit-rating upgrades exceeded downgrades. We expect that this
positive trend will continue with the possible exception of health care
bonds, whose issuers have been experiencing increased financial and
operating pressures.
Q: WHAT WAS YOUR INVESTMENT STRATEGY?
A: The relative lack of volatility in the municipal market limited our
opportunities to enhance total return through trading activity. Therefore,
we focused on improving the relative value of Seligman Municipal Fund
Series' portfolios. Through in-depth credit analysis and market research, we
have been able to identify municipal credits that we believe have been
undervalued by the market, and we have used this information in our security
selection process.
During the period, our investment strategy was consistent with our positive
outlook for the economy and long-term interest rates. We reduced portfolio
holdings with short durations, replacing them with longer-term bonds because
they offer the greatest opportunity for price appreciation during periods of
declining interest rates. (Conversely, during periods of rising interest
rates, long-term bonds will depreciate more than shorter-term bonds.)
Long-term bonds have also provided the highest yields historically. During
the past six months, long-term municipal yields rose slightly, resulting in
declines in Seligman Municipal Fund Series' net asset values.
We have concentrated new purchases in triple "A" rated insured bonds because
of the prevailing narrow yield spread between high-quality and lower-quality
bonds. At this time, lower-quality bonds do not offer enough additional
yield to compensate for the increased credit risk. For the six-month period,
high-quality insured bonds outperformed lower-quality bonds.
Q: WHAT IS YOUR OUTLOOK?
A: Recent economic reports have suggested that the economy may be strengthening
further, raising concerns about an acceleration in the rate of inflation. In
response, long-term municipal yields have increased modestly. However, we
believe that any increase in long-term yields will be temporary, and our
outlook for interest rates remains positive. We will continually monitor
market conditions and will adjust our investment strategy accordingly.
There are currently a number of factors that bode well for the municipal
market going forward. First, new issue supply has slowed, widening the yield
spread between municipals and Treasuries to a historically normal range. If
this trend continues, and we believe that it will, the performance of the
municipal market should improve relative to the Treasury market. In
addition, the municipal bond market has been the beneficiary of a healthy
economy and a stable rate of inflation, and we anticipate that these
favorable market conditions will continue for the balance of the year.
3
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
NATIONAL SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (4.21)% (0.03)% 6.34% 7.03% n/a
Without Sales Charge 0.51 5.00 7.38 7.55 n/a
CLASS D**
With 1% CDSC (0.90) 2.95 n/a n/a n/a
Without CDSC 0.08 3.95 6.38 n/a 4.13%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.17 $8.32 $8.16 CLASS A $0.193 -- 4.02%
CLASS D 8.16 8.31 8.16 CLASS D 0.157 -- 3.33
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 81% Aaa/AAA 42%
General Obligation Bonds 19 Aa/AA 29
A/A 20
WEIGHTED AVERAGE MATURITY 24.6 years Baa/BBB 9
</TABLE>
COLORADO SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
----------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (4.11)% 0.07% 5.01% 6.16% n/a
Without Sales Charge 0.65 5.01 6.04 6.68 n/a
CLASS D**
With 1% CDSC (0.65) 3.04 n/a n/a n/a
Without CDSC 0.33 4.04 5.05 n/a 3.58%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $7.52 $7.64 $7.50 CLASS A $0.171 -- 3.84%
CLASS D 7.52 7.63 7.50 CLASS D 0.136 -- 3.13
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 78% Aaa/AAA 58%
General Obligation Bonds 22 Aa/AA 17
A/A 12
WEIGHTED AVERAGE MATURITY 20.5 years Baa/BBB 13
</TABLE>
- ---------------------------
See footnotes on page 10.
4
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
GEORGIA SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (3.88)% 0.38% 6.31% 7.17% n/a
Without Sales Charge 0.94 5.40 7.35 7.70 n/a
CLASS D**
With 1% CDSC (0.49) 3.45 n/a n/a n/a
Without CDSC 0.50 4.45 6.41 n/a 4.52%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.23 $8.38 $8.21 CLASS A $0.184 $0.045 3.71%
CLASS D 8.25 8.40 8.23 CLASS D 0.147 0.045 3.00
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 65% Aaa/AAA 43%
General Obligation Bonds 35 Aa/AA 30
A/A 24
WEIGHTED AVERAGE MATURITY 17.7 years Baa/BBB 3
</TABLE>
LOUISIANA SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (3.84)% 0.21% 5.80% 6.91% n/a
Without Sales Charge 0.91 5.24 6.82 7.44 n/a
CLASS D**
With 1% CDSC (0.40) 3.43 n/a n/a n/a
Without CDSC 0.58 4.42 5.83 n/a 4.28%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.28 $8.51 $8.36 CLASS A $0.194 $0.112 3.90%
CLASS D 8.28 8.50 8.35 CLASS D 0.157 0.112 3.19
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 85% Aaa/AAA 79%
General Obligation Bonds 15 Aa/AA 13
Baa/BBB 8
WEIGHTED AVERAGE MATURITY 20.8 years
</TABLE>
- --------------------
See footnotes on page 10.
5
<PAGE>
MARYLAND SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- --------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (3.45)% 0.38% 5.84% 6.91% n/a
Without Sales Charge 1.31 5.40 6.87 7.43 n/a
CLASS D**
With 1% CDSC (0.13) 3.58 n/a n/a n/a
Without CDSC 0.86 4.58 5.90 n/a 4.31%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.21 $8.32 $8.19 CLASS A $0.191 $0.028 3.93%
CLASS D 8.22 8.33 8.19 CLASS D 0.154 0.028 3.23
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 72% Aaa/AAA 42%
General Obligation Bonds 28 Aa/AA 39
A/A 17
Weighted Average maturity 21.5 years Baa/BBB 2
</TABLE>
MASSACHUSETTS SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (4.24)% 0.77% 5.94% 7.14% n/a
Without Sales Charge 0.51 5.79 6.98 7.66 n/a
CLASS D**
With 1% CDSC (0.82) 3.96 n/a n/a n/a
Without CDSC 0.18 4.97 5.99 n/a 4.54%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.08 $8.27 $8.04 CLASS A $0.182 $0.050 3.79%
CLASS D 8.08 8.26 8.03 CLASS D 0.144 0.050 3.08
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 82% Aaa/AAA 62%
General Obligation Bonds 18 Aa/AA 26
A/A 5
WEIGHTED AVERAGE MATURITY 21.9 years Baa/BBB 5
Non-Rated 2
</TABLE>
- ------------------
See footnotes on page 10.
6
<PAGE>
MICHIGAN SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (3.89)% 0.60% 5.81% 7.18% n/a
Without Sales Charge 0.90 5.60 6.84 7.71 n/a
CLASS D**
With 1% CDSC (0.52) 3.67 n/a n/a n/a
Without CDSC 0.45 4.66 5.82 n/a 4.38%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.55 $8.83 $8.64 CLASS A $0.200 $0.158 3.79%
CLASS D 8.54 8.82 8.63 CLASS D 0.160 0.158 3.09
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 72% Aaa/AAA 60%
General Obligation Bonds 28 Aa/AA 32
A/A 8
WEIGHTED AVERAGE MATURITY 20.9 years
</TABLE>
MINNESOTA SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (3.57)% 0.85% 4.79% 6.48% n/a
Without Sales Charge 1.27 5.88 5.82 6.99 n/a
CLASS D**
With 1% CDSC (0.16) 3.93 n/a n/a n/a
Without CDSC 0.82 4.93 4.86 n/a 3.78%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $7.80 $7.98 $7.82 CLASS A $0.182 $0.098 4.01%
CLASS D 7.80 7.98 7.82 CLASS D 0.147 0.098 3.31
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 52% Aaa/AAA 41%
General Obligation Bonds 48 Aa/AA 36
A/A 18
Weighted Average maturity 18.6 years Baa/BBB 5
</TABLE>
- --------------------
See footnotes on page 10.
7
<PAGE>
MISSOURI SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- --------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (4.38)% 0.31% 5.76% 6.77% n/a
Without Sales Charge 0.38 5.31 6.80 7.29 n/a
Class D**
With 1% CDSC (1.04) 3.38 n/a n/a n/a
Without CDSC (0.07) 4.37 5.80 n/a 4.04%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $7.77 $8.03 $7.83 CLASS A $0.172 $0.118 3.80%
CLASS D 7.77 8.03 7.83 CLASS D 0.137 0.118 3.09
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 82% Aaa/AAA 36%
General Obligation Bonds 18 Aa/AA 53
A/A 9
WEIGHTED AVERAGE MATURITY 20.6 YEARS BAA/BBB 2
</TABLE>
NEW YORK SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (4.37)% 0.93% 6.58% 7.43% n/a
Without Sales Charge 0.42 6.01 7.62 7.96 n/a
CLASS D**
With 1% CDSC (0.87) 4.19 n/a n/a n/a
Without CDSC 0.09 5.18 6.60 n/a 4.74%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.24 $8.60 $8.34 CLASS A $0.188 $0.207 3.94%
CLASS D 8.25 8.60 8.34 CLASS D 0.149 0.207 3.24
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 82% Aaa/AAA 63%
General Obligation Bonds 18 Aa/AA 7
A/A 22
WEIGHTED AVERAGE MATURITY 23.1 YEARS BAA/BBB 8
</TABLE>
- --------------------------
See footnotes on page 10.
8
<PAGE>
OHIO SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
----------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (4.01)% 0.66% 5.64% 6.92% n/a
Without Sales Charge 0.80 5.71 6.68 7.44 n/a
CLASS D**
With 1% CDSC (0.61) 3.77 n/a n/a n/a
Without CDSC 0.36 4.76 5.75 n/a 4.28%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.11 $8.37 $8.18 CLASS A $0.193 $0.132 3.77%
CLASS D 8.15 8.41 8.22 CLASS D 0.157 0.132 3.06
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 67% Aaa/AAA 79%
General Obligation Bonds 33 Aa/AA 13
A/A 5
WEIGHTED AVERAGE MATURITY 19.3 years Baa/BBB 3
</TABLE>
OREGON SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
------------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (3.61)% 0.77% 5.70% 6.91% n/a
Without Sales Charge 1.18 5.75 6.74 7.43 n/a
CLASS D**
WITH 1% CDSC (0.25) 3.80 n/a n/a
N/A
Without CDSC 0.73 4.80 5.74 n/a 4.41%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $7.92 $8.05 $7.88 CLASS A $0.174 $0.050 3.88%
CLASS D 7.91 8.04 7.87 CLASS D 0.139 0.050 3.18
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 65% Aaa/AAA 42%
General Obligation Bonds 35 Aa/AA 31
A/A 19
WEIGHTED AVERAGE MATURITY 17.9 years Baa/BBB 8
</TABLE>
- -------------------
See footnotes on page 10.
9
<PAGE>
SOUTH CAROLINA SERIES
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (4.18)% 0.17% 5.99% 7.05% n/a
Without Sales Charge 0.63 5.17 7.03 7.58 n/a
CLASS D**
With 1% CDSC (0.80) 3.23 n/a n/a n/a
Without CDSC 0.18 4.22 6.08 n/a 4.32%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999
3/31/99 9/30/98 3/31/98 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
--------- --------- --------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.18 $8.38 $8.21 CLASS A $0.186 $0.066 3.80%
CLASS D 8.18 8.38 8.21 CLASS D 0.149 0.066 3.10
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTORo MOODY'S/S&P RATINGSo
<S> <C> <C> <C>
Revenue Bonds 93% Aaa/AAA 64%
General Obligation Bonds 7 Aa/AA 12
A/A 20
WEIGHTED AVERAGE MATURITY 20.3 years Baa/BBB 4
</TABLE>
- ------------
*Returns for periods of less than one year are not annualized.
**Return figures reflect any change in price and assume all distributions
within the period are invested in additional shares. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class D shares are calculated with and
without the effect of the 1% contingent deferred sales charge ("CDSC"),
charged on redemptions made within one year of the date after purchase. No
adjustment was made to the performance of Class A shares for periods prior
to January 1, 1993, the commencement date for the annual Administration,
Shareholder Services and Distribution Plan fee of up to 0.25% of average
daily net assets. The rates of return will vary and the principal value of
an investment will fluctuate. Shares, if redeemed, may be worth more or less
than their original cost. A portion of each Series' income may be subject to
applicable state and local taxes, and any amount may be subject to the
federal alternative minimum tax. Past performance is not indicative of
future investment results.
***The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
include any fees or sales charges. It is composed of approximately 60%
revenue bonds and 40% state government obligations. Investors cannot invest
directly in an index.
++ From 1/31/94.
+ Represents per share amount paid or declared for the six months ended March
31, 1999.
++ Current yield, representing the annualized yield for the 30-day period ended
March 31, 1999, has been computed in accordance with SEC regulations and
will vary.
0 Percentages based on market values of long-term holdings at March 31, 1999.
NATIONAL SERIES
10
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
11
<PAGE>
PORTFOLIOS OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
STATE AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------- --------------- ----------- --------
<S> <C> <C> <C> <C>
ALABAMA -- 3.6% $4,000,000 Jefferson County Sewer Rev., 51/8% due 2/1/2039 .......... Aaa/AAA $ 3,916,560
Alaska-- 1.4% 1,500,000 Alaska Housing Finance Corporation Mortgage Rev.,
53/4% due 6/1/2024* .................................... Aaa/AAA 1,555,575
California -- 2.6% 2,500,000 San Joaquin Hills Transportation Corridor Agency Rev.
(Orange County Senior Lien Toll Road),
63/4% due 1/1/2032 .................................... Aaa/AAA 2,819,375
Florida-- 4.5% 5,000,000 Jacksonville Electric Authority (Electric System Rev.),
5.10% due 10/1/2032 ................................... Aa2/AA 4,928,900
Illinois-- 6.5% 3,000,000 Chicago Water Rev., 51/2% due 11/1/2022 .................. Aaa/AAA 3,111,990
1,250,000 Illinois Health Facilities Authority Rev. (Edward Hospital
Project), 6% due 2/15/2019 ............................ A2/A+ 1,307,813
2,500,000 Illinois Health Facilities Authority Rev. (Northwestern
Memorial Hospital), 6% due 8/15/2024 .................. Aa2/AA 2,681,650
Kentucky -- 1.9% 1,880,000 Trimble County Pollution Control Rev. (Louisville
Gas & Electric Co. Project), 75/8% due 11/1/2020* ........ Aa2/A+ 2,008,103
Michigan -- 2.2% 2,250,000 Michigan State Strategic Fund Pollution Control Rev.
(General Motors Corp.), 6.20% due 9/1/2020 ............ A2/A 2,421,585
Missouri -- 4.6% 4,750,000 St. Louis Industrial Development Authority Pollution
Control Rev. (Anheuser-Busch Companies, Inc. Project),
57/8% due 11/1/2026* .................................. A1/A+ 4,972,823
NEVADA-- 4.7% 5,000,000 Clark County Industrial Development Rev. (Nevada
Power Company Project), 5.90% due 11/1/2032* .......... NR/BBB- 5,089,950
New York-- 4.5% 3,500,000 New York City GOs, 71/4% due 8/15/2024 ................... Aaa/A- 3,791,515
1,000,000 Trust for Cultural Resources of the City of New York Rev.
(American Museum of Natural History),
5.65% due 4/1/2027 .................................... Aaa/AAA 1,058,660
South 2,000,000 Oconee County Pollution Control Rev. (Duke Power
Carolina-- 1.9% Company Project), 71/2% due 2/1/2017 .................. Aa2/AA- 2,066,480
South 6,000,000 South Dakota Housing Development Authority Rev.
Dakota-- 5.7% (Home ownership Mortgage), 6.15% due 5/1/2026* ......... Aa1/AAA 6,161,280
Texas-- 18.2% 3,700,000 Harris County Health Facilities Development Corp.
Hospital Rev. (St. Luke's Episcopal Hospital Project),
63/4% due 2/15/2021 ................................... Aa3/AAA 3,971,210
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 2,184,100
2,000,000 Harris County Health Facilities Development Corp. SCH
Health Care System Rev. (Sisters of Charity of the
Incarnate Word), 53/4% due 7/1/2027 ................... Aa3/AA 2,094,460
4,750,000 Potter County Industrial Development Corp. Pollution
Control Rev. (Southwestern Public Service Company
Project), 53/4% due 9/1/2016 .......................... Aaa/AAA 5,095,895
2,375,000 San Antonio Electric & Gas Rev., 51/2% due 2/1/2020 ..... Aa1/AA 2,454,990
125,000 San Antonio Electric & Gas Rev., 51/2% due 2/1/2020 ..... Aa1/AA 136,297
</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.
12
<PAGE>
PORTFOLIOS OF INVESTMENTS
MARCH 31, 1999
NATIONAL SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
STATE AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------- --------------- ----------- --------
<S> <C> <C> <C> <C>
Texas (continued) $2,200,000 Texas Veterans Housing Assistance GOs, 6.80%
due 12/1/2023* ..................................... Aa2/AA $ 2,359,654
1,340,000 Travis County Housing Finance Corporation (Single
Family Mortgage Rev.), 6.95% due 10/1/2027 ......... NR/AAA 1,444,171
UTAH-- 3.6% 4,000,000 Intermountain Power Agency Power Supply Rev.,
5% due 7/1/2020 .................................... Aaa/AAA 3,902,520
VIRGINIA -- 9.5 5,000,000 Fairfax County Industrial Development Authority
Health Care Rev. (Inova Health System Project),
6% due 8/15/2026 ................................... Aa2/AA 5,413,000
5,000,000 Pocahont as Parkway Association Toll Road Bonds
(Route 895 Connector), 51/2% due 8/15/2028 ......... Baa3/BBB- 4,928,000
WASHINGTON-- 12.6% 4,325,000 King County Sewer GOs, 61/8% due 1/1/2033 ............. Aaa/AAA 4,747,466
3,000,000 Port Seattle Rev., 51/2% due 9/1/2021 ................. Aaa/AAA 3,093,570
5,520,000 Seattle Water System Rev., 55/8% due 8/1/2026 ......... Aaa/AAA 5,777,232
WISCONSIN -- 6.1% 6,000,000 LaCrosse Resource Recovery Rev. (Northern States
Power Company Project), 6% due 11/1/2021* ......... A1/AA- 6,565,680
WYOMING -- 3.9% 4,000,000 Sweet water County Pollution Control Rev. (Idaho Power
Company Project), 6.05% due 7/15/2026 .............. A3/A 4,241,560
------------
TOTAL MUNICIPAL BONDS (Cost $100,659,942)-- 98.0% ..................................................... 106,302,064
VARIABLE RATE DEMAND NOTES (Cost $1,000,000)-- 0.9% ................................................... 1,000,000
OTHER ASSETS LESS LIABILITIES-- 1.1% .................................................................. 1,222,826
------------
NET ASSETS-- 100.0% $108,524,890
============
</TABLE>
COLORADO SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------- --------------- ----------- --------
<S> <C> <C> <C>
$3,000,000 Adams County, CO Pollution Control Rev. (Public Service Co. of Colorado Project),
5-7/8% due 4/1/2014 ............................................................ Aaa/AAA $ 3,209,820
1,000,000 Boulder, Larimer and Weld Counties, CO (Vrain Valley School District),
5% due 12/15/2022 .............................................................. Aaa/AAA 987,610
2,000,000 Colorado Health Facilities Authority Rev. (North Colorado Medical Center),
6% due 5/15/2020 ............................................................... Aaa/AAA 2,152,760
2,250,000 Colorado Health Facilities Authority Rev. (Sisters of Charity of Leavenworth
Health Services Corporation), 5% due 12/1/2025 ................................. Aaa/AAA 2,198,002
2,000,000 Colorado Health Facilities Authority Rev. (Catholic Health Initiatives),
5% due 12/1/2028 ............................................................... Aaa/AA 1,930,920
2,350,000 Colorado Springs, CO Utilities Rev., 53/8% due 11/15/2026 ......................... Aaa/AA 2,410,982
105,000 Colorado Water Resources & Power Development Authority
(Clean Water Rev.), 67/8% due 9/1/2011 ......................................... Aaa/AAA 113,166
2,000,000 Colorado Water Resources & Power Development Authority
(Clean Water Rev.), 6% due 9/1/2014 ............................................ Aaa/AAA 2,143,940
</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.
13
<PAGE>
PORTFOLIO OF INVESTMENTS
COLORADO SERIES (continued)
<TABLE>
<CAPTION>
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 Rev.), 6.30% due 9/1/2014 .................................... Aaa/AAA $ 1,089,190
2,000,000 Denver, CO City & County (St. Anthony Hospital Systems Rev.),
7-3/4% due 5/1/2014 ....................................................... Aaa/AAA 2,027,520
2,000,000 Denver, CO City &County Department of Aviation Airport System Rev.,
5-1/2% due 11/15/2025 ..................................................... Aaa/AAA 2,076,500
500,000 Denver, CO City & County School District GOs, 5% due 12/1/2019 ................ Aaa/AAA 495,515
2,200,000 Denver, CO City & County School District GOs, 5% due 12/1/2023 ............... Aaa/AAA 2,172,214
2,000,000 Denver, CO Health and Hospital Authority Healthcare Rev., 53/8% due 12/1/2028 . Baa2/BBB 1,943,540
1,985,000 Fort Collins, CO GOs Water Bonds, 6-3/8% due 12/1/2012 ....................... Aa1/AA 2,180,582
2,500,000 Fort Collins Pollution Control Rev. (Anheuser-Busch Project), 6% due 9/1/2031. A1/A+ 2,696,325
1,000,000 Fountain Valley Authority, CO Water Treatment Rev., 6.80% due 12/1/2019 ...... Aa/AA 1,066,710
1,895,000 Northglenn, CO GOs Joint Water & Wastewater Utility, 6.80% due 12/1/2008 ..... Aaa/NR 2,130,757
2,500,000 Platte River Power Authority, CO Power Rev., 61/8% due 6/1/2014 .............. Aa3/A+ 2,661,900
1,590,000 Pueblo County, CO Single Family Mortgage Rev., 7.05% due 11/1/2027 ........... NR/AAA 1,710,586
2,000,000 Puerto Rico Highway & Transportation Authority Rev., 51/2% due 7/1/2036 ...... Baa1/A 2,119,280
2,000,000 University of Colorado Hospital Authority Rev., 51/4% due 11/15/2022 ......... Aaa/NR 2,004,720
2,000,000 Virgin Islands Public Finance Authority Rev., 51/2% due 10/1/2022 ............ NR/BBB- 2,011,860
2,000,000 Westminster, CO (Adams & Jefferson Counties) Sales & Use Tax Rev.,
7% due 12/1/2008 .......................................................... Aaa/AAA 2,130,040
-------------
TOTAL MUNICIPAL BONDS (Cost $43,221,007)-- 95.6% .......................................................... 45,664,439
VARIABLE RATE DEMAND NOTES (Cost $1,300,000)-- 2.7% ....................................................... 1,300,000
OTHER ASSETS LESS LIABILITIES-- 1.7% ...................................................................... 815,634
-------------
NET ASSETS-- 100.0% ....................................................................................... $47,780,073
=============
</TABLE>
GEORGIA SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------- ------------ -----------
<S> <C> <C> <C>
$2,500,000 Atlanta, GA Water & Sewer Rev., 51/4% due 1/1/2027 ........................... Aaa/AAA $ 2,537,925
1,000,000 Cartersville, GA Development Authority Rev. Water & Wastewater Facilities
(Anheuser-Busch), 7.40% due 11/1/2010* .................................... A1/A+ 1,220,120
2,000,000 Cartersville, GA Development Authority Rev. Water & Wastewater Facilities
(Anheuser-Busch), 63/4% due 2/1/2012* ..................................... A1/A+ 2,175,080
3,000,000 Chatham County, GA School District GOs, 51/2% due 8/1/2020 ................... Aaa/AAA 3,101,730
2,000,000 Columbia County, GA School District GOs, 61/4% due 4/1/2013 .................. Aaa/AAA 2,242,680
1,000,000 DEKALB COUNTY, GA GOS, 51/4% DUE 1/1/2020 .................................... AA1/AA+ 1,011,240
1,000,000 DeKalb County, GA Water & Sewerage Rev., 7% due 10/1/2014 .................... Aaa/AA 1,073,070
2,000,000 DeKalb County, GA Water & Sewerage Rev., 51/4% due 10/1/2023 ................. Aa/AA 2,023,040
700,000 DeKalb Private Hospital Authority, GA Rev. (Emory University Project),
63/4% due 4/1/2017 ........................................................ Aa1/AA 755,503
300,000 DeKalb Private Hospital Authority, GA Rev. (Emory University Project),
7% due 4/1/2021 ........................................................... Aa1/AA 325,224
</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.
14
<PAGE>
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
GEORGIA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$ 1,000,000 Fayette County, GA School District GOs, 61/8% due 3/1/2015 .................... Aa/A+ $ 1,103,800
1,000,000 Fulco Hospital Authority Health System Rev. (Catholic Health East),
5% due 11/15/2028 .......................................................... Aaa/AAA 972,830
3,000,000 Fulton County, GA School District GOs, 55/8% due 1/1/2021 ..................... Aa2/AA 3,263,970
2,250,000 Georgia Housing & Finance Authority Rev. (Single Family Mortgage),
51/4% due 12/1/2020 ........................................................ Aa2/AAA 2,272,500
2,500,000 Georgia Municipal Gas Authority Rev. (Southern Storage Gas Project),
6.40% due 7/1/2014 ......................................................... NR/A- 2,683,200
1,000,000 Georgia State GOs, 53/4% due 2/1/2011* ........................................ Aaa/AAA 1,054,840
1,750,000 Glynn-Brunswick Memorial Hospital Authority Rev. (Southeast Georgia Health
Systems Project), 6% due 8/1/2016 .......................................... Aaa/AAA 1,894,060
1,000,000 Gwinnett County, GA School District GOs, 6.40% due 2/1/2012 ................... Aa1/AA+ 1,175,060
1,500,000 Henry County School District, GA GOs, 6.45% due 8/1/2011 ...................... A1/A+ 1,763,820
500,000 Metropolitan Atlanta Rapid Transit Authority, GA Sales Tax Rev.,
61/4% due 7/1/2018 ......................................................... A1/AA- 574,280
2,000,000 Monroe County, GA Development Authority Pollution Control Rev.
(Georgia Power Company Plant-- Scherer Project), 6% due 7/1/2025 ........... Aaa/AAA 2,093,460
2,500,000 Peach tree City, GA Water &Sewerage Authority Sewer System Rev.,
5.60% due 3/1/2027 ......................................................... Aa3/AA 2,644,100
2,000,000 Private Colleges & Universities Authority Rev., GA (Spelman College Project),
6.20% due 6/1/2014 ......................................................... Aaa/AAA 2,211,260
1,500,000 Private Colleges & Universities Authority Rev., GA (Mercer University Project),
61/2% due 11/1/2015 ........................................................ Aaa/AAA 1,789,245
3,000,000 Private Colleges & Universities Authority Rev., GA (Agnes Scott College Project),
55/8% due 6/1/2023 ......................................................... A1/AA 3,135,420
1,500,000 Puerto Rico Highway & Transportation Authority Rev., 51/2% due 7/1/2026 ....... Baa1/A 1,558,260
2,000,000 Savannah, GA Airport Rev., 61/4% due 1/1/2015* ................................ Aaa/AAA 2,142,580
-----------
Total Municipal Bonds (Cost $44,867,088)-- 98.1% ............................................................ 48,798,297
Variable Rate Demand Notes (Cost $1,000,000)-- 2.0% ......................................................... 1,000,000
Other Assets Less Liabilities-- (0.1)% ...................................................................... (77,188)
-----------
NET ASSETS-- 100.0% ......................................................................................... $49,721,109
===========
</TABLE>
LOUISIANA SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$3,000,000 Bastrop, LA Industrial Development Board Pollution Control Rev.
(International Paper Company Project), 6.90% due 3/1/2007 .................. A3/BBB+ $ 3,237,870
2,500,000 Calcasieu Parish, LA Industrial Development Board (Conoco Inc. Project),
53/4% due 12/1/2026* ....................................................... Aa3/AA- 2,626,975
</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.
15
<PAGE>
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
LOUISIANA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$ 1,775,000 East Baton Rouge Parish, LA Mortgage Finance Authority (Single Family
Mortgage Rev.), 5.40% due 10/1/2025 ........................................ Aaa/NR $ 1,793,389
3,000,000 East Baton Rouge Parish, LA Public Improvement Sales & Use Tax Rev.,
5.90% due 2/1/2018 ......................................................... Aaa/AAA 3,191,850
2,000,000 Houma, LA Utilities Rev., 61/4% due 1/1/2012 .................................. Aaa/AAA 2,149,640
2,000,000 Jefferson Parish, LA Home Mortgage Authority (Single Family Mortgage Rev.),
6% due 12/1/2024* .......................................................... Aa/NR 2,065,140
2,000,000 Jefferson Parish, LA Hospital Service District Rev., 5% due 7/1/2028 .......... Aaa/AAA 1,922,620
2,500,000 Lafayette, LA Public Improvement Sales Tax, 5% due 5/1/2021 ................... Aaa/AAA 2,440,775
2,495,000 Louisiana Housing Finance Agency Mortgage Rev. (Single Family),
6.45% due 6/1/2027* ........................................................ Aaa/AAA 2,642,704
2,500,000 Louisiana Public Facilities Authority Hospital Rev. (Franciscan Missionaries
of Our Lady Health System Project), 5% due 7/1/2025 ........................ Aaa/AAA 2,411,300
2,500,000 Louisiana Public Facilities Authority Rev. (Loyola University Project),
55/8% due 10/1/2016 ........................................................ Aaa/AAA 2,657,950
3,000,000 Louisiana Public Facilities Authority Rev. (Tulane University),
53/4% due 2/15/2021 ........................................................ Aaa/AAA 3,137,910
1,500,000 Louisiana State GOs, 5% due 4/15/2018 ......................................... Aaa/AAA 1,483,635
2,000,000 Louisiana State University & Agricultural & Mechanical College Auxiliary Rev.,
53/4% due 7/1/2014 ......................................................... Aaa/AAA 2,151,160
2,500,000 Ouachita Parish, LA Hospital Service District Rev. (Glenwood Regional
Medical Center), 53/4% due 5/15/2021 ....................................... Aaa/AAA 2,640,825
190,000 Ouachita Parish, LA Industrial Development Rev. (International Paper Company),
61/2% due 4/1/2006 ......................................................... NR/NR 190,171
2,500,000 Saint Bernard Parish, LA Exempt Facility Rev. (Mobil Oil Corporation Project),
5.90% due 11/1/2026* ....................................................... Aa2/AA 2,689,250
1,250,000 Saint Charles Parish, LA Environmental Improvement Rev. (Louisiana Power
and Light Company Project), 6.20% due 5/1/2023* ............................ Baa2/BBB 1,293,137
2,960,000 Saint Charles Parish, LA Waterworks & Wastewater District Utility Rev.,
7.15% due 7/1/2016 ......................................................... Aaa/AAA 3,226,045
2,500,000 Shreveport, LA Airport System Rev., 53/8% due 1/1/2024* ....................... Aaa/AAA 2,521,125
1,555,000 Shreveport, LA GOs, 71/2% due 4/1/2006 ........................................ Aaa/AAA 1,848,911
2,750,000 Shreveport, LA GOs, 5% due 3/1/2019 ........................................... Aaa/AAA 2,725,910
2,050,000 Sulphur, LA Housing & Mortgage Finance Trust (Residential Mortgage Rev.),
71/4% due 12/1/2010 ........................................................ Aaa/AAA 2,409,980
2,500,000 Tangipahoa Parish, LA Hospital Service District No. 1 Rev. (Northoaks
Medical Center), 61/4% due 2/1/2024 ........................................ Aaa/AAA 2,745,475
-------------
Total Municipal Bonds (Cost $52,841,091)-- 101.5% ........................................................... 56,203,747
Variable Rate Demand Notes (Cost $1,000,000)-- 1.8% ......................................................... 1,000,000
Other Assets Less Liabilities-- (3.3)% ...................................................................... (1,854,303)
-------------
NET ASSETS-- 100.0% ......................................................................................... $55,349,444
=============
</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.
16
<PAGE>
ORTFOLIO OF INVESTMENTS
MARCH 31, 1999
MARYLAND SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$1,340,000 Anne Arundel County, MD GOs, 51/8% due 2/1/2026 ............................... Aa2/AA+ $ 1,344,877
1,340,000 Anne Arundel County, MDGOs, 51/8% due 2/1/2027 ................................ Aa2/AA+ 1,344,877
3,000,000 Anne Arundel County, MD Pollution Control Rev. (Baltimore Gas and Electric
Company Project), 6% due 4/1/2024 .......................................... A2/A 3,225,120
2,000,000 Baltimore, MD Consolidated Public Improvement GOs, 63/8% due 10/15/2006 ....... Aaa/AAA 2,287,600
2,500,000 Baltimore, MD Port Facilities Rev. (Consolidated Coal Sales Co. Project),
61/2% due 10/1/2011 ........................................................ Aa3/AA- 2,730,425
2,000,000 Baltimore, MD Project and Refunding Rev. (Water Projects), 51/2% due 7/1/2026 . Aaa/AAA 2,087,640
2,000,000 Howard County, MD Metropolitan District Project GOs, 51/2% due 8/15/2022 ...... Aaa/AAA 2,061,560
2,000,000 Maryland Community Development Administration Dept. of Housing &
Community Development (Multi-Family Housing), 7.70% due 5/15/2020* ......... Aa/NR 2,117,100
2,465,000 Maryland Community Development Administration Dept. of Housing &
Community Development (Single Family Program), 6.80% due 4/1/2024* ......... Aa2/NR 2,626,581
2,500,000 Maryland Community Development Administration Dept. of Housing &
Community Development (Residential Rev.), 57/8% due 9/1/2025* .............. Aa2/NR 2,603,775
2,500,000 Maryland Community Development Administration Dept. of Housing &
Community Development (Multi-Family Housing), 6.70% due 5/15/2027 .......... Aa/NR 2,660,375
2,710,000 Maryland Health & Higher Educational Facilities Authority Rev. (Good Samaritan
Hospital), 53/4% due 7/1/2019 .............................................. A1/NR 2,933,738
2,000,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Suburban Hospital), 51/8% due 7/1/2021 .................................... A1/A+ 1,939,180
2,750,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Anne Arundel Medical Center), 5% due 7/1/2023 ............................. Aaa/AAA 2,711,775
2,500,000 Maryland Health & Higher Educational Facilities Authority Rev. (Francis Scott Key
Medical Center), 5% due 7/1/2023 ........................................... Aaa/AAA 2,465,250
2,000,000 Maryland Health &Higher Educational Facilities Authority Rev.
(Mercy Medical Center), 53/4% due 7/1/2026 ................................. Aaa/AAA 2,135,800
1,500,000 Maryland Health &Higher Educational Facilities Authority Rev. (Anne Arundel
Medical Center), 51/8% due 7/1/2028 ........................................ Aaa/AAA 1,506,885
1,000,000 Maryland Health & Higher Educational Facilities Authority Rev. (Charity
Obligated Group), 5% due 11/1/2029 ......................................... Aa2/AA+ 973,980
1,000,000 Maryland National Capital Park & Planning Commission GOs
(Prince George's County), 6.90% due 7/1/2010 ............................... Aa2/AA 1,062,990
2,000,000 Maryland Transportation Authority Rev. (Baltimore/Washington International
Airport Project), 61/4% due 7/1/2014* ...................................... Aaa/AAA 2,196,500
2,000,000 Maryland Transportation Authority Rev. Transportation Facilities Projects,
53/4% due 7/1/2015 ......................................................... A1/A+ 2,084,480
1,000,000 Maryland Water Quality Financing Administration Revolving Loan Fund Rev.,
6.70% due 9/1/2013 ......................................................... Aaa/AAA 1,090,740
1,000,000 Maryland Water Quality Financing Administration Revolving Loan Fund Rev.,
7.10% due 9/1/2013 ......................................................... Aaa/AAA 1,099,730
</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.
17
<PAGE>
ORTFOLIO OF INVESTMENTS
MARCH 31, 1999
MARYLAND SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$ 440,000 Montgomery County, MD Housing Opportunities Commission (Single Family
Mortgage Rev.), 73/8% due 7/1/2017 ......................................... Aa2/NR $ 450,745
1,500,000 Montgomery County, MD Housing Opportunities Commission Rev.,
6.20% due 7/1/2026* ........................................................ Aa2/NR 1,589,685
2,000,000 Northeast Maryland Waste Disposal Authority Solid Waste Rev.
(Montgomery County Resource Recovery Project), 6.30% due 7/1/2016* ......... A2/NR 2,138,640
1,000,000 Puerto Rico Highway &Transportation Authority Rev., 51/2% due 7/1/2036 ........ Baa1/A 1,059,640
630,000 Puerto Rico Housing Finance Corporation (Single Family Mortgage Rev.
Portfolio 1-C), 6.85% due 10/15/2023 ....................................... Aaa/AAA 668,468
2,000,000 Washington Suburban Sanitary District, MD, 61/2% due 1/1/2016 ................. Aa1/AA 2,164,700
-------------
TOTAL MUNICIPAL BONDS (Cost $51,511,611)-- 97.9% ............................................................ 55,362,856
VARIABLE RATE DEMAND NOTES (Cost $500,000)-- 0.9% ........................................................... 500,000
OTHER ASSETS LESS LIABILITIES-- 1.2% ........................................................................ 679,297
-------------
NET ASSETS-- 100.0% ......................................................................................... $56,542,153
=============
MASSACHUSETTS SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$5,000,000 Boston, MA Water & Sewer Commission General Rev., 51/4% due 11/1/2019 ......... A1/A+ $ 5,192,050
4,000,000 Massachusetts Bay Transportation Authority General Transportation System Rev.,
55/8% due 3/1/2026 ......................................................... Aa3/AA- 4,381,560
975,000 Massachusetts Education Loan Authority Education Loan Rev., 8% due 6/1/2002 ... NR/AAA 982,624
3,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Daughters of
Charity National Health Systems-- Carney Hospital), 6% due 7/1/2009 ........ Aa2/AA+ 3,291,120
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+ 2,703,775
5,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Newton-Wellesley
Hospital), 6% due 7/1/2018 ................................................. Aaa/AAA 5,403,050
3,500,000 Massachusetts Health &Educational Facilities Authority Rev. (Williams College),
53/4% due 7/1/2019 ......................................................... Aa1/AA+ 3,695,265
2,500,000 Massachusetts Health & Educational Facilities Authority Rev. (Suffolk University),
81/8% due 7/1/2020 ......................................................... NR/NR 2,678,750
5,100,000 Massachusetts Health & Educational Facilities Authority Rev. (Smith College),
53/4% due 7/1/2024 ......................................................... Aa2/AA- 5,374,125
5,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Partners Healthcare
System), 53/8% due 7/1/2024 ................................................ Aaa/AAA 5,068,400
</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>
ORTFOLIO OF INVESTMENTS
MARCH 31, 1999
MASSACHUSETTS SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$ 7,500,000 Massachusetts Health & Educational Facilities Authority Rev. (Harvard University),
55/8% due 11/1/2028 ........................................................ Aaa/AAA $ 7,947,000
5,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Catholic Health
East Health System), 5% due 11/15/2028 ..................................... Aaa/AAA 4,812,900
5,250,000 Massachusetts Housing Finance Agency Rev. (Single Family Housing),
51/2% due 12/1/2030* ....................................................... Aaa/AAA 5,327,070
2,000,000 Massachusetts Industrial Finance Agency Electric Utility Rev. (Nantucket Electric
Company Project), 57/8% due 7/1/2017* ...................................... Aaa/AAA 2,145,000
3,500,000 Massachusetts Industrial Finance Agency Rev. (Phillips Academy),
53/8% due 9/1/2023 ......................................................... Aa1/AA+ 3,616,060
3,000,000 Massachusetts Industrial Finance Agency Rev. (College of the Holy Cross),
55/8% due 3/1/2026 ......................................................... Aaa/AAA 3,151,050
3,000,000 Massachusetts Industrial Finance Agency Rev. (Suffolk University),
51/4% due 7/1/2027 ......................................................... Aaa/AAA 3,035,340
3,000,000 Massachusetts Port Authority Special Facilities Rev. (BOS FUEL Project),
53/4% due 7/1/2039* ........................................................ Aaa/AAA 3,161,250
5,000,000 Massachusetts State Consolidated Loan GOs, 51/8% due 11/1/2013 ................ Aaa/AAA 5,144,900
2,400,000 Massachusetts State Port Authority Rev., 5% due 7/1/2023 ...................... Aa3/AA- 2,347,032
2,000,000 Massachusetts State Port Authority Rev., 5% due 7/1/2028* ..................... Aa3/AA- 1,916,880
5,000,000 Massachusetts Water Pollution Abatement Trust Pool Loan Program,
55/8% due 2/1/2016 ......................................................... Aaa/AAA 5,304,200
5,000,000 Massachusetts Water Resources Authority General Rev., 5.60% due 11/1/2026 ..... Aaa/AAA 5,521,150
4,825,000 Plymouth County, MA Certificates of Participation (Plymouth County
Correctional Facility Project), 5% due 4/1/2022 ............................ Aaa/AAA 4,709,055
730,000 Puerto Rico Electric Power Authority Power Rev., 71/8% due 7/1/2014 ........... Baa1/BBB+ 747,907
4,000,000 Puerto Rico Highway & Transportation Authority Rev., 51/2% due 7/1/2036 ....... Baa1/A 4,238,560
2,750,000 Puerto Rico Port Authority Rev., 6% due 7/1/2021* ............................. Aaa/AAA 2,858,598
--------------
TOTAL MUNICIPAL BONDS (Cost $97,849,834)-- 99.0% 104,754,671
VARIABLE RATE DEMAND NOTES (Cost $200,000)-- 0.2% 200,000
OTHER ASSETS LESS LIABILITIES-- 0.8% 819,552
--------------
NET ASSETS-- 100.0% $105,774,223
==============
</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>
ORTFOLIO OF INVESTMENTS
MARCH 31, 1999
MICHIGAN SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$5,000,000 Capital Region Airport Authority, MI Airport Rev., 6.70% due 7/1/2021* ........ Aaa/AAA $ 5,455,000
5,000,000 Detroit, MI GOs, 51/2% due 4/1/2016 ........................................... Aaa/AAA 5,201,450
6,000,000 Detroit, MI Water Supply System Rev., 61/4% due 7/1/2012 ...................... Aaa/AAA 6,551,220
3,000,000 Grand Haven, MI Electric System Rev., 51/4% due 7/1/2013 ...................... Aaa/AAA 3,094,800
5,000,000 Grand Rapids, MI Water Supply System Rev., 53/4% due 1/1/2018 ................. Aaa/AAA 5,147,000
325,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 61/4% due 7/1/2012 ....................................... Aaa/AAA 351,214
485,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 61/4% due 7/1/2022 ....................................... Aaa/AAA 524,120
2,000,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 5% due 7/1/2028 .......................................... Aaa/NR 1,922,620
2,500,000 Kalamazoo, MI Hospital Finance Authority Rev. (Bronson Methodist
Hospital), 51/2% due 5/15/2028 ............................................. Aaa/NR 2,596,850
5,000,000 Kent County, MI Airport Rev., 6.10% due 1/1/2025* ............................. Aa/AAA 5,611,100
1,850,000 Kent County, MI Airport Rev., 5% due 1/1/2028* ................................ Aaa/AAA 1,776,315
2,775,000 Kentwood, MI Public Schools Building & Site GOs, 6.40% due 5/1/2015 ........... Aa2/A+ 3,036,627
3,000,000 Lansing, MI Building Authority Rev., 5.60% due 6/1/2019 ....................... Aa3/AA+ 3,144,060
3,250,000 Marquette, MI Hospital Finance Authority Rev. (Marquette General Hospital),
6.10% due 4/1/2019 ......................................................... Aaa/AAA 3,555,500
3,000,000 Michigan Public Power Agency Rev. (Belle River Project), 51/4% due 1/1/2018 ... A1/AA- 3,014,520
3,000,000 Michigan State Building Authority Rev., 61/4% due 10/1/2020 ................... Aa2/AA 3,197,850
6,000,000 Michigan State GOs (Environmental Protection Program), 5.40% due 11/1/2019 .... Aa1/AA+ 6,218,580
5,000,000 Michigan State Hospital Finance Authority Rev. (Oakwood Obligated Group),
51/8% due 8/15/2025 ........................................................ Aaa/AAA 4,918,000
4,500,000 Michigan State Hospital Finance Authority Rev. (St. John Hospital),
51/4% due 5/15/2026 ........................................................ Aaa/AAA 4,473,945
5,250,000 Michigan State Hospital Finance Authority Rev. (Mercy Health Services
Obligated Group), 53/4% due 8/15/2026 ..................................... Aa3/AA- 5,554,763
5,000,000 Michigan State Hospital Finance Authority Rev. (Charity Obligated Group),
51/8% due 11/1/2029 ........................................................ Aa2/AA+ 4,795,050
5,000,000 Michigan State Hospital Finance Authority Rev. (Sparrow Obligated Group),
6% due 11/15/2036 .......................................................... Aaa/AAA 5,405,200
2,045,000 Michigan State Housing Development Authority Rev. (Single Family Mortgage),
6.80% due 12/1/2016 ........................................................ NR/AA+ 2,162,424
3,925,000 Michigan State Housing Development Authority Rev. (Rental Housing),
6.65% due 4/1/2023 ......................................................... NR/AA- 4,196,649
4,000,000 Michigan State Housing Development Authority Rev. (Single Family Mortgage),
6.05% due 12/1/2027 ........................................................ NR/AA+ 4,206,360
3,000,000 Michigan State Strategic Fund Pollution Control Rev. (Detroit Edison Company),
61/2% due 2/15/2016 ........................................................ Aaa/AAA 3,237,930
6,000,000 Michigan State Strategic Fund Pollution Control Rev. (General Motors Corp.),
6.20% due 9/1/2020 ......................................................... A2/A 6,457,560
</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>
ORTFOLIO OF INVESTMENTS
MARCH 31, 1999
MICHIGAN SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$2,500,000 Michigan State Trunk Line Rev., 5.80% due 11/15/2024 .......................... Aaa/AAA $ 2,775,175
5,000,000 Michigan State Trunk Line Rev., 5% due 11/1/2026 .............................. Aaa/AAA 4,882,750
2,000,000 Midland, MI Water Supply System Rev., 7.20% due 4/1/2010 ...................... A/A 2,107,880
6,300,000 Oxford, MI Area Community Schools GOs, 51/2% due 5/1/2021 ..................... Aaa/AAA 6,556,851
5,000,000 Royal Oak, MI Hospital Finance Authority Rev. (William Beaumont Hospital),
51/4% due 1/1/2020 ......................................................... Aa3/AA 4,937,350
3,000,000 UNIVERSITY OF MICHIGAN HOSPITAL REV., 63/8% DUE 12/1/2024 ...................... AA2/AA 3,144,390
5,000,000 Western Michigan State University Rev., 51/8% due 11/15/2022 .................. Aaa/AAA 4,979,350
3,000,000 Wyandotte, MI Electric Rev., 61/4% due 10/1/2017 .............................. Aaa/AAA 3,265,500
--------------
TOTAL MUNICIPAL BONDS (Cost $130,018,316)-- 98.1% ........................................................... 138,455,953
VARIABLE RATE DEMAND NOTES (Cost $600,000)-- 0.4% ........................................................... 600,000
OTHER ASSETS LESS LIABILITIES-- 1.5% ........................................................................ 2,143,674
--------------
NET ASSETS-- 100.0% ......................................................................................... $141,199,627
==============
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$5,000,000 Becker, MN Pollution Control Rev. (Northern States Power Company),
6.80% due 4/1/2007 ......................................................... A1/A+ $ 5,110,450
1,500,000 Buffalo, MN Independent School District GOs, 6.15% due 2/1/2022 ............... Aaa/AAA 1,625,670
2,250,000 Burnsville - Eagan - Savage, MN Independent School District GOs,
51/8% due 2/1/2016 ......................................................... Aa1/NR 2,285,955
2,350,000 Burnsville - Eagan - Savage, MN Independent School District GOs,
51/8% due 2/1/2017 ......................................................... Aa1/NR 2,380,996
1,500,000 Cloquet, MN Pollution Control Rev. (Potlatch Corporation Projects),
5.90% due 10/1/2026 ........................................................ NR/BBB+ 1,567,635
5,000,000 Edina, MN Housing Development Rev. (Edina Park Plaza Project),
7.70% due 12/1/2028 ........................................................ Aa/NR 5,158,550
3,545,000 Fridley, MN Independent School District GOs, 5.35% due 2/1/2021 ............... Aaa/AAA 3,608,633
1,500,000 Minneapolis, MNGOs, 6% due 3/1/2016 ........................................... Aaa/AAA 1,601,775
4,725,000 Minneapolis, MN Rev. (University Gateway Project), 51/4% due 12/1/2024 ........ Aa2/AA 4,783,732
4,300,000 Minneapolis, MN Special School District GOs, 5% due 2/1/2014 .................. Aa1/AA+ 4,351,815
1,400,000 Minneapolis - St. Paul Metropolitan Area (Metropolitan Council of the
Twin Cities), MN, 51/2% due 12/1/2012 ...................................... Aaa/AAA 1,490,062
5,000,000 Minneapolis - St. Paul, MN Housing & Redevelopment Authority Health Care
Rev. (Children's Health Care), 51/2% due 8/15/2025 ......................... Aaa/AAA 5,162,100
4,000,000 Minneapolis - St. Paul, MN Metropolitan Airport Commission Rev.,
5% due 1/1/2030 ............................................................ Aaa/AAA 3,931,840
2,250,000 Minnesota Agricultural & Economic Development Board Rev. (Evangelical
Lutheran Good Samaritan Society Project), 5.15% due 12/1/2022 .............. Aaa/AAA 2,231,595
</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
MARCH 31, 1999
MINNESOTA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$1,250,000 MINNESOTA AGRICULTURAL & ECONOMIC DEVELOPMENT BOARD REV. (EVANGELICAL
LUTHERAN GOOD SAMARITAN SOCIETY PROJECT), 5% DUE 12/1/2023 ................. AAA/AAA $ 1,220,475
2,775,000 Minnesota Higher Education Facilities Authority Rev. (University of St. Thomas),
5.40% due 4/1/2022 ......................................................... A2/NR 2,852,977
1,000,000 Minnesota Higher Education Facilities Authority Rev. (St. John's University),
5.40% due 10/1/2022 ........................................................ A3/NR 1,022,560
1,775,000 Minnesota Higher Education Facilities Authority Rev. (University of St. Thomas),
5.40% due 4/1/2023 ......................................................... A2/NR 1,809,630
2,500,000 Minnesota Higher Education Facilities Authority Rev. (St. Olaf College),
51/4% due 4/1/2029 ......................................................... A3/NR 2,481,325
790,000 Minnesota Housing Finance Agency (Housing Development), 61/4% due 2/1/2020 .... Aa2/AA 802,205
800,000 Minnesota Housing Finance Agency (Single Family Mortgage),
5.65% due 7/1/2022* ........................................................ Aa2/AA+ 810,208
5,000,000 Minnesota Housing Finance Agency (Single Family Mortgage),
6.85% due 1/1/2024* ........................................................ Aa2/AA+ 5,280,150
1,500,000 Minnesota Public Facilities Authority Water Pollution Control Rev.,
7.10% due 3/1/2012 ......................................................... Aaa/AAA 1,582,530
4,000,000 Minnesota Public Facilities Authority Water Pollution Control Rev.,
61/4% due 3/1/2015 ......................................................... Aaa/AAA 4,472,080
5,000,000 Minnesota State GOs, 5.70% due 5/1/2016 ....................................... Aaa/AAA 5,404,350
5,000,000 North Saint Paul - Maplewood, MN Independent School District GOs,
51/8% due 2/1/2025 ......................................................... Aa1/AA+ 4,974,800
2,500,000 Northfield, MNIndependent School District GOs, 51/4% due 2/1/2017 ............. Aa1/NR 2,546,300
2,000,000 Ramsey & Washington Counties, MN Resource Recovery Rev. (Northern States
Power Company Project), 63/4% due 12/1/2006 ................................ A1/AA 2,058,280
4,000,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo
Medical Center), 7.45% due 11/15/2006 ...................................... NR/AA+ 4,254,360
4,500,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo
Medical Center), 61/4% due 11/15/2014 ...................................... NR/AA+ 4,893,660
2,575,000 Rochester, MN Independent School District GOs, 55/8% due 2/1/2016 ............. Aaa/AA+ 2,808,398
2,715,000 Rochester, MN Independent School District GOs, 55/8% due 2/1/2017 ............. Aaa/AA+ 2,961,088
4,500,000 Saint Paul, MN Housing and Redevelopment Health Care Rev.,
(Regions Hospital Project), 5.30% due 5/15/2028 ............................ NR/BBB+ 4,282,110
45,000 Saint Paul Port Authority, MN Industrial Development Rev. Series E,
91/8% due 10/1/2000 ........................................................ NR/CCC 45,381
5,000 Saint Paul Port Authority, MN Industrial Development Rev. Series H,
91/8% due 12/1/2000 ........................................................ NR/CCC 5,041
55,000 Saint Paul Port Authority, MN Industrial Development Rev. Series I,
91/8% due 12/1/2000 ........................................................ NR/CCC 55,449
50,000 Saint Paul Port Authority, MN Industrial Development Rev. Series E,
91/8% due 10/1/2001 ........................................................ NR/CCC 50,635
10,000 Saint Paul Port Authority, MN Industrial Development Rev. Series H,
91/8% due 12/1/2001 ........................................................ NR/CCC 10,145
</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
MARCH 31, 1999
MINNESOTA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$ 55,000 Saint Paul Port Authority, MN Industrial Development Rev. Series I,
91/8% due 12/1/2001 ........................................................ NR/CCC $ 55,799
5,000 Saint Paul Port Authority, MN Industrial Development Rev. Series L,
93/4% due 12/1/2001 ........................................................ NR/CCC 5,084
50,000 Saint Paul Port Authority, MN Industrial Development Rev. Series E,
91/8% due 10/1/2002 ........................................................ NR/CCC 50,727
10,000 Saint Paul Port Authority, MN Industrial Development Rev. Series H,
91/8% due 12/1/2002 ........................................................ NR/CCC 10,141
60,000 Saint Paul Port Authority, MN Industrial Development Rev. Series I,
91/8% due 12/1/2002 ........................................................ NR/CCC 60,846
10,000 Saint Paul Port Authority, MN Industrial Development Rev. Series L,
93/4% due 12/1/2002 ........................................................ NR/CCC 10,167
1,500,000 Southern Minnesota Municipal Power Agency-- Power Supply System Rev.,
53/4% due 1/1/2018 ......................................................... A2/A+ 1,569,975
1,500,000 Southern Minnesota Municipal Power Agency-- Power Supply System Rev.,
43/4% due 1/1/2016 ......................................................... A2/A+ 1,436,340
3,090,000 Western Minnesota Municipal Power Agency-- Power Supply Rev.,
51/2% due 1/1/2015 ......................................................... A1/A 3,091,761
9,010,000 Western Minnesota Municipal Power Agency-- Power Supply Rev.,
63/8% due 1/1/2016 ......................................................... Aaa/AAA 10,176,164
------------
TOTAL MUNICIPAL BONDS (Cost $112,378,203)-- 98.0% ........................................................ 118,441,949
VARIABLE RATE DEMAND NOTES (Cost $800,000)-- 0.7% ........................................................ 800,000
OTHER ASSETS LESS LIABILITIES-- 1.3% ..................................................................... 1,613,956
------------
NET ASSETS-- 100.0% ...................................................................................... $120,855,905
============
</TABLE>
MISSOURI SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$2,000,000 Columbia, MO Water and Electric System Improvement Rev., 61/8% due 10/1/2012 .. A1/AA $ 2,190,260
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 2,611,050
1,500,000 Hannibal, MO Industrial Development Authority Health Facilities Rev.
(Hannibal Regional Hospital), 53/4% due 3/1/2022 ........................... Aaa/AAA 1,581,165
1,000,000 Joplin, MO Industrial Development Authority Rev. (Catholic Health Initiatives),
5 1/8% due 12/1/2015 ....................................................... Aa2/AA 1,001,150
1,500,000 Joplin, MO Industrial Development Authority Rev. (Catholic Health Initiatives),
5% due 12/1/2028 ........................................................... Aa2/AA 1,432,980
1,000,000 Missouri Development Finance Board Solid Waste Disposal Rev. (The Procter &
Gamble Company Paper Products Project), 5.20% due 3/15/2029* ............... Aa2/AA 995,460
145,000 Missouri School Boards Pooled Financing Program Certificates of Participation,
7 3/8% due 3/1/2006 ........................................................ Aaa/AAA 147,436
</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
MARCH 31, 1999
MISSOURI SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$ 525,000 Missouri School Boards Pooled Financing Program Certificates of Participation,
7% due 3/1/2006 ............................................................ Aaa/AAA $ 533,017
1,000,000 Missouri State Environmental Improvement & Energy Resources Authority Rev.
(State Revolving Fund Program), 6.55% due 7/1/2014 ......................... Aa1/NR 1,082,040
2,500,000 Missouri State Environmental Improvement & Energy Resources Authority Rev.
(Union Electric Company Project), 5.45% due 10/1/2028* ..................... A1/AA- 2,567,325
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 2,570,200
2,000,000 Missouri State GOs, 55/8% due 4/1/2017 ........................................ Aaa/AAA 2,122,180
2,500,000 Missouri State Health & Educational Facilities Authority Rev. (Lester E. Cox
Medical Centers Project), 51/4% due 6/1/2015 ............................... Aaa/AAA 2,599,600
1,500,000 Missouri State Health & Educational Facilities Authority Rev. (Sisters of Mercy
Health System, St. Louis, Inc.), 61/4% due 6/1/2015 ........................ Aa1/AA+ 1,607,220
1,000,000 Missouri State Health & Educational Facilities Authority Rev. (Sisters of Mercy
Health System, St. Louis, Inc.), 71/4% due 6/1/2019 ........................ Aaa/AA+ 1,026,580
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+ 977,570
2,500,000 Missouri State Health & Educational Facilities Authority Rev.
(Barnes-Jewish, Inc./Christian Health Services), 51/4% due 5/15/2021 ....... Aa2/AA 2,499,850
2,500,000 Missouri State Health & Educational Facilities Authority Rev. (SSM Health Care),
5% due 6/1/2022 ............................................................ Aaa/AAA 2,449,425
2,500,000 Missouri State Health Educational Facilities Authority Rev.
(The Washington University), 5% due 11/15/2037 ............................. Aa1/AA+ 2,408,875
820,000 Missouri State Housing Development Commission Housing Development Bonds
(Federally Insured Mortgage Loans), 6% due 10/15/2019 ...................... Aa2/AA+ 831,964
2,375,000 Missouri State Housing Development Commission Single Family Mortgage Rev.
(Homeownership Loan Program), 5.90% due 9/1/2028* .......................... NR/AAA 2,471,663
1,000,000 Puerto Rico Highway & Transportation Authority Rev., 51/2% due 7/1/2026 ....... Baa1/A 1,038,840
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+ 1,782,000
1,500,000 St. Louis, MO Municipal Finance Corporation City Justice Center Leasehold
Improvement Rev., 5.95% due 2/15/2016 ...................................... Aaa/AAA 1,628,340
2,400,000 Southeast Missouri Correctional Facility Lease Rev. (Missouri State Project),
53/4% due 10/15/2016 ....................................................... Aa/NR 2,509,056
2,500,000 Springfield, MO Waterworks Rev., 5.60% due 5/1/2023 ........................... Aa2/A+ 2,707,000
2,750,000 University of Missouri Systems Facilities Rev., 51/2% due 11/1/2023 ........... Aa2/AA+ 2,837,752
-----------
TOTAL MUNICIPAL BONDS (Cost $45,571,343)-- 97.3% ......................................................... 48,209,998
VARIABLE RATE DEMAND NOTES (Cost $500,000)-- 1.0% ........................................................ 500,000
OTHER ASSETS LESS LIABILITIES-- 1.7% ..................................................................... 860,163
-----------
NET ASSETS-- 100.0% ...................................................................................... $49,570,161
===========
</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.
24
<PAGE>
PORTFOLIOS OF INVESTMENTS
MARCH 31, 1999
NEW YORK SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$2,490,000 Buffalo Municipal Water Finance Authority, NY Water System Rev.,
5% due 7/1/2026 ............................................................ Aaa/AAA $ 2,439,005
2,500,000 Long Island Power Authority, NY Electric Systems General Rev.,
51/2% due 12/1/2029 ........................................................ Baa1/A- 2,568,550
4,000,000 Metropolitan Transportation Authority, NY (Dedicated Tax Fund),
5% due 4/1/2023 ............................................................ Aaa/AAA 3,934,120
4,000,000 New York City Municipal Water Finance Authority, NY Water & Sewer
System Rev., 61/4% due 6/15/2020 ........................................... Aaa/AAA 4,564,080
4,000,000 New York City Municipal Water Finance Authority, NY Water & Sewer
System Rev., 51/8% due 6/15/2030 ........................................... Aaa/AAA 3,984,240
1,340,000 New York City, NY GOs, 71/4% due 8/15/2024 .................................... Aaa/A- 1,451,609
5,000 New York City, NY GOs, 71/4% due 8/15/2024 .................................... A3/A- 5,368
1,380,000 New York City, NY GOs, 6% due 8/1/2026 ........................................ A3/A- 1,497,659
2,400,000 New York City, NY Industrial Development Agency Civic Facility Rev.
(The Nightingale - Bamford School Project), 5.85% due 1/15/2020 ............ A3/A 2,532,264
2,500,000 New York City, NY Transitional Finance Authority (Future Tax Secured Bonds),
5% due 5/1/2026 ............................................................ Aa3/AA 2,431,225
4,000,000 New York City, NY Trust for Cultural Resources Rev. (American Museum of
Natural History), 5.65% due 4/1/2027 ....................................... Aaa/AAA 4,234,640
4,000,000 New York State Dormitory Authority Rev. (Fordham University),
53/4% due 7/1/2015 ......................................................... Aaa/AAA 4,250,160
4,000,000 New York State Dormitory Authority Rev. (Rochester Institute of Technology),
51/2% due 7/1/2018 ......................................................... Aaa/AAA 4,176,680
3,500,000 New York State Dormitory Authority Rev. (Mental Health Services Facilities
Improvement), 53/4% due 8/15/2022 .......................................... A3/A- 3,719,170
3,000,000 New York State Dormitory Authority Rev. (Skidmore College), 53/8% due 7/1/2023 Aaa/AAA 3,062,730
1,500,000 New York State Dormitory Authority Rev. (Vassar Brothers Hospital),
53/8% due 7/1/2025 ......................................................... Aaa/AAA 1,547,475
2,000,000 New York State Dormitory Authority Rev. (Hospital for Special Surgery),
5% due 2/1/2028 ............................................................ Aaa/AAA 1,958,000
2,000,000 New York State Dormitory Authority Rev. (Rockefeller University),
5% due 7/1/2028 ............................................................ Aaa/AAA 1,960,680
4,000,000 New York State Energy Research & Development Authority Gas Facilities Rev.
(Brooklyn Union Gas), 51/2% due 1/1/2021 ................................... Aaa/AAA 4,171,680
3,000,000 New York State Environmental Facilities Corporation Pollution Control Rev.
(State Water-- Revolving Fund), 6.90% due 11/15/2015 ....................... Aaa/AAA 3,445,920
3,000,000 New York State Housing Finance Agency Rev. (Phillips Village Project),
73/4% due 8/15/2017* ....................................................... A2/NR 3,325,470
3,000,000 New York State Local Government Assistance Corp., 6% due 4/1/2024 ............. A3/A+ 3,252,180
2,000,000 New York State Mortgage Agency Rev. (Homeowner Mortgage),
71/2% due 4/1/2016 ......................................................... Aa2/NR 2,058,260
1,000,000 New York State Mortgage Agency Rev. (Homeowner Mortgage),
51/2% due 10/1/2028* ....................................................... Aa2/NR 1,016,370
</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
MARCH 31, 1999
NEW YORK SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$3,000,000 New York State Thruway Authority General Rev., 6% due 1/1/2025 ................ Aaa/AAA $ 3,351,390
2,000,000 New York State Thruway Authority (Highway and Bridge Trust Fund),
5% due 4/1/2018 ............................................................ A3/A- 1,949,720
4,000,000 New York State Thruway Authority Service Contract Rev., 61/4% due 4/1/2014 .... Baa1/BBB+ 4,513,760
4,000,000 Onondaga County, NY Industrial Development Agency Sewer Facilities Rev.
(Bristol-Myers Squibb Co. Project), 53/4% due 3/1/2024* .................... Aaa/AAA 4,352,320
2,250,000 Port Authority of New York and New Jersey Consolidated Rev., 61/8% due 6/1/2094 A1/AA- 2,581,695
-----------
TOTAL MUNICIPAL BONDS (Cost $78,914,488)-- 95.5% ......................................................... 84,336,420
VARIABLE RATE DEMAND NOTES (Cost $1,400,000)-- 1.6% ...................................................... 1,400,000
OTHER ASSETS LESS LIABILITIES-- 2.9% ..................................................................... 2,531,290
-----------
NET ASSETS-- 100.0% ...................................................................................... $88,267,710
===========
</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.
OHIO SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$2,250,000 Beavercreek Local School District, OH GOs (School Improvement Bonds),
5.70% due 12/1/2020 ........................................................ Aaa/AAA $ 2,385,810
3,450,000 Big Walnut Local School District, OH School Building Construction &
Improvement GOs, 7.20% due 6/1/2007 ........................................ Aaa/AAA 3,772,851
4,000,000 Butler County, OH Transportation Improvement District Highway
Improvement Rev., 51/8% due 4/1/2017 ....................................... Aaa/AAA 4,056,120
4,000,000 Cleveland, OH Airport System Rev., 51/8% due 1/1/2027* ........................ Aaa/AAA 3,927,040
2,395,000 Cleveland,OH Airport System Rev., 51/8% due 1/1/2027 .......................... Aaa/AAA 2,393,036
5,000,000 Cleveland, OH Public Power System Rev., 5% due 11/15/2024 ..................... Aaa/AAA 4,935,700
4,915,000 Cleveland, OH Waterworks Improvement First Mortgage Rev., 53/4% due 1/1/2021 .. Aaa/AAA 5,469,559
85,000 Cleveland, OH Waterworks Improvement First Mortgage Rev., 53/4% due 1/1/2021 .. Aaa/AAA 90,645
4,500,000 Columbus, OH Municipal Airport Authority Rev. (Port Columbus International
Airport Project), 6% due 1/1/2020* ......................................... Aaa/AAA 4,824,225
1,000,000 Columbus, OH Municipal Airport Authority Rev. (Port Columbus International
Airport Project), 5% due 1/1/2028 .......................................... Aaa/AAA 984,920
3,000,000 Dayton, OH Water System Mortgage Rev., 63/4% due 12/1/2010 .................... Aaa/AAA 3,004,200
7,000,000 Franklin County, OH GOs, 53/8% due 12/1/2020 .................................. Aaa/AAA 7,254,450
7,500,000 Franklin County, OH Hospital Rev. (Riverside United Methodist Hospital),
53/4% due 5/15/2020 ........................................................ Aa3/NR 7,769,025
2,500,000 Hamilton County, OH Sewer System Rev., 51/2% due 12/1/2017 .................... Aaa/AAA 2,591,450
5,000,000 Hamilton, OH Electric System Mortgage Rev., 6% due 10/15/2023 ................. Aaa/AAA 5,405,150
4,000,000 Hudson Local School District, OH GOs, 7.10% due 12/15/2013 .................... A1/NR 4,323,640
1,095,000 Lake County, OH Hospital Improvement Rev. (Lake Hospital System Inc.),
8% due 1/1/2013 ............................................................ Aaa/AAA 1,110,111
</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
MARCH 31, 1999
OHIO SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$6,425,000 Mahoning County, OH Hospital Rev. (Forum Health Obligated Group),
5% due 11/15/2025 .......................................................... Aaa/AAA $ 6,276,711
2,000,000 Montgomery County, OH Catholic Health Initiatives Rev., 51/8% due 12/1/2017 ... Aa2/AA 1,986,800
2,000,000 Ohio Air Quality Development Authority Rev. (Cincinnati Gas & Electric
Company Project), 5.45% due 1/1/2024 ....................................... Aaa/AAA 2,055,460
6,500,000 Ohio Air Quality Development Authority Rev. (JMG Project), 63/8% due 1/1/2029* Aaa/AAA 7,216,690
4,415,000 Ohio Housing Finance Agency Residential Mortgage Rev. (Mortgage-Backed
Securities Program), 6.10% due 9/1/2028* ................................... NR/AAA 4,680,960
3,000,000 Ohio State Higher Educational Facilities Commission Rev. (Oberlin College
Project), 53/8% due 10/1/2015 .............................................. NR/AA 3,083,550
4,000,000 Ohio State Higher Educational Facilities Commission Rev. (University of
Dayton Project), 5.40% due 12/1/2022 ....................................... Aaa/AAA 4,118,080
2,000,000 Ohio State Liquor Profits Rev., 6.85% due 3/1/2000 ............................ Aaa/AAA 2,066,000
4,000,000 Ohio State Public Facilities Commission Rev. (Higher Education Capital Facilities),
6.30% due 5/1/2006 ......................................................... Aaa/AAA 4,293,240
2,190,000 Ohio State Water Development Authority Rev. (Safe Water), 93/8% due 12/1/2010 . Aaa/AAA 2,757,385
7,500,000 Ohio State Water Development Authority Rev. (Fresh Water), 51/8% due 12/1/2023 Aaa/AAA 7,515,300
5,000,000 Ohio State Water Development Authority Rev. (Community Assistance),
53/8% due 12/1/2024 ........................................................ Aaa/AAA 5,149,000
5,000,000 Ohio State Water Development Authority Rev. (Dayton Power & Light Co.
Project), 6.40% due 8/15/2027 .............................................. Aa3/AA- 5,420,900
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/A+ 2,717,125
3,000,000 Ohio Turnpike Commission, OH Turnpike Rev., 5.70% due 2/15/2017 ............... Aaa/AAA 3,333,990
2,955,000 Pickerington Local School District, OH School Building Construction GOs,
8% due 12/1/2005 ........................................................... Aaa/aaa 3,452,001
4,000,000 Puerto Rico Highway &Transportation Authority Rev., 51/2% due 7/1/2036 ........ Baa1/A 4,238,560
775,000 Toledo, OH Sewer System Rev., 73/4% due 11/15/2017 ............................ Aaa/AAA 793,368
560,000 Toledo, OH Waterworks Rev., 73/4% due 11/15/2017 .............................. Aaa/AAA 573,272
2,500,000 Twinsburg City School District, OH School Improvement GOs,
5.90% due 12/1/2021 ........................................................ Aaa/AAA 2,698,875
3,000,000 University of Toledo, OH General Receipts Bonds, 7.10% due 6/1/2010 ........... Aaa/AAA 3,189,420
2,000,000 Worthington City School District, OH School Building Construction &
Improvement GOs, 83/4% due 12/1/2002 ....................................... Aaa/AAA 2,110,500
------------
TOTAL MUNICIPAL BONDS (Cost $135,108,793)-- 95.5% ........................................................ 144,025,119
VARIABLE RATE DEMAND NOTES (Cost $5,000,000)-- 3.3% ...................................................... 5,000,000
OTHER ASSETS LESS LIABILITIES-- 1.2% ..................................................................... 1,821,123
------------
NET ASSETS-- 100.0% ...................................................................................... $150,846,242
============
</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
MARCH 31, 1999
OREGON SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$2,000,000 Benton County, OR Hospital Facilities Authority Rev. (Samaritan Health
Services Project), 51/8% due 10/1/2028 ..................................... NR/A $ 1,948,080
2,000,000 Chemeketa, OR Community College District GOs, 5.95% due 6/1/2016 .............. Aaa/AAA 2,230,260
1,000,000 Clackamas & Washington Counties, OR GOs (West Linn-Wilsonville
School District), 5% due 6/1/2017 .......................................... Aaa/AAA 1,001,930
1,500,000 Eugene, OR Trojan Nuclear Project Rev., 5.90% due 9/1/2009 .................... Aa1/AA- 1,541,250
1,250,000 Multnomah County, OR Education Facility Rev. (University of Portland),
5% due 4/1/2018 ............................................................ Aaa/AAA 1,250,975
1,750,000 Multnomah County School District, OR GOs, 51/2% due 6/1/2015 .................. A1/A+ 1,825,583
2,000,000 North Clackamas Parks & Recreation District -- Clackamas County, OR Rev.
(Recreational Facilities), 5.70% due 4/1/2013 .............................. NR/A- 2,113,640
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- 2,003,200
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 ...................................... Aa2/AA 799,560
2,500,000 Oregon Department of Administrative Services Certificates of Participation,
5.80% due 5/1/2024 ......................................................... Aaa/AAA 2,795,000
2,250,000 Oregon Department of Administrative Services Certificates of Participation,
5% due 5/1/2024 ............................................................ Aaa/AAA 2,234,002
1,000,000 Oregon Department of Transportation Regional Light Rail Extension Rev.,
6.20% due 6/1/2008 ......................................................... Aaa/AAA 1,112,050
2,000,000 Oregon Health, Housing, Educational &Cultural Facilities Authority Rev.
(Linfield College Project), 51/4% due 10/1/2023 ............................ Baa1/NR 1,983,660
2,500,000 Oregon Health, Housing, Educational &Cultural Facilities Authority Rev.
(Reed College Project), 53/8% due 7/1/2025 ................................. NR/A+ 2,559,250
1,250,000 Oregon Health Sciences University Rev., 51/4% due 7/1/2028 .................... Aaa/AAA 1,259,000
2,000,000 Oregon Housing & Community Services Department Housing & Finance Rev.
(Assisted or Insured Multi-Unit Program), 53/4% due 7/1/2012 ............... Aa2/A+ 2,075,140
880,000 Oregon Housing & Community Services Department Mortgage Rev.
(Single Family Mortgage Program), 5.65% due 7/1/2019* ...................... Aa2/NR 897,046
300,000 Oregon Housing & Community Services Department Mortgage Rev.
(Single Family Mortgage Program), 7% due 7/1/2022* ......................... Aa2/NR 302,283
500,000 Oregon Housing & Community Services Department Mortgage Rev.
(Single Family Mortgage Program), 5.30% due 7/1/2024* ...................... Aa2/NR 502,060
1,000,000 Oregon Housing & Community Services Department Mortgage Rev.
(Single Family Mortgage Program), 6% due 7/1/2027* ......................... Aa2/NR 1,048,330
</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
MARCH 31, 1999
OREGON SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$ 500,000 Oregon State GOs (Veterans' Welfare), 9% due 10/1/2006 ........................ Aa2/AA $ 655,305
1,375,000 Oregon State GOs (Veterans' Welfare), 57/8% due 10/1/2018 ..................... Aa2/AA 1,437,150
250,000 Oregon State GOs (Elderly & Disabled Housing), 7.20% due 8/1/2021 ............. Aa2/AA 264,807
1,000,000 Oregon State GOs (Elderly & Disabled Housing), 6.60% due 8/1/2022* ............ Aa2/AA 1,092,250
950,000 Port of Portland, OR International Airport Rev., 7.10% due 7/1/2021* .......... Aaa/AAA 1,163,227
15,000 Port of Portland, OR International Airport Rev., 7.10% due 7/1/2021* .......... Aaa/AAA 16,273
35,000 Port of Portland, OR International Airport Rev., 7.10% due 7/1/2021* .......... Aaa/AAA 37,923
500,000 Port of Portland, OR International Airport Rev., 53/4% due 7/1/2025* .......... Aaa/AAA 523,270
1,500,000 Port of Portland, OR International Airport Rev., 55/8% due 7/1/2026* .......... Aaa/AAA 1,561,860
2,000,000 Portland, OR GOs, 5.60% due 6/1/2014 .......................................... Aa2/NR 2,131,480
1,250,000 Portland, OR Hospital Facilities Authority Rev. (Legacy Health System),
65/8% due 5/1/2011 ......................................................... Aaa/AAA 1,339,750
2,500,000 Portland, OR Sewer System Rev., 5% due 6/1/2015 ............................... Aaa/AAA 2,521,525
1,000,000 Puerto Rico Highway & Transportation Authority Rev., 51/2% due 7/1/2026 ....... Baa1/A 1,038,840
630,000 Puerto Rico Housing Finance Corp. (Single Family Mortgage Rev.),
6.85% due 10/15/2023 ....................................................... Aaa/AAA 668,468
1,000,000 Puerto Rico Ports Authority Rev., 7% due 7/1/2014* ............................ Aaa/AAA 1,082,150
1,000,000 Puerto Rico Telephone Authority Rev., 51/2% due 1/1/2013 ...................... A/A+ 1,041,140
2,000,000 Salem, OR Hospital Facility Authority Rev. (Salem Hospital), 5% due 8/15/2018 . NR/AA- 1,968,200
2,600,000 Salem, OR Pedestrian Safety Improvements GOs, 53/4% due 5/1/2011 ............. Aaa/AAA 2,826,356
1,000,000 Tri-County Metropolitan Transportation District of Oregon GOs
(Light Rail Extension), 6% due 7/1/2012 .................................... Aa2/AA+ 1,077,990
1,110,000 Tualatin Development Commission, OR (Urban Renewal & Redevelopment),
73/8% due 1/1/2007 ......................................................... Baa1/NR 1,119,857
500,000 Virgin Islands Public Finance Authority Rev., 51/2% due 10/1/2022 ............. NR/BBB- 502,965
2,500,000 Washington and Multnomah Counties, OR (Beaverton School District),
5% due 8/1/2017 ............................................................ Aa2/AA- 2,501,675
1,500,000 Washington County, OR Unified Sewerage Agency Rev., 53/4% due 10/1/2011 ....... Aaa/AAA 1,670,175
-----------
TOTAL MUNICIPAL BONDS (Cost $56,194,635)-- 98.3% ......................................................... 59,724,935
VARIABLE RATE DEMAND NOTES (Cost $300,000)-- 0.5% ........................................................ 300,000
OTHER ASSETS LESS LIABILITIES-- 1.2% ..................................................................... 710,377
-----------
NET ASSETS-- 100.0% ...................................................................................... $60,735,312
===========
</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
MARCH 31, 1999
SOUTH CAROLINA SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$2,500,000 Anderson County, SC Hospital Rev. (Anderson Memorial Hospital),
51/4% due 2/1/2012 ......................................................... Aaa/AAA $ 2,561,600
3,800,000 Berkeley County, SC Water & Sewer Rev., 5.55% due 6/1/2016 .................... Aaa/AAA 3,935,964
745,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.15% due 2/1/2004 ......................................................... A1/A 781,438
770,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.15% due 8/1/2004 ......................................................... A1/A 807,661
800,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.20% due 2/1/2005 ......................................................... A1/A 839,112
2,500,000 Charleston, SC Waterworks & Sewer System Rev., 6% due 1/1/2012 ................ A1/AA- 2,663,500
6,000,000 Darlington County, SC Industrial Development Rev. (Nucor Corporation Project),
53/4% due 8/1/2023* ........................................................ A1/AA- 6,201,780
3,500,000 Darlington County, SC Industrial Development Rev. (Sonoco Products
Company Project), 6% due 4/1/2026* ......................................... A2/A 3,709,545
2,500,000 Fairfield County, SC Pollution Control Rev. (South Carolina Electric & Gas
Company), 61/2% due 9/1/2014 ............................................... A1/A+ 2,738,625
1,000,000 Georgetown County, SC Pollution Control Facilities Rev. (International Paper
Company), 73/8% due 6/15/2005 .............................................. A3/BBB+ 1,015,220
3,000,000 Greenville Hospital System, SC Hospital Facilities Rev., 51/2% due 5/1/2016 ... NR/AA 3,058,800
2,000,000 Greenville Hospital System, SC Hospital Facilities Rev., 51/4% due 5/1/2023 ... Aa3/AA 1,959,740
3,000,000 Greenwood County, SC Hospital Facilities Rev. (Self Memorial Hospital),
57/8% due 10/1/2017 ........................................................ Aaa/AAA 3,162,870
2,600,000 Lancaster County, SC School District GOs, 6.60% due 7/1/2012 .................. AAA/AAA 2,874,872
2,000,000 Lancaster County, SC Waterworks & Sewer System Rev., 51/4% due 5/1/2021 ....... Aaa/AAA 2,014,020
2,720,000 Laurens County, SC Combined Utility System Rev., 5% due 1/1/2018 .............. Aaa/AAA 2,690,434
5,000,000 Lexington County, SC Hospital Rev. (Health Services District, Inc.),
51/8% due 11/1/2026 ........................................................ Aaa/AAA 4,916,400
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 1,098,750
1,000,000 Medical University South Carolina Hospital Facilities Rev., 5.60% due 7/1/2011 Aaa/AAA 1,094,740
3,000,000 Mount Pleasant, SC Water & Sewer Rev., 6% due 12/1/2020 ....................... Aaa/AAA 3,249,090
2,000,000 Myrtle Beach, SC Waterworks & Sewer System Rev., 51/4% due 3/1/2020 ........... Aaa/AAA 2,012,020
1,500,000 North Charleston Sewer District, SC Rev., 63/8% due 7/1/2012 .................. Aaa/AAA 1,760,205
5,000,000 Oconee County, SC Pollution Control Rev. (Duke Power Co. Project),
5.80% due 4/1/2014 ......................................................... Aa2/AA- 5,264,900
1,250,000 Piedmont Municipal Power Agency, SC Electric Rev., 61/4% due 1/1/2021 ......... Aaa/AAA 1,448,337
3,000,000 Piedmont Municipal Power Agency, SC Electric Rev., 6.30% due 1/1/2022 ......... Aaa/AAA 3,313,950
1,000,000 Puerto Rico Highway &Transportation Authority Rev., 51/2% due 7/1/2036 ........ Baa1/A 1,059,640
2,000,000 Puerto Rico Highway &Transportation Authority Rev., 5% due 7/1/2038 ........... Baa1/A 1,946,220
</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
MARCH 31, 1999
SOUTH CAROLINA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
------------ --------------- ------------ ----------
<S> <C> <C> <C>
$ 2,500,000 Puerto Rico Industrial, Tourist, Educational, Medical & Environmental Control
Facilities Financing Authority Higher Education Rev. (Inter-American
University of Puerto Rico Project), 5% due 10/1/2022 ....................... Aaa/AAA $ 2,493,150
1,000,000 Puerto Rico Telephone Authority Rev., 51/2% due 1/1/2022 ...................... A/A+ 1,028,160
2,000,000 Richland County, SC Solid Waste Disposal Facilities Rev. (Union Camp
Corp. Project), 7.45% due 4/1/2021* ........................................ A1/A- 2,163,280
1,000,000 Richland County, SC Solid Waste Disposal Facilities Rev. (Union Camp
Corp. Project), 71/8% due 9/1/2021* ........................................ A2/A- 1,080,570
5,000,000 Rock Hill, SC Combined Utilities System Rev., 5% due 1/1/2020 ................. Aaa/AAA 4,892,200
2,000,000 South Carolina Jobs--Economic Development Authority Hospital Rev.
(Georgetown Memorial Hospital), 5% due 11/1/2029 ........................... Aaa/NR 1,921,260
6,000,000 South Carolina Public Service Authority Rev., 57/8% due 1/1/2023 .............. Aaa/AAA 6,447,960
500,000 South Carolina State Housing Finance & Development Authority
(Homeownership Mortgage), 7.55% due 7/1/2011 ............................... Aa2/AA 516,225
2,095,000 South Carolina State Housing Finance & Development Authority Rental
Housing Rev. (North Bluff Project), 5.60% due 7/1/2016 ..................... NR/AA 2,126,760
1,000,000 South Carolina State Housing Finance & Development Authority (Multi-Family
Development Rev.), 67/8% due 11/15/2023 .................................... Aaa/NR 1,063,170
5,000,000 South Carolina State Ports Authority Rev., 5.30% due 7/1/2026* ................ Aaa/AAA 4,999,550
5,000,000 Spartanburg, SC Water System Rev., 5% due 6/1/2027 ............................ Aaa/AAA 4,881,550
3,000,000 University of South Carolina Rev., 53/4% due 6/1/2026 ......................... Aaa/AAA 3,190,890
2,000,000 Western Carolina Regional Sewer Authority, SC Sewer System Rev.
51/2% due 3/1/2010 ......................................................... Aaa/AAA 2,136,140
------------
TOTAL MUNICIPAL BONDS (Cost $100,549,652)-- 96.5% ........................................................ 107,120,298
VARIABLE RATE DEMAND NOTES (Cost $2,300,000)-- 2.1% ...................................................... 2,300,000
OTHER ASSETS LESS LIABILITIES-- 1.4% ..................................................................... 1,603,402
------------
NET ASSETS-- 100.0% ...................................................................................... $111,023,700
============
</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>
<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 ................................. $106,302,064 $45,664,439 $48,798,297 $56,203,747 $55,362,856
Short-term holdings ................................ 1,000,000 1,300,000 1,000,000 1,000,000 500,000
------------ ----------- ----------- ----------- -----------
107,302,064 46,964,439 49,798,297 57,203,747 55,862,856
Cash ................................................. 122,895 125,965 101,872 122,774 67,432
Interest receivable .................................. 1,553,190 847,717 782,863 941,171 914,343
Expenses prepaid to shareholder service agent ........ 13,846 5,769 6,154 6,154 7,692
Receivable for Capital Stock sold .................... -- 38,418 305 18,586 48,507
Receivable for securities sold ....................... -- -- -- 345,000 --
Other ................................................ 1,105 491 529 591 576
------------ ----------- ----------- ----------- -----------
TOTAL ASSETS ......................................... 108,993,100 47,982,799 50,690,020 58,638,023 56,901,406
------------ ----------- ----------- ----------- -----------
LIABILITIES:
Dividends payable .................................... 197,654 85,212 88,437 101,444 104,519
Payable for Capital Stock repurchased ................ 143,613 48,368 805,226 357,708 176,996
Payable for securities purchased ..................... -- -- -- 2,747,653 --
Accrued expenses and other ........................... 126,943 69,146 75,248 81,774 77,738
------------ ----------- ----------- ----------- -----------
TOTAL LIABILITIES .................................... 468,210 202,726 968,911 3,288,579 359,253
------------ ----------- ----------- ----------- -----------
NET ASSETS ........................................... $108,524,890 $47,780,073 $49,721,109 $55,349,444 $56,542,153
============ =========== =========== =========== ===========
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A ............................................ $ 12,313 $ 6,234 $ 5,717 $ 6,592 $ 6,516
Class D ............................................ 976 117 325 92 371
Additional paid-in capital ........................... 104,318,619 45,350,143 45,788,945 51,847,646 52,693,880
Undistributed/accumulated net realized gain (loss) ... (1,449,140) (19,853) (5,087) 132,458 (9,859)
Net unrealized appreciation of investments ........... 5,642,122 2,443,432 3,931,209 3,362,656 3,851,245
------------ ----------- ----------- ----------- -----------
NET ASSETS ........................................... $108,524,890 $47,780,073 $49,721,109 $55,349,444 $56,542,153
============ =========== =========== =========== ===========
NET ASSETS:
Class A ............................................ $100,556,597 $46,896,526 $47,043,361 $54,586,766 $53,490,344
Class D ............................................ $ 7,968,293 $ 883,547 $ 2,677,748 $ 762,678 $ 3,051,809
SHARES OF CAPITAL STOCK OUTSTANDING ($.001 par value):
Class A ............................................ 12,312,824 6,233,828 5,717,624 6,592,158 6,515,386
Class D ............................................ 976,129 117,562 324,753 92,140 371,425
NET ASSET VALUE PER SHARE:
CLASS A ............................................ $8.17 $7.52 $8.23 $8.28 $8.21
CLASS D ............................................ $8.16 $7.52 $8.25 $8.28 $8.22
</TABLE>
- ----------
See Notes to Financial Statements.
32
<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 ................................. $104,754,671 $138,455,953 $118,441,949 $48,209,998
Short-term holdings ................................ 200,000 600,000 800,000 500,000
------------ ------------ ------------ -----------
104,954,671 139,055,953 119,241,949 48,709,998
Cash ................................................. 142,097 62,937 81,499 89,748
Interest receivable .................................. 1,513,262 2,430,632 1,903,807 891,844
Expenses prepaid to shareholder service agent ........ 13,462 17,692 16,154 6,153
Receivable for Capital Stock sold .................... 2,001 119,297 40,766 --
Receivable for securities sold ....................... -- -- -- 40,500
Other ................................................ 1,141 1,519 1,282 537
------------ ------------ ------------ -----------
TOTAL ASSETS ......................................... 106,626,634 141,688,030 121,285,457 49,738,780
------------ ------------ ------------ -----------
LIABILITIES:
Dividends payable .................................... 182,939 251,707 215,118 84,846
Payable for Capital Stock repurchased ................ 547,546 86,000 71,775 10,270
Payable for securities purchased ..................... -- -- -- --
Accrued expenses and other ........................... 121,926 150,696 142,659 73,503
------------ ------------ ------------ -----------
TOTAL LIABILITIES .................................... 852,411 488,403 429,552 168,619
------------ ------------ ------------ -----------
NET ASSETS ........................................... $105,774,223 $141,199,627 $120,855,905 $49,570,161
============ ============ ============ ===========
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A ............................................ $ 12,794 $ 16,215 $ 15,230 $ 6,297
Class D ............................................ 294 310 271 81
Additional paid-in capital ........................... 98,611,717 132,470,882 114,329,810 46,922,780
Undistributed/accumulated net realized gain (loss) ... 244,581 274,583 446,848 2,348
Net unrealized appreciation of investments ........... 6,904,837 8,437,637 6,063,746 2,638,655
------------ ------------ ------------ -----------
NET ASSETS ........................................... $105,774,223 $141,199,627 $120,855,905 $49,570,161
============ ============ ============ ===========
NET ASSETS:
Class A ............................................ $103,399,661 $138,557,794 $118,743,178 $48,944,507
Class D ............................................ $ 2,374,562 $ 2,641,833 $ 2,112,727 $ 625,654
SHARES OF CAPITAL STOCK OUTSTANDING ($.001 par value):
Class A ............................................ 12,793,834 16,215,028 15,230,222 6,297,041
Class D ............................................ 293,833 309,505 270,946 80,497
NET ASSET VALUE PER SHARE:
CLASS A ............................................ $8.08 $8.55 $7.80 $7.77
CLASS D ............................................ $8.08 $8.54 $7.80 $7.77
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW YORK OHIO OREGON SOUTH CAROLINA
SERIES SERIES SERIES SERIES
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (see Portfolios of Investments):
Long-term holdings ................................. $84,336,420 $144,025,119 $59,724,935 $107,120,298
Short-term holdings ................................ 1,400,000 5,000,000 300,000 2,300,000
----------- ------------ ----------- ------------
85,736,420 149,025,119 60,024,935 109,420,298
Cash ................................................. 150,477 151,513 -- 126,753
Interest receivable .................................. 1,409,724 2,499,062 1,031,075 1,775,886
Expenses prepaid to shareholder service agent ........ 10,769 18,462 8,077 13,846
Receivable for Capital Stock sold .................... 1,240,201 14,045 38,345 151,101
Receivable for securities sold ....................... -- -- -- --
Other ................................................ 890 1,600 3,738 1,144
----------- ------------ ----------- ------------
TOTAL ASSETS ......................................... 88,548,481 151,709,801 61,106,170 111,489,028
----------- ------------ ----------- ------------
LIABILITIES:
Dividends payable .................................... 152,675 270,287 105,372 192,273
Payable for Capital Stock repurchased ................ 21,809 428,277 92,253 143,955
Payable for securities purchased ..................... -- -- -- --
Accrued expenses and other ........................... 106,287 164,995 173,233 129,100
----------- ------------ ----------- ------------
TOTAL LIABILITIES .................................... 280,771 863,559 370,858 465,328
----------- ------------ ----------- ------------
NET ASSETS ........................................... $88,267,710 $150,846,242 $60,735,312 $111,023,700
=========== ============ =========== ============
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A ............................................ $ 10,311 $ 18,387 $ 7,320 $ 12,774
Class D ............................................ 400 202 351 793
Additional paid-in capital ........................... 82,788,641 141,866,755 56,969,827 104,449,328
Undistributed/accumulated net realized gain (loss) ... 46,426 44,572 227,514 (9,841)
Net unrealized appreciation of investments ........... 5,421,932 8,916,326 3,530,300 6,570,646
----------- ------------ ----------- ------------
NET ASSETS ........................................... $88,267,710 $150,846,242 $60,735,312 $111,023,700
=========== ============ =========== ============
NET ASSETS:
Class A ............................................ $84,970,666 $149,197,388 $57,957,413 $104,542,749
Class D ............................................ $ 3,297,044 $ 1,648,854 $ 2,777,899 $ 6,480,951
SHARES OF CAPITAL STOCK OUTSTANDING ($.001 par value):
Class A ............................................ 10,310,987 18,386,874 7,319,611 12,774,100
Class D ............................................ 399,764 202,193 351,116 792,640
NET ASSET VALUE PER SHARE:
CLASS A ............................................ $8.24 $8.11 $7.92 $8.18
CLASS D ............................................ $8.25 $8.15 $7.91 $8.18
</TABLE>
33
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
NATIONAL COLORADO GEORGIA LOUISIANA MARYLAND
SERIES SERIES SERIES SERIES SERIES
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest .............................................. $2,976,135 $1,281,721 $1,354,539 $1,561,672 $1,590,626
---------- ---------- ---------- ---------- ----------
EXPENSES:
Management fees ....................................... 268,589 118,094 126,769 140,962 143,774
Distribution and service fees ......................... 81,071 26,216 39,040 30,036 44,054
Shareholder account services .......................... 72,575 33,043 37,646 37,785 42,550
Auditing and legal fees ............................... 16,042 14,039 11,350 12,692 14,158
Registration .......................................... 12,975 5,896 6,297 5,712 7,385
Shareholder reports and communications ................ 7,443 5,256 8,711 8,018 6,545
Directors' fees and expenses .......................... 5,536 4,247 4,265 4,427 4,839
Custody and related services .......................... 4,890 8,136 3,483 7,035 4,687
Miscellaneous ......................................... 2,259 1,369 1,418 1,524 1,708
---------- ---------- ---------- ---------- ----------
TOTAL EXPENSES ........................................ 471,380 216,296 238,979 248,191 269,700
---------- ---------- ---------- ---------- ----------
NET INVESTMENT INCOME ................................. 2,504,755 1,065,425 1,115,560 1,313,481 1,320,926
---------- ---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ...................... 110,075 95,990 -- 137,525 688
Net change in unrealized appreciation of investments .. (2,108,981) (817,397) (668,888) (906,312) (571,804)
---------- ---------- ---------- ---------- ----------
NET LOSS ON INVESTMENTS ............................... (1,998,906) (721,407) (668,888) (768,787) (571,116)
---------- ---------- ---------- ---------- ----------
INCREASE IN NET ASSETS FROM OPERATIONS ................ $ 505,849 $ 344,018 $ 446,672 $ 544,694 $ 749,810
========== ========== ========== ========== ==========
</TABLE>
- ----------
See Notes to Financial Statements.
34
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS MICHIGAN MINNESOTA MISSOURI
SERIES SERIES SERIES SERIES
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest .............................................. $2,867,511 $3,896,784 $3,335,485 $1,316,653
---------- ---------- ---------- ----------
EXPENSES:
Management fees ....................................... 270,389 356,548 304,418 124,194
Distribution and service fees ......................... 64,343 84,617 73,263 26,482
Shareholder account services .......................... 71,413 96,603 89,108 37,070
Auditing and legal fees ............................... 16,954 20,011 18,992 13,620
Registration .......................................... 3,828 4,352 5,909 5,591
Shareholder reports and communications ................ 6,639 9,086 9,764 7,983
Directors' fees and expenses .......................... 5,244 5,440 5,361 4,272
Custody and related services .......................... 15,212 10,875 13,392 6,609
Miscellaneous ......................................... 2,382 2,872 2,639 1,452
---------- ---------- ---------- ----------
TOTAL EXPENSES ........................................ 456,404 590,404 522,846 227,273
---------- ---------- ---------- ----------
NET INVESTMENT INCOME ................................. 2,411,107 3,306,380 2,812,639 1,089,380
---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ...................... 540,284 409,565 459,408 9,141
Net change in unrealized appreciation of investments .. (2,344,784) (2,439,155) (1,722,354) (866,824)
---------- ---------- ---------- ----------
NET LOSS ON INVESTMENTS ............................... (1,804,500) (2,029,590) (1,262,946) (857,683)
---------- ---------- ---------- ----------
INCREASE IN NET ASSETS FROM OPERATIONS ................ $ 606,607 $1,276,790 $1,549,693 $ 231,697
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW YORK OHIO OREGON SOUTH CAROLINA
SERIES SERIES SERIES SERIES
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest .............................................. $2,320,199 $4,210,238 $1,602,431 $2,967,557
---------- ---------- ---------- ----------
EXPENSES:
Management fees ....................................... 217,605 379,582 151,261 276,584
Distribution and service fees ......................... 57,067 83,683 43,455 83,452
Shareholder account services .......................... 55,672 100,456 43,375 76,525
Auditing and legal fees ............................... 13,994 20,675 15,121 16,823
Registration .......................................... 7,453 7,462 7,889 7,108
Shareholder reports and communications ................ 8,805 8,495 6,876 8,665
Directors' fees and expenses .......................... 5,037 5,635 3,044 4,686
Custody and related services .......................... 4,449 10,682 7,697 12,608
Miscellaneous ......................................... 1,948 3,062 1,582 2,325
---------- ---------- ---------- ----------
TOTAL EXPENSES ........................................ 372,030 619,732 280,300 488,776
---------- ---------- ---------- ----------
NET INVESTMENT INCOME ................................. 1,948,169 3,590,506 1,322,131 2,478,781
---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ...................... 54,413 68,278 231,647 145,532
Net change in unrealized appreciation of investments .. (1,598,135) (2,278,558) (824,508) (1,950,699)
---------- ---------- ---------- ----------
NET LOSS ON INVESTMENTS ............................... (1,543,722) (2,210,280) (592,861) (1,805,167)
---------- ---------- ---------- ----------
INCREASE IN NET ASSETS FROM OPERATIONS ................ $ 404,447 $1,380,226 $ 729,270 $ 673,614
========== ========== ========== ==========
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
NATIONAL SERIES COLORADO SERIES GEORGIA SERIES
---------------------------- -------------------------- -------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income .................... $ 2,504,755 $ 4,996,585 $ 1,065,425 $ 2,274,183 $ 1,115,560 $ 2,287,170
Net realized gain on investments ......... 110,075 1,375,240 95,990 1,217,468 -- 355,347
Net change in unrealized
appreciation of investments ............ (2,108,981) 2,557,155 (817,397) 133,704 (668,888) 1,483,755
------------ ------------ ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS ... 505,849 8,928,980 344,018 3,625,355 446,672 4,126,272
------------ ------------ ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ............................... (2,397,327) (4,774,389) (1,053,163) (2,263,810) (1,065,727) (2,185,497)
Class D ............................... (107,428) (222,196) (12,262) (10,373) (49,833) (101,673)
Net realized gain on investments:
Class A ............................... -- -- -- -- (256,931) (187,062)
Class D ............................... -- -- -- -- (15,052) (10,787)
------------ ------------ ----------- ----------- ----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS (2,504,755) (4,996,585) (1,065,425) (2,274,183) (1,387,543) (2,485,019)
------------ ------------ ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ............................... 2,876,558 7,098,841 779,400 1,287,016 1,198,004 2,038,654
Class D ............................... 783,176 929,650 312,810 143,429 424,248 918,990
Net asset value of shares issued in
payment of dividends:
Class A ............................... 1,325,925 2,620,048 593,794 1,265,360 697,527 1,422,482
Class D ............................... 66,836 171,356 9,439 7,311 39,424 87,282
Exchanged from associated Funds:
Class A ............................... 7,207,504 7,059,979 4,243,293 2,208,315 743,185 260,904
Class D ............................... 4,203,451 16,952,120 318,471 40,000 38,798 53,323
Net asset value of shares issued in
payment of gain distribution:
Class A ............................... -- -- -- -- 200,164 145,261
Class D ............................... -- -- -- -- 12,933 9,588
------------ ------------ ----------- ----------- ----------- -----------
Total .................................... 16,463,450 34,831,994 6,257,207 4,951,431 3,354,283 4,936,484
------------ ------------ ----------- ----------- ----------- -----------
Cost of shares repurchased:
Class A ............................... (3,441,400) (9,998,684) (1,784,955) (7,569,275) (3,070,713) (6,905,867)
Class D ............................... (519,960) (631,664) -- (78,801) (523,538) (608,241)
Exchanged into associated Funds:
Class A ............................... (7,445,182) (6,101,457) (1,806,124) (2,730,725) (260,154) (703,073)
Class D ............................... (3,834,475) (12,491,491) (91,807) (14,735) (71,184) (381,284)
------------ ------------ ----------- ----------- ----------- -----------
Total .................................... (15,241,017) (29,223,296) (3,682,886) (10,393,536) (3,925,589) (8,598,465)
------------ ------------ ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ........ 1,222,433 5,608,698 2,574,321 (5,442,105) (571,306) (3,661,981)
------------ ------------ ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ........ (776,473) 9,541,093 1,852,914 (4,090,933) (1,512,177) (2,020,728)
NET ASSETS:
Beginning of period ...................... 109,301,363 99,760,270 45,927,159 50,018,092 51,233,286 53,254,014
------------ ------------ ----------- ----------- ----------- -----------
END OF PERIOD ............................ $108,524,890 $109,301,363 $47,780,073 $45,927,159 $49,721,109 $51,233,286
============ ============ =========== =========== =========== ===========
</TABLE>
- ----------
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA SERIES MARYLAND SERIES
------------------------- --------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .................... $ 1,313,481 $ 2,755,599 $ 1,320,926 $ 2,639,840
Net realized gain on investments ......... 137,525 750,930 688 183,975
Net change in unrealized
appreciation of investments ............ (906,312) 904,770 (571,804) 1,341,557
----------- ----------- ----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS ... 544,694 4,411,299 749,810 4,165,372
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ............................... (1,298,732) (2,732,585) (1,260,790) (2,539,788)
Class D ............................... (14,749) (23,014) (60,136) (100,052)
Net realized gain on investments:
Class A ............................... (742,225) (95,055) (184,646) (307,098)
Class D ............................... (11,055) (862) (10,939) (11,949)
----------- ----------- ----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS (2,066,761) (2,851,516) (1,516,511) (2,958,887)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ............................... 787,748 1,593,079 1,042,860 3,716,423
Class D ............................... 49,990 275,183 312,781 1,423,657
Net asset value of shares issued in
payment of dividends:
Class A ............................... 643,637 1,366,881 750,294 1,496,930
Class D ............................... 10,353 16,878 52,344 78,222
Exchanged from associated Funds:
Class A ............................... 35,505 29,131 121,573 294,333
Class D ............................... 12,220 45,621 45,272 16,794
Net asset value of shares issued in
payment of gain distribution:
Class A ............................... 490,938 64,975 138,396 225,691
Class D ............................... 7,862 692 10,428 10,991
----------- ----------- ----------- -----------
Total .................................... 2,038,253 3,392,440 2,473,948 7,263,041
----------- ----------- ----------- -----------
Cost of shares repurchased:
Class A ............................... (2,135,385) (4,220,025) (2,629,218) (4,254,611)
Class D ............................... (133,532) (28,622) (432,474) (521,910)
Exchanged into associated Funds:
Class A ............................... (42,477) (266,535) (100,235) (282,486)
Class D ............................... -- -- (21,780) (3,461)
----------- ----------- ----------- -----------
Total .................................... (2,311,394) (4,515,182) (3,183,707) (5,062,468)
----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ........ (273,141) (1,122,742) (709,759) 2,200,573
----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ........ (1,795,208) 437,041 (1,476,460) 3,407,058
NET ASSETS:
Beginning of period ...................... 57,144,652 56,707,611 58,018,613 54,611,555
----------- ----------- ----------- -----------
END OF PERIOD ............................ $55,349,444 $57,144,652 $56,542,153 $58,018,613
=========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES MICHIGAN SERIES
--------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .................... $ 2,411,107 $ 5,151,550 $ 3,306,380 $ 6,920,269
Net realized gain on investments ......... 540,284 360,413 409,565 2,466,720
Net change in unrealized
appreciation of investments ............ (2,344,784) 4,686,395 (2,439,155) 2,641,464
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS ... 606,607 10,198,358 1,276,790 12,028,453
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ............................... (2,379,234) (5,099,272) (3,263,836) (6,853,272)
Class D ............................... (31,873) (52,278) (42,544) (66,997)
Net realized gain on investments:
Class A ............................... (643,189) (1,288,484) (2,565,404) (1,235,329)
Class D ............................... (9,341) (14,760) (38,013) (15,651)
------------ ------------ ------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS (3,063,637) (6,454,794) (5,909,797) (8,171,249)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ............................... 2,046,906 2,426,260 3,153,256 4,780,685
Class D ............................... 997,638 392,038 678,378 325,385
Net asset value of shares issued in
payment of dividends:
Class A ............................... 1,389,237 3,066,637 1,959,419 4,190,240
Class D ............................... 15,131 22,770 30,046 50,303
Exchanged from associated Funds:
Class A ............................... 9,593,018 10,859,223 298,172 2,928,969
Class D ............................... 158,159 116,384 298,535 106,164
Net asset value of shares issued in
payment of gain distribution:
Class A ............................... 460,197 951,011 1,897,325 911,174
Class D ............................... 5,256 7,293 32,823 14,084
------------ ------------ ------------ ------------
Total .................................... 14,665,542 17,841,616 8,347,954 13,307,004
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A ............................... (4,391,072) (9,987,117) (7,314,994) (12,531,450)
Class D ............................... (234,172) (361,116) (169,380) (479,641)
Exchanged into associated Funds:
Class A ............................... (12,605,161) (11,696,486) (1,033,263) (3,299,610)
Class D ............................... -- -- -- (66,539)
------------ ------------ ------------ ------------
Total .................................... (17,230,405) (22,044,719) (8,517,637) (16,377,240)
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ........ (2,564,863) (4,203,103) (169,683) (3,070,236)
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ........ (5,021,893) (459,539) (4,802,690) 786,968
NET ASSETS:
Beginning of period ...................... 110,796,116 111,255,655 146,002,317 145,215,349
------------ ------------ ------------ ------------
END OF PERIOD ............................ $105,774,223 $110,796,116 $141,199,627 $146,002,317
============ ============ ============ ============
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA SERIES MISSOURI SERIES NEW YORK SERIES
--------------------------- ------------------------- -------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income ..................... $ 2,812,639 $ 5,966,394 $ 1,089,380 $ 2,391,647 $ 1,948,169 $ 4,037,530
Net realized gain on investments .......... 459,408 2,326,890 9,141 792,748 54,413 2,733,067
Net change in unrealized
appreciation of investments ............. (1,722,354) 714,989 (866,824) 984,919 (1,598,135) 1,350,015
------------ ------------ ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS .... 1,549,693 9,008,273 231,697 4,169,314 404,447 8,120,612
------------ ------------ ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Class A ................................ (2,772,106) (5,891,605) (1,081,205) (2,377,089) (1,901,114) (3,969,021)
Class D ................................ (40,533) (74,789) (8,175) (14,558) (47,055) (68,509)
Net realized gain on investments:
Class A ................................ (1,489,186) (139,563) (736,677) (437,159) (2,031,676) (837,486)
Class D ................................ (27,145) (2,075) (6,599) (3,680) (55,062) (15,723)
------------ ------------ ----------- ----------- ----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS . (4,328,970) (6,108,032) (1,832,656) (2,832,486) (4,034,907) (4,890,739)
------------ ------------ ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ................................ 1,888,210 3,759,777 789,364 1,518,510 4,771,815 3,404,935
Class D ................................ 233,422 583,305 201,000 79,605 701,387 541,566
Net asset value of shares issued in
payment of dividends:
Class A ................................ 1,831,820 3,934,003 545,898 1,135,261 1,140,408 2,342,732
Class D ................................ 23,109 42,082 7,101 12,480 35,990 49,242
Exchanged from associated Funds:
Class A ................................ 516,786 373,852 302,917 223,404 2,415,310 3,247,626
Class D ................................ 192,572 132,637 23,606 -- 493,526 109,289
Net asset value of shares issued in
payment of gain distribution:
Class A ................................ 1,196,281 112,803 486,691 281,752 1,630,608 666,270
Class D ................................ 20,449 1,581 6,011 2,904 47,092 12,694
------------ ------------ ----------- ----------- ----------- -----------
Total ..................................... 5,902,649 8,940,040 2,362,588 3,253,916 11,236,136 10,374,354
------------ ------------ ----------- ----------- ----------- -----------
Cost of shares repurchased:
Class A ................................ (5,151,608) (10,246,157) (1,487,534) (6,778,544) (2,805,417) (8,149,245)
Class D ................................ (409,813) (199,128) (2,607) (162,241) (51,450) (152,914)
Exchanged into associated Funds:
Class A ................................ (182,556) (1,084,969) (56,301) (522,272) (3,477,641) (3,375,173)
Class D ................................ -- (306,816) (12,439) -- (7,041) (22,942)
------------ ------------ ----------- ----------- ----------- -----------
Total ..................................... (5,743,977) (11,837,070) (1,558,881) (7,463,057) (6,341,549) (11,700,274)
------------ ------------ ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ......... 158,672 (2,897,030) 803,707 (4,209,141) 4,894,587 (1,325,920)
------------ ------------ ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ......... (2,620,605) 3,211 (797,252) (2,872,313) 1,264,127 1,903,953
NET ASSETS:
Beginning of period ....................... 123,476,510 123,473,299 50,367,413 53,239,726 87,003,583 85,099,630
------------ ------------ ----------- ----------- ----------- -----------
END OF PERIOD ............................. $120,855,905 $123,476,510 $49,570,161 $50,367,413 $88,267,710 $87,003,583
============ ============ =========== =========== =========== ===========
</TABLE>
- ----------
See Notes to Financial Statements.
38
<PAGE>
<TABLE>
<CAPTION>
OHIO SERIES OREGON SERIES SOUTH CAROLINA SERIES
--------------------------- ------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
------------ ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income ..................... $ 3,590,506 $ 7,551,775 $ 1,322,131 $ 2,628,729 $ 2,478,781 $ 5,074,598
Net realized gain on investments .......... 68,278 3,398,423 231,647 375,535 145,532 1,214,196
Net change in unrealized
appreciation of investments ............. (2,278,558) 1,953,712 (824,508) 1,637,046 (1,950,699) 2,638,545
------------ ------------ ----------- ----------- ------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS .... 1,380,226 12,903,910 729,270 4,641,310 673,614 8,927,339
------------ ------------ ----------- ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Class A ................................ (3,565,746) (7,504,421) (1,275,324) (2,555,801) (2,374,477) (4,905,709)
Class D ................................ (24,760) (47,354) (46,807) (72,928) (104,304) (168,889)
Net realized gain on investments:
Class A ................................ (2,412,770) (2,017,799) (359,284) (700,268) (835,120) (905,320)
Class D ................................ (18,170) (15,589) (16,245) (21,792) (44,640) (34,538)
------------ ------------ ----------- ----------- ------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS . (6,021,446) (9,585,163) (1,697,660) (3,350,789) (3,358,541) (6,014,456)
------------ ------------ ----------- ----------- ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ................................ 1,542,015 3,716,543 3,434,589 4,579,085 3,856,980 10,736,862
Class D ................................ 596,196 208,265 243,306 912,518 1,195,316 2,250,161
Net asset value of shares issued in
payment of dividends:
Class A ................................ 2,171,848 4,618,664 797,476 1,588,261 1,337,509 2,804,800
Class D ................................ 19,705 40,700 31,349 56,847 73,618 133,057
Exchanged from associated Funds:
Class A ................................ 677,093 404,291 794,384 120,904 234,475 452,032
Class D ................................ 225,056 70,396 69,512 47,138 61,237 52,119
Net asset value of shares issued in
payment of gain distribution:
Class A ................................ 1,820,544 1,532,501 281,167 536,993 661,343 698,627
Class D ................................ 15,630 13,962 11,943 18,047 38,926 31,538
------------ ------------ ----------- ----------- ------------ ------------
Total ..................................... 7,068,087 10,605,322 5,663,726 7,859,793 7,459,404 17,159,196
------------ ------------ ----------- ----------- ------------ ------------
Cost of shares repurchased:
Class A ................................ (5,311,811) (13,102,427) (2,857,549) (5,263,365) (5,088,140) (10,837,647)
Class D ................................ (125,239) (395,804) (184,984) (103,120) (310,853) (605,605)
Exchanged into associated Funds:
Class A ................................ (223,276) (1,758,230) (1,168,327) (437,002) (240,671) (1,330,837)
Class D ................................ (149,792) (17,309) (690) (12,598) (33,134) (57,130)
------------ ------------ ----------- ----------- ------------ ------------
Total ..................................... (5,810,118) (15,273,770) (4,211,550) (5,816,085) (5,672,798) (12,831,219)
------------ ------------ ----------- ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ......... 1,257,969 (4,668,448) 1,452,176 2,043,708 1,786,606 4,327,977
------------ ------------ ----------- ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ......... (3,383,251) (1,349,701) 483,786 3,334,229 (898,321) 7,240,860
NET ASSETS:
Beginning of period ....................... 154,229,493 155,579,194 60,251,526 56,917,297 111,922,021 104,681,161
------------ ------------ ----------- ----------- ------------ ------------
END OF PERIOD ............................. $150,846,242 $154,229,493 $60,735,312 $60,251,526 $111,023,700 $111,922,021
============ ============ =========== =========== ============ ============
</TABLE>
39
<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. 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 charge ("CDSC") 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 CDSC 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 six months ended March 31, 1999,
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 six months ended March 31,
1999, were as follows:
SERIES PURCHASES SALES
- -------------- ------------- --------------
National $3,890,520 $2,879,200
Colorado 2,662,223 1,141,160
Georgia -- --
Louisiana 4,677,643 2,932,525
Maryland 975,380 35,600
Massachusetts 4,683,435 6,618,930
Michigan 5,130,253 8,498,693
Minnesota 5,571,758 7,152,638
Missouri 1,000,000 721,350
New York 4,021,920 3,884,200
Ohio 1,006,780 5,880,999
Oregon 6,191,915 3,999,491
South Carolina 1,598,265 1,787,700
40
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At March 31, 1999, each Series' 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 $5,696,542 $ 54,420
Colorado 2,464,302 20,870
Georgia 3,931,209 --
Louisiana 3,391,796 29,140
Maryland 3,852,645 1,400
Massachusetts 6,904,837 --
Michigan 8,645,585 207,948
Minnesota 6,132,918 69,172
Missouri 2,650,470 11,815
New York 5,459,612 37,680
Ohio 8,927,750 11,424
Oregon 3,559,420 29,120
South Carolina 6,570,646 --
4. MANAGEMENT FEE, DISTRIBUTION 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 Advisors, 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 sales of Class A shares:
DISTRIBUTOR DEALER
SERIES CONCESSIONS COMMISSIONS
- -------------- ----------------- -----------------
National $ 4,492 $34,312
Colorado 4,002 29,104
Georgia 5,464 41,746
Louisiana 3,734 27,613
Maryland 5,187 39,854
Massachusetts 10,102 65,965
Michigan 8,845 65,656
Minnesota 8,678 62,576
Missouri 3,615 27,006
New York 5,485 40,673
Ohio 6,775 47,648
Oregon 10,173 76,014
South Carolina 11,800 85,735
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 six months
ended March 31, 1999, the Distributor charged such fees to the Fund pursuant to
the Plan as follows:
TOTAL FEES % OF AVERAGE
SERIES PAID NET ASSETS
- -------------- ------------- ---------------
NATIONAL $52,918 .10%
Colorado 22,830 .10
Georgia 25,006 .10
Louisiana 26,115 .09
Maryland 27,997 .10
Massachusetts 55,441 .10
Michigan 73,290 .10
Minnesota 62,418 .10
Missouri 24,142 .10
New York 44,024 .10
Ohio 77,222 .10
Oregon 30,123 .10
South Carolina 54,735 .10
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 six months ended March 31, 1999, fees incurred under the
Plan equivalent to 1% per annum of the average daily net assets of Class D
shares were as follows:
SERIES SERIES
- -------------- -------------
National $28,153 Minnesota $10,845
Colorado 3,386 Missouri 2,340
Georgia 14,034 New York 13,043
Louisiana 3,921 Ohio 6,461
Maryland 16,057 Oregon 13,332
Massachusetts 8,902 South Carolina 28,717
Michigan 11,327
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Distributor is entitled to retain any CDSC 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 six months ended
March31, 1999, such charges were as follows:
SERIES SERIES
- ------------- -------------
National $ 804 Missouri $ 21
Georgia 1,271 New York 317
Maryland 635 Ohio 258
Massachusetts 192 Oregon 416
Michigan 54 South Carolina 331
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the six months ended March 31, 1999,
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 $ 320 $4,356
Colorado 571 1,357
Georgia 108 496
Louisiana 272 594
Maryland 404 758
Massachusetts 476 1,108
Michigan 962 1,587
Minnesota -- 1,273
Missouri -- 1,637
New York 405 7,069
Ohio 89 2,210
Oregon 177 883
South Carolina 1,960 3,174
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost for shareholder account services the following
amounts:
SERIES SERIES
- ------------- ------------
National $72,575 Minnesota $ 89,108
Colorado 33,043 Missouri 37,070
Georgia 37,646 New York 55,672
Louisiana 37,785 Ohio 100,456
Maryland 42,550 Oregon 43,375
Massachusetts 71,413 South Carolina 76,525
Michigan 96,603
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. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. Deferred fees
and related accrued earnings are not deductible for federal income tax purposes
until such amounts are paid. The cost of such fees and earnings accrued thereon
is included in directors' fees and expenses, and the accumulated balances
thereof at March 31, 1999, are included in other liabilities as follows:
SERIES SERIES
- ------------ -------------
National $17,260 Minnesota $14,879
Colorado 11,052 Missouri 11,063
Georgia 10,420 New York 14,752
Louisiana 11,956 Ohio 14,980
Maryland 11,951 Oregon 10,906
Massachusetts 14,831 South Carolina 10,595
Michigan 14,476
5. COMMITTED LINE OF CREDIT -- Effective July 1, 1998, the Fund entered into a
joint $800 million committed line of credit that is shared by substantially all
funds in the Seligman Group of Investment Companies. Each Series' borrowings are
limited to 10% of its net assets. Borrowings pursuant to the credit facility are
subject to interest at a rate equal to the overnight federal funds rate plus
0.50%. Each Series incurs a commitment fee of 0.08% per annum on its share of
the unused portion of the credit facility. The credit facility may be drawn upon
only for temporary purposes and is subject to certain other customary
restrictions. The credit facility commitment expires one year from the date of
the agreement but is renewable with the consent of the participating banks. To
date, the Fund has not borrowed from the credit facility.
6. CAPITAL LOSS CARRYFORWARD -- At September 30, 1998, the National and Colorado
Series had net capital loss carryforwards for federal income tax purposes of
$1,559,215 and $115,843, respectively, which are available for offset against
future taxable net capital gains, expiring in various amounts through 2005.
Accordingly, no capital gain distributions are expected to be paid to
shareholders of the National and Colorado Series until net capital gains have
been realized in excess of the available capital loss carryforwards.
42
<PAGE>
NOTES TO FINANCIAL STATEMENTS
7. CAPITAL STOCK TRANSACTIONS -- The Fund has 1,300,000,000 shares of Capital
Stock authorized. At March 31, 1999, 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
------------------------ ------------------------ ------------------------ ------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares:
Class A ...................... 348,974 873,287 102,918 171,756 144,600 248,416 94,118 191,119
Class D ...................... 95,186 114,176 41,316 19,107 51,067 111,889 6,000 32,909
Shares issued in payment
of dividends:
Class A ...................... 161,032 321,523 78,319 168,624 84,168 173,232 76,968 163,549
Class D ...................... 8,129 21,003 1,247 974 4,746 10,608 1,238 2,019
Exchanged from associated
Funds:
Class A ...................... 872,466 865,763 559,067 294,638 89,829 31,751 4,240 3,509
Class D ...................... 511,643 2,093,008 41,999 5,319 4,650 6,394 1,465 5,444
Shares issued in payment
of gain distributions:
Class A ...................... -- -- -- -- 24,233 17,956 58,865 7,857
Class D ...................... -- -- -- -- 1,562 1,182 944 84
--------- --------- --------- --------- --------- --------- -------- --------
Total .......................... 1,997,430 4,288,760 824,866 660,418 404,855 601,428 243,838 406,490
--------- --------- --------- --------- -------- --------- -------- --------
Shares repurchased:
Class A ...................... (418,672) (1,226,722) (235,921) (1,009,933) (370,619) (844,100) (256,140) (505,091)
Class D ...................... (63,192) (77,574) -- (10,459) (63,143) (73,925) (15,974) (3,426)
Exchanged into associated
Funds:
Class A ...................... (906,141) (747,805) (238,574) (363,810) (31,508) (86,018) (5,117) (31,881)
Class D ...................... (464,782) (1,545,820) (12,080) (1,959) (8,583) (46,291) -- --
--------- --------- --------- --------- -------- --------- -------- --------
Total .......................... (1,852,787) (3,597,921) (486,575) (1,386,161) (473,853) (1,050,334) (277,231) (540,398)
--------- --------- --------- --------- --------- --------- -------- --------
Increase (decrease) in shares .. 144,643 690,839 338,291 (725,743) (68,998) (448,906) (33,393) (133,908)
========= ========= ========= ========= ======== ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
MARYLAND SERIES MASSACHUSETTS SERIES MICHIGAN SERIES MINNESOTA SERIES
------------------------ ------------------------ ------------------------ ------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
Sales of shares:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ...................... 126,186 452,967 251,371 301,803 367,020 552,545 240,449 480,210
Class D ...................... 37,910 173,585 123,019 48,564 78,956 37,739 29,799 74,514
Shares issued in payment
of dividends:
Class A ...................... 90,903 182,716 170,493 381,287 226,980 484,322 233,082 502,233
Class D ...................... 6,337 9,536 1,858 2,830 3,488 5,822 2,941 5,371
Exchanged from associated
Funds:
Class A ...................... 14,712 35,858 1,176,196 1,354,117 34,263 339,541 65,699 47,797
Class D ...................... 5,472 2,043 19,490 14,321 34,117 12,157 24,259 16,965
Shares issued in payment
of gain distributions:
Class A ...................... 16,816 27,829 56,744 120,229 221,133 106,820 153,173 14,480
Class D ...................... 1,266 1,354 648 923 3,830 1,653 2,614 203
--------- -------- --------- --------- -------- --------- -------- ---------
Total .......................... 299,602 885,888 1,799,819 2,224,074 969,787 1,540,599 752,016 1,141,773
-------- -------- --------- --------- -------- --------- -------- ---------
Shares repurchased:
Class A ...................... (318,699) (519,240) (539,123) (1,241,182) (848,134) (1,447,886) (655,459)(1,308,615)
Class D ...................... (52,509) (63,527) (28,832) (44,816) (19,765) (55,636) (52,235) (25,476)
Exchanged into associated
Funds:
Class A ...................... (12,187) (34,518) (1,549,374) (1,454,254) (118,976) (382,652) (23,311) (138,742)
Class D ...................... (2,650) (423) -- -- -- (7,657) -- (38,924)
-------- -------- --------- --------- -------- --------- -------- ---------
Total .......................... (386,045) (617,708) (2,117,329) (2,740,252) (986,875) (1,893,831) (731,005)(1,511,757)
--------- -------- --------- --------- -------- --------- -------- ---------
Increase (decrease) in shares .. (86,443) 268,180 (317,510) (516,178) (17,088) (353,232) 21,011 (369,984)
======== ======== ========= ========= ======== ========= ======== =========
</TABLE>
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MISSOURI SERIES NEW YORK SERIES OHIO SERIES OREGON SERIES
------------------------ ------------------------ ------------------------ ------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98 3/31/99 9/30/98
------------------------ ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares:
Class A ...................... 100,686 192,882 574,951 409,090 188,190 453,643 432,247 578,820
Class D ...................... 25,696 10,178 84,600 64,754 72,872 25,288 30,675 115,620
Shares issued in payment
of dividends:
Class A ...................... 69,523 144,574 136,720 280,689 265,323 563,375 100,210 201,391
Class D ...................... 905 1,589 4,314 5,891 2,396 4,941 3,942 7,211
Exchanged from associated
Funds:
Class A ...................... 38,285 28,380 290,682 389,085 82,467 49,472 100,018 15,314
Class D ...................... 2,979 -- 58,629 12,843 27,382 8,543 8,729 5,944
Shares issued in payment
of gain distributions:
Class A ...................... 62,316 36,308 196,696 81,252 223,380 189,198 35,501 69,111
Class D ...................... 770 374 5,681 1,546 1,911 1,715 1,508 2,326
-------- -------- --------- --------- -------- --------- -------- --------
Total .......................... 301,160 414,285 1,352,273 1,245,150 863,921 1,296,175 712,830 995,737
-------- -------- --------- --------- -------- --------- -------- --------
Shares repurchased:
Class A ...................... (189,592) (861,837) (337,306) (974,859) (649,067) (1,599,143) (359,864) (666,927)
Class D ...................... (329) (20,769) (6,170) (18,301) (15,249) (48,136) (23,271) (13,128)
Exchanged into associated
Funds:
Class A ...................... (7,174) (66,519) (417,437) (404,227) (27,329) (214,380) (147,191) (55,368)
Class D ...................... (1,561) -- (848) (2,738) (18,379) (2,092) (87) (1,600)
-------- -------- --------- --------- -------- --------- -------- --------
Total .......................... (198,656) (949,125) (761,761) (1,400,125) (710,024) (1,863,751) (530,413) (737,023)
-------- -------- --------- --------- -------- --------- -------- --------
Increase (decrease) in shares .. 102,504 (534,840) 590,512 (154,975) 153,897 (567,576) 182,417 258,714
======== ======== ========= ========= ======== ========= ======== ========
</TABLE>
SOUTH CAROLINA
-------------------------
SIX MONTHS YEAR
ENDED ENDED
3/31/99 9/30/98
------------ ------------
Sales of shares:
Class A 467,298 1,307,029
Class D 145,508 273,163
Shares issued in payment
of dividends:
Class A 161,946 341,280
Class D 8,923 16,202
Exchanged from associated
Funds:
Class A 28,320 54,738
Class D 7,434 6,370
Shares issued in payment
of gain distributions:
Class A 80,358 86,250
Class D 4,735 3,898
-------- ---------
Total 904,522 2,088,930
-------- ---------
Shares repurchased:
Class A (616,633) (1,319,559)
Class D (37,768) (73,888)
Exchanged into associated
Funds:
Class A (29,133) (162,725)
Class D (4,022) (6,993)
-------- ---------
Total (687,556) (1,563,165)
-------- ---------
Increase in shares 216,966 525,765
======== =========
44
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand the financial
performance of each Class of each Series for the past five and one-half years or
from its inception if less than five and one-half years. Certain information
reflects financial results for a single share of a Class that was held
throughout the periods shown. Per share amounts are calculated using average
shares outstanding. "Total return" shows the rate that you would have earned (or
lost) on an investment in each Class, assuming you reinvested all your dividend
and capital gain distributions. Total returns do not reflect any sales charges,
and are not annualized for periods of less than one year.
NATIONAL SERIES
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.32 $8.01 $7.70 $7.58 $7.18 $8.72
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.19 0.39 0.39 0.40 0.40 0.41
Net realized and unrealized gain (loss)
on investments .................................... (0.15) 0.31 0.31 0.12 0.40 (1.04)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.04 0.70 0.70 0.52 0.80 (0.63)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.19) (0.39) (0.39) (0.40) (0.40) (0.41)
Distributions from net realized capital gain ........ -- -- -- -- -- (0.50)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.19) (0.39) (0.39) (0.40) (0.40) (0.91)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.17 $8.32 $8.01 $7.70 $7.58 $7.18
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.51% 9.00% 9.40% 6.97% 11.48% (7.83)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $100,557 $101,909 $97,481 $98,767 $104,184 $111,374
Ratio of expenses to average net assets ............. 0.83%+ 0.80% 0.84% 0.80% 0.86% 0.85%
Ratio of net income to average net assets ........... 4.71%+ 4.82% 5.05% 5.19% 5.46% 5.30%
Portfolio turnover rate ............................. 2.76% 18.00% 20.63% 33.99% 24.91% 24.86%
CLASS D
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
--------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ---- ---- ---- ---- -------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.31 $8.02 $7.70 $7.57 $7.18 $8.20
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.16 0.32 0.32 0.33 0.32 0.22
Net realized and unrealized gain (loss)
on investments .................................... (0.15) 0.29 0.32 0.13 0.39 (1.02)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.01 0.61 0.64 0.46 0.71 (0.80)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.16) (0.32) (0.32) (0.33) (0.32) (0.22)
Distributions from net realized capital gain ........ -- -- -- -- -- --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.16) (0.32) (0.32) (0.33) (0.32) (0.22)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.16 $8.31 $8.02 $7.70 $7.57 $7.18
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.08% 7.76% 8.56% 6.13% 10.17% (9.96)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $7,968 $7,392 $2,279 $4,826 $1,215 $446
Ratio of expenses to average net assets ............. 1.73%+ 1.71% 1.75% 1.67% 1.95% 1.76%+
Ratio of net income to average net assets ........... 3.81%+ 3.91% 4.15% 4.27% 4.40% 4.37%+
Portfolio turnover rate ............................. 2.76% 18.00% 20.63% 33.99% 24.91% 24.86%++
</TABLE>
- -------------------------
See footnotes on page 57.
45
<PAGE>
FINANCIAL HIGHLIGHTS
COLORADO SERIES
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $7.64 $7.42 $7.27 $7.30 $7.09 $7.76
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.17 0.36 0.37 0.37 0.38 0.37
Net realized and unrealized gain (loss)
on investments .................................... (0.12) 0.22 0.15 (0.03) 0.21 (0.59)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.05 0.58 0.52 0.34 0.59 (0.22)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.17) (0.36) (0.37) (0.37) (0.38) (0.37)
Distributions from net realized capital gain ........ -- -- -- -- -- (0.08)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.17) (0.36) (0.37) (0.37) (0.38) (0.45)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $7.52 $7.64 $7.42 $7.27 $7.30 $7.09
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.65% 8.03% 7.30% 4.76% 8.56% (2.92)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $46,896 $45,583 $49,780 $52,295 $54,858 $58,197
Ratio of expenses to average net assets ............. 0.90%+ 0.90% 0.90% 0.85% 0.93% 0.86%
Ratio of net income to average net assets ........... 4.52%+ 4.80% 5.01% 5.07% 5.31% 5.06%
Portfolio turnover rate ............................. 2.55% 28.66% 3.99% 12.39% 14.70% 10.07%
</TABLE>
<TABLE>
<CAPTION>
CLASS D
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................ $7.63 $7.42 $7.27 $7.29 $7.09 $7.72
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.14 0.29 0.30 0.31 0.30 0.20
Net realized and unrealized gain (loss)
on investments .................................... (0.11) 0.21 0.15 (0.02) 0.20 (0.63)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.03 0.50 0.45 0.29 0.50 (0.43)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.14) (0.29) (0.30) (0.31) (0.30) (0.20)
Distributions from net realized capital gain ........ -- -- -- -- -- --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.14) (0.29) (0.30) (0.31) (0.30) (0.20)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $7.52 $7.63 $7.42 $7.27 $7.29 $7.09
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.33% 6.90% 6.34% 3.95% 7.26% (5.73)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $884 $344 $238 $255 $193 $96
Ratio of expenses to average net assets ............. 1.80%+ 1.80% 1.81% 1.75% 2.02% 1.78%+
Ratio of net income to average net assets ........... 3.62%+ 3.90% 4.10% 4.17% 4.23% 4.05%+
Portfolio turnover rate ............................. 2.55% 28.66% 3.99% 12.39% 14.70% 10.07%++
</TABLE>
- -------------------------
See footnotes on page 57.
46
<PAGE>
FINANCIAL HIGHLIGHTS
GEORGIA SERIES
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.38 $8.12 $7.87 $7.81 $7.48 $8.43
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.18 0.38 0.38 0.39 0.39 0.41
Net realized and unrealized gain (loss)
on investments .................................... (0.10) 0.29 0.28 0.11 0.43 (0.86)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.08 0.67 0.66 0.50 0.82 (0.45)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.18) (0.38) (0.38) (0.39) (0.39) (0.41)
Distributions from net realized capital gain ........ (0.05) (0.03) (0.03) (0.05) (0.10) (0.09)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.23) (0.41) (0.41) (0.44) (0.49) (0.50)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.23 $8.38 $8.12 $7.87 $7.81 $7.48
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.94% 8.44% 8.65% 6.56% 11.66% (5.52)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ............ $47,043 $48,424 $50,614 $50,995 $57,678 $61,466
Ratio of expenses to average net assets ............. 0.89%+ 0.89% 0.89% 0.83% 0.91% 0.73%
Ratio of net income to average net assets ........... 4.45%+ 4.57% 4.82% 4.94% 5.26% 5.21%
Portfolio turnover rate ............................. -- 2.92% 12.28% 16.24% 3.36% 19.34%
Without management fee waiver:*
Ratio of expenses to average net assets ............. 0.96% 0.93%
Ratio of net income to average net assets ........... 5.21% 5.01%
CLASS D
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.40 $8.13 $7.88 $7.82 $7.49 $8.33
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.15 0.30 0.31 0.32 0.32 0.22
Net realized and unrealized gain (loss)
on investments .................................... (0.10) 0.30 0.28 0.11 0.43 (0.84)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.05 0.60 0.59 0.43 0.75 (0.62)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.15) (0.30) (0.31) (0.32) (0.32) (0.22)
Distributions from net realized capital gain ........ (0.05) (0.03) (0.03) (0.05) (0.10) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.20) (0.33) (0.34) (0.37) (0.42) (0.22)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.25 $8.40 $8.13 $7.88 $7.82 $7.49
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.50% 7.59% 7.67% 5.60% 10.58% (7.57)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $2,678 $2,809 $2,640 $2,327 $2,079 $849
Ratio of expenses to average net assets ............. 1.79%+ 1.80% 1.79% 1.73% 1.90% 1.76%+
Ratio of net income to average net assets ........... 3.55%+ 3.66% 3.92% 4.03% 4.28% 4.28%+
Portfolio turnover rate ............................. -- 2.92% 12.28% 16.24% 3.36% 19.34%++
Without management fee waiver:*
Ratio of expenses to average net assets ............. 1.95% 1.90%+
Ratio of net income to average net assets ........... 4.23% 4.15%+
</TABLE>
- -------------------------
See footnotes on page 57.
47
<PAGE>
FINANCIAL HIGHLIGHTS
LOUISIANA SERIES
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.51 $8.28 $8.16 $8.14 $7.94 $8.79
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.19 0.41 0.41 0.42 0.43 0.44
Net realized and unrealized gain (loss)
on investments .................................... (0.12) 0.24 0.23 0.08 0.34 (0.77)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.07 0.65 0.64 0.50 0.77 (0.33)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.19) (0.41) (0.41) (0.42) (0.43) (0.44)
Distributions from net realized capital gain ........ (0.11) (0.01) (0.11) (0.06) (0.14) (0.08)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.30) (0.42) (0.52) (0.48) (0.57) (0.52)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.28 $8.51 $8.28 $8.16 $8.14 $7.94
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.91% 8.08% 8.17% 6.32% 10.30% (3.83)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ............ $54,587 $56,308 $56,199 $57,264 $61,988 $61,441
Ratio of expenses to average net assets ............. 0.87%+ 0.88% 0.86% 0.82% 0.89% 0.87%
Ratio of net income to average net assets ........... 4.67%+ 4.86% 5.08% 5.15% 5.44% 5.31%
Portfolio turnover rate ............................. 5.31% 15.72% 16.08% 10.08% 4.82% 17.16%
CLASS D
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- --------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.50 $8.27 $8.16 $8.14 $7.94 $8.73
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.16 0.33 0.34 0.35 0.35 0.24
Net realized and unrealized gain (loss)
on investments .................................... (0.11) 0.24 0.22 0.08 0.34 (0.79)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.05 0.57 0.56 0.43 0.69 (0.55)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.16) (0.33) (0.34) (0.35) (0.35) (0.24)
Distributions from net realized capital gain ........ (0.11) (0.01) (0.11) (0.06) (0.14) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.27) (0.34) (0.45) (0.41) (0.49) (0.24)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.28 $8.50 $8.27 $8.16 $8.14 $7.94
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.58% 7.11% 7.07% 5.37% 9.17% (6.45)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $762 $837 $509 $389 $465 $704
Ratio of expenses to average net assets ............. 1.78%+ 1.78% 1.76% 1.72% 1.91% 1.78%+
Ratio of net income to average net assets ........... 3.76%+ 3.96% 4.18% 4.25% 4.41% 4.33%+
Portfolio turnover rate ............................. 5.31% 15.72% 16.08% 10.08% 4.82% 17.16%++
</TABLE>
- -------------------------
See footnotes on page 57.
48
<PAGE>
FINANCIAL HIGHLIGHTS
MARYLAND SERIES
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.32 $8.14 $7.99 $7.96 $7.71 $8.64
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.19 0.40 0.40 0.40 0.41 0.42
Net realized and unrealized gain (loss)
on investments .................................... (0.08) 0.23 0.19 0.06 0.38 (0.76)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.11 0.63 0.59 0.46 0.79 (0.34)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.19) (0.40) (0.40) (0.40) (0.41) (0.42)
Distributions from net realized capital gain ........ (0.03) (0.05) (0.04) (0.03) (0.13) (0.17)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.22) (0.45) (0.44) (0.43) (0.54) (0.59)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.21 $8.32 $8.14 $7.99 $7.96 $7.71
====== ====== ====== ====== ====== ======
TOTAL RETURN: 1.31% 7.89% 7.64% 6.00% 10.90% (4.08)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $53,490 $54,891 $52,549 $54,041 $56,290 $57,263
Ratio of expenses to average net assets ............. 0.89%+ 0.89% 0.90% 0.84% 0.96% 0.92%
Ratio of net income to average net assets ........... 4.64%+ 4.82% 4.99% 5.05% 5.31% 5.17%
Portfolio turnover rate ............................. 0.06% 7.59% 14.79% 5.56% 3.63% 17.68%
CLASS D
--------------------------------------------------------------------
SIX MONTHS **2/1/94**
ENDED YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------------
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.33 $8.15 $7.99 $7.97 $7.72 $8.46
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.15 0.32 0.33 0.33 0.33 0.23
Net realized and unrealized gain (loss)
on investments .................................... (0.08) 0.23 0.20 0.05 0.38 (0.74)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.07 0.55 0.53 0.38 0.71 (0.51)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.15) (0.32) (0.33) (0.33) (0.33) (0.23)
Distributions from net realized capital gain ........ (0.03) (0.05) (0.04) (0.03) (0.13) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.18) (0.37) (0.37) (0.36) (0.46) (0.23)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.22 $8.33 $8.15 $7.99 $7.97 $7.72
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.86% 6.91% 6.80% 4.91% 9.75% (6.21)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $3,052 $3,128 $2,063 $2,047 $630 $424
RATIO OF EXPENSES TO AVERAGE NET ASSETS ............. 1.79%+ 1.80% 1.81% 1.72% 2.02% 1.80%+
Ratio of net income to average net assets ........... 3.74%+ 3.91% 4.08% 4.14% 4.27% 4.26%+
Portfolio turnover rate ............................. 0.06% 7.59% 14.79% 5.56% 3.63% 17.68%++
</TABLE>
- -------------------------
See footnotes on page 57.
49
<PAGE>
FINANCIAL HIGHLIGHTS
MASSACHUSETTS SERIES
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.27 $7.99 $7.85 $7.91 $7.66 $8.54
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.18 0.38 0.40 0.41 0.42 0.44
Net realized and unrealized gain (loss)
on investments .................................... (0.14) 0.37 0.22 0.05 0.28 (0.67)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.04 0.75 0.62 0.46 0.70 (0.23)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.18) (0.38) (0.40) (0.41) (0.42) (0.44)
Distributions from net realized capital gain ........ (0.05) (0.09) (0.08) (0.11) (0.03) (0.21)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.23) (0.47) (0.48) (0.52) (0.45) (0.65)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.08 $8.27 $7.99 $7.85 $7.91 $7.66
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.51% 9.80% 8.11% 5.97% 9.58% (2.94)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ............ $103,400 $109,328 $110,011 $109,872 $115,711 $120,149
Ratio of expenses to average net assets ............. 0.83%+ 0.80% 0.84% 0.80% 0.86% 0.85%
Ratio of net income to average net assets ........... 4.47%+ 4.72% 5.06% 5.24% 5.51% 5.46%
Portfolio turnover rate ............................. 4.45% 13.41% 29.26% 26.30% 16.68% 12.44%
CLASS D
--------------------------------------------------------------------
SIX MONTHS 2/1/94**
ENDED YEAR ENDED SEPTEMBER 30, TO
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.26 $7.99 $7.84 $7.90 $7.66 $8.33
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.14 0.31 0.33 0.34 0.34 0.24
Net realized and unrealized gain (loss)
on investments .................................... (0.13) 0.36 0.23 0.05 0.27 (0.67)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.01 0.67 0.56 0.39 0.61 (0.43)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.14) (0.31) (0.33) (0.34) (0.34) (0.24)
Distributions from net realized capital gain ........ (0.05) (0.09) (0.08) (0.11) (0.03) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.19) (0.40) (0.41) (0.45) (0.37) (0.24)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.08 $8.26 $7.99 $7.84 $7.90 $7.66
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.18% 8.68% 7.29% 5.01% 8.33% (5.34)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $2,374 $1,468 $1,245 $1,405 $809 $1,099
Ratio of expenses to average net assets ............. 1.73%+ 1.71% 1.74% 1.70% 1.95% 1.78%+
Ratio of net income to average net assets ........... 3.57%+ 3.81% 4.16% 4.32% 4.47% 4.52%+
Portfolio turnover rate ............................. 4.45% 13.41% 29.26% 26.30% 16.68% 12.44%++
</TABLE>
- -------------------------
See footnotes on page 57.
50
<PAGE>
FINANCIAL HIGHLIGHTS
MICHIGAN SERIES
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.83 $8.60 $8.46 $8.54 $8.28 $9.08
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.20 0.41 0.43 0.45 0.46 0.46
Net realized and unrealized gain (loss)
on investments .................................... (0.12) 0.30 0.23 0.06 0.30 (0.71)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.08 0.71 0.66 0.51 0.76 (0.25)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.20) (0.41) (0.43) (0.45) (0.46) (0.46)
Distributions from net realized capital gain ........ (0.16) (0.07) (0.09) (0.14) (0.04) (0.09)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.36) (0.48) (0.52) (0.59) (0.50) (0.55)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.55 $8.83 $8.60 $8.46 $8.54 $8.28
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.90% 8.63% 8.16% 6.16% 9.56% (2.90)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $138,558 $144,161 $143,370 $148,178 $151,589 $151,095
Ratio of expenses to average net assets ............. 0.81%+ 0.79% 0.81% 0.78% 0.87% 0.84%
Ratio of net income to average net assets ........... 4.65%+ 4.78% 5.13% 5.29% 5.50% 5.32%
Portfolio turnover rate ............................. 3.62% 23.60% 10.98% 19.62% 20.48% 10.06%
CLASS D
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.82 $8.59 $8.45 $8.54 $8.28 $9.01
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.16 0.33 0.36 0.37 0.37 0.25
Net realized and unrealized gain (loss)
on investments .................................... (0.12) 0.30 0.23 0.05 0.30 (0.73)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.04 0.63 0.59 0.42 0.67 (0.48)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.16) (0.33) (0.36) (0.37) (0.37) (0.25)
Distributions from net realized capital gain ........ (0.16) (0.07) (0.09) (0.14) (0.04) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.32) (0.40) (0.45) (0.51) (0.41) (0.25)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.54 $8.82 $8.59 $8.45 $8.54 $8.28
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.45% 7.66% 7.19% 5.09% 8.36% (5.47)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $2,642 $1,841 $1,845 $1,486 $1,172 $671
RATIO OF EXPENSES TO AVERAGE NET ASSETS ............. 1.71%+ 1.70% 1.71% 1.68% 2.01% 1.75%+
Ratio of net income to average net assets ........... 3.75%+ 3.87% 4.23% 4.39% 4.40% 4.40%+
Portfolio turnover rate ............................. 3.62% 23.60% 10.98% 19.62% 20.48% 10.06%++
</TABLE>
- -------------------------
See footnotes on page 57.
51
<PAGE>
FINANCIAL HIGHLIGHTS
MINNESOTA SERIES
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $7.98 $7.79 $7.68 $7.82 $7.72 $8.28
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.18 0.38 0.40 0.42 0.45 0.45
Net realized and unrealized gain (loss)
on investments .................................... (0.08) 0.20 0.11 (0.12) 0.11 (0.44)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.10 0.58 0.51 0.30 0.56 0.01
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.18) (0.38) (0.40) (0.42) (0.45) (0.45)
Distributions from net realized capital gain ........ (0.10) (0.01) -- (0.02) (0.01) (0.12)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.28) (0.39) (0.40) (0.44) (0.46) (0.57)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $7.80 $7.98 $7.79 $7.68 $7.82 $7.72
====== ====== ====== ====== ====== ======
TOTAL RETURN: 1.27% 7.68% 6.85% 3.99% 7.61% 0.12%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $118,743 $121,374 $121,674 $126,173 $132,716 $134,990
Ratio of expenses to average net assets ............. 0.84%+ 0.81% 0.85% 0.81% 0.87% 0.85%
Ratio of net income to average net assets ........... 4.64%+ 4.87% 5.21% 5.47% 5.89% 5.70%
Portfolio turnover rate ............................. 4.65% 21.86% 6.88% 26.89% 5.57% 3.30%
CLASS D
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $7.98 $7.79 $7.68 $7.82 $7.73 $8.22
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.15 0.31 0.33 0.35 0.38 0.25
Net realized and unrealized gain (loss)
on investments .................................... (0.08) 0.20 0.11 (0.12) 0.10 (0.49)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.07 0.51 0.44 0.23 0.48 (0.24)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.15) (0.31) (0.33) (0.35) (0.38) (0.25)
Distributions from net realized capital gain ........ (0.10) (0.01) -- (0.02) (0.01) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.25) (0.32) (0.33) (0.37) (0.39) (0.25)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $7.80 $7.98 $7.79 $7.68 $7.82 $7.73
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.82% 6.71% 5.89% 3.06% 6.45% (3.08)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $2,113 $2,103 $1,799 $2,036 $2,237 $1,649
Ratio of expenses to average net assets ............. 1.74%+ 1.72% 1.75% 1.71% 1.85% 1.74%+
Ratio of net income to average net assets ........... 3.74%+ 3.96% 4.31% 4.57% 4.92% 4.68%+
Portfolio turnover rate ............................. 4.65% 21.86% 6.88% 26.89% 5.57% 3.30%++
</TABLE>
- -------------------------
See footnotes on page 57.
52
<PAGE>
FINANCIAL HIGHLIGHTS
MISSOURI SERIES
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.03 $7.82 $7.71 $7.70 $7.41 $8.31
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.17 0.36 0.38 0.39 0.40 0.40
Net realized and unrealized gain (loss)
on investments .................................... (0.14) 0.28 0.19 0.08 0.36 (0.79)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.03 0.64 0.57 0.47 0.76 (0.39)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.17) (0.36) (0.38) (0.39) (0.40) (0.40)
Distributions from net realized capital gain ........ (0.12) (0.07) (0.08) (0.07) (0.07) (0.11)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.29) (0.43) (0.46) (0.46) (0.47) (0.51)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $7.77 $8.03 $7.82 $7.71 $7.70 $7.41
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.38% 8.41% 7.70% 6.27% 10.67% (4.85)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $48,944 $49,949 $52,766 $49,941 $51,169 $52,621
Ratio of expenses to average net assets ............. 0.90%+ 0.89% 0.89% 0.86% 0.88% 0.74%
Ratio of net income to average net assets ........... 4.39%+ 4.59% 4.93% 5.03% 5.31% 5.18%
Portfolio turnover rate ............................. 1.49% 21.26% 6.47% 8.04% 3.88% 14.33%
Without management fee waiver:*
Ratio of expenses to average net assets ............. 0.93% 0.88%
Ratio of net income to average net assets ........... 5.26% 5.04%
CLASS D
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94*
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.03 $7.82 $7.72 $7.70 $7.41 $8.20
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.14 0.29 0.31 0.32 0.32 0.22
Net realized and unrealized gain (loss)
on investments .................................... (0.14) 0.28 0.18 0.09 0.36 (0.79)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... -- 0.57 0.49 0.41 0.68 (0.57)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.14) (0.29) (0.31) (0.32) (0.32) (0.22)
Distributions from net realized capital gain ........ (0.12) (0.07) (0.08) (0.07) (0.07) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.26) (0.36) (0.39) (0.39) (0.39) (0.22)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $7.77 $8.03 $7.82 $7.72 $7.70 $7.41
====== ====== ====== ====== ====== ======
TOTAL RETURN: (0.07)% 7.45% 6.60% 5.46% 9.49% (7.16)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $626 $418 $474 $565 $515 $350
Ratio of expenses to average net assets ............. 1.80%+ 1.79% 1.80% 1.76% 1.98% 1.70%+
Ratio of net income to average net assets ........... 3.49%+ 3.69% 4.02% 4.13% 4.23% 4.27%+
Portfolio turnover rate ............................. 1.49% 21.26% 6.47% 8.04% 3.88% 14.33%++
Without management fee waiver:*
Ratio of expenses to average net assets ............. 2.03% 1.80%+
Ratio of net income to average net assets ........... 4.18% 4.17%+
</TABLE>
- -------------------------
See footnotes on page 57.
53
<PAGE>
FINANCIAL HIGHLIGHTS
NEW YORK SERIES
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.60 $8.28 $7.98 $7.86 $7.67 $8.75
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.19 0.40 0.41 0.42 0.42 0.43
Net realized and unrealized gain (loss)
on investments .................................... (0.15) 0.40 0.32 0.12 0.36 (0.88)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.04 0.80 0.73 0.54 0.78 (0.45)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.19) (0.40) (0.41) (0.42) (0.42) (0.43)
Distributions from net realized capital gain ........ (0.21) (0.08) (0.02) -- (0.17) (0.20)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.40) (0.48) (0.43) (0.42) (0.59) (0.63)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.24 $8.60 $8.28 $7.98 $7.86 $7.67
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.42% 10.02% 9.45% 6.97% 10.93% (5.37)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $84,971 $84,822 $83,528 $82,719 $83,980 $90,914
Ratio of expenses to average net assets ............. 0.82%+ 0.81% 0.82% 0.77% 0.88% 0.87%
Ratio of net income to average net assets ........... 4.51%+ 4.74% 5.09% 5.24% 5.52% 5.31%
Portfolio turnover rate ............................. 4.57% 39.85% 23.83% 25.88% 34.05% 28.19%
CLASS D
-------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.60 $8.29 $7.98 $7.87 $7.67 $8.55
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.15 0.32 0.34 0.34 0.34 0.23
Net realized and unrealized gain (loss)
on investments .................................... (0.14) 0.39 0.33 0.11 0.37 (0.88)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.01 0.71 0.67 0.45 0.71 (0.65)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.15) (0.32) (0.34) (0.34) (0.34) (0.23)
Distributions from net realized capital gain ........ (0.21) (0.08) (0.02) -- (0.17) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.36) (0.40) (0.36) (0.34) (0.51) (0.23)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.25 $8.60 $8.29 $7.98 $7.87 $7.67
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.09% 8.88% 8.60% 5.86% 9.87% (7.73)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $3,297 $2,182 $1,572 $1,152 $885 $476
Ratio of expenses to average net assets ............. 1.72%+ 1.72% 1.73% 1.68% 1.96% 1.81%+
Ratio of net income to average net assets ........... 3.61%+ 3.83% 4.18% 4.33% 4.42% 4.39%+
Portfolio turnover rate ............................. 4.57% 39.85% 23.83% 25.88% 34.05% 28.19%++
</TABLE>
- -------------------------
See footnotes on page 57.
54
<PAGE>
FINANCIAL HIGHLIGHTS
OHIO SERIES
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.37 $8.19 $8.09 $8.11 $7.90 $8.77
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.19 0.40 0.42 0.43 0.44 0.44
Net realized and unrealized gain (loss)
on investments .................................... (0.13) 0.29 0.17 0.02 0.28 (0.70)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.06 0.69 0.59 0.45 0.72 (0.26)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.19) (0.40) (0.42) (0.43) (0.44) (0.44)
Distributions from net realized capital gain ........ (0.13) (0.11) (0.07) (0.04) (0.07) (0.17)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.32) (0.51) (0.49) (0.47) (0.51) (0.61)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.11 $8.37 $8.19 $8.09 $8.11 $7.90
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.80% 8.77% 7.54% 5.68% 9.59% (3.08)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $149,197 $153,126 $154,419 $162,243 $170,191 $171,469
Ratio of expenses to average net assets ............. 0.81%+ 0.78% 0.81% 0.77% 0.84% 0.84%
Ratio of net income to average net assets ........... 4.73%+ 4.92% 5.19% 5.32% 5.56% 5.34%
Portfolio turnover rate ............................. 0.68% 24.74% 11.76% 12.90% 2.96% 9.37%
CLASS D
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.41 $8.23 $8.13 $8.15 $7.92 $8.61
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.16 0.33 0.35 0.36 0.36 0.24
Net realized and unrealized gain (loss)
on investments .................................... (0.13) 0.29 0.17 0.02 0.30 (0.69)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.03 0.62 0.52 0.38 0.66 (0.45)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.16) (0.33) (0.35) (0.36) (0.36) (0.24)
Distributions from net realized capital gain ........ (0.13) (0.11) (0.07) (0.04) (0.07) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.29) (0.44) (0.42) (0.40) (0.43) (0.24)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.15 $8.41 $8.23 $8.13 $8.15 $7.92
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.36% 7.78% 6.57% 4.74% 8.67% (5.36)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $1,649 $1,103 $1,160 $1,011 $660 $324
Ratio of expenses to average net assets ............. 1.71%+ 1.69% 1.71% 1.67% 1.93% 1.78%+
Ratio of net income to average net assets ........... 3.83%+ 4.01% 4.29% 4.42% 4.48% 4.41%+
Portfolio turnover rate ............................. 0.68% 24.74% 11.76% 12.90% 2.96% 9.37%++
</TABLE>
- -------------------------
See footnotes on page 57.
55
<PAGE>
FINANCIAL HIGHLIGHTS
OREGON SERIES
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.05 $7.87 $7.65 $7.66 $7.43 $8.08
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.17 0.36 0.38 0.40 0.40 0.40
Net realized and unrealized gain (loss)
on investments .................................... (0.08) 0.28 0.26 -- 0.25 (0.59)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.09 0.64 0.64 0.40 0.65 (0.19)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.17) (0.36) (0.38) (0.40) (0.40) (0.40)
Distributions from net realized capital gain ........ (0.05) (0.10) (0.04) (0.01) (0.02) (0.06)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.22) (0.46) (0.42) (0.41) (0.42) (0.46)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $7.92 $8.05 $7.87 $7.65 $7.66 $7.43
====== ====== ====== ====== ====== ======
TOTAL RETURN: 1.18% 8.48% 8.60% 5.27% 9.05% (2.38)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $57,957 $57,601 $55,239 $57,345 $59,549 $59,884
Ratio of expenses to average net assets ............. 0.88%+ 0.88% 0.90% 0.86% 0.86% 0.78%
Ratio of net income to average net assets ........... 4.41%+ 4.60% 4.88% 5.18% 5.40% 5.20%
Portfolio turnover rate ............................. 6.76% 12.62% 19.46% 28.65% 2.47% 9.43%
Without management fee waiver:*
Ratio of expenses to average net assets ............. 0.91% 0.89%
Ratio of net income to average net assets ........... 5.35% 5.09%
CLASS D
------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.04 $7.87 $7.64 $7.65 $7.43 $8.02
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.14 0.29 0.31 0.33 0.33 0.22
Net realized and unrealized gain (loss)
on investments .................................... (0.08) 0.27 0.27 .-- 0.24 (0.59)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.06 0.56 0.58 0.33 0.57 (0.37)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.14) (0.29) (0.31) (0.33) (0.33) (0.22)
Distributions from net realized capital gain ........ (0.05) (0.10) (0.04) (0.01) (0.02) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.19) (0.39) (0.35) (0.34) (0.35) (0.22)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $7.91 $8.04 $7.87 $7.64 $7.65 $7.43
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.73% 7.37% 7.77% 4.33% 7.86% (4.76)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $2,778 $2,650 $1,678 $1,540 $1,495 $843
Ratio of expenses to average net assets ............. 1.78%+ 1.79% 1.80% 1.76% 1.83% 1.72%+
Ratio of net income to average net assets ........... 3.51%+ 3.69% 3.98% 4.28% 4.41% 4.32%+
Portfolio turnover rate ............................. 6.76% 12.62% 19.46% 28.65% 2.47% 9.43%++
Without management fee waiver:*
Ratio of expenses to average net assets ............. 1.88% 1.82%+
Ratio of net income to average net assets ........... 4.36% 4.22%+
</TABLE>
- -------------------------
See footnotes on page 57.
56
<PAGE>
FINANCIAL HIGHLIGHTS
SOUTH CAROLINA SERIES
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.38 $8.16 $8.07 $7.97 $7.61 $8.52
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.19 0.39 0.40 0.41 0.41 0.41
Net realized and unrealized gain (loss)
on investments .................................... (0.13) 0.29 0.22 0.12 0.37 (0.79)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.06 0.68 0.62 0.53 0.78 (0.38)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.19) (0.39) (0.40) (0.41) (0.41) (0.41)
Distributions from net realized capital gain ........ (0.07) (0.07) (0.13) (0.02) (0.01) (0.12)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.26) (0.46) (0.53) (0.43) (0.42) (0.53)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.18 $8.38 $8.16 $8.07 $7.97 $7.61
====== ====== ====== ====== ====== ======
TOTAL RETURN: 0.63% 8.66% 7.99% 6.82% 10.69% (4.61)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $104,543 $106,328 $101,018 $108,163 $112,421 $115,133
Ratio of expenses to average net assets ............. 0.83%+ 0.80% 0.84% 0.80% 0.88% 0.83%
Ratio of net income to average net assets ........... 4.53%+ 4.74% 5.04% 5.15% 5.38% 5.12%
Portfolio turnover rate ............................. 1.50% 16.63% -- 20.66% 4.13% 1.81%
CLASS D
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94**
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
--------- ----- ----- ----- ----- ----------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $8.38 $8.16 $8.06 $7.97 $7.61 $8.42
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.15 0.31 0.33 0.34 0.34 0.22
Net realized and unrealized gain (loss)
on investments .................................... (0.13) 0.29 0.23 0.11 0.37 (0.81)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.02 0.60 0.56 0.45 0.71 (0.59)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.15) (0.31) (0.33) (0.34) (0.34) (0.22)
Distributions from net realized capital gain ........ (0.07) (0.07) (0.13) (0.02) (0.01) .--
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.22) (0.38) (0.46) (0.36) (0.35) (0.22)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $8.18 $8.38 $8.16 $8.06 $7.97 $7.61
====== ====== ====== ====== ===== ======
TOTAL RETURN: 0.18% 7.68% 7.15% 5.73% 9.63% (7.14)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $6,481 $5,594 $3,663 $2,714 $1,704 $1,478
Ratio of expenses to average net assets ............. 1.73%+ 1.71% 1.75% 1.70% 1.85% 1.74%+
Ratio of net income to average net assets ........... 3.63%+ 3.83% 4.13% 4.25% 4.40% 4.29%+
Portfolio turnover rate ............................. 1.50% 16.63% -- 20.66% 4.13% 1.81%++
</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 Seligman Municipal Fund Series, Inc.
(comprising, respectively, the National, Colorado, Georgia, Louisiana, Maryland,
Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oregon, and South
Carolina Series) as of March 31, 1999, the related statements of operations for
the six months then ended and of changes in net assets for the six months then
ended and for the year ended September 30, 1998, 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 March
31, 1999 by correspondence with the Fund's custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Series constituting the Seligman Municipal Fund Series, Inc.
as of March 31, 1999, the results of their operations, the changes in their net
assets, and their financial highlights for the respective stated periods, in
conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
April 30, 1999
58
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN 3, 4
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
DIRECTOR, New York Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3, 4
Director, KEYSPAN ENERGY CORPORATION
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3, 4
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2, 4
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR, ICI Mutual Insurance Company
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. &W. Seligman &Co. Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
59
<PAGE>
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
THOMAS G. MOLES
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
FOR MORE INFORMATION
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 Shareholder Services
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated Telephone Access Service
60
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES CHARGE (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC expires after a fixed time period).
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price or net asset value.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of a fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE -- The price at which a mutual fund's share can be purchased. The
offering price per share is the current net asset value plus any sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains more detailed
information about an investment company and that supplements the prospectus. It
is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The AVERAGE ANNUAL TOTAL
RETURN represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- --------------------------------------
Adapted from the Investment Company Institute's 1998 MUTUAL FUND FACT BOOK.
61
<PAGE>
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF SHAREHOLDERS OR THOSE
WHO HAVE RECEIVED THE OFFERING PROSPECTUS COVERING SHARES OF CAPITAL STOCK OF
SELIGMAN MUNICIPAL FUND SERIES, INC., WHICH CONTAINS INFORMATION ABOUT THE SALES
CHARGES, MANAGEMENT FEE, AND OTHER COSTS. PLEASE READ THE PROSPECTUS CAREFULLY
BEFORE INVESTING OR SENDING MONEY.
SELIGMAN ADVISORS, INC.
AN AFFILIATE OF
[LOGO OMITTED]
J. & W. SELIGMAN & CO.
Incorporated
Established 1864
100 PARK AVENUE, NEW YORK, NY 10017
TEA3 3/99 [GRAPHIC OMITTED] Printed on Recycled Paper
<PAGE>
SELIGMAN
--------------
MUNICIPAL FUND [GRAPHIC OMITTED]
SERIES. INC.
ANNUAL REPORT
SEPTEMBER 30, 1998
---------
PROVIDING
INCOME EXEMPT
FROM REGULAR
INCOME
TAX
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN--TIMES CHANGE...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
TIMES CHANGE...
Established in 1864, Seligman's history of providing financial services has been
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 134 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and launched its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including funds that focus on technology stocks, municipal
bonds, and international securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
TABLE OF CONTENTS
To the Shareholders .................................... 1
Interview With Your Portfolio Manager .................. 2
Performance Overview and
Portfolio Summary .................................... 4
Portfolios of Investments .............................. 18
Statements of Assets and Liabilities ................... 38
Statements of Operations ............................... 40
Statements of Changes in Net Assets .................... 42
Notes to Financial Statements .......................... 46
Financial Highlights ................................... 51
Report of Independent Auditors ......................... 64
Board of Directors ..................................... 65
Executive Officers AND For More Information ............ 66
Glossary of Financial Terms ............................ 67
<PAGE>
TO THE SHAREHOLDERS
Seligman Municipal Fund Series posted strong results for its fiscal year ended
September 30, 1998. Although the growth of the US economy slowed from its record
pace, the expansion continued. Inflation and interest rates reached their lowest
levels in a quarter century, and unemployment was at its lowest level since
1970.
Despite ongoing strength in the US, economic turmoil spread throughout the rest
of the world. The Asian financial crisis worsened, Japan failed to resolve its
banking problems, Russia's economy became chaotic, and economic crises loomed
throughout much of Latin America, particularly in Brazil. Fears of risk in
nearly all types of financial assets drove investors out of the equity markets
and into the relative safety and quality of investments such as US Treasury
bonds, often a haven from a turbulent stock market. This "flight to quality"
helped create a more attractive environment for municipal bonds.
Major factors influencing the market for municipal bonds over the year were the
prolonged Treasury bond rally and heavy issuance of municipal securities.
Municipal bond holders fared well as interest rates generally declined over this
time period. Nonetheless, the performance of the municipal market lagged that of
the Treasury bond market, as investors focused on quality because of concerns
about financial instability. Treasury bond prices rose sharply over the 12-month
period, sending yields significantly lower. At one point in the period, selected
municipal obligations traded at the same yield as Treasuries, even though
municipals offered more favorable tax treatment. Currently, long-term municipal
bonds have not been this attractive, relative to long-term Treasuries, since
1986, when proposed legislation threatened the tax-exempt status of municipal
securities.
Looking ahead, we see the favorable climate for municipal bonds continuing. Low
inflation and a growing economy should serve to protect the value of municipal
investments. Fewer new issues may be entering the market, which could tighten
the supply/demand balance. This could improve overall total rate-of-return
prospects. Also, although the US economy continues to grow, this growth is
slowing, and the global situation is forcing the Federal Reserve into a more
benign strategy on interest rates. The Fed has already cut short-term rates
twice, and we expect more cuts until a semblance of international stability
emerges. Finally, the municipal market's record of safety and stability offers
further appeal to investors in these more troubled times, especially as equity
market volatility continues.
All in all, we feel the investment attractiveness of municipals remains
compelling. In this period of global economic uncertainty and low interest
rates, municipals are an appropriate alternative for those investors with
suitable investment requirements.
As you may know, companies are modifying their computer systems to recognize
dates of January 1, 2000, and beyond. This is often referred to as the "Y2K"
problem. Unless systems are updated, many applications may interpret the last
two digits of the year to mean 1900 instead of 2000. J. & W. Seligman & Co.
Incorporated, the Seligman Investment Companies, and Seligman Data Corp., your
shareholder service agent, have jointly established a team to ensure that your
investment and shareholder services are not disrupted. This team is supported by
consulting firms specializing in Y2K solutions. Substantial work has been
performed to date, and we are confident that when our plans are finalized and
all systems are tested, there will be no disruption in the services provided by
your Fund.
Thank you for your continued support of Seligman Municipal Fund Series. We look
forward to serving your investment needs in the many years to come. A discussion
with your Portfolio Manager, performance overviews, portfolio holdings, and
financial statements follow this letter.
By order of the Board of Directors,
/s/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
-----------------------
Brian T. Zino
President
October 30, 1998
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER
Q. WHAT ECONOMIC FACTORS INFLUENCED SELIGMAN MUNICIPAL FUND SERIES IN THE LAST
12 MONTHS?
A. The continuing combination of low inflation, low unemployment, and steady
economic growth throughout the past 12 months sustained what became one of
the nation's longest peacetime economic expansions. This contributed to the
overall improvement of the financial condition of America's states, cities,
and municipalities. Over the past year, credit rating upgrades significantly
outnumbered rating downgrades. These upgrades enhanced the overall
creditworthiness of the municipal marketplace.
But, by the end of the fiscal year, there was widespread expectation that
the US may be unable to avoid the economic slowdown that has already gripped
much of the world. While many economists were calling a recession unlikely,
the fact that they were including its potential in their forecasts implied
that the ongoing domestic economic expansion would not continue. In the
final months of the fiscal year, turmoil in world markets began to
contribute to a modest slowdown in the pace of US economic growth, and
prevented an acceleration in the rate of inflation. In September, the
Federal Reserve Board lowered the federal funds rate by one-quarter of one
percent. With a warning that growing fear among investors and lenders was
threatening the nation's economic expansion, the Fed unexpectedly cut
interest rates again in October, the first time in four and a half years
that the central bank had changed interest-rate policy outside one of its
normally scheduled meetings. This unusual timing suggested that the Fed
believed that the domestic economy is beginning to deteriorate as the
worldwide financial crisis gains momentum, and that a credit shortage may be
developing that could further curb growth. Fed officials have hinted that
more interest-rate reductions will ensue if the global financial turmoil
escalates. Declining US equity markets reflected these fears, as investors
sold stocks in favor of the relative safety and quality of US Treasury
bonds, which are often considered a haven from a volatile stock market.
Q. WHAT MARKET FACTORS INFLUENCED SELIGMAN MUNICIPAL FUND SERIES IN THE LAST 12
MONTHS?
A. Overall, Seligman Municipal Fund Series ended its fiscal year on a positive
note. During the period, long-term municipal yields fluctuated within a
narrow range, decreasing by almost one-half of a point. The declining
interest-rate environment led to rising prices for the majority of holdings
and competitive performance results for each Series' net asset value.
[GRAPHIC OMITTED]
SELIGMAN MUNICIPAL TEAMS: (FROM LEFT) AUDREY KUCHTYAK, THERESA BARION, DEBRA
McGUINNESS, (SEATED) EILEEN COMERFORD, THOMAS G. MOLES (PORTFOLIO MANAGER)
A TEAM APPROACH SELIGMAN MUNICIPAL FUND SERIES IS MANAGED BY THE SELIGMAN
MUNICIPALS TEAM, HEADED BY THOMAS G. MOLES. MR. MOLES IS ASSISTED IN THE
MANAGEMENT OF THE FUND BY A GROUP OF SEASONED PROFESSIONALS WHO ARE RESPONSIBLE
FOR RESEARCH AND TRADING CONSISTENT WITH THE SERIES' INVESTMENT OBJECTIVE.
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER
THOMAS G. MOLES
However, the municipal market underperformed the US Treasury market during
the 12-month period. The ongoing strength in the economy over the year
caused the supply of Treasury bonds to shrink, as the federal government
needed to borrow less after running its first budget surplus in 29 years.
But, the solid economy and low interest rates caused the supply of municipal
bonds to grow. The net reduction in Treasury financing and the increasing
municipal bond issuance was compounded by the increased investor demand for
Treasuries. These factors caused the decline in Treasury yields to
significantly outpace the drop in municipal yields. Because of these
factors, long-term municipal bonds have not been as attractive, relative to
long-term Treasuries, since 1986, when proposed tax legislation threatened
the tax-exempt status of municipal securities.
Q. WHAT WAS YOUR INVESTMENT STRATEGY?
A. Throughout the 12-month period, the long-term interest rate outlook was
positive, and Seligman Municipal Fund Series was positioned to benefit from
the declining interest-rate environment. The Seligman Municipals Team
engaged in duration-extension trades, selling shorter-term holdings and
replacing them with long-term, current-coupon bonds. Current-coupon bonds
have coupon rates that are at or near current market rates. Generally, when
long-term bond yields decline, the prices appreciate more than those of
shorter-term bonds.
During the past 12 months, we also improved the call protection of the
portfolios. As the bonds within the portfolio mature, older holdings
approach their optional call dates (a callable bond can be redeemed by the
issuer, prior to maturity, on specified dates and at predetermined prices).
Declining interest rates increase the risk that these bonds will be called
by the issuer. The lower interest-rate environment over the 12-month period
prompted many municipal issuers to retire outstanding, higher-coupon debt.
Additionally, as a direct result of the significant increase in refunding
volume, many of the portfolio's holdings were advance-refunded, which had a
positive impact on performance. In general, when a municipal bond is
refunded, total return performance is improved, and the bond's rating is
often upgraded.
Q. WHAT IS YOUR OUTLOOK?
A. Long-term municipal yields have fallen to levels not seen in many years.
Municipal securities continue to offer a significant yield advantage
compared to the after-tax returns of other fixed-income investments.
Further, as the yield spread between municipal and Treasury bonds
normalizes, municipal market performance should improve, relative to the
Treasury market. Finally, the municipal market's record of safety and
stability may become more appealing as volatility persists in the US equity
markets. Consequently, we remain optimistic about the long-term prospects
for the municipal bond market, and for Seligman Municipal Fund Series.
3
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
The following charts compare a $10,000 hypothetical investment made in each
Series of Seligman Municipal Fund Series Class A shares, with and without the
initial 4.75% maximum sales charge, for the 10-year period ended September 30,
1998, to a $10,000 hypothetical investment made in the Lehman Brothers Municipal
Bond Index (Lehman Index) for the same period. The performance of each Series of
Seligman Municipal Fund Series Class D shares is not shown in the charts but is
included in the table below each chart. It is important to keep in mind that the
Lehman Index does not include any fees or sales charges, and does not reflect
state-specific bond market performance. The table below each chart also includes
relevant portfolio characteristics for each Series.
SELIGMAN NATIONAL MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9526 10000 10000
9794 10281 10185
9885 10377 10252
10476 10998 10859
9/30/89 10347 10862 10867
10756 11291 11284
10684 11216 11335
10964 11510 11600
9/30/90 10771 11307 11607
11382 11948 12107
11578 12154 12381
11824 12412 12645
9/30/91 12305 12917 13136
12688 13319 13578
12657 13286 13619
13162 13816 14136
9/30/92 13393 14059 14511
13688 14369 14775
14381 15096 15323
14944 15688 15824
9/30/93 15536 16309 16359
15617 16394 16588
14336 15049 15677
14423 15141 15851
9/30/94 14320 15033 15959
14064 14763 15729
15224 15981 16841
15613 16390 17247
9/30/95 15964 16758 17744
16891 17731 18475
16524 17346 18251
16636 17464 18392
9/30/96 17077 17926 18815
17453 18322 19295
17355 18218 19250
18016 18912 19914
9/30/97 18682 19611 20516
19264 20223 21072
19493 20463 21314
19781 20765 21638
9/30/98 20363 21376 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.54)% 3.81% 4.55% 7.37% n/a
Without Sales Charge 4.46 9.00 5.56 7.89 n/a
CLASS D**
With 1% CDSC 2.87 6.76 n/a n/a n/a
Without CDSC 3.87 7.76 n/a n/a 4.57%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $8.32 $8.16 $8.01 Class A $0.394 -- 3.86%
Class D 8.31 8.16 8.02 Class D 0.319 -- 3.16
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 81% Aaa/AAA 38% A/A 21%
General Obligation Bonds 19 Aa/AA 29 Baa/BBB 12
</TABLE>
WEIGHTED AVERAGE MATURITY 24.7 years
- ----------
See footnotes on page 16.
4
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN COLORADO MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9528 10000 10000
9813.95 10299.64 10185
9917.61 10408.43 10252
10474.22 10992.58 10859
9/30/89 10452.21 10969.48 10867
10799.09 11333.52 11284
10734.07 11265.29 11335
10984.95 11528.58 11600
9/30/90 10909.81 11449.72 11607
11344.18 11905.6 12107
11533.33 12104.1 12381
11743.36 12324.51 12645
9/30/91 12126.35 12726.46 13136
12410.18 13024.34 13578
12382.81 12995.61 13619
12793.04 13426.14 14136
9/30/92 13065.18 13711.74 14511
13361.95 14023.2 14775
13805.63 14488.84 15323
14248.54 14953.67 15824
9/30/93 14703.19 15430.82 16359
14846.95 15581.7 16588
14123.24 14822.16 15677
14249.19 14954.35 15851
9/30/94 14273.9 14980.28 15959
14085.74 14782.8 15729
14979.21 15720.49 16841
15236.82 15990.85 17247
9/30/95 15495.22 16262.03 17744
16052.56 16846.95 18475
15862.52 16647.51 18251
16025.26 16818.31 18392
9/30/96 16232.1 17035.38 18815
16596.37 17417.68 19295
16574.53 17394.77 19250
17015.93 17858.01 19914
9/30/97 17416.77 18278.7 20516
17844.68 18727.78 21072
18034.86 18927.37 21314
18300.18 19205.82 21638
9/30/98 18814 19745 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.58)% 2.89% 4.03% 6.52% n/a
Without Sales Charge 4.32 8.03 5.05 7.04 n/a
CLASS D**
With 1% CDSC 2.70 5.90 n/a n/a n/a
Without CDSC 3.70 6.90 n/a n/a 3.89%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $7.64 $7.50 $7.42 CLASS A $0.360 -- 3.80%
CLASS D 7.63 7.50 7.42 CLASS D 0.291 -- 3.09
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
REVENUE BONDS 81% AAA/AAA 49%
GENERAL OBLIGATION BONDS 19 AA/AA 25
A/A 12
WEIGHTED AVERAGE MATURITY 21.3 years Baa/BBB 14
</TABLE>
- ------------
See footnotes on page 16.
5
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN GEORGIA MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9530 10000 10000
9858.8 10345.47 10185
9951 10442.11 10252
10539.97 11060.27 10859
9/30/89 10496.44 11014.6 10867
10832.01 11366.73 11284
10832.01 11366.73 11335
11072.38 11618.96 11600
9/30/90 11040.95 11585.98 11607
11591.31 12163.51 12107
11803.42 12386.08 12381
12040.7 12635.07 12645
9/30/91 12509.22 13126.72 13136
12863.3 13498.27 13578
12854.83 13489.38 13619
13378.28 14039 14136
9/30/92 13716 14392.82 14511
14021.03 14713.13 14775
14427.52 15139.68 15323
14915.7 15651.95 15824
9/30/93 15630.27 16401.79 16359
15732.53 16509.1 16588
14658.86 15382.44 15677
14748.93 15476.96 15851
9/30/94 14768 15496.62 15959
14530.75 15248 15729
15650.32 16422.82 16841
16120.93 16916.67 17247
9/30/95 16489.52 17303.45 17744
17314.63 18169.3 18475
16958.21 17795.28 18251
17109.44 17953.99 18392
9/30/96 17571.95 18439.32 18815
17983.71 18871.42 19295
17833.25 18713.54 19250
18519.79 19433.96 19914
9/30/97 19091.39 20033.77 20516
19605.21 20572.95 21072
19826.96 20805.64 21314
20153.91 21148.73 21638
9/30/98 20702 21724 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.55)% 3.35% 4.76% 7.55% n/a
Without Sales Charge 4.41 8.44 5.78 8.07 n/a
CLASS D**
With 1% CDSC 2.94 6.59 n/a n/a n/a
Without CDSC 3.94 7.59 n/a n/a 4.90%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.38 $8.21 $8.12 CLASS A $0.375 $0.032 3.69%
CLASS D 8.40 8.23 8.13 CLASS D 0.301 0.032 2.99
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 66% Aaa/AAA 43%
General Obligation Bonds 34 Aa/AA 36
A/A 18
WEIGHTED AVERAGE MATURITY 18.6 years Baa/BBB 3
</TABLE>
- --------
See footnotes on page 16.
6
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN LOUISIANA MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9523 10000 10000
9732.81 10220.08 10185
9848.63 10341.7 10252
10380.93 10900.65 10859
9/30/89 10383.79 10903.65 10867
10719.31 11255.97 11284
10721.19 11257.94 11335
10984.21 11534.15 11600
9/30/90 10923.82 11470.73 11607
11455.08 12028.59 12107
11695.72 12281.27 12381
11939.1 12536.84 12645
9/30/91 12397.93 13018.63 13136
12758.92 13397.71 13578
12744.2 13382.26 13619
13268.39 13932.7 14136
9/30/92 13529.88 14207.28 14511
13758.47 14447.31 14775
14282.07 14997.13 15323
14713.74 15450.41 15824
9/30/93 15166.51 15925.85 16359
15333.5 16101.2 16588
14507.95 15234.31 15677
14569.92 15299.39 15851
9/30/94 14585.03 15315.25 15959
14431.18 15153.69 15729
15379.62 16149.62 16841
15681.87 16467.01 17247
9/30/95 16086.5 16891.9 17744
16898.5 17744.61 18475
16624.27 17456.58 18251
16677.94 17512.94 18392
9/30/96 17103.45 17959.75 18815
17488 18363.56 19295
17469.59 18344.23 19250
18049.78 18953.45 19914
9/30/97 18500.82 19427.08 20516
18966.3 19915.86 21072
19171.91 20131.77 21314
19408.04 20379.72 21638
9/30/98 19996 20997 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.69)% 2.98% 4.66% 7.17% n/a
Without Sales Charge 4.30 8.08 5.68 7.70 n/a
Class D**
With 1% CDSC 2.82 6.11 n/a n/a n/a
Without CDSC 3.82 7.11 n/a n/a 4.61%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.51 $8.36 $8.28 CLASS A $0.407 $0.014 3.82%
CLASS D 8.50 8.35 8.27 CLASS D 0.331 0.014 3.11
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 85% Aaa/AAA 78%
General Obligation Bonds 15 Aa/AA 14
Baa/BBB 8
WEIGHTED AVERAGE MATURITY 20.0 years
</TABLE>
- ----------
See footnotes on page 16.
7
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN MARYLAND MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9523 10000 10000
9755 10243 10185
9871 10365 10252
10448 10971 10859
9/30/89 10421 10943 10867
10779 11318 11284
10752 11290 11335
10977 11527 11600
9/30/90 10887 11432 11607
11442 12015 12107
11630 12212 12381
11841 12434 12645
9/30/91 12331 12948 13136
12640 13272 13578
12681 13316 13619
13140 13798 14136
9/30/92 13459 14133 14511
13681 14366 14775
14188 14898 15323
14677 15412 15824
9/30/93 15239 16002 16359
15313 16080 16588
14503 15229 15677
14593 15323 15851
9/30/94 14617 15349 15959
14475 15200 15729
15482 16257 16841
15825 16617 17247
9/30/95 16210 17022 17744
16912 17759 18475
16620 17453 18251
16815 17657 18392
9/30/96 17183 18043 18815
17532 18410 19295
17417 18289 19250
17976 18876 19914
9/30/97 18495 19421 20516
18949 19898 21072
19179 20139 21314
19438 20411 21638
9/30/98 19954 20954 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.92)% 2.72% 4.52% 7.15% n/a
Without Sales Charge 4.04 7.89 5.54 7.68 n/a
Class D**
With 1% CDSC 2.69 5.91 n/a n/a n/a
Without CDSC 3.69 6.91 n/a n/a 4.59%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.32 $8.19 $8.14 CLASS A $0.395 $0.048 3.86%
CLASS D 8.33 8.19 8.15 CLASS D 0.321 0.048 3.15
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 77% Aaa/AAA 43%
General Obligation Bonds 23 Aa/AA 38
A/A 17
WEIGHTED AVERAGE MATURITY 21.8 years Baa/BBB 2
</TABLE>
- ---------
See footnotes on page 16.
8
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN MASSACHUSETTS MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9525 10000 10000
9716.55 10201 10185
9765.6 10252.61 10252
10343.83 10859.68 10859
9/30/89 10304.4 10818.29 10867
10558.88 11085.44 11284
10556 11082.46 11335
10775 11312.65 11600
9/30/90 10560 11086.62 11607
11130.86 11685.94 12107
11463.16 12034.83 12381
11730.29 12315.27 12645
9/30/91 12232.45 12842.47 13136
12574.71 13201.8 13578
12645.32 13275.93 13619
13123.25 13777.69 14136
9/30/92 13425.45 14094.96 14511
13716.21 14400 14775
14210 14918.62 15323
14723.31 15457.53 15824
9/30/93 15194.58 15952.32 16359
15296.89 16059.74 16588
14579.3 15306.38 15677
14698.91 15431.93 15851
9/30/94 14747.79 15483.25 15959
14618.99 15348.02 15729
15520 16294.06 16841
15810.25 16598.68 17247
9/30/95 16160.94 16966.86 17744
16840.83 17680.65 18475
16549.23 17374.51 18251
16726.63 17560.75 18392
9/30/96 17125.04 17979.03 18815
17537.45 18412 19295
17399.28 18266.93 19250
17989.8 18886.9 19914
9/30/97 18514.12 19437.36 20516
19059.03 20009.44 21072
19313.65 20276.76 21314
19612.26 20590.27 21638
9/30/98 20328 21342 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge 0.26% 4.56% 4.96% 7.35% n/a
Without Sales Charge 5.25 9.80 5.99 7.88 n/a
CLASS D**
With 1% CDSC 3.78 7.68 n/a n/a n/a
Without CDSC 4.78 8.68 n/a n/a 5.00%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.27 $8.04 $7.99 CLASS A $0.380 $0.094 3.72%
CLASS D 8.26 8.03 7.99 CLASS D 0.307 0.094 3.02
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C> <C> <C>
Revenue Bonds 88% Aaa/AAA 60% Baa/BBB 5%
General Obligation Bonds 12 Aa/AA 28 Non-Rated 2
A/A 5
WEIGHTED AVERAGE MATURITY 22.5 years
</TABLE>
- ---------
See footnotes on page 16.
9
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN MICHIGAN MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9520 10000 10000
9762 10253 10185
9862 10359 10252
10483 11011 10859
9/30/89 10463 10991 10867
10807 11351 11284
10799 11343 11335
11055 11612 11600
9/30/90 10941 11492 11607
11439 12015 12107
11676 12265 12381
11933 12534 12645
9/30/91 12400 13025 13136
12813 13458 13578
12837 13484 13619
13356 14029 14136
9/30/92 13709 14399 14511
14006 14712 14775
14481 15210 15323
15012 15769 15824
9/30/93 15487 16267 16359
15614 16401 16588
14892 15642 15677
14977 15731 15851
9/30/94 15038 15795 15959
14859 15607 15729
15836 16634 16841
16109 16920 17247
9/30/95 16475 17304 17744
17204 18071 18475
16925 17778 18251
17053 17912 18392
9/30/96 17490 18371 18815
17846 18745 19295
17777 18673 19250
18399 19326 19914
9/30/97 18916 19869 20516
19404 20382 21072
19634 20623 21314
19940 20944 21638
9/30/98 20548 21583 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.31)% 3.45% 4.80% 7.47% n/a
Without Sales Charge 4.66 8.63 5.82 8.00 n/a
Class D**
With 1% CDSC 3.19 6.66 n/a n/a n/a
Without CDSC 4.19 7.66 n/a n/a 4.76%
Lehman Index*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ capital gain+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.83 $8.64 $8.60 CLASS A $0.413 $0.074 3.76%
CLASS D 8.82 8.63 8.59 CLASS D 0.334 0.074 3.06
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 78% Aaa/AAA 56%
General Obligation Bonds 22 Aa/AA 34
A/A 10
WEIGHTED AVERAGE MATURITY 21.7 years
</TABLE>
- ---------
See footnotes on page 16.
10
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN MINNESOTA MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9519 10000 10000
9753.87 10246.75 10185
9797.9 10293.04 10252
10387.15 10912.03 10859
9/30/89 10312.42 10833.52 10867
10718.59 11260.21 11284
10722 11263.82 11335
10965.59 11519.69 11600
9/30/90 10909.45 11460.73 11607
11417.72 11994.69 12107
11565.86 12150.3 12381
11779.82 12375.06 12645
9/30/91 12120 12732.44 13136
12277.28 12897.67 13578
12407.49 13034.46 13619
12785.26 13431.33 14136
9/30/92 13054.27 13713.92 14511
13219.38 13887.39 14775
13762.71 14458.16 15323
14282.38 15004.09 15824
9/30/93 14759.49 15505.32 16359
15002.26 15760.36 16588
14517.49 15251.1 15677
14620.72 15359.54 15851
9/30/94 14776.66 15523.36 15959
14621.5 15360.38 15729
15352.49 16128.29 16841
15637.43 16427.63 17247
9/30/95 15900.95 16704.47 17744
16289.3 17112.44 18475
16095.31 16908.65 18251
16228.13 17048.18 18392
9/30/96 16535.26 17370.82 18815
16841.41 17692.45 19295
16836.9 17687.71 19250
17239.31 18110.45 19914
9/30/97 17667 18559.75 20516
18023.44 18934.2 21072
18194.93 19114.35 21314
18445.64 19377.72 21638
9/30/98 19023 19984 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.41)% 2.54% 4.19% 6.64% n/a
Without Sales Charge 4.55 7.68 5.21 7.17 n/a
CLASS D**
With 1% CDSC 3.07 5.71 n/a n/a n/a
Without CDSC 4.07 6.71 n/a n/a 4.01%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $7.98 $7.82 $7.79 CLASS A $0.381 $0.009 4.01%
CLASS D 7.98 7.82 7.79 CLASS D 0.310 0.009 3.33
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 49% Aaa/AAA 36%
General Obligation Bonds 51 Aa/AA 44
A/A 20
WEIGHTED AVERAGE MATURITY 19.1 years Caa/CCC --
</TABLE>
- -----------
See footnotes on page 16.
11
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN MISSOURI MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9530 10000 10000
9840 10325 10185
9888 10376 10252
10457 10973 10859
9/30/89 10420 10933 10867
10769 11300 11284
10763 11293 11335
11047 11592 11600
9/30/90 10989 11531 11607
11515 12083 12107
11738 12317 12381
12012 12605 12645
9/30/91 12485 13100 13136
12824 13456 13578
12827 13459 13619
13304 13960 14136
9/30/92 13468 14131 14511
13754 14432 14775
14222 14923 15323
14717 15442 15824
9/30/93 15242 15993 16359
15322 16077 16588
14386 15096 15677
14468 15182 15851
9/30/94 14503 15218 15959
14354 15062 15729
15403 16162 16841
15684 16458 17247
9/30/95 16051 16842 17744
16787 17615 18475
16457 17269 18251
16648 17468 18392
9/30/96 17056 17897 18815
17410 18269 19295
17279 18131 19250
17844 18724 19914
9/30/97 18370 19275 20516
18817 19745 21072
18983 19918 21314
19326 20279 21638
9/30/98 19915 20897 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C> >
CLASS A**
With Sales Charge (0.06)% 3.26% 4.48% 7.13% n/a
Without Sales Charge 4.91 8.41 5.49 7.65 n/a
CLASS D**
With 1% CDSC 3.44 6.45 n/a n/a n/a
Without CDSC 4.44 7.45 n/a n/a 4.50%
Lehman Index*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.03 $7.83 $7.82 CLASS A $0.361 $0.065 3.74%
CLASS D 8.03 7.83 7.82 CLASS D 0.290 0.065 3.04
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 83% Aaa/AAA 37%
General Obligation Bonds 17 Aa/AA 42
A/A 19
WEIGHTED AVERAGE MATURITY 20.7 years Baa/BBB 2
</TABLE>
- ----------
See footnotes on page 16.
12
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN NEW YORK MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9522 10000 10000
9795.85 10287.58 10185
9831.7 10325.23 10252
10464.69 10990 10859
9/30/89 10412.17 10934.85 10867
10715.78 11253.7 11284
10601.73 11133.91 11335
10907.95 11455.51 11600
9/30/90 10744.36 11283.71 11607
11163 11723.47 12107
11422.33 11995.71 12381
11717.99 12306.3 12645
9/30/91 12308.64 12926.51 13136
12673.09 13309.25 13578
12691.1 13328.17 13619
13278.24 13944.8 14136
9/30/92 13514.89 14193.3 14511
13852.61 14547.99 14775
14494.16 15221.74 15323
15040.21 15795.1 15824
9/30/93 15576.56 16358.47 16359
15689.78 16477.38 16588
14652.19 15387.71 15677
14751.42 15491.92 15851
9/30/94 14740.09 15480 15959
14445.54 15170.66 15729
15619.57 16403.62 16841
15953.87 16754.7 17247
9/30/95 16351.81 17172.61 17744
17234.58 18099.7 18475
16900.48 17748.83 18251
17042.67 17898.17 18392
9/30/96 17491.31 18369.32 18815
17895.13 18793.4 19295
17759.91 18651.42 19250
18404.4 19328.24 19914
9/30/97 19144.53 20105.53 20516
19692.39 20680.88 21072
19950.06 20951.49 21314
20287.34 21305.71 21638
9/30/98 21061 22119 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge 0.51% 4.83% 5.18% 7.73% n/a
Without Sales Charge 5.57 10.02 6.22 8.26 n/a
CLASS D**
With 1% CDSC 4.09 7.88 n/a n/a n/a
Without CDSC 5.09 8.88 n/a n/a 5.24%
Lehman Index*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.60 $8.34 $8.28 CLASS A $0.396 $0.083 3.91%
CLASS D 8.60 8.34 8.29 CLASS D 0.320 0.083 3.23
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 82% Aaa/AAA 63%
General Obligation Bonds 18 Aa/AA 7
A/A 22
WEIGHTED AVERAGE MATURITY 23.4 YEARS BAA/BBB 8
</TABLE>
- -----------
See footnotes on page 16.
13
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN OHIO MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9530 10000 10000
9754.2 10234.95 10185
9872.56 10359.14 10252
10383.6 10895 10859
9/30/89 10349.39 10859 10867
10723.38 11251.89 11284
10752.44 11282.38 11335
10973.43 11514.26 11600
9/30/90 10939.46 11478.62 11607
11429.34 11992.63 12107
11642.71 12216.52 12381
11891.53 12477.62 12645
9/30/91 12356.91 12965.93 13136
12722.51 13349.54 13578
12758.09 13386.87 13619
13258.92 13912 14136
9/30/92 13552.56 14220.49 14511
13795 14475 14775
14288.48 14992.66 15323
14794 15523.5 15824
9/30/93 15289 16042.54 16359
15400.9 16159.93 16588
14647.76 15369.67 15677
14800.84 15530.2 15851
9/30/94 14817.82 15548 15959
14645.21 15366.99 15729
15592.5 16360.98 16841
15903.56 16687.38 17247
9/30/95 16238.7 17039.04 17744
16875.69 17707.43 18475
16603.51 17420.83 18251
16787 17614 18392
9/30/96 17160.31 18006 18815
17512.51 18375.63 19295
17432.84 18292 19250
17952.56 18837 19914
9/30/97 18454.49 19364 20516
18981.86 19917 21072
19142.67 20086 21314
19428.69 20386 21638
9/30/98 20074 21063 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.14)% 3.59% 4.57% 7.22% n/a
Without Sales Charge 4.86 8.77 5.60 7.73 n/a
CLASS D**
With 1% CDSC 3.38 6.78 n/a n/a n/a
Without CDSC 4.38 7.78 n/a n/a 4.67%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.37 $8.18 $8.19 CLASS A $0.403 $0.108 3.83%
CLASS D 8.41 8.22 8.23 CLASS D 0.331 0.108 3.14
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C> <C> <C>
Revenue Bonds 70% Aaa/AAA 77% Baa/BBB 3%
General Obligation Bonds 30 Aa/AA 14 Non-Rated 3
A/A 3
</TABLE>
WEIGHTED AVERAGE MATURITY 19.8 YEARS
- -----------
See footnotes on page 16.
14
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN OREGON MUNICIPAL SERIES
[GRAPHIC OMITTED]
[Table below reflect plotting points for line chart]
DATE With Load Without Load Lehman**
9/30/88 9526 10000 10000
9808.05 10296 10185
9877.56 10369 10252
10518.28 11042 10859
9/30/89 10473.59 10995 10867
10832.08 11371 11284
10789.62 11326.7 11335
11079.6 11631 11600
9/30/90 10996.06 11543 11607
11535.49 12109.7 12107
11774.38 12360.5 12381
12021.8 12620 12645
9/30/91 12453.6 13073.5 13136
12783.8 13420 13578
12824.3 13462.7 13619
13218.59 13876.6 14136
9/30/92 13493.56 14165 14511
13777.93 14463.79 14775
14199 14905.8 15323
14666.42 15396.5 15824
9/30/93 15141.12 15894.8 16359
15280 16040.6 16588
14595.89 15322 15677
14722.65 15455.5 15851
9/30/94 14781.1 15516.9 15959
14582.5 15309 15729
15478.6 16249 16841
15786.8 16573 17247
9/30/95 16118.9 16921 17744
16703.7 17535 18475
16444.8 17263 18251
16619 17446.7 18392
9/30/96 16968.8 17813.5 18815
17339.6 18202.8 19295
17298.4 18159.6 19250
17837.7 18725.7 19914
9/30/97 18427.3 19344.7 20516
18908 19849.7 21072
19126 20078 21314
19424.5 20391 21638
9/30/98 19990 20986 22302
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.41)% 3.36% 4.70% 7.17% n/a
Without Sales Charge 4.52 8.48 5.71 7.69 n/a
CLASS D**
With 1% CDSC 3.04 6.37 n/a n/a n/a
Without CDSC 4.04 7.37 n/a n/a 4.72%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
</TABLE>
<TABLE>
<CAPTION>
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.05 $7.88 $7.87 CLASS A $0.363 $0.100 3.73%
CLASS D 8.04 7.87 7.87 CLASS D 0.291 0.100 3.02
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
<S> <C> <C> <C>
Revenue Bonds 61% Aaa/AAA 44%
General Obligation Bonds 39 Aa/AA 29
A/A 22
WEIGHTED AVERAGE MATURITY 18.0 years Baa/BBB 5
</TABLE>
- --------
See footnotes on page 16.
15
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
SELIGMAN SOUTH CAROLINA MUNICIPAL SERIES
DATE With Load Without Load Lehman**
9/30/88 9524 10000 10000
9805.9 10295.5 10185
9858 10350 10252
10492 11016 10859
9/30/89 10420.6 10940.9 10867
10845.8 11387 11284
10804 11343.77 11335
11066 11619 11600
9/30/90 10887 11430.78 11607
11498 12071.9 12107
11722 12306.9 12381
11968 12565.5 12645
9/30/91 12406 13025 13136
12822 13462 13578
12880 13523 13619
13369 14036.7 14136
9/30/92 13655.9 14337.8 14511
13898 14592 14775
14361.8 15078.9 15323
14851.7 15593 15824
9/30/93 15366 16133 16359
15525 16300 16588
14566 15293 15677
14653 15384.7 15851
9/30/94 14656 15388 15959
14484.7 15207.97 15729
15531.8 16307 16841
15854.8 16646.5 17247
9/30/95 16223 17033 17744
17041.7 17892.6 18475
16714.8 17549 18251
16894 17738 18392
9/30/96 17329.8 18195 18815
17711.5 18595.86 19295
17577.66 18455 19250
18189 19097 19914
9/30/97 18714 19648 20516
19255 20216.8 21072
19455.8 20427 21314
19738 20723.8 21638
9/30/98 20334 21349 22302
[GRAPHIC OMITTED]
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------------
CLASS D
SIX ONE FIVE 10 SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- ------ ------- ------- -------------------
CLASS A**
<S> <C> <C> <C> <C>
With Sales Charge (0.46)% 3.46% 4.75% 7.36% n/a
Without Sales Charge 4.51 8.66 5.76 7.88 n/a
CLASS D**
With 1% CDSC 3.04 6.68 n/a n/a n/a
Without CDSC 4.04 7.68 n/a n/a 4.76%
LEHMAN INDEX*** 4.64 8.71 6.40 8.35 6.29++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1998
9/30/98 3/31/98 9/30/97 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
------- ------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.38 $8.21 $8.16 CLASS A $0.390 $0.074 3.82%
CLASS D 8.38 8.21 8.16 CLASS D 0.315 0.074 3.12
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 94% Aaa/AAA 65%
General Obligation Bonds 6 Aa/AA 12
A/A 19
WEIGHTED AVERAGE MATURITY 20.7 YEARS BAA/BBB 4
</TABLE>
- --------------------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price and assume all distributions
within the period are invested in additional shares. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class D shares are calculated with and
without the effect of the 1% contingent deferred sales charge ("CDSC"),
charged on redemptions made within one year of the date after purchase. No
adjustment was made to the performance of Class A shares for periods prior
to January 1, 1993, the commencement date for the annual Administration,
Shareholder Services and Distribution Plan fee of up to 0.25% of average
daily net assets. The rates of return will vary and the principal value of
an investment will fluctuate. Shares, if redeemed, may be worth more or
less than their original cost. A portion of each Series' income may be
subject to applicable state and local taxes, and any amount may be subject
to the federal alternative minimum tax. Past performance is not indicative
of future investment results.
*** The Lehman Index is an unmanaged index that does not include any fees or
sales charges, and does not reflect state-specific bond market performance.
Investors cannot invest directly in an index.
++ From 1/31/94.
+ Represents per share amount paid or declared for the year ended September
30, 1998.
++ Current yield, representing the annualized yield for the 30-day period
ended September 30, 1998, has been computed in accordance with SEC
regulations and will vary.
0 Percentages based on current market values of long-term holdings at
September 30, 1998.
16
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
17
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NATIONAL SERIES
FACE RATINGS+ MARKET
STATE AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ----------- ---------------------- --------------- -------------
<S> <C> <C> <C>
ALASKA-- 1.4% $1,500,000 Alaska Housing Finance Corporation Mortgage Rev.,
5 3/4% due 6/1/2024* ................................ Aaa/AAA $ 1,570,410
CALIFORNIA -- 2.6% 2,500,000 San Joaquin Hills Transportation Corridor Agency Rev.
(Orange County Senior Lien Toll Road),
6 3/4% due 1/1/2032 ................................. Aaa/AAA 2,852,875
FLORIDA-- 4.6% 5,000,000 Jacksonville Electric Authority (Electric System Rev.),
5.10% due 10/1/2032 ................................. Aa2/AA 5,042,900
ILLINOIS-- 6.6% 3,000,000 Chicago Water Rev., 5 1/2% due 11/1/2022 ............... Aaa/AAA 3,194,730
1,250,000 Illinois Health Facilities Authority Rev.
(Edward Hospital Project), 6% due 2/15/2019 ......... A2/A+ 1,325,438
2,500,000 Illinois Health Facilities Authority Rev. (Northwestern
Memorial Hospital), 6% due 8/15/2024 ................ Aa2/AA 2,720,575
KENTUCKY-- 1.9% 1,880,000 Trimble County Pollution Control Rev. (Louisville
Gas & Electric Co. Project), 7 5/8% due 11/1/2020* .. Aa2/A+ 2,043,992
MICHIGAN-- 2.2% 2,250,000 Michigan State Strategic Fund Pollution Control Rev.
(General Motors Corp.), 6.20% due 9/1/2020 .......... A2/A 2,454,075
MISSOURI-- 4.7% 4,750,000 St. Louis Industrial Development Authority
Pollution Control Rev. (Anheuser-Busch Companies,
Inc. Project), 5 7/8% due 11/1/2026* ................ A1/A+ 5,086,110
NEVADA-- 4.7% 5,000,000 Clark County Industrial Development Rev. (Nevada
Power Company Project), 5.90% due 11/1/2032* ........ NR/BBB- 5,120,150
NEW YORK-- 6.9% 2,500,000 Long Island Power Authority Electric System General Rev.,
5 1/2% due 12/1/2029 ................................ Baa1/A- 2,590,150
3,495,000 New York City GOs, 7 1/4% due 8/15/2024 ................ Aaa/A- 3,836,741
5,000 New York City GOs, 7 1/4% due 8/15/2024 ................ A3/A- 5,425
1,000,000 Trust for Cultural Resources of the City of
New York Rev. (American Museum of Natural History),
5.65% due 4/1/2027 .................................. Aaa/AAA 1,077,800
SOUTH 2,000,000 Oconee County Pollution Control Rev. (Duke Power Company
CAROLINA-- 1.9% Project), 7 1/2% due 2/1/2017 ....................... Aa2/AA- 2,082,840
SOUTH 6,000,000 South Dakota Housing Development Authority Rev.
DAKOTA-- 5.8% (Homeownership Mortgage), 6.15% due 5/1/2026* ....... Aa1/AAA 6,286,860
TEXAS-- 18.7% 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 4,013,094
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 2,213,880
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 2,168,480
4,750,000 Potter County Industrial Development Corp. Pollution
Control Rev. (Southwestern Public Service Company
Project), 5 3/4% due 9/1/2016 ....................... Aaa/AAA 5,215,168
2,500,000 San Antonio Electric &Gas Rev., 5 1/2% due 2/1/2020 .... Aa1/AA 2,623,425
- --------------------
+ 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 Statement.
</TABLE>
18
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NATIONAL SERIES (CONTINUED)
FACE RATINGS+ MARKET
STATE AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ----------- ---------------------- --------------- -------------
<S> <C> <C> <C>
TEXAS (CONTINUED) $2,495,000 Texas Veterans' Housing Assistance GOs,
6.80% due 12/1/2023* ................................ Aa2/AA $ 2,700,139
1,340,000 Travis County Housing Finance Corporation
(Single Family Mortgage Rev.),
6.95% due 10/1/2027 ................................. NR/AAA 1,455,655
UTAH-- 3.7% 4,000,000 Intermountain Power AgencyPower Supply Rev.,
5% due 7/1/2020 ..................................... Aaa/AAA 3,999,680
Virginia-- 9.6% 5,000,000 Fairfax County Industrial Development Authority
Health Care Rev. (Inova Health System Project),
6% due 8/15/2026 .................................... Aa2/AA 5,524,150
5,000,000 Pocahontas Parkway Association TollRoad Bonds
(Route 895 Connector), 5 1/2% due 8/15/2028 ......... Baa3/BBB- 5,025,650
Washington-- 12.8% 4,325,000 King County Sewer GOs, 6 1/8% due 1/1/2033 ............. Aaa/AAA 4,798,544
3,000,000 Port Seattle Rev., 5 1/2% due 9/1/2021 ................. Aaa/AAA 3,173,100
5,520,000 Seattle Water System Rev., 5 5/8% due 8/1/2026 ......... Aaa/AAA 5,983,459
WISCONSIN -- 6.2% 6,000,000 LaCrosse Resource Recovery Rev. (Northern States Power
Company Project), 6% due 11/1/2021* ................. A1/AA- 6,798,120
WYOMING-- 3.9% 4,000,000 Sweetwater County Pollution Control Rev. (Idaho Power
Company Project), 6.05% due 7/15/2026 ............... A3/A 4,315,280
------------
TOTAL MUNICIPAL BONDS (Cost $99,547,792)-- 98.2% ............................................................. 107,298,895
VARIABLE RATE DEMAND NOTES (Cost $700,000)-- 0.6% ............................................................ 700,000
OTHER ASSETS LESS LIABILITIES-- 1.2% ......................................................................... 1,302,468
------------
NET ASSETS-- 100.0% .......................................................................................... $109,301,363
============
</TABLE>
<TABLE>
<CAPTION>
COLORADO SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 Adams County, CO Pollution Control Rev. (Public Service Co. of
Colorado Project), 5 7/8% due 4/1/2014 ...................................... Aaa/AAA $ 3,247,050
1,000,000 Boulder, Larimer and Weld Counties,CO(Vrain Valley School District),
5% due 12/15/2022 ........................................................... Aaa/AAA 1,003,890
3,000,000 Colorado Health Facilities Authority Rev. (North Colorado Medical Center),
6% due 5/15/2020 ............................................................ Aaa/AAA 3,275,520
2,250,000 Colorado Health Facilities Authority Rev. (Sisters of Charity of
Leavenworth Health Services Corporation), 5% due 12/1/2025 .................. Aaa/AAA 2,243,205
2,000,000 Colorado Health Facilities Authority Rev. (Catholic Health
Initiatives), 5% due 12/1/2028 .............................................. Aa2/AA 1,978,340
2,350,000 Colorado Springs, CO Utilities Rev., 53/8% due 11/15/2026 ...................... Aa2/AA 2,450,533
105,000 Colorado Water Resources & Power Development Authority (Clean Water
Bonds Rev.), 6 7/8% due 9/1/2011 ............................................ Aa1/AAA 114,520
2,000,000 Colorado Water Resources & Power Development Authority (Clean Water
Bonds Rev.), 6% due 9/1/2014 ................................................ Aa1/AAA 2,160,820
- --------------------
+ 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 Statement.
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
COLORADO SERIES
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 ............................................ Aa1/AAA $ 1,099,760
2,000,000 Denver, CO City & County (St. Anthony Hospital Systems Rev.), 7 3/4%
due 5/1/2014 ................................................................ Aaa/AAA 2,070,860
2,000,000 Denver, CO City &County Department of Aviation Airport System Rev.,
5 1/2% due 11/15/2025 ....................................................... Aaa/AAA 2,127,520
2,000,000 Denver, CO Health and Hospital Authority Healthcare Rev.,
5 3/8% due 12/1/2028 ........................................................ Baa2/BBB 2,008,180
1,985,000 Fort Collins, CO GOs Water Bonds, 6 3/8% due 12/1/2012 ......................... Aa1/AA 2,185,922
2,500,000 Fort Collins Pollution Control Rev. (Anheuser-Busch Project),
6% due 9/1/2031 ............................................................. A1/A+ 2,745,700
1,000,000 Fountain Valley Authority, CO Water Treatment Rev., 6.80% due 12/1/2019 ........ Aa/AA 1,079,580
1,895,000 Northglenn, CO Joint Water & Wastewater Utility, 6.80% due 12/1/2008 ........... Aaa/NR 2,150,086
2,500,000 Platte River Power Authority, CO Power Rev., 6 1/8% due 6/1/2014 ............... Aa3/A+ 2,695,075
1,655,000 Pueblo County, CO Single Family Mortgage Rev., 7.05% due 11/1/2027 ............. NR/AAA 1,795,510
2,000,000 Puerto Rico Highway &Transportation Authority Rev., 5 1/2% due 7/1/2036 ........ Baa1/A 2,180,920
2,000,000 University of Colorado Hospital Authority Rev., 5 1/4% due 11/15/2022 .......... Aaa/NR 2,043,860
2,000,000 Virgin Islands Public Finance Authority Rev., 5 1/2% due 10/1/2022 ............. NR/BBB- 2,065,900
2,000,000 Westminster, CO (Adams & Jefferson Counties) Sales & Use Tax Rev.,
7% due 12/1/2008 ........................................................... Aaa/AAA 2,151,320
-----------
TOTAL MUNICIPAL BONDS (Cost $41,613,242)-- 97.7% ................................................................. 44,874,071
VARIABLE RATE DEMAND NOTES (Cost $300,000)-- 0.7% ................................................................ 300,000
OTHER ASSETS LESS LIABILITIES-- 1.6% ............................................................................. 753,088
-----------
NET ASSETS-- 100.0% .............................................................................................. $45,927,159
===========
- --------------------
+ 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 Statement.
</TABLE>
GEORGIA SERIES
<TABLE>
<CAPTION>
GEORGIA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$2,500,000 Atlanta, GA Water & Sewer Rev., 5 1/4% due 1/1/2027 ............................ Aaa/AAA $ 2,573,725
1,000,000 Cartersville, GA Development Authority Rev. Water & Wastewater Facilities
(Anheuser-Busch), 7.40% due 11/1/2010* ...................................... A1/A+ 1,265,020
2,000,000 Cartersville, GA Development Authority Rev. Water & Wastewater Facilities
(Anheuser-Busch), 6 3/4% Due 2/1/2012* ...................................... A1/A+ 2,196,880
3,000,000 Chatham County, GA School District GOs, 5 1/2% due 8/1/2020 .................... Aaa/AAA 3,140,520
2,000,000 Columbia County, GA School District GOs, 6 1/4% due 4/1/2013 ................... Aaa/AAA 2,240,860
1,000,000 DeKalb County, GA GOs, 5 1/4% due 1/1/2020 ..................................... Aa1/AA+ 1,025,980
1,000,000 DeKalb County, GA Water & Sewerage Rev., 7% due 10/1/2014 ...................... Aaa/AA 1,083,650
2,000,000 DeKalb County, GA Water & Sewerage Rev., 5 1/4% due 10/1/2023 .................. Aa/AA 2,045,820
700,000 DeKalb Private Hospital Authority, GA Rev. (Emory University Project),
6 3/4% due 4/1/2017 ......................................................... Aa1/AA 764,246
300,000 DeKalb Private Hospital Authority, GA Rev. (Emory University Project),
7% due 4/1/2021 ............................................................. Aa1/AA 329,235
1,000,000 Fayette County, GA School District GOs, 6 1/8% due 3/1/2015 .................... Aa/A+ 1,107,340
1,000,000 Fulco Hospital Authority HealthSystem Rev. (Catholic Health East),
5% due 11/15/2028 ........................................................... Aaa/AAA 996,850
- --------------------
+ 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 Statement.
</TABLE>
20
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
GEORGIA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 Fulton County, GA School District GOs, 5 5/8% due 1/1/2021 ..................... Aa2/AA $ 3,293,940
2,250,000 Georgia Housing & Finance Authority Rev. (Single Family Mortgage),
5 1/4% due 12/1/2020 ........................................................ Aa2/AAA 2,287,440
2,500,000 Georgia Municipal Gas Authority Rev. (Southern Storage Gas Project),
6.40% due 7/1/2014 .......................................................... NR/A- 2,732,200
1,000,000 Georgia State GOs, 5 3/4% due 2/1/2011 ......................................... Aaa/AAA 1,062,310
1,750,000 Glynn-Brunswick Memorial Hospital Authority Rev. (Southeast Georgia Health
Systems Project), 6% due 8/1/2016 ........................................... Aaa/AAA 1,927,958
1,000,000 Gwinnett County, GA School District GOs, 6.40% due 2/1/2012 .................... Aa1/AA+ 1,201,200
1,500,000 Henry County School District, GA GOs, 6.45% due 8/1/2011 ....................... A1/A+ 1,789,710
500,000 Metropolitan Atlanta Rapid Transit Authority, GA Sales Tax Rev.,
6 1/4% due 7/1/2018 ......................................................... A1/A+ 586,585
2,000,000 Monroe County, GA Development Authority Pollution Control Rev. (Georgia Power
Company Plant-- Scherer Project), 6% due 7/1/2025 ........................... Aaa/AAA 2,110,880
2,500,000 Peachtree City, GA Water &Sewerage Authority Sewer System Rev.,
5.60% due 3/1/2027 .......................................................... Aa3/AA 2,707,150
2,000,000 Private Colleges & Universities Authority, GA (Spelman College Project),
6.20% due 6/1/2014 .......................................................... Aaa/AAA 2,241,120
1,500,000 Private Colleges & Universities Authority, GA (Mercer University Project),
6 1/2% due 11/1/2015 ........................................................ Aaa/AAA 1,832,625
3,000,000 Private Colleges & Universities Authority, GA (Agnes Scott College Project),
5 5/8% due 6/1/2023 ......................................................... Aa3/AA- 3,184,020
1,500,000 Puerto Rico Highway & Transportation Authority Rev., 5 1/2% due 7/1/2026 ....... Baa1/A 1,580,895
2,000,000 Savannah, GA Airport Rev., 6 1/4% due 1/1/2015* ................................ Aaa/AAA 2,167,800
-----------
TOTAL MUNICIPAL BONDS (Cost $44,875,862)-- 96.6% .............................................................. 49,475,959
VARIABLE RATE DEMAND NOTES (Cost $1,000,000)-- 1.9% ........................................................... 1,000,000
OTHER ASSETS LESS LIABILITIES-- 1.5% .......................................................................... 757,327
-----------
NET ASSETS-- 100.0% ........................................................................................... $51,233,286
===========
- --------------------
+ 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 Statement.
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
LOUISIANA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 Bastrop, LA Industrial Development Board Pollution Control Rev.
(International Paper Company Project), 6.90% due 3/1/2007 ................... A3/BBB+ $ 3,299,850
2,500,000 Calcasieu Parish, LA Industrial Development Board (Conoco Inc. Project),
5 3/4% due 12/1/2026* ....................................................... Aa3/AA- 2,679,225
2,120,000 East Baton Rouge Parish, LA Mortgage Finance Authority (Single
Family Mortgage Rev.), 5.40% due 10/1/2025 .................................. Aaa/NR 2,154,556
3,000,000 East Baton Rouge Parish, LA Public Improvement Sales & Use Tax Rev.,
5.90% due 2/1/2018 .......................................................... Aaa/AAA 3,245,070
2,000,000 Houma, LA Utilities Rev., 6 1/4% due 1/1/2012 .................................. Aaa/AAA 2,170,360
2,000,000 Jefferson Parish, LA Home Mortgage Authority (Single Family Mortgage Rev.),
6% due 12/1/2024* ........................................................... Aa/NR 2,078,800
2,500,000 Lafayette, LA Public Improvement Sales Tax, 5% due 5/1/2021 .................... Aaa/AAA 2,507,700
2,495,000 Louisiana Housing Finance Agency Mortgage Rev. (Single Family),
6.45% due 6/1/2027* ......................................................... Aaa/AAA 2,663,612
2,500,000 Louisiana Public Facilities Authority Hospital Rev. (Franciscan
Missionaries of Our Lady HealthSystem Project), 5% due 7/1/2025 ............. Aaa/AAA 2,488,850
2,500,000 Louisiana Public Facilities Authority Rev. (Loyola University Project),
5 5/8% due 10/1/2016 ........................................................ Aaa/AAA 2,723,825
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+ 2,615,450
3,000,000 Louisiana Public Facilities Authority Rev. (Tulane University),
5 3/4% due 2/15/2021 ........................................................ Aaa/AAA 3,204,300
1,500,000 Louisiana State GOs, 5% due 4/15/2018 .......................................... Aaa/AAA 1,514,385
2,000,000 Louisiana State University & Agricultural & Mechanical College
Auxiliary Rev., 5 3/4% Due 7/1/2014 ......................................... AAA/AAA 2,164,780
2,500,000 Ouachita Parish, LA Hospital Service District Rev. (Glenwood
Regional Medical Center), 5 3/4% due 5/15/2021 .............................. Aaa/AAA 2,718,875
190,000 Ouachita Parish, LA Industrial Development Rev. (International
Paper Company), 6 1/2% due 4/1/2006 ......................................... NR/NR 190,215
2,500,000 Saint Bernard Parish, LA Exempt Facility Rev. (Mobil Oil
Corporation Project), 5.90% due 11/1/2026* .................................. Aa2/AA 2,742,975
1,250,000 Saint Charles Parish, LA Environmental Improvement Rev. (Louisiana
Power and Light Company Project), 6.20% due 5/1/2023* ....................... Baa2/BBB 1,316,563
2,960,000 Saint Charles Parish, LA Waterworks & Wastewater District Utility Rev.,
7.15% due 7/1/2016 .......................................................... Aaa/AAA 3,257,687
2,500,000 Shreveport, LA Airport System Rev., 5 3/8% due 1/1/2024* ....................... Aaa/AAA 2,562,425
1,555,000 Shreveport, LA GOs, 7 1/2% due 4/1/2006 ........................................ Aaa/AAA 1,704,949
- --------------------
+ 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 Statement.
</TABLE>
22
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<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 $ 2,454,034
2,500,000 Tangipahoa Parish, LA Hospital Service District No. 1 Rev.
(Northoaks Medical Center), 6 1/4% due 2/1/2024 ............................. Aaa/AAA 2,774,975
-----------
TOTAL MUNICIPAL BONDS (Cost $50,964,493)-- 96.7% ............................................................. 55,233,461
VARIABLE RATE DEMAND NOTES (Cost $800,000)-- 1.4% ............................................................ 800,000
OTHER ASSETS LESS LIABILITIES-- 1.9% ......................................................................... 1,111,191
-----------
NET ASSETS-- 100.0% .......................................................................................... $57,144,652
===========
</TABLE>
<TABLE>
<CAPTION>
MARYLAND SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$1,340,000 Anne Arundel County, MD GOs, 5 1/8% due 2/1/2026 ............................... Aa2/AA+ $ 1,369,641
1,340,000 Anne Arundel County, MDGOs, 5 1/8% due 2/1/2027 ................................ Aa2/AA+ 1,369,641
3,000,000 Anne Arundel County, MD Pollution Control Rev. (Baltimore Gas and Electric
Company Project), 6% due 4/1/2024 ........................................... A2/A 3,245,820
2,000,000 Baltimore, MD Consolidated Public Improvement GOs, 6 3/8% due 10/15/2006 ....... Aaa/AAA 2,326,840
2,500,000 Baltimore, MD Port Facilities Rev. (Consolidated Coal Sales Co. Project),
6 1/2% due 10/1/2011 ........................................................ Aa3/AA- 2,753,775
2,000,000 Baltimore, MD Project and Refunding Rev. (Water Projects), 5 1/2% due 7/1/2026 . Aaa/AAA 2,123,440
2,000,000 Howard County, MD Metropolitan District Project GOs, 5 1/2% due 8/15/2022 ...... Aaa/AAA 2,083,420
2,000,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Multi-Family Housing), 7.70% due 5/15/2020* .................... Aa/NR 2,132,080
2,465,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Single Family Program), 6.80% due 4/1/2024* .................... Aa2/NR 2,649,333
2,500,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Residential Rev.), 5 7/8% due 9/1/2025* ........................ Aa2/NR 2,628,150
2,500,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Multi-Family Housing), 6.70% due 5/15/2027 ..................... Aa/NR 2,683,525
2,710,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Good Samaritan Hospital), 5 3/4% due 7/1/2019 .............................. A1/A 2,881,543
2,000,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Suburban Hospital), 5 1/8% due 7/1/2021 .................................... A1/A+ 2,007,200
2,750,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Ann Arundel Medical Center), 5% due 7/1/2023 ............................... Aaa/AAA 2,751,347
2,500,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Francis Scott Key Medical Center), 5% due 7/1/2023 ......................... Aaa/AAA 2,501,225
2,000,000 Maryland Health &Higher Educational Facilities Authority Rev.
(Mercy Medical Center), 5 3/4% due 7/1/2026 ................................. Aaa/AAA 2,164,220
- --------------------
+ 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 Statement.
</TABLE>
23
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
MARYLAND SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$1,500,000 Maryland Health &Higher Education Facilities Authority Rev.
(Anne Arundel Medical Center), 5 1/8% due 7/1/2028 .......................... Aaa/AAA $ 1,516,395
1,000,000 Maryland National Capital Park & Planning Commission GOs (Prince
George's County), 6.90% due 7/1/2010 ........................................ Aa2/AA 1,074,350
2,000,000 Maryland Transportation Authority Rev. (Baltimore/Washington International
Airport Project), 6 1/4% due 7/1/2014* ...................................... Aaa/AAA 2,212,920
2,000,000 Maryland Transportation Authority Rev. Transportation Facilities Projects,
5 3/4% due 7/1/2015 ......................................................... A1/A+ 2,093,720
1,000,000 Maryland Water Quality Financing Administration Revolving Loan Fund Rev.,
6.70% due 9/1/2013 .......................................................... Aaa/AAA 1,102,080
1,000,000 Maryland Water Quality Financing Administration Revolving Loan Fund Rev.,
7.10% due 9/1/2013 .......................................................... Aaa/AAA 1,112,650
440,000 Montgomery County, MD Housing Opportunities Commission (Single Family
Mortgage Rev.), 7 3/8% due 7/1/2017 ......................................... Aa2/NR 455,140
1,500,000 Montgomery County, MD Housing Opportunities Commission Rev.,
6.20% due 7/1/2026* ......................................................... Aa2/NR 1,605,180
2,000,000 Northeast Maryland Waste Disposal Authority Solid Waste Rev.
(Montgomery County Resource Recovery Project),
6.30% due 7/1/2016* ......................................................... A2/NR 2,162,320
1,000,000 Puerto Rico Highway &Transportation Authority Rev., 5 1/2% due 7/1/2036 ........ Baa1/A 1,090,460
35,000 Puerto Rico Housing Finance Corporation (Single Family Mortgage Rev.
Portfolio 1), 7.80% due 10/15/2021 .......................................... Aaa/AAA 35,724
630,000 Puerto RicoHousing Finance Corporation (Single Family Mortgage Rev.
Portfolio 1-C), 6.85% due 10/15/2023 ........................................ Aaa/AAA 674,900
2,000,000 Washington Suburban Sanitary District, MD, 6 1/2% due 1/1/2016 ................. Aa1/AA 2,185,460
-----------
TOTAL MUNICIPAL BONDS (Cost $50,569,450)-- 94.8% .............................................................. 54,992,499
VARIABLE RATE DEMAND NOTES (Cost $2,200,000)-- 3.8% ........................................................... 2,200,000
OTHER ASSETS LESS LIABILITIES-- 1.4% .......................................................................... 826,114
-----------
NET ASSETS-- 100.0% ........................................................................................... $58,018,613
===========
</TABLE>
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$5,000,000 Boston, MA Water & Sewer Commission General Rev., 5 1/4% due 11/1/2019 ......... A1/A+ $ 5,300,250
3,000,000 Boston, MA Water & Sewer Commission General Rev., 7.10% due 11/1/2019 .......... Aaa/AAA 3,175,950
5,000,000 Massachusetts Bay Transportation Authority General Transportation System Rev.,
5 5/8% due 3/1/2026 ......................................................... Aa3/AA- 5,557,650
1,155,000 Massachusetts Education Loan Authority Education Loan Rev., 8% due 6/1/2002 .... NR/AAA 1,168,848
3,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Daughters of Charity
National Health Systems-- Carney Hospital), 6% due 7/1/2009 ................. Aa2/AA+ 3,320,460
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+ 2,741,925
- --------------------
+ 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 Statement.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$5,000,000 Massachusetts Health & Educational Facilities Authority Rev.
(Newton-Wellesley Hospital), 6% due 7/1/2018 ................................ Aaa/AAA $ 5,509,300
3,500,000 Massachusetts Health & Educational Facilities Authority Rev.
(Williams College), 5 3/4% due 7/1/2019 ..................................... Aa1/AA+ 3,798,620
2,500,000 Massachusetts Health & Educational Facilities Authority Rev.
(Suffolk University), 8 1/8% due 7/1/2020 ................................... NR/NR 2,721,025
5,100,000 Massachusetts Health & Educational Facilities Authority Rev.
(SmithCollege), 5 3/4% due 7/1/2024 ......................................... Aa2/AA- 5,455,521
5,000,000 Massachusetts Health & Educational Facilities Authority Rev.
(Partners Healthcare System), 5 3/8% due 7/1/2024 ........................... Aaa/AAA 5,187,800
7,500,000 Massachusetts Health & Educational Facilities Authority Rev.
(Harvard University), 5 5/8% Due 11/1/2028 ............................... AAA/AAA 8,135,250
5,000,000 Massachusetts Health & Educational Facilities Authority Rev.
(Catholic Health East Health System), 5% due 11/15/2028 ..................... Aaa/AAA 4,984,250
5,250,000 Massachusetts Housing Finance Agency Rev. (Single Family Housing),
5 1/2% due 12/1/2030* ....................................................... Aaa/AAA 5,459,790
2,000,000 Massachusetts Industrial Finance Agency Electric Utility Rev.
(Nantucket Electric Company Project), 5 7/8% due 7/1/2017* .................. Aaa/AAA 2,187,160
3,500,000 Massachusetts Industrial Finance Agency Rev. (Phillips Academy),
5 3/8% due 9/1/2023 ......................................................... Aa1/AA+ 3,687,425
3,000,000 Massachusetts Industrial Finance Agency Rev. (College of the Holy Cross),
5 5/8% due 3/1/2026 ......................................................... Aaa/AAA 3,225,660
3,000,000 Massachusetts Industrial Finance Agency Rev. (Suffolk University),
5 1/4% due 7/1/2027 ......................................................... Aaa/AAA 3,091,770
3,000,000 Massachusetts Port Authority Special Facilities Rev. (BOSFUELProject),
5 3/4% due 7/1/2039* ........................................................ Aaa/AAA 3,205,740
1,500,000 Massachusetts Special Obligation Rev. (Highway Improvement Loan),
5.80% due 6/1/2014 .......................................................... Aa3/AA 1,656,480
5,000,000 Massachusetts State Consolidated Loan GOs, 5 1/8% due 11/1/2013 ................ Aaa/AAA 5,221,600
2,400,000 Massachusetts State Port Authority Rev., 5% due 7/1/2023 ....................... Aa3/AA- 2,405,760
2,000,000 Massachusetts State Port Authority Rev., 5% due 7/1/2028* ...................... Aa3/AA- 1,978,460
5,000,000 Massachusetts Water Pollution Abatement Trust Pool Loan Program,
5 5/8% due 2/1/2016 ......................................................... Aaa/AAA 5,414,300
5,500,000 Massachusetts Water Resources Authority General Rev.,
5.60% due 11/1/2026 ......................................................... Aaa/AAA 5,894,185
730,000 Puerto Rico Electric Power Authority Power Rev.,
7 1/8% due 7/1/2014 ......................................................... Baa1/BBB+ 760,441
4,000,000 Puerto Rico Highway & Transportation Authority Rev.,
5 1/2% due 7/1/2036 ......................................................... Baa1/A 4,361,840
2,750,000 Puerto Rico Port Authority Rev., 6% due 7/1/2021* .............................. Aaa/AAA 2,886,703
------------
TOTAL MUNICIPAL BONDS (Cost $99,244,542)-- 97.9% ............................................................... 108,494,163
VARIABLE RATE DEMAND NOTES (Cost $900,000)-- 0.8% .............................................................. 900,000
OTHER ASSETS LESS LIABILITIES-- 1.3% ........................................................................... 1,401,953
------------
NET ASSETS-- 100.0% ............................................................................................ $110,796,116
============
- --------------------
+ 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 Statement.
</TABLE>
25
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<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 $ 5,503,950
5,000,000 Detroit, MI GOs, 5 1/2% due 4/1/2016 ........................................... Aaa/AAA 5,315,550
6,000,000 Detroit, MI Water Supply System Rev., 6 1/4% due 7/1/2012 ...................... Aaa/AAA 6,602,280
3,000,000 Grand Haven, MI Electric System Rev., 5 1/4% due 7/1/2013 ...................... Aaa/AAA 3,122,460
5,000,000 Grand Rapids, MI Water Supply System Rev., 5 3/4% due 1/1/2018 ................. Aaa/AAA 5,120,250
1,000,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 6 1/4% due 7/1/2012 ....................................... Aaa/AAA 1,090,080
1,500,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 6 1/4% due 7/1/2022 ....................................... Aaa/AAA 1,636,215
2,000,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 5% due 7/1/2028 ........................................... Aaa/NR 1,984,540
2,500,000 Kalamazoo, MI Hospital Finance Authority Rev. (Bronson Methodist
Hospital), 5 1/2% due 5/15/2028 ............................................. Aaa/NR 2,635,450
5,000,000 Kent County, MI Airport Rev., 6.10% due 1/1/2025* .............................. Aa/AAA 5,521,550
1,850,000 Kent County, MI Airport Rev., 5% due 1/1/2028* ................................. Aaa/AAA 1,830,224
2,775,000 Kentwood, MI Public Schools Building & Site GOs, 6.40% due 5/1/2015 ............ Aa2/A+ 3,068,068
3,000,000 Lansing, MI Building Authority Rev., 5.60% due 6/1/2019 ........................ Aa3/AA+ 3,187,230
3,250,000 Marquette, MI Hospital Finance Authority Rev. (Marquette General Hospital),
6.10% due 4/1/2019 .......................................................... Aaa/AAA 3,628,982
3,000,000 Michigan Public Power Agency Rev. (Belle River Project), 5 1/4% due 1/1/2018 ... A1/AA- 3,054,120
3,000,000 Michigan State Building Authority Rev., 6 1/4% due 10/1/2020 ................... Aa2/AA 3,229,170
6,000,000 Michigan State GOs (Environmental Protection Program), 5.40% due 11/1/2019 ..... Aa1/AA+ 6,304,260
5,000,000 Michigan State Hospital Finance Authority Rev. (Henry Ford Health System),
5 1/4% due 11/15/2020 ....................................................... Aa3/AA 5,086,650
5,000,000 Michigan State Hospital Finance Authority Rev. (Oakwood Obligated Group),
5 1/8% due 8/15/2025 ........................................................ Aaa/AAA 5,015,150
4,500,000 Michigan State Hospital Finance Authority Rev. (St. John Hospital),
5 1/4% due 5/15/2026 ........................................................ Aaa/AAA 4,584,870
5,000,000 Michigan State Hospital Finance Authority Rev. (Mercy Health Services
Obligated Group), 5 3/4% due 8/15/2026 ..................................... Aa3/AA- 5,410,200
5,000,000 Michigan State Hospital Finance Authority Rev. (Sparrow Obligated Group),
6% due 11/15/2036 ........................................................... Aaa/AAA 5,524,500
2,500,000 Michigan State Housing Development Authority Rev. (Single Family Mortgage),
6.80% due 12/1/2016 ......................................................... NR/AA+ 2,706,675
4,055,000 Michigan State Housing Development Authority Rev. (Rental Housing),
6.65% due 4/1/2023 .......................................................... NR/AA- 4,369,222
4,000,000 Michigan State Housing Development Authority Rev. (Single Family Mortgage),
6.05% due 12/1/2027 ......................................................... NR/AA+ 4,246,120
- --------------------
+ 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 Statement.
</TABLE>
26
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
MICHIGAN SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 Michigan State Strategic Fund Pollution Control Rev.
(Detroit Edison Company), 6 1/2% due 2/15/2016 .............................. Aaa/AAA $ 3,265,980
6,000,000 Michigan State Strategic Fund Pollution Control Rev.
(General Motors Corp.), 6.20% due 9/1/2020 .................................. A2/A 6,544,200
2,500,000 Michigan State Trunk Line Rev., 5.80% due 11/15/2024 ........................... Aaa/AAA 2,800,300
5,000,000 Michigan State Trunk Line Rev., 5% due 11/1/2026 ............................... Aaa/AAA 5,004,300
2,000,000 Midland, MI Water Supply System Rev., 7.20% due 4/1/2010 ....................... A/A 2,129,840
6,300,000 Oxford, MI Area Community Schools GOs, 5 1/2% due 5/1/2021 ..................... Aaa/AAA 6,666,660
5,000,000 Royal Oak, MI Hospital Finance Authority Rev. (William
Beaumont Hospital), 5 1/4% due 1/1/2020 ..................................... Aa3/AA 5,087,600
4,000,000 University of Michigan Hospital Rev., 6 3/8% due 12/1/2024 ..................... Aa2/AA 4,226,160
5,000,000 Western Michigan State University Rev., 5 1/8% due 11/15/2022 .................. Aaa/AAA 5,045,050
3,000,000 Wyandotte, MI Electric Rev., 6 1/4% due 10/1/2017 .............................. Aaa/AAA 3,297,420
------------
TOTAL MUNICIPAL BONDS (COST $132,968,484)-- 98.5% ............................................................ 143,845,276
VARIABLE RATE DEMAND NOTES (COST $100,000)-- 0.1% ............................................................ 100,000
OTHER ASSETS LESS LIABILITIES-- 1.4% ......................................................................... 2,057,041
------------
NET ASSETS-- 100.0% .......................................................................................... $146,002,317
============
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$6,250,000 Becker, MN Pollution Control Rev. (Northern States Power Company),
6.80% due 4/1/2007 ......................................................... A1/A+ $ 6,465,250
1,500,000 Buffalo, MN Independent School District GOs, 6.15% due 2/1/2022................. Aaa/AAA 1,612,605
2,250,000 Burnsville - Eagan - Savage, MN Independent School
District GOs, 5 1/8% due 2/1/2016 .......................................... Aa1/NR 2,320,245
2,350,000 Burnsville - Eagan - Savage, MN Independent School District GOs,
5 1/8% due 2/1/2017 ........................................................ Aa1/NR 2,418,009
1,500,000 Cloquet, MN Pollution Control Rev. (Potlatch Corporation
Projects), 5.90% due 10/1/2026 ............................................. NR/A- 1,600,380
5,000,000 Edina, MN Housing Development Rev. (Edina Park Plaza Project),
7.70% due 12/1/2028 ........................................................ Aa/NR 5,193,150
3,545,000 Fridley, MN Independent School District GOs, 5.35% due 2/1/2021 ................ Aaa/AAA 3,644,331
1,500,000 Minneapolis, MN GOs, 6% due 3/1/2016 ........................................... Aaa/AAA 1,608,900
4,725,000 Minneapolis, MN Rev. (University Gateway Project),
5 1/4% due 12/1/2024 ....................................................... Aa2/AA 4,856,166
4,300,000 Minneapolis, MN Special School District GOs, 5% due 2/1/2014 ................... Aa1/AA+ 4,400,448
1,400,000 Minneapolis - St. Paul Metropolitan Area (Metropolitan Council of
the Twin Cities), MN, 5 1/2% due 12/1/2012 ................................. Aaa/AAA 1,496,432
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 5,246,550
- --------------------
+ 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 Statement.
</TABLE>
27
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
MINNESOTA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$4,000,000 Minneapolis - St. Paul, MN Metropolitan Airport Commission Rev.,
5% due 1/1/2030 ............................................................. Aaa/AAA $ 4,009,960
2,250,000 Minnesota Agricultural & Economic Development Board Rev.
(Evangelical Lutheran Good Samaritan Society Project),
5.15% due 12/1/2022 ......................................................... Aaa/AAA 2,274,615
2,775,000 Minnesota Higher Education Facilities Authority Rev.
(University of St. Thomas), 5.40% due 4/1/2022 .............................. A2/NR 2,882,282
1,000,000 Minnesota Higher Education Facilities Authority Rev. (St. John's
University), 5.40% due 10/1/2022 ............................................ A3/NR 1,040,480
1,775,000 Minnesota Higher Education Facilities Authority Rev. (University
of St. Thomas), 5.40% due 4/1/2023 .......................................... A2/NR 1,837,356
2,500,000 Minnesota Higher Education Facilities Authority Rev. (St. Olaf College),
5 1/4% due 4/1/2029 ......................................................... A3/NR 2,535,800
810,000 Minnesota Housing Finance Agency (Housing Development),
6 1/4% due 2/1/2020 ......................................................... Aa2/AA 822,409
800,000 Minnesota Housing Finance Agency (Single Family Mortgage),
5.65% due 7/1/2022* ......................................................... Aa2/AA+ 815,640
5,000,000 Minnesota Housing Finance Agency (Single Family Mortgage),
6.85% due 1/1/2024* ......................................................... Aa2/AA+ 5,322,900
1,500,000 Minnesota Public Facilities Authority Water Pollution Control Rev.,
7.10% due 3/1/2012 .......................................................... Aaa/AAA 1,600,845
4,000,000 Minnesota Public Facilities Authority Water Pollution Control Rev.,
6 1/4% due 3/1/2015 ......................................................... Aaa/AAA 4,524,280
5,000,000 Minnesota State GOs, 5.70% due 5/1/2016 ........................................ Aaa/AAA 5,421,900
5,000,000 North Saint Paul - Maplewood, MNIndependent School District GOs,
5 1/8% due 2/1/2025 ......................................................... Aa1/AA+ 5,062,250
2,500,000 Northfield, MN Independent School District GOs, 5 1/4% due 2/1/2017 ............ Aa1/NR 2,560,675
2,000,000 Ramsey & Washington Counties, MN Resource Recovery Rev. (Northern
States Power Company Project), 6 3/4% due 12/1/2006 ......................... A1/AA 2,058,660
4,000,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo
Medical Center), 7.45% due 11/15/2006 ....................................... NR/AA+ 4,306,560
4,500,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo
Medical Center), 6 1/4% due 11/15/2014 ...................................... NR/AA+ 4,946,850
1,000,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo
Medical Center), 6 1/4% due 11/15/2021 ...................................... NR/AA+ 1,091,300
2,575,000 Rochester, MN Independent School District GOs, 5 5/8% due 2/1/2016 ............. Aaa/AA+ 2,752,469
2,715,000 Rochester, MN Independent School District GOs, 5 5/8% due 2/1/2017 ............. Aaa/AA+ 2,903,855
45,000 Saint Paul Port Authority, MN Industrial Development Rev. Series E,
9 1/8% due 10/1/2000 ....................................................... NR/CCC 45,775
5,000 Saint Paul Port Authority, MN Industrial Development Rev. Series H,
9 1/8% due 12/1/2000 ....................................................... NR/CCC 5,092
55,000 Saint Paul Port Authority, MN Industrial Development Rev. Series I,
9 1/8% due 12/1/2000 ....................................................... NR/CCC 56,009
50,000 Saint Paul Port Authority, MN Industrial Development Rev. Series E,
9 1/8% due 10/1/2001 ....................................................... NR/CCC 51,176
10,000 Saint Paul Port Authority, MN Industrial Development Rev. Series H,
9 1/8% due 12/1/2001 ....................................................... NR/CCC 10,208
55,000 Saint Paul Port Authority, MN Industrial Development Rev. Series I,
9 1/8% due 12/1/2001 ....................................................... NR/CCC 56,145
5,000 Saint Paul Port Authority, MN Industrial Development Rev. Series L,
9 3/4% due 12/1/2001 ....................................................... NR/CCC 5,109
- --------------------
+ 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 Statement.
</TABLE>
28
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
MINNESOTA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$ 50,000 Saint Paul Port Authority, MN Industrial Development Rev. Series E,
9 1/8% due 10/1/2002 ....................................................... NR/CCC $ 51,165
10,000 Saint Paul Port Authority, MN Industrial Development Rev. Series H,
9 1/8% due 12/1/2002 ....................................................... NR/CCC 10,207
60,000 Saint Paul Port Authority, MN Industrial Development Rev. Series I,
9 1/8% due 12/1/2002 ....................................................... NR/CCC 61,244
10,000 Saint Paul Port Authority, MNIndustrial Development Rev. Series L,
9 3/4% due 12/1/2002 ....................................................... NR/CCC 10,217
1,500,000 Southern Minnesota Municipal Power Agency -- Power Supply System Rev.,
5 3/4% due 1/1/2018 ........................................................ A2/A+ 1,577,715
750,000 Southern Minnesota Municipal Power Agency-- Power Supply System Rev.,
5 3/4% due 1/1/2018 ........................................................ Aaa/AAA 815,947
1,500,000 Southern Minnesota Municipal Power Agency-- Power Supply System Rev.,
4 3/4% due 1/1/2016 ........................................................ A2/A+ 1,465,350
3,500,000 Washington County, MN GOs, 5.90% due 2/1/2010 .................................. Aa2/AA- 3,705,555
3,090,000 Western Minnesota Municipal Power Agency-- Power Supply Rev.,
5 1/2% due 1/1/2015 ........................................................ A1/A 3,092,039
9,305,000 Western Minnesota Municipal Power Agency-- Power Supply Rev.,
6 3/8% due 1/1/2016 ........................................................ Aaa/AAA 10,680,372
------------
TOTAL MUNICIPAL BONDS (Cost $113,546,777)-- 98.3% ............................................................. 121,332,877
VARIABLE RATE DEMAND NOTES (Cost $400,000)-- 0.3% ............................................................. 400,000
OTHER ASSETS LESS LIABILITIES-- 1.4% .......................................................................... 1,743,633
------------
NET ASSETS-- 100.0% ........................................................................................... $123,476,510
============
</TABLE>
<TABLE>
<CAPTION>
MISSOURI SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$2,000,000 Columbia, MO Water and Electric System Improvement Rev., 6 1/8% due 10/1/2012 .. A1/AA $ 2,209,900
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 2,660,375
1,500,000 Hannibal, MO Industrial Development Authority Health Facilities Rev.
(Hannibal Regional Hospital), 5 3/4% due 3/1/2022 ........................... Aaa/AAA 1,619,865
1,000,000 Joplin, MO Industrial Development Authority Rev. (Catholic Health
Initiatives), 5 1/8% due 12/1/2015 .......................................... Aa2/AA 1,015,670
1,500,000 Joplin, MO Industrial Development Authority Rev. (Catholic Health
Initiatives), 5% due 12/1/2028 .............................................. Aa2/AA 1,490,640
565,000 Missouri School Boards Pooled Financing Program Certificates of
Participation, 7 3/8% due 3/1/2006 .......................................... Aaa/AAA 579,594
740,000 Missouri School Boards Pooled Financing Program Certificates of
Participation, 7% due 3/1/2006 .............................................. Aaa/AAA 757,967
1,000,000 Missouri State Environmental Improvement & Energy Resources Authority Rev.
(State Revolving Fund Program), 6.55% due 7/1/2014 .......................... Aa1/NR 1,098,200
2,500,000 Missouri State Environmental Improvement & Energy Resources Authority Rev.
(Union Electric Company Project), 5.45% due 10/1/2028* ...................... A1/AA- 2,619,725
29
- --------------------
+ 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 Statement.
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
MISSOURI SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$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 $ 2,616,250
2,000,000 Missouri State GOs, 5 5/8% due 4/1/2017 ........................................ Aaa/AAA 2,159,120
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 2,663,500
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+ 1,628,145
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+ 1,045,330
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+ 1,000,490
2,500,000 Missouri State Health & Educational Facilities Authority Rev. (Barnes-Jewish,
Inc./Christian Health Services), 5 1/4% due 5/15/2021 ....................... Aa2/AA 2,538,950
2,500,000 Missouri State Health & Educational Facilities Authority Rev.
(SSM Health Care), 5% due 6/1/2022 .......................................... Aaa/AAA 2,489,525
2,500,000 Missouri State Health & Educational Facilities Authority Rev. (The
Washington University), 5% due 11/15/2037 ................................... Aa1/AA+ 2,502,100
860,000 Missouri State Housing Development Commission Housing Development Bonds
(Federally Insured Mortgage Loans), 6% due 10/15/2019 ....................... Aa2/AA+ 873,674
2,415,000 Missouri State Housing Development Commission Single Family Mortgage Rev.
(Homeownership Loan Program), 5.90% due 9/1/2028* ........................... NR/AAA 2,535,847
1,000,000 Puerto Rico Highway &Transportation Authority Rev., 5 1/2% due 7/1/2026 ........ Baa1/A 1,053,930
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+ 1,835,100
1,500,000 St. Louis, MO Municipal Finance Corporation City Justice Center
Leasehold Improvement Rev., 5.95% due 2/15/2016 ............................. Aaa/AAA 1,659,735
2,400,000 Southeast Missouri Correctional Facility Lease Rev. (Missouri State
Project), 5 3/4% due 10/15/2016 ............................................. Aa/AA 2,536,008
2,500,000 Springfield, MO Waterworks Rev., 5.60% due 5/1/2023 ............................ Aa/A+ 2,738,600
2,750,000 University of Missouri Systems Facilities Rev., 5 1/2% due 11/1/2023 ........... Aa2/AA+ 2,863,767
-----------
TOTAL MUNICIPAL BONDS (Cost $45,286,528)-- 96.9% .............................................................. 48,792,007
VARIABLE RATE DEMAND NOTES (Cost $800,000)-- 1.6% ............................................................. 800,000
OTHER ASSETS LESS LIABILITIES-- 1.5% .......................................................................... 775,406
-----------
NET ASSETS-- 100.0% ........................................................................................... $50,367,413
===========
- --------------------
+ 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 Statement.
</TABLE>
30
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NEW YORK SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$2,490,000 Buffalo Municipal Water Finance Authority, NY Water System Rev.,
5% due 7/1/2026 ............................................................ Aaa/AAA $ 2,496,399
2,500,000 Long Island Power Authority, NY Electric Systems General Rev.,
5 1/2% due 12/1/2029 ....................................................... Baa1/A- 2,590,150
4,000,000 Metropolitan Transportation Authority, NY (Dedicated Tax Fund),
5% due 4/1/2023 ............................................................ Aaa/AAA 4,010,400
4,000,000 Metropolitan Transportation Authority, NY (Transit Facilities Rev.),
4 3/4% due 7/1/2026 ........................................................ Aaa/AAA 3,921,120
4,000,000 New York City Municipal Water Finance Authority Water & Sewer System Rev.,
6 1/4% due 6/15/2020 ........................................................ Aaa/AAA 4,644,240
1,340,000 New York City, NY GOs, 7 1/4% due 8/15/2024 .................................... Aaa/A- 1,471,025
5,000 New York City, NY GOs, 7 1/4% due 8/15/2024 .................................... A3/A- 5,425
1,380,000 New York City, NY GOs, 6% due 8/1/2026 ......................................... A3/A- 1,511,707
2,450,000 New York City, NY Industrial Development Agency Civic Facility Rev.
(The Nightingale - Bamford School Project), 5.85% due 1/15/2020 ............. A3/A 2,591,414
2,500,000 New York City, NY Transitional Finance Authority (Future Tax
Secured Bonds), 5% due 5/1/2026 ............................................. Aa3/AA 2,506,425
4,000,000 New York City, NY Trust for Cultural Resources Rev. (American Museum of
Natural History), 5.65% due 4/1/2027 ........................................ Aaa/AAA 4,311,200
4,000,000 New York State Dormitory Authority Rev. (Fordham University),
5 3/4% due 7/1/2015 ......................................................... Aaa/AAA 4,316,800
4,000,000 New York State Dormitory Authority Rev. (Rochester Institute of Technology),
5 1/2% due 7/1/2018 ......................................................... Aaa/AAA 4,280,561
3,500,000 New York State Dormitory Authority Rev. (Mental Health Services Facilities
Improvement), 5 3/4% due 8/15/2022 .......................................... A3/A- 3,754,205
3,000,000 New York State Dormitory Authority Rev. (Skidmore College),
5 3/8% due 7/1/2023 ......................................................... Aaa/AAA 3,096,510
1,500,000 New York State Dormitory Authority Rev. (Vassar Brothers Hospital),
5 3/8% due 7/1/2025 ......................................................... Aaa/AAA 1,562,265
2,000,000 New YorkState Dormitory Authority Rev. (Hospital for Special Surgery),
5% due 2/1/2028 ............................................................. Aaa/AAA 1,993,760
2,000,000 New YorkState Dormitory Authority Rev. (Rockefeller University),
5% due 7/1/2028 ............................................................. Aaa/AAA 2,010,460
4,000,000 New York State Energy Research &Development Authority Gas Facilities Rev.
(Brooklyn Union Gas), 5 1/2% due 1/1/2021 ................................... Aaa/AAA 4,243,720
3,000,000 New York State Environmental Facilities Corporation Pollution Control Rev.
(State Water-- Revolving Fund), 6.90% due 11/15/2015 ........................ Aaa/AAA 3,495,750
3,000,000 New York State Housing Finance Agency Rev. (Phillips Village Project),
7 3/4% due 8/15/2017* ....................................................... A2/NR 3,359,670
3,000,000 New York State Local Government Assistance Corp., 6% due 4/1/2024 .............. A3/A+ 3,267,750
2,000,000 New York State Mortgage Agency Rev. (Homeowner Mortgage),
7 1/2% due 4/1/2016 ......................................................... Aa2/NR 2,080,160
1,000,000 New York State Mortgage Agency Rev. (Homeowner Mortgage),
5 1/2% due 10/1/2028* ....................................................... Aa2/NR 1,025,540
- -----------------------
+ 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 Statement.
</TABLE>
31
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NEW YORK SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 New York State Thruway Authority General Rev., 6% due 1/1/2025 ................. Aaa/AAA $ 3,400,680
2,000,000 New York State Thruway Authority (Highway and Bridge Trust Fund),
5% due 4/1/2018 ............................................................. A3/A- 2,001,740
4,000,000 New York State Thruway Authority Service Contract Rev.,
6 1/4% due 4/1/2014 ......................................................... Baa1/BBB+ 4,582,640
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 4,516,200
2,250,000 Port Authority of New York and New Jersey Consolidated Rev.,
6 1/8% due 6/1/2094 ......................................................... A1/AA- 2,698,380
-----------
TOTAL MUNICIPAL BONDS (Cost $78,726,229)-- 98.6% ............................................................. 85,746,296
OTHER ASSETS LESS LIABILITIES-- 1.4% ......................................................................... 1,257,287
-----------
NET ASSETS-- 100.0% .......................................................................................... $87,003,583
===========
</TABLE>
<TABLE>
<CAPTION>
OHIO SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$2,250,000 Beavercreek Local School District, OH GOs (School Improvement Bonds),
5.70% due 12/1/2020 ......................................................... Aaa/AAA $ 2,443,860
3,450,000 Big Walnut Local School District, OH School Building Construction
& Improvement GOs, 7.20% due 6/1/2007 ....................................... Aaa/AAA 3,821,427
4,000,000 Butler County, OH Transportation Improvement District Highway Improvement
Rev., 5 1/8% due 4/1/2017 ................................................... Aaa/AAA 4,140,000
4,000,000 Cleveland, OH Airport System Rev., 5 1/8% due 1/1/2027* ........................ Aaa/AAA 4,004,760
2,395,000 Cleveland, OH Airport System Rev., 5 1/8% due 1/1/2027 ......................... Aaa/AAA 2,426,518
5,000,000 Cleveland, OH Public Power System Rev., 5% due 11/15/2024 ...................... Aaa/AAA 5,011,550
4,915,000 Cleveland, OH Waterworks Improvement First Mortgage Rev.,
5 3/4% due 1/1/2021 ......................................................... Aaa/AAA 5,538,566
85,000 Cleveland, OH Waterworks Improvement First Mortgage Rev.,
5 3/4% due 1/1/2021 ......................................................... Aaa/AAA 93,026
4,500,000 Columbus, OH Municipal Airport Authority Rev. (Port Columbus
International Airport Project), 6% due 1/1/2020* ............................ Aaa/AAA 4,874,715
1,000,000 Columbus, OH Municipal Airport Authority Rev. (Port Columbus
International Airport Project), 5% due 1/1/2028 ............................. Aaa/AAA 1,000,780
3,000,000 Dayton, OH Water System Mortgage Rev., 6 3/4% due 12/1/2010 .................... Aaa/AAA 3,067,530
7,000,000 Franklin County, OH GOs, 5 3/8% due 12/1/2020 .................................. Aaa/AAA 7,440,300
7,500,000 Franklin County, OH Hospital Rev. (Riverside United Methodist
Hospital), 5 3/4% due 5/15/2020 ............................................. Aa3/NR 7,882,425
2,500,000 Hamilton County, OH Sewer System Rev., 5 1/2% due 12/1/2017 .................... Aaa/AAA 2,643,750
5,000,000 Hamilton, OH Electric System Mortgage Rev., 6% due 10/15/2023 .................. Aaa/AAA 5,452,900
4,000,000 Hudson Local School District, OH GOs, 7.10% due 12/15/2013 ..................... A1/NR 4,367,480
1,095,000 Lake County, OH Hospital Improvement Rev. (Lake Hospital
System Inc.), 8% due 1/1/2013 ............................................... Aaa/AAA 1,115,279
+ 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 Statement.
</TABLE>
32
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
OHIO SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$6,425,000 Mahoning County, OHHospital Rev. (Forum Health Obligated Group),
5% due 11/15/2025 ........................................................... Aaa/AAA $ 6,430,076
2,000,000 Montgomery County, OHCatholic Health Initiatives Rev.,
5 1/8% due 12/1/2017 ........................................................ Aa2/AA 2,029,620
4,650,000 Mount Vernon, OH Hospital Rev. (Knox Community Hospital),
7 7/8% due 6/1/2012 ......................................................... NR/NR 4,755,276
2,000,000 Ohio Air Quality Development Authority Rev. (Cincinnati Gas & Electric
Company Project), 5.45% due 1/1/2024 ........................................ Aaa/AAA 2,082,400
6,500,000 Ohio Air Quality Development Authority Rev. (JMG Project),
6 3/8% due 1/1/2029* ........................................................ Aaa/AAA 7,270,900
4,415,000 Ohio Housing Finance Agency Residential Mortgage Rev. (Mortgage-Backed
Securities Program), 6.10% due 9/1/2028* .................................... NR/AAA 4,720,342
3,000,000 Ohio State Higher Educational Facilities Commission Rev.
(Oberlin College Project), 5 3/8% due 10/1/2015 ............................. NR/AA 3,137,850
4,000,000 Ohio State Higher Educational Facilities Commission Rev.
(University of Dayton Project), 5.40% due 12/1/2022 ......................... Aaa/AAA 4,194,320
2,000,000 Ohio State Liquor Profits Rev., 6.85% due 3/1/2000 ............................. Aaa/AAA 2,089,420
4,000,000 Ohio State Public Facilities Commission Rev. (Higher Education
Capital Facilities), 6.30% due 5/1/2006 .................................... Aaa/AAA 4,334,120
2,330,000 Ohio State Water Development Authority Rev. (Safe Water),
9 3/8% due 12/1/2010 ........................................................ Aaa/AAA 2,968,047
7,500,000 Ohio State Water Development Authority Rev. (Fresh Water),
5 1/8% due 12/1/2023 ........................................................ Aaa/AAA 7,601,475
5,000,000 Ohio State Water Development Authority Rev. (Community Assistance),
5 3/8% due 12/1/2024 ........................................................ Aaa/AAA 5,259,250
5,000,000 Ohio State Water Development Authority Rev. (Dayton Power &
Light Co. Project), 6.40% due 8/15/2027 ..................................... Aa3/AA- 5,418,200
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- 2,768,525
3,000,000 Ohio Turnpike Commission, OH Turnpike Rev., 5.70% due 2/15/2017 ................ Aaa/AAA 3,375,810
2,955,000 Pickerington Local School District, OH School Building Construction
GOs, 8% due 12/1/2005 ....................................................... Aaa/AAA 3,499,843
4,000,000 Puerto Rico Highway &Transportation Authority Rev., 5 1/2% due 7/1/2036 ........ Baa1/A 4,361,840
775,000 Toledo, OH Sewer System Rev., 7 3/4% due 11/15/2017 ............................ Aaa/AAA 794,445
560,000 Toledo, OH Waterworks Rev., 7 3/4% due 11/15/2017 .............................. Aaa/AAA 574,050
2,500,000 Twinsburg City School District, OH School Improvement GOs,
5.90% due 12/1/2021 ......................................................... Aaa/AAA 2,770,175
3,000,000 University of Toledo, OH General Receipts Bonds, 7.10% due 6/1/2010 ............ Aaa/AAA 3,225,840
2,000,000 Worthington City School District, OH School Building Construction
& Improvement GOs, 8 3/4% due 12/1/2002 ..................................... Aaa/AAA 2,156,100
------------
TOTAL MUNICIPAL BONDS (Cost $139,947,906)-- 98.0% ............................................................ 151,142,790
VARIABLE RATE DEMAND NOTES (Cost $800,000)-- 0.5% ............................................................ 800,000
OTHER ASSETS LESS LIABILITIES-- 1.5% ......................................................................... 2,286,703
------------
NET ASSETS-- 100.0% .......................................................................................... $154,229,493
+ 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 Statement.
</TABLE>
33
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
OREGON SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$2,000,000 Benton County, OR Hospital Facilities Authority Rev. (Samaritan Health
Services Project), 5 1/8% due 10/1/2028 ..................................... NR/A $ 1,998,480
2,000,000 Chemeketa, OR Community College District GOs, 5.95% due 6/1/2016 ............... Aaa/AAA 2,263,740
1,000,000 Clackamas & Washington Counties, OR GOs (West Linn-Wilsonville School
District), 5% due 6/1/2017 .................................................. Aaa/AAA 1,021,100
2,000,000 Eugene, OR Electric Utility Rev., 5.80% due 8/1/2022 ........................... Aaa/AAA 2,219,120
1,500,000 Eugene, OR Trojan Nuclear Project Rev., 5.90% due 9/1/2009 ..................... Aa1/AA- 1,502,445
1,250,000 Multnomah County, OR Education Facility Rev. (University of Portland),
5% due 4/1/2018 ............................................................. Aaa/AAA 1,273,538
1,250,000 Multnomah County School District, OR GOs, 6.80% due 12/15/2004 ................. Aa/A+ 1,258,438
1,750,000 Multnomah County School District, OR GOs, 5 1/2% due 6/1/2015 .................. A1/A+ 1,867,005
2,000,000 North Clackamas Parks & Recreation District -- Clackamas County, OR Rev.
(Recreational Facilities), 5.70% due 4/1/2013 ............................... NR/A- 2,113,240
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- 2,026,120
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 ............ Aa2/AA 808,927
2,500,000 Oregon Department of Administrative Services Certificates of
Participation, 5.80% due 5/1/2024 ............................................ Aaa/AAA 2,722,250
1,000,000 Oregon Department of Transportation Regional Light Rail Extension Rev.,
6.20% due 6/1/2008 ........................................................... Aaa/AAA 1,123,260
2,500,000 Oregon Health, Housing, Educational & Cultural Facilities Authority Rev.
(Reed College Project), 5 3/8% due 7/1/2025 .................................. NR/A+ 2,606,750
1,250,000 Oregon Health Sciences University Rev., 5 1/4% due 7/1/2028 ..................... Aaa/AAA 1,274,750
2,000,000 Oregon Housing & Community Services Department Housing & Finance Rev.
(Assisted or Insured Multi-Unit Program), 5 3/4% due 7/1/2012 ................ Aa2/A+ 2,079,080
900,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 5.65% due 7/1/2019* ....................................... Aa2/NR 923,643
310,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 7% due 7/1/2022* .......................................... Aa2/NR 314,101
500,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 5.30% due 7/1/2024* ....................................... Aa2/NR 506,510
1,000,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 6% due 7/1/2027* .......................................... Aa2/NR 1,058,150
- ----------------
+ 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 Statement.
</TABLE>
34
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
OREGON SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$ 500,000 Oregon State GOs (Veterans' Welfare), 9% due 10/1/2006 ......................... Aa2/AA $ 671,400
1,375,000 Oregon State GOs (Veterans' Welfare), 5 7/8% due 10/1/2018 ..................... Aa2/AA 1,450,144
500,000 Oregon State GOs (Alternate Energy Project), 8.40% due 1/1/2008 ................. Aa2/AA 518,545
250,000 Oregon State GOs (Elderly & Disabled Housing), 7.20% due 8/1/2021 ............... Aa2/AA 270,192
1,000,000 Oregon State GOs (Elderly & Disabled Housing), 6.60% due 8/1/2022* .............. Aa2/AA 1,109,860
950,000 Port of Portland, OR International Airport Rev., 7.10% due 7/1/2021* ............ Aaa/AAA 1,190,331
50,000 Port of Portland, OR International Airport Rev., 7.10% due 7/1/2021* ............ Aaa/AAA 54,133
500,000 Port of Portland, OR International Airport Rev., 5 3/4% due 7/1/2025* ........... Aaa/AAA 530,710
1,500,000 Port of Portland, OR International Airport Rev., 5 5/8% due 7/1/2026* ........... Aaa/AAA 1,590,555
2,000,000 Portland, OR GOs, 5.60% due 6/1/2014 ............................................ Aa2/NR 2,156,820
1,250,000 Portland, OR Hospital Facilities Authority Rev. (Legacy Health System),
6 5/8% due 5/1/2011 .......................................................... Aaa/AAA 1,352,050
2,500,000 Portland, OR Sewer System Rev., 5% due 6/1/2015 ................................. Aaa/AAA 2,568,875
1,000,000 Puerto Rico Highway & Transportation Authority Rev., 5 1/2% due 7/1/2026 ........ Baa1/A 1,053,930
630,000 Puerto Rico Housing Finance Corp. (Single Family Mortgage Rev.),
6.85% due 10/15/2023 ......................................................... Aaa/AAA 674,900
1,000,000 Puerto Rico Ports Authority Rev., 7% due 7/1/2014* .............................. Aaa/AAA 1,089,000
1,000,000 Puerto Rico Telephone Authority Rev., 5 1/2% due 1/1/2013 ....................... A/A+ 1,052,240
2,600,000 Salem, OR Pedestrian Safety Improvements GOs, 5 3/4% due 5/1/2011 .............. Aaa/AAA 2,861,170
1,000,000 Tri-County Metropolitan Transportation District of Oregon GOs
(Light Rail Extension), 6% due 7/1/2012 ...................................... Aa/AA+ 1,077,960
1,110,000 Tualatin Development Commission, OR (Urban Renewal & Redevelopment),
7 3/8% due 1/1/2007 .......................................................... Baa1/NR 1,119,424
500,000 Virgin Islands Public Finance Authority Rev., 5 1/2% due 10/1/2022 .............. NR/BBB- 516,475
2,500,000 Washington and Multnomah Counties, OR (Beaverton School District),
5% due 8/1/2017 ............................................................. Aa2/AA- 2,554,425
1,500,000 Washington County, OR Unified Sewerage Agency Rev.,
5 3/4% due 10/1/2011 ........................................................ Aaa/AAA 1,708,485
-----------
TOTAL MUNICIPAL BONDS (COST $53,777,463)-- 96.5% .............................................. 58,132,271
-----------
VARIABLE RATE DEMAND NOTES
-------------------------------
300,000 Floyd County, GA Development Authority Environmental Improvement
Rev. (Georgia Kraft Co. Project) due 12/1/2015 .............................. P-1/NR 300,000
200,000 New York City Municipal Water Finance Authority, NY Water & Sewer System Rev.
due 6/15/2022 ............................................................... VMIG-1/A-1+ 200,000
900,000 New York State Energy Research & Development Authority Pollution Control Rev.
(Niagara Mohawk) due 12/1/2023 .............................................. NR/A-1+ 900,000
+ 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 Statement.
</TABLE>
35
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
OREGON SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$1,100,000 New York State Energy Research & Development Authority Pollution Control Rev.
(Niagara Mohawk) due 7/1/2027* .............................................. NR/A-1+ $ 1,100,000
600,000 Sweetwater County, WY Pollution Control Rev. (Pacificorp) due 12/1/2014 ........ P-1/A-1+ 600,000
-----------
TOTAL VARIABLE RATE DEMAND NOTES (Cost $3,100,000)-- 5.1% .................................................... 3,100,000
-----------
other assets less liabilities-- (1.6)% ....................................................................... (980,745)
-----------
NET ASSETS-- 100.0% .......................................................................................... $60,251,526
===========
</TABLE>
<TABLE>
<CAPTION>
SOUTH CAROLINA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$2,500,000 Anderson County, SC Hospital Rev. (Anderson Memorial Hospital),
5 1/4% due 2/1/2012 ......................................................... Aaa/AAA $ 2,589,675
3,800,000 Berkeley County, SC Water & Sewer Rev., 5.55% due 6/1/2016 ..................... Aaa/AAA 4,011,318
745,000 Charleston County, SC Public Facilities Corp. Certificates of
Participation, 7.15% due 2/1/2004 ........................................... A1/A 789,991
770,000 Charleston County, SC Public Facilities Corp. Certificates of
Participation, 7.15% due 8/1/2004 ........................................... A1/A 816,500
800,000 Charleston County, SC Public Facilities Corp. Certificates of
Participation, 7.20% due 2/1/2005 ........................................... A1/A 848,280
2,500,000 Charleston, SC Waterworks & Sewer System Rev., 6% due 1/1/2012 ................. A1/AA- 2,684,525
6,000,000 Darlington County, SC Industrial Development Rev. (Nucor Corporation
Project), 5 3/4% due 8/1/2023* .............................................. A1/AA- 6,310,560
2,000,000 Darlington County, SC Industrial Development Rev. (Sonoco Products
Company Project), 6% Due 4/1/2026* .......................................... A2/A 2,169,820
2,500,000 Fairfield County, SC Pollution Control Rev. (South Carolina Electric &
Gas Company), 6 1/2% due 9/1/2014 ........................................... A1/A+ 2,758,850
1,000,000 Georgetown County, SC Pollution Control Facilities Rev.
(International Paper Company), 7 3/8% due 6/15/2005 ......................... A3/BBB+ 1,030,410
3,000,000 Greenville Hospital System, SC Hospital Facilities Rev.,
5 1/2% due 5/1/2016 ......................................................... NR/AA 3,113,820
2,000,000 Greenville Hospital System, SC Hospital Facilities Rev.,
5 1/4% due 5/1/2023 ......................................................... Aa3/AA 2,039,140
3,000,000 Greenwood County, SC Hospital Facilities Rev. (Self Memorial Hospital),
5 7/8% due 10/1/2017 ........................................................ Aaa/AAA 3,208,650
2,600,000 Lancaster County, SC School District GOs, 6.60% due 7/1/2012 ................... Aaa/AAA 2,906,098
2,000,000 Lancaster County, SC Waterworks & Sewer System Rev., 5 1/4% due 5/1/2021 ....... Aaa/AAA 2,046,360
2,720,000 Laurens County, SC Combined Utility System Rev., 5% due 1/1/2018 ............... Aaa/AAA 2,736,021
5,000,000 Lexington County,SC Hospital Rev. (Health Services District, Inc.),
5 1/8% due 11/1/2026 ........................................................ Aaa/AAA 5,019,900
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 1,100,640
1,000,000 Medical University South Carolina Hospital Facilities Rev.,
5.60% due 7/1/2011 .......................................................... Aaa/AAA 1,121,290
3,000,000 Mount Pleasant, SC Water & Sewer Rev., 6% due 12/1/2020 ........................ Aaa/AAA 3,277,770
+ 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 Statement.
</TABLE>
36
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SOUTH CAROLINA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
-------- ------------------- -------------- -------------
<S> <C> <C> <C>
$2,000,000 Myrtle Beach, SC Waterworks & Sewer System Rev., 5 1/4% due 3/1/2020 ........... Aaa/AAA $ 2,040,280
1,500,000 North Charleston Sewer District, SC Rev., 6 3/8% due 7/1/2012 .................. Aaa/AAA 1,801,395
5,000,000 Oconee County, SC Pollution Control Rev. (Duke Power Co. Project),
5.80% due 4/1/2014 .......................................................... Aa2/AA- 5,326,800
1,250,000 Piedmont Municipal Power Agency, SC Electric Rev., 6 1/4% due 1/1/2021 ......... Aaa/AAA 1,499,937
3,000,000 Piedmont Municipal Power Agency, SC Electric Rev., 6.30% due 1/1/2022 .......... Aaa/AAA 3,344,130
1,000,000 Puerto Rico Highway &Transportation Authority Rev., 5 1/2% due 7/1/2036 ........ Baa1/A 1,090,460
2,000,000 Puerto Rico Highway &Transportation Authority Rev., 5% due 7/1/2038 ............ Baa1/A 1,982,760
2,500,000 Puerto Rico Industrial, Tourist, Educational, Medical & Environmental
Control Facilities Financing Authority Higher Education Rev.
(Inter-American University of Puerto Rico Project), 5% due 10/1/2022 ........ Aaa/AAA 2,517,975
1,000,000 Puerto Rico Telephone Authority Rev., 5 1/2% due 1/1/2022 ...................... A/A+ 1,038,440
2,000,000 Richland County, SC Solid Waste Disposal Facilities Rev. (Union
Camp Corp. Project), 7.45% due 4/1/2021* .................................... A1/A- 2,185,440
1,000,000 Richland County, SC Solid Waste Disposal Facilities Rev. (Union Camp
Corp. Project), 7 1/8% due 9/1/2021* ........................................ A2/A- 1,088,950
5,000,000 Rock Hill, SC Combined Utilities System Rev., 5% due 1/1/2020 .................. Aaa/AAA 5,003,400
2,000,000 South Carolina Jobs--Economic Development Authority Hospital Rev.
(Georgetown Memorial Hospital), 5% due 11/1/2029 ............................ Aaa/NR 1,978,120
6,000,000 South Carolina Public Service Authority Rev., 5 7/8% due 1/1/2023 .............. Aaa/AAA 6,592,920
1,740,000 South Carolina State Housing Authority (Single Family Mortgage Purchase),
6.70% due 7/1/2010 .......................................................... Aaa/AAA 1,760,062
500,000 South Carolina State Housing Finance & Development Authority
(Homeownership Mortgage), 7.55% due 7/1/2011 ................................ Aa2/AA 522,015
2,140,000 South Carolina State Housing Finance & Development Authority
Rental Housing Rev. (North Bluff Project), 5.60% due 7/1/2016 ............... NR/AA 2,186,802
1,000,000 South Carolina State Housing Finance & Development Authority
(Multi-Family Development Rev.), 6 7/8% due 11/15/2023 ...................... Aaa/NR 1,065,060
5,000,000 South Carolina State Ports Authority Rev., 5.30% due 7/1/2026* ................. Aaa/AAA 5,100,500
5,000,000 Spartanburg, SC Water System Rev., 5% due 6/1/2027 ............................. Aaa/AAA 5,003,750
3,000,000 University of South Carolina Rev., 5 3/4% due 6/1/2026 ......................... Aaa/AAA 3,266,550
2,000,000 Western Carolina Regional Sewer Authority, SC Sewer System Rev.,
5 1/2% due 3/1/2010 ........................................................ Aaa/AAA 2,135,420
------------
TOTAL MUNICIPAL BONDS (Cost $100,589,439)-- 97.5% ........................................................... 109,110,784
VARIABLE RATE DEMAND NOTES (Cost $800,000)-- 0.7% ........................................................... 800,000
OTHER ASSETS LESS LIABILITIES-- 1.8% ........................................................................ 2,011,237
------------
NET ASSETS-- 100.0% ......................................................................................... $111,922,021
============
+ 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 Statement.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITES
SEPTEMBER 30, 1998
NATIONAL COLORADO GEORGIA LOUISIANA MARYLAND
SERIES SERIES SERIES SERIES SERIES
--------------- -------------- -------------- -------------- --------------
ASSETS:
Investments, at value (see Portfolios of Investments):
<S> <C> <C> <C> <C> <C>
Long-term holdings ............................ $107,298,895 $44,874,071 $49,475,959 $55,233,461 $54,992,499
Short-term holdings ........................... 700,000 300,000 1,000,000 800,000 2,200,000
------------ ----------- ----------- ----------- -----------
107,998,895 45,174,071 50,475,959 56,033,461 57,192,499
Cash ............................................ 123,926 77,738 122,737 105,448 93,416
Interest receivable ............................. 1,562,261 835,793 785,873 943,112 912,213
Receivable for Capital Stock sold ............... 116,365 -- 783 6,718 26,190
Expenses prepaid to shareholder
service agent ................................. 13,754 6,287 6,680 6,680 7,466
Receivable for securities sold .................. -- -- -- 265,000 --
Other ........................................... 1,449 630 682 767 750
------------ ----------- ----------- ----------- -----------
TOTAL ASSETS .................................... 109,816,650 46,094,519 51,392,714 57,361,186 58,232,534
------------ ----------- ----------- ----------- -----------
Liabilities:
Payable for Capital Stock repurchased ........... 202,840 17,872 170 31,977 34,989
Dividends payable ............................... 181,880 75,001 80,571 96,299 94,112
Payable for securities purchased ................ -- -- -- -- --
Accrued expenses, taxes, and other .............. 130,567 74,487 78,687 88,258 84,820
------------ ----------- ----------- ----------- -----------
TOTAL LIABILITIES ............................... 515,287 167,360 159,428 216,534 213,921
------------ ----------- ----------- ----------- -----------
NET ASSETS ...................................... $109,301,363 $45,927,159 $51,233,286 $57,144,652 $58,018,613
============ =========== =========== =========== ===========
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A ....................................... $ 12,255 $ 5,968 $ 5,777 $ 6,619 $ 6,598
Class D ....................................... 889 45 334 99 375
Additional paid-in capital ...................... 103,096,331 42,776,160 46,360,182 52,120,753 53,403,553
Undistributed/accumulated net realized
gain (loss) ................................... (1,559,215) (115,843) 266,896 748,213 185,038
Net unrealized appreciation of investments ...... 7,751,103 3,260,829 4,600,097 4,268,968 4,423,049
------------ ----------- ----------- ----------- -----------
NET ASSETS ...................................... $109,301,363 $45,927,159 $51,233,286 $57,144,652 $58,018,613
============ =========== =========== =========== ===========
NET ASSETS:
Class A ....................................... $101,908,896 $45,583,092 $48,423,993 $56,307,378 $54,891,172
Class D ....................................... $ 7,392,467 $ 344,067 $ 2,809,293 $ 837,274 $ 3,127,441
SHARES OF CAPITAL STOCK OUTSTANDING
($.001 PAR VALUE):
Class A ....................................... 12,255,165 5,968,019 5,776,921 6,619,224 6,597,655
Class D ....................................... 889,145 45,080 334,454 98,467 375,599
NET ASSET VALUE PER SHARE:
CLASS A ....................................... $8.32 $7.64 $8.38 $8.51 $8.32
CLASS D ....................................... $8.31 $7.63 $8.40 $8.50 $8.33
- ----------------------
See Notes to Financial Statements.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS MICHIGAN MINNESOTA MISSOURI
SERIES SERIES SERIES SERIES
---------------- --------------- ---------------- -------------
ASSETS:
Investments, at value (see Portfolios of Investments):
<S> <C> <C> <C> <C>
Long-term holdings ........................................... $108,494,163 $143,845,276 $121,332,877 $48,792,007
Short-term holdings .......................................... 900,000 100,000 400,000 800,000
------------ ------------ ------------ -----------
............................................................... 109,394,163 143,945,276 121,732,877 49,592,007
Cash ........................................................... 69,480 72,871 129,277 10,05
Interest receivable ............................................ 1,627,916 2,500,978 1,981,575 935,202
Receivable for Capital Stock sold .............................. 14,168 30,957 14,281 27,504
Expenses prepaid to shareholder
service agent ................................................ 14,147 18,470 16,898 6,680
Receivable for securities sold ................................. -- -- -- --
Other .......................................................... 1,480 1,970 1,659 689
------------ ------------ ------------ -----------
TOTAL ASSETS ................................................... 111,121,354 146,570,522 123,876,567 50,572,133
------------ ------------ ------------ -----------
Liabilities:
Payable for Capital Stock repurchased .......................... 20,610 177,957 53,965 46,024
Dividends payable .............................................. 174,746 236,774 203,842 77,772
Payable for securities purchased -- -- -- --
Accrued expenses, taxes, and other ............................. 129,882 153,474 142,250 80,924
------------ ------------ ------------ -----------
TOTAL LIABILITIES .............................................. 325,238 568,205 400,057 204,720
------------ ------------ ------------ -----------
NET ASSETS ..................................................... $110,796,116 $146,002,317 $123,476,510 $50,367,413
============ ============ ============ ===========
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A ...................................................... $ 13,227 $ 16,333 $ 15,217 $ 6,223
Class D 178 209 263 52
Additional paid-in capital ..................................... 101,176,263 132,640,548 114,171,159 46,119,176
Undistributed/accumulated net realized
gain (loss) .................................................. 356,827 2,468,435 1,503,771 736,483
Net unrealized appreciation of investments ..................... 9,249,621 10,876,792 7,786,100 3,505,479
------------ ------------ ------------ -----------
NET ASSETS ..................................................... $110,796,116 $146,002,317 $123,476,510 $50,367,413
============ ============ ============ ===========
NET ASSETS:
Class A ...................................................... $109,327,849 $144,160,667 $121,373,756 $49,949,695
Class D ...................................................... 1,468,267 1,841,650 2,102,754 417,718
SHARES OF CAPITAL STOCK OUTSTANDING
($.001 PAR VALUE):
Class A ...................................................... 13,227,527 16,332,742 15,216,589 6,222,997
Class D ...................................................... 177,650 208,879 263,568 52,037
NET ASSET VALUE PER SHARE:
CLASS A ...................................................... $8.27 $8.83 $7.98 $8.03
CLASS D ...................................................... $8.26 $8.82 $7.98 $8.03
- ----------------------
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
NEW YORK OHIO OREGON SOUTH CAROLINA
SERIES SERIES SERIES SERIES
-------------- --------------- -------------- ----------------
ASSETS:
Investments, at value (see Portfolios of Investments):
<S> <C> <C> <C> <C>
Long-term holdings ...................................... $85,746,296 $151,142,790 $58,132,271 $109,110,784
Short-term holdings ..................................... -- 800,000 3,100,000 800,000
----------- ------------ ----------- ------------
.......................................................... 85,746,296 151,942,790 61,232,271 109,910,784
Cash ...................................................... 113,225 160,645 110,843 97,468
Interest receivable ....................................... 1,406,077 2,653,997 1,032,032 1,785,326
Receivable for Capital Stock sold ......................... 51,273 19,510 37,382 424,137
Expenses prepaid to shareholder
service agent ........................................... 11,003 20,041 7,859 14,147
Receivable for securities sold ............................ -- -- 171,403 --
Other ..................................................... 1,155 2,067 786 1,498
----------- ------------ ----------- ------------
TOTAL ASSETS .............................................. 87,329,029 154,799,050 62,592,576 112,233,360
----------- ------------ ----------- ------------
Liabilities:
Payable for Capital Stock repurchased ..................... 82,754 144,002 192,678 4,023
Dividends payable ......................................... 137,336 259,015 92,028 177,701
Payable for securities purchased .......................... -- -- 1,967,373 --
Accrued expenses, taxes, and other ........................ 105,356 166,540 88,971 129,615
----------- ------------ ----------- ------------
TOTAL LIABILITIES ......................................... 325,446 569,557 2,341,050 311,339
----------- ------------ ----------- ------------
NET ASSETS ................................................ $87,003,583 $154,229,493 $60,251,526 $111,922,021
=========== ============ =========== ============
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A ................................................. $ 9,867 $ 18,304 $ 7,159 $ 12,682
Class D 253 131 329 668
Additional paid-in capital ................................ 77,894,645 140,608,940 55,517,834 102,662,939
Undistributed/accumulated net realized
gain (loss) ............................................. 2,078,751 2,407,234 371,396 724,387
Net unrealized appreciation of investments ................ 7,020,067 11,194,884 4,354,808 8,521,345
----------- ------------ ----------- ------------
NET ASSETS ................................................ $87,003,583 $154,229,493 $60,251,526 $111,922,021
=========== ============ =========== ============
NET ASSETS:
Class A ................................................. $84,821,960 $153,126,162 $57,601,297 $106,328,118
Class D ................................................. 2,181,623 1,103,331 2,650,229 5,593,903
SHARES OF CAPITAL STOCK OUTSTANDING
($.001 PAR VALUE):
Class A ................................................. 9,866,681 18,303,910 7,158,690 12,681,944
Class D ................................................. 253,558 131,260 329,620 667,830
NET ASSET VALUE PER SHARE:
CLASS A ................................................. $8.60 $8.37 $8.05 $8.38
CLASS D ................................................. $8.60 $8.41 $8.04 $8.38
- ----------------------
See Notes to Financial Statements.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
NATIONAL COLORADO GEORGIA LOUISIANA MARYLAND
SERIES SERIES SERIES SERIES SERIES
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest .......................................... $5,890,123 $2,702,213 $2,764,172 $3,256,299 $3,151,030
---------- ---------- ---------- ---------- ----------
EXPENSES:
Management fees ................................... 522,358 236,819 253,187 283,699 276,179
Distribution and service fees ..................... 144,067 48,288 72,377 60,185 73,397
Shareholder account services ...................... 128,464 63,960 70,106 68,976 76,286
Auditing and legal fees ........................... 35,088 38,029 36,590 38,371 37,938
Registration ...................................... 28,590 11,929 14,206 15,673 16,143
Shareholder reports and communications ............ 14,047 10,951 13,278 13,652 15,704
Custody and related services ...................... 10,266 9,828 8,947 11,739 7,135
Directors' fees and expenses ...................... 5,244 4,873 4,957 4,928 4,884
Miscellaneous ..................................... 5,414 3,353 3,354 3,477 3,524
---------- ---------- ---------- ---------- ----------
TOTAL EXPENSES .................................... 893,538 428,030 477,002 500,700 511,190
---------- ---------- ---------- ---------- ----------
NET INVESTMENT INCOME ............................. 4,996,585 2,274,183 2,287,170 2,755,599 2,639,840
---------- ---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments .................. 1,375,240 1,217,468 355,347 750,930 183,975
Net change in unrealized appreciation
of investments .................................. 2,557,155 133,704 1,483,755 904,770 1,341,557
---------- ---------- ---------- ---------- ----------
NET GAIN ON INVESTMENTS ........................... 3,932,395 1,351,172 1,839,102 1,655,700 1,525,532
---------- ---------- ---------- ---------- ----------
INCREASE IN NET ASSETS FROM OPERATIONS ............ $8,928,980 $3,625,355 $4,126,272 $4,411,299 $4,165,372
========== ========== ========== ========== ==========
</TABLE>
- -----------------------------
See Notes to Financial Statements.
40
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS MICHIGAN MINNESOTA MISSOURI NEW YORK OHIO OREGON SOUTH CAROLINA
SERIES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
- ----------------------------- ------------ ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 6,041,059 $ 8,081,223 $6,978,847 $2,860,843 $4,741,309 $ 8,760,743 $3,153,675 $5,980,487
- ----------- ----------- ---------- ---------- ---------- ----------- ---------- ----------
545,891 726,553 614,405 260,574 426,872 768,368 287,757 539,515
116,077 153,231 134,829 56,182 92,196 152,714 71,660 142,882
133,887 183,757 170,425 71,916 98,764 192,969 76,751 137,733
39,566 35,761 38,824 35,841 35,086 36,526 40,474 36,487
15,581 17,776 11,713 12,948 14,886 15,797 12,974 14,238
16,168 19,074 16,241 13,147 14,985 18,565 13,780 9,381
11,006 11,378 13,669 10,240 11,193 10,040 12,912 14,206
5,578 6,214 5,808 4,942 5,157 6,336 5,021 5,863
5,755 7,210 6,539 3,406 4,640 7,653 3,617 5,584
- ----------- ----------- ---------- ---------- ---------- ----------- ---------- ----------
889,509 1,160,954 1,012,453 469,196 703,779 1,208,968 524,946 905,889
- ----------- ----------- ---------- ---------- ---------- ----------- ---------- ----------
5,151,550 6,920,269 5,966,394 2,391,647 4,037,530 7,551,775 2,628,729 5,074,598
- ----------- ----------- ---------- ---------- ---------- ----------- ---------- ----------
360,413 2,466,720 2,326,890 792,748 2,733,067 3,398,423 375,535 1,214,196
4,686,395 2,641,464 714,989 984,919 1,350,015 1,953,712 1,637,046 2,638,545
- ----------- ----------- ---------- ---------- ---------- ----------- ---------- ----------
5,046,808 5,108,184 3,041,879 1,777,667 4,083,082 5,352,135 2,012,581 3,852,741
- ----------- ----------- ---------- ---------- ---------- ----------- ---------- ----------
$10,198,358 $12,028,453 $9,008,273 $4,169,314 $8,120,612 $12,903,910 $4,641,310 $8,927,339
=========== =========== ========== ========== ========== =========== ========== ==========
</TABLE>
41
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONAL SERIES COLORADO SERIES GEORGIA SERIES
----------------------------- ------------------------------- -------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
----------------------------- ------------------------------- -------------------------------
1998 1997 1998 1997 1998 1997
-------------- ------------- -------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income ........ $ 4,996,585 $ 5,074,538 $ 2,274,183 $ 2,552,660 $ 2,287,170 $ 2,496,948
Net realized gain (loss)
on investments ............. 1,375,240 278,366 1,217,468 (1,295,378) 355,347 117,571
Net change in unrealized
appreciation of
investments ................ 2,557,155 3,753,003 133,704 2,352,484 1,483,755 1,648,469
------------- ------------- ------------- ------------- ------------- -------------
INCREASE IN NET ASSETS
FROM OPERATIONS............. 8,928,980 9,105,907 3,625,355 3,609,766 4,126,272 4,262,988
------------- ------------- ------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ................... (4,774,389) (4,906,738) (2,263,810) (2,542,330) (2,185,497) (2,406,265)
Class D ................... (222,196) (167,800) (10,373) (10,330) (101,673) (90,683)
Net realized gain on
investments:
Class A ................... -- -- -- -- (187,062) (180,236)
Class D ................... -- -- -- -- (10,787) (6,873)
------------- ------------- ------------- ------------- ------------- -------------
Decrease in Net Assets from
Distributions ............. (4,996,585) (5,074,538) (2,274,183) (2,552,660) (2,485,019) (2,684,057)
------------- ------------- ------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale
of shares:
Class A ................... 7,098,841 3,114,125 1,287,016 1,076,262 2,038,654 4,134,682
Class D ................... 929,650 475,323 143,429 32,754 918,990 1,056,744
Net asset value of shares
issued in payment
of dividends:
Class A ................... 2,620,048 2,676,250 1,265,360 1,383,913 1,422,482 1,593,994
Class D ................... 171,356 108,599 7,311 6,306 87,282 74,720
Exchanged from
associated Funds:
Class A ................... 7,059,979 5,221,126 2,208,315 2,519,749 260,904 220,471
Class D ................... 16,952,120 35,760,206 40,000 13,676 53,323 46,374
Net asset value of shares
issued in payment of
gain distributions:
Class A ................... -- -- -- -- 145,261 140,329
Class D ................... -- -- -- -- 9,588 6,295
------------- ------------- ------------- ------------- ------------- -------------
Total ........................ 34,831,994 47,355,629 4,951,431 5,032,660 4,936,484 7,273,609
------------- ------------- ------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ................... (9,998,684) (10,801,204) (7,569,275) (6,020,226) (6,905,867) (6,985,116)
Class D ................... (631,664) (585,245) (78,801) (45,914) (608,241) (749,883)
Exchanged into
associated Funds:
Class A ................... (6,101,457) (5,287,181) (2,730,725) (2,526,522) (703,073) (984,750)
Class D ................... (12,491,491) (38,546,451) (14,735) (29,141) (381,284) (201,142)
------------- ------------- ------------- ------------- ------------- -------------
Total ........................ (29,223,296) (55,220,081) (10,393,536) (8,621,803) (8,598,465) (8,920,891)
------------- ------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE)
IN NET ASSETS
FROM CAPITAL SHARE
TRANSACTIONS ............... 5,608,698 (7,864,452) (5,442,105) (3,589,143) (3,661,981) (1,647,282)
------------- ------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE)
IN NET ASSETS .............. 9,541,093 (3,833,083) (4,090,933) (2,532,037) (2,020,728) (68,351)
NET ASSETS:
Beginning of year ............ 99,760,270 103,593,353 50,018,092 52,550,129 53,254,014 53,322,365
------------- ------------- ------------- ------------- ------------- -------------
END OF YEAR .................. $ 109,301,363 $ 99,760,270 $ 45,927,159 $ 50,018,092 $ 51,233,286 $ 53,254,014
============= ============= ============= ============= ============= =============
</TABLE>
- -------------
See Notes to Financial Statements.
42
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA SERIES MARYLAND SERIES MASSACHUSETTS SERIES
------------------------------ -------------------------------- -------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
------------------------------ -------------------------------- -------------------------------
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income ........ $ 2,755,599 $ 2,882,172 $ 2,639,840 $ 2,728,689 $ 5,151,550 $ 5,574,868
Net realized gain (loss)
on investments ............. 750,930 96,176 183,975 383,873 360,413 1,304,763
Net change in unrealized
appreciation of
investments ................ 904,770 1,423,177 1,341,557 952,592 4,686,395 1,867,804
------------- ------------- ------------- ------------- ------------- -------------
INCREASE IN NET ASSETS
FROM OPERATIONS............. 4,411,299 4,401,525 4,165,372 4,065,154 10,198,358 8,747,435
------------- ------------- ------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ................... (2,732,585) (2,865,407) (2,539,788) (2,647,830) (5,099,272) (5,516,992)
Class D ................... (23,014) (16,765) (100,052) (80,859) (52,278) (57,876)
Net realized gain on
investments:
Class A ................... (95,055) (753,044) (307,098) (281,130) (1,288,484) (1,068,791)
Class D ................... (862) (5,217) (11,949) (11,087) (14,760) (14,031)
------------- ------------- ------------- ------------- ------------- -------------
Decrease in Net Assets from
Distributions ............. (2,851,516) (3,640,433) (2,958,887) (3,020,906) (6,454,794) (6,657,690)
------------- ------------- ------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale
of shares:
Class A ................... 1,593,079 1,489,134 3,716,423 1,434,072 2,426,260 2,431,716
Class D ................... 275,183 135,107 1,423,657 510,347 392,038 288,117
Net asset value of shares
issued in payment
of dividends:
Class A ................... 1,366,881 1,461,539 1,496,930 1,543,240 3,066,637 3,307,753
Class D ................... 16,878 9,122 78,222 69,209 22,770 31,220
Exchanged from
associated Funds:
Class A ................... 29,131 21,008 294,333 613,677 10,859,223 11,842,999
Class D ................... 45,621 -- 16,794 -- 116,384 8,924
Net asset value of shares
issued in payment of
gain distributions:
Class A ................... 64,975 518,498 225,691 205,081 951,011 774,630
Class D ................... 692 3,466 10,991 10,110 7,293 9,688
------------- ------------- ------------- ------------- ------------- -------------
Total ........................ 7,273,609 3,392,440 3,637,874 7,263,041 4,385,736 17,841,616
------------- ------------- ------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ................... (4,220,025) (5,240,608) (4,254,611) (5,400,781) (9,987,117) (11,114,300)
Class D ................... (28,622) (34,626) (521,910) (509,633) (361,116) (510,040)
Exchanged into
associated Funds:
Class A ................... (266,535) (69,802) (282,486) (896,334) (11,696,486) (9,172,465)
Class D ................... -- -- (3,461) (99,960) -- (8,905)
------------- ------------- ------------- ------------- ------------- -------------
Total ........................ (4,515,182) (5,345,036) (5,062,468) (6,906,708) (22,044,719) (20,805,710)
------------- ------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE)
IN NET ASSETS
FROM CAPITAL SHARE
TRANSACTIONS ............... (1,122,742) (1,707,162) 2,200,573 (2,520,972) (4,203,103) (2,110,663)
------------- ------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE)
IN NET ASSETS .............. 437,041 (946,070) 3,407,058 (1,476,724) (459,539) (20,918)
NET ASSETS:
Beginning of year ............ 56,707,611 57,653,681 54,611,555 56,088,279 111,255,655 111,276,573
------------- ------------- ------------- ------------- ------------- -------------
END OF YEAR .................. $ 57,144,652 $ 56,707,611 $ 58,018,613 $ 54,611,555 $ 110,796,116 $ 111,255,655
============= ============= ============= ============= ============= =============
</TABLE>
- -------------
See Notes to Financial Statements.
<PAGE>
MICHIGAN SERIES
------------------------------
YEAR ENDED SEPTEMBER 30,
-----------------------------
1998 1997
------------- -------------
OPERATIONS:
Net investment income ........ $ 6,920,269 $ 7,494,605
Net realized gain (loss)
on investments ............. 2,466,720 1,259,022
Net change in unrealized
appreciation of
investments ................ 2,641,464 2,653,074
------------- -------------
INCREASE IN NET ASSETS
FROM OPERATIONS............. 12,028,453 11,406,701
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ................... (6,853,272) (7,427,374)
Class D ................... (66,997) (67,231)
Net realized gain on
investments:
Class A ................... (1,235,329) (1,581,301)
Class D ................... (15,651) (17,780)
------------- -------------
Decrease in Net Assets from
Distributions ............. (8,171,249) (9,093,686)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale
of shares:
Class A ................... 4,780,685 5,064,050
Class D ................... 325,385 706,948
Net asset value of shares
issued in payment
of dividends:
Class A ................... 4,190,240 4,475,470
Class D ................... 50,303 47,279
Exchanged from
associated Funds:
Class A ................... 2,928,969 9,115,725
Class D ................... 106,164 258,662
Net asset value of shares
issued in payment of
gain distributions:
Class A ................... 911,174 1,180,119
Class D ................... 14,084 13,960
------------- -------------
Total ........................ 13,307,004 13,307,004
------------- -------------
Cost of shares repurchased:
Class A ................... (12,531,450) (15,967,293)
Class D ................... (479,641) (552,079)
Exchanged into
associated Funds:
Class A ................... (3,299,610) (10,959,291)
Class D ................... (66,539) (145,528)
------------- -------------
Total ........................ (16,377,240) (27,624,191)
------------- -------------
INCREASE (DECREASE)
IN NET ASSETS
FROM CAPITAL SHARE
TRANSACTIONS ............... (3,070,236) (6,761,978)
------------- -------------
INCREASE (DECREASE)
IN NET ASSETS .............. 786,968 (4,448,963)
NET ASSETS:
Beginning of year ............ 145,215,349 149,664,312
------------- -------------
END OF YEAR .................. $146,002,317 $ 145,215,349
============= =============
- -------------
See Notes to Financial Statements.
43
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MINNESOTA SERIES MISSOURI SERIES NEW YORK SERIES
----------------------------- ---------------------------- -----------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
----------------------------- ---------------------------- -----------------------------
1998 1997 1998 1997 1998 1997
--------------- ------------- -------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income ................. $ 5,966,394 $ 6,538,641 $ 2,391,647 $ 2,583,310 $ 4,037,530 $ 4,228,630
Net realized gain on investments ...... 2,326,890 757,947 792,748 389,565 2,733,067 200,181
Net change in unrealized
appreciation of investments ......... 714,989 978,768 984,919 900,350 1,350,015 3,171,620
------------ ------------ ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS
FROM OPERATIONS ..................... 9,008,273 8,275,356 4,169,314 3,873,225 8,120,612 7,600,431
------------ ------------ ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ............................ (5,891,605) (6,456,679) (2,377,089) (2,563,601) (3,969,021) (4,176,066)
Class D ............................ (74,789) (81,962) (14,558) (19,709) (68,509) (52,564)
Net realized gain on investments:
Class A ............................ (139,563) -- (437,159) (542,355) (837,486) (213,515)
Class D ............................ (2,075) -- (3,680) (5,999) (15,723) (3,062)
------------ ------------ ----------- ----------- ----------- -----------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS ...................... (6,108,032) (6,538,641) (2,832,486) (3,131,664) (4,890,739) (4,445,207)
------------ ------------ ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ............................ 3,759,777 5,444,733 1,518,510 5,524,679 3,404,935 3,917,958
Class D ............................ 583,305 135,740 79,605 39,028 541,566 431,628
Net asset value of shares issued in
payment of dividends:
Class A ............................ 3,934,003 4,394,871 1,135,261 1,240,533 2,342,732 2,427,328
Class D ............................ 42,082 55,878 12,480 15,171 49,242 36,517
Exchanged from associated Funds:
Class A ............................ 373,852 356,606 223,404 243,591 3,247,626 4,314,919
Class D ............................ 132,637 90,000 -- 100 109,289 12,295
Net asset value of shares issued in
payment of gain distributions:
Class A ............................ 112,803 -- 281,752 354,701 666,270 166,872
Class D ............................ 1,581 -- 2,904 5,296 12,694 2,545
------------ ------------ ----------- ----------- ----------- -----------
Total ................................. 8,940,040 10,477,828 3,253,916 7,423,099 10,374,354 11,310,062
------------ ------------ ----------- ----------- ----------- -----------
Cost of shares repurchased:
Class A ............................ (10,246,157) (14,412,829) (6,778,544) (4,255,392) (8,149,245) (9,574,807)
Class D ............................ (199,128) (503,408) (162,241) (114,612) (152,914) (68,104)
Exchanged into associated Funds:
Class A ............................ (1,084,969) (1,994,727) (522,272) (1,021,172) (3,375,173) (3,551,797)
Class D ............................ (306,816) (39,298) -- (40,189) (22,942) (42,506)
------------ ------------ ----------- ----------- ----------- -----------
Total ................................. (11,837,070) (16,950,262) (7,463,057) (5,431,365) (11,700,274) (13,237,214)
------------ ------------ ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ..... (2,897,030) (6,472,434) (4,209,141) 1,991,734 (1,325,920) (1,927,152)
------------ ------------ ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS 3,211 (4,735,719) (2,872,313) 2,733,295 1,903,953 1,228,072
NET ASSETS:
Beginning of year ..................... 123,473,299 128,209,018 53,239,726 50,506,431 85,099,630 83,871,558
------------ ------------ ----------- ----------- ----------- -----------
END OF YEAR ........................... $123,476,510 $123,473,299 $50,367,413 $53,239,726 $87,003,583 $85,099,630
============= ============ =========== =========== =========== ===========
- ------------------
See Notes to Financial Statements.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
OHIO SERIES OREGON SERIES SOUTH CAROLINA SERIES
----------------------------- ---------------------------- ------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
----------------------------- ---------------------------- ------------------------------
1998 1997 1998 1997 1998 1997
---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income ................. $ 7,551,775 $ 8,161,050 $ 2,628,729 $ 2,771,624 $ 5,074,598 $ 5,370,795
Net realized gain on investments ...... 3,398,423 1,052,154 375,535 747,838 1,214,196 452,558
Net change in unrealized
appreciation of investments ......... 1,953,712 2,121,935 1,637,046 1,208,172 2,638,545 2,381,666
------------ ------------ ----------- ----------- ------------ ------------
INCREASE IN NET ASSETS
FROM OPERATIONS ..................... 12,903,910 11,335,139 4,641,310 4,727,634 8,927,339 8,205,019
------------ ------------ ----------- ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ............................ (7,504,421) (8,118,451) (2,555,801) (2,712,769) (4,905,709) (5,239,991)
Class D ............................ (47,354) (42,599) (72,928) (58,855) (168,889) (130,804)
Net realized gain on investments:
Class A ............................ (2,017,799) (1,382,343) (700,268) (304,704) (905,320) (1,667,625)
Class D ............................ (15,589) (8,277) (21,792) (8,165) (34,538) (42,381)
------------ ------------ ----------- ----------- ------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS ...................... (9,585,163) (9,551,670) (3,350,789) (3,084,493) (6,014,456) (7,080,801)
------------ ------------ ----------- ----------- ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ............................ 3,716,543 3,568,969 4,579,085 2,019,494 10,736,862 4,596,375
Class D ............................ 208,265 352,330 912,518 513,511 2,250,161 1,258,114
Net asset value of shares issued in
payment of dividends:
Class A ............................ 4,618,664 5,063,815 1,588,261 1,713,320 2,804,800 3,057,472
Class D ............................ 40,700 38,045 56,847 43,464 133,057 111,193
Exchanged from associated Funds:
Class A ............................ 404,291 858,387 120,904 59,994 452,032 385,497
Class D ............................ 70,396 15,368 47,138 105,958 52,119 29,567
Net asset value of shares issued in
payment of gain distributions:
Class A ............................ 1,532,501 1,060,708 536,993 232,602 698,627 1,298,064
Class D ............................ 13,962 7,582 18,047 6,239 31,538 40,550
------------ ------------ ----------- ----------- ------------ ------------
Total ................................. 10,605,322 10,965,204 7,859,793 4,694,582 17,159,196 10,776,832
------------ ------------ ----------- ----------- ------------ ------------
Cost of shares repurchased:
Class A ............................ (13,102,427) (18,663,417) (5,263,365) (6,926,397) (10,837,647) (16,191,089)
Class D ............................ (395,804) (216,985) (103,120) (525,899) (605,605) (432,224)
Exchanged into associated Funds:
Class A ............................ (1,758,230) (1,482,349) (437,002) (801,759) (1,330,837) (1,366,846)
Class D ............................ (17,309) (60,245) (12,598) (51,638) (57,130) (106,657)
------------ ------------ ----------- ----------- ------------ ------------
Total ................................. (15,273,770) (20,422,996) (5,816,085) (8,305,693) (12,831,219) (18,096,816)
------------ ------------ ----------- ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ..... (4,668,448) (9,457,792) 2,043,708 (3,611,111) 4,327,977 (7,319,984)
------------ ------------ ----------- ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS (1,349,701) (7,674,323) 3,334,229 (1,967,970) 7,240,860 (6,195,766)
NET ASSETS:
Beginning of year ..................... 155,579,194 163,253,517 56,917,297 58,885,267 104,681,161 110,876,927
------------ ------------ ----------- ----------- ------------ ------------
END OF YEAR ........................... $154,229,493 $155,579,194 $60,251,526 $56,917,297 $111,922,021 $104,681,161
============ ============ =========== =========== ============ ============
- ------------------
See Notes to Financial Statements.
</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. 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 charge ("CDSC") 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 CDSC 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, 1998,
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,
1998, were as follows:
SERIES PURCHASES SALES
- -------------- ------------- --------------
National $23,762,460 $18,323,615
Colorado 13,277,678 18,619,022
Georgia 1,442,325 5,205,437
Louisiana 8,789,265 10,259,954
Maryland 4,075,165 4,145,015
Massachusetts 14,246,324 18,932,828
Michigan 33,205,383 36,554,371
Minnesota 25,897,686 27,603,543
Missouri 10,775,390 14,822,167
New York 33,532,285 34,942,327
Ohio 37,247,043 44,155,347
Oregon 7,559,695 7,064,965
South Carolina 20,757,120 17,566,580
46
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At September 30, 1998, 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 of portfolio
securities was as follows:
TOTAL
UNREALIZED
SERIES APPRECIATION
- ------------- ---------------
National $ 7,751,103
Colorado 3,260,829
Georgia 4,600,097
Louisiana 4,268,968
Maryland 4,423,049
Massachusetts 9,249,621
Michigan 10,876,792
Minnesota 7,786,100
Missouri 3,505,479
New York 7,020,067
Ohio 11,194,884
Oregon 4,354,808
South Carolina 8,521,345
4. MANAGEMENT FEE, DISTRIBUTION 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 Advisors, Inc. (the "Distributor") (formerly Seligman Financial
Services, Inc.), 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 sales of Class A shares:
DISTRIBUTOR DEALER
SERIES CONCESSIONS COMMISSIONS
- -------------- -------------- --------------
National $10,617 $ 75,401
Colorado 5,093 38,359
Georgia 6,978 52,316
Louisiana 6,743 50,723
Maryland 10,969 80,864
Massachusetts 9,068 65,913
Michigan 21,176 155,700
Minnesota 16,223 116,958
Missouri 7,654 52,971
New York 7,561 58,094
Ohio 17,244 124,965
Oregon 15,346 121,619
South Carolina 23,670 171,364
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, 1998, the Distributor charged such fees to the Fund pursuant to
the Plan as follows:
TOTAL FEES % OF AVERAGE
SERIES PAID NET ASSETS
- -------------- ------------- ---------------
National $ 87,412 .09%
Colorado 45,621 .10
Georgia 44,562 .09
Louisiana 54,359 .10
Maryland 47,718 .09
Massachusetts 102,371 .09
Michigan 135,906 .09
Minnesota 115,933 .09
Missouri 52,242 .10
New York 74,294 .09
Ohio 140,954 .09
Oregon 51,836 .09
South Carolina 98,768 .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, 1998, fees incurred under the Plan
equivalent to 1% per annum of the average daily net assets of Class D shares
were as follows:
SERIES SERIES
- -------------- -------------
National $56,655 Minnesota $18,896
Colorado 2,667 Missouri 3,940
Georgia 27,815 New York 17,902
Louisiana 5,826 Ohio 11,760
Maryland 25,679 Oregon 19,824
Massachusetts 13,706 South Carolina 44,114
Michigan 17,325
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Distributor is entitled to retain any CDSC 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, 1998, such charges were as follows:
SERIES SERIES
- ------------- -------------
National $ 3,560 Minnesota $ 47
Colorado 219 Missouri 35
Georgia 26,175 New York 1,310
Maryland 445 Ohio 1,259
Massachusetts 267 Oregon 40
Michigan 397 South Carolina 2,648
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the year ended September 30, 1998,
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 $ 192 $7,528
Colorado 2,216 2,599
Georgia 1,654 918
Louisiana 117 1,112
Maryland 366 1,572
Massachusetts 718 2,105
Michigan 219 2,822
Minnesota 1,344 2,335
Missouri 405 3,410
New York 3,453 13,359
Ohio 4,159 3,900
Oregon 45 1,682
South Carolina 19,615 4,498
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost for shareholder account services the following
amounts:
SERIES SERIES
- ------------- ------------
National $128,464 Minnesota $170,425
Colorado 63,960 Missouri 71,916
Georgia 70,106 New York 98,764
Louisiana 68,976 Ohio 192,969
Maryland 76,286 Oregon 76,751
Massachusetts 133,887 South Carolina 137,733
Michigan 183,757
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. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. Deferred fees
and related accrued earnings are not deductible for federal income tax purposes
until such amounts are paid. The cost of such fees and earnings accrued thereon
is included in directors' fees and expenses, and the accumulated balances
thereof at September 30, 1998, are included in other liabilities as follows:
SERIES SERIES
- ------------ -------------
National $16,068 Minnesota $13,782
Colorado 10,193 Missouri 10,201
Georgia 9,587 New York 13,693
Louisiana 11,049 Ohio 13,851
Maryland 11,045 Oregon 10,045
Massachusetts 13,748 South Carolina 9,707
Michigan 13,378
5. COMMITTED LINE OF CREDIT -- Effective July 1, 1998, the Fund entered into a
joint $800 million committed line of credit that is shared by substantially all
funds in the Seligman Group of Investment Companies. Each Series' borrowings are
limited to 10% of its net assets. Borrowings pursuant to the credit facility are
subject to interest at a rate equal to the overnight federal funds rate plus
0.50% on an overnight basis. Each Series incurs a commitment fee of 0.08% per
annum on its share of the unused portion of the credit facility. The credit
facility may be drawn upon only for temporary purposes and is subject to certain
other customary restrictions. The credit facility commitment expires one year
from the date of the agreement but is renewable with the consent of the
participating banks. To date, the Fund has not borrowed from the credit
facility.
6. 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 on an annual basis. At
September 30, 1998, the net loss carryforwards for the National and Colorado
Series amounted to $1,559,215 and $115,843, 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 and Colorado Series until net capital gains have
been realized in excess of the available capital loss carryforwards.
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS
7. CAPITAL STOCK TRANSACTIONS -- The Fund has 1,300,000,000 shares of Capital
Stock authorized. At September 30, 1998, 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,
------------------------ ------------------------ ------------------------ -------------------------
1998 1997 1998 1997 1998 1997 1998 1997
------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares:
Class A ..................... 873,287 401,292 171,756 146,785 248,416 513,632 191,119 181,700
Class D ..................... 114,176 61,208 19,107 4,493 111,889 133,099 32,909 16,439
Shares issued in payment
of dividends:
Class A ..................... 321,523 343,369 168,624 188,633 173,232 200,681 163,549 179,244
Class D ..................... 21,003 13,912 974 860 10,608 9,380 2,019 1,120
Exchanged from associated Funds:
Class A ..................... 865,763 672,956 294,638 345,869 31,751 28,040 3,509 2,599
Class D ..................... 2,093,008 4,606,174 5,319 1,897 6,394 5,782 5,444 --
Shares issued in payment of
gain distributions:
Class A ..................... -- -- -- -- 17,956 17,674 7,857 63,776
Class D ..................... -- -- -- -- 1,182 792 84 426
--------- --------- --------- -------- --------- --------- -------- ---------
Total ......................... 4,288,760 6,098,911 660,418 688,537 601,428 909,080 406,490 445,304
--------- --------- --------- -------- --------- --------- -------- ---------
Shares repurchased:
Class A ..................... (1,226,722) (1,389,619) (1,009,933) (821,576) (844,100) (881,743) (505,091) (642,677)
Class D ..................... (77,574) (75,516) (10,459) (6,235) (73,925) (94,407) (3,426) (4,237)
Exchanged into associated Funds:
Class A ..................... (747,805) (679,856) (363,810) (345,924) (86,018) (123,961) (31,881) (8,595)
Class D ..................... (1,545,820) (4,948,529) (1,959) (4,012) (46,291) (25,271) -- --
--------- --------- --------- -------- --------- --------- -------- ---------
Total ......................... (3,597,921) (7,093,520) (1,386,161) (1,177,747) (1,050,334) (1,125,382) (540,398) (655,509)
--------- --------- --------- -------- --------- --------- -------- ---------
Increase (decrease) in shares . 690,839 (994,609) (725,743) (489,210) (448,906) (216,302) (133,908) (210,205)
========= ========= ========= ======== ========= ========= ======== =========
MARYLAND SERIES MASSACHUSETTS SERIES MICHIGAN SERIES MINNESOTA SERIES
------------------------ ------------------------ ------------------------ -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------ ------------------------ -------------------------
1998 1997 1998 1997 1998 1997 1998 1997
------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
Sales of shares:
Class A ..................... 452,967 178,081 301,803 308,839 552,545 596,810 480,210 706,910
Class D ..................... 173,585 63,517 48,564 36,578 37,739 83,579 74,514 17,609
Shares issued in payment
of dividends:
Class A ..................... 182,716 192,610 381,287 420,799 484,322 529,332 502,233 569,754
Class D ..................... 9,536 8,633 2,830 3,981 5,822 5,592 5,371 7,244
Exchanged from associated Funds:
Class A ..................... 35,858 77,084 1,354,117 1,523,024 339,541 1,080,365 47,797 46,568
Class D ..................... 2,043 -- 14,321 1,134 12,157 30,637 16,965 11,509
Shares issued in payment of
gain distributions:
Class A ..................... 27,829 25,571 120,229 98,428 106,820 139,825 14,480 --
Class D ..................... 1,354 1,259 923 1,232 1,653 1,654 203 --
--------- --------- --------- -------- --------- --------- -------- ---------
Total ......................... 885,888 546,755 2,224,074 2,394,015 1,540,599 2,467,794 1,141,773 1,359,594
--------- --------- --------- -------- --------- --------- -------- ---------
Shares repurchased:
Class A ..................... (519,240) (674,114) (1,241,182) (1,413,634) (1,447,886) (1,886,059) (1,308,615)(1,868,498)
Class D ..................... (63,527) (63,960) (44,816) (65,121) (55,636) (65,355) (25,476) (65,288)
Exchanged into associated Funds:
Class A ..................... (34,518) (112,466) (1,454,254) (1,175,580) (382,652) (1,297,651) (138,742) (258,689)
Class D ..................... (423) (12,507) -- (1,133) (7,657) (17,125) (38,924) (5,099)
--------- --------- --------- -------- --------- --------- -------- ---------
Total ......................... (617,708) (863,047) (2,740,252) (2,655,468) (1,893,831) (3,266,190) (1,511,757)(2,197,574)
--------- --------- --------- -------- --------- --------- -------- ---------
Increase (decrease) in shares . 268,180 (316,292) (516,178) (261,453) (353,232) (798,396) (369,984) (837,980)
========= ========= ========= ======== ========= ========= ======== =========
</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,
----------------------- ------------------------- ------------------------ -------------------------
1998 1997 1998 1997 1998 1997 1998 1997
------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares:
Class A ...................... 192,882 722,053 409,090 486,564 453,643 441,039 578,820 262,547
Class D ...................... 10,178 5,024 64,754 52,683 25,288 43,216 115,620 66,778
Shares issued in payment
of dividends:
Class A ...................... 144,574 161,292 280,689 300,867 563,375 626,911 201,391 222,418
Class D ...................... 1,589 1,973 5,891 4,524 4,941 4,687 7,211 5,646
Exchanged from associated Funds:
Class A ...................... 28,380 31,545 389,085 540,465 49,472 106,616 15,314 7,803
Class D ...................... -- 13 12,843 1,501 8,543 1,906 5,944 13,881
Shares issued in payment of
gain distributions:
Class A ...................... 36,308 46,125 81,252 20,729 189,198 131,276 69,111 30,287
Class D ...................... 374 688 1,546 316 1,715 934 2,326 813
--------- --------- --------- -------- --------- --------- -------- ---------
Total .......................... 414,285 968,713 1,245,150 1,407,649 1,296,175 1,356,585 995,737 610,173
--------- --------- --------- -------- --------- --------- -------- ---------
Shares repurchased:
Class A ...................... (861,837) (553,544) (974,859) (1,191,908) (1,599,143) (2,310,439) (666,927) (900,692)
Class D ...................... (20,769) (15,067) (18,301) (8,476) (48,136) (26,589) (13,128) (68,686)
Exchanged into associated Funds:
Class A ...................... (66,519) (131,979) (404,227) (442,854) (214,380) (184,026) (55,368) (104,744)
Class D ...................... -- (5,250) (2,738) (5,338) (2,092) (7,441) (1,600) (6,685)
--------- --------- --------- -------- --------- --------- -------- ---------
Total .......................... (949,125) (705,840) (1,400,125) (1,648,576) (1,863,751) (2,528,495) (737,023)(1,080,807)
--------- --------- --------- -------- --------- --------- -------- ---------
Increase (decrease) in shares .. (534,840) 262,873 (154,975) (240,927) (567,576) (1,171,910) 258,714 (470,634)
========= ========= ========= ========= ========= ========= ======== =========
</TABLE>
SOUTH CAROLINA
-------------------------
YEAR ENDED
SEPTEMBER 30,
-------------------------
1998 1997
------------ -----------
Sales of shares:
Class A ...................... 1,307,029 572,615
Class D ...................... 273,163 156,977
Shares issued in payment
of dividends:
Class A ...................... 341,280 380,701
Class D ...................... 16,202 13,850
Exchanged from associated Funds:
Class A ...................... 54,738 47,863
Class D ...................... 6,370 3,643
Shares issued in payment of
gain distributions:
Class A ...................... 86,250 161,652
Class D ...................... 3,898 5,056
--------- ---------
Total .......................... 2,088,930 1,342,357
--------- ---------
Shares repurchased:
Class A ...................... (1,319,559) (2,018,325)
Class D ...................... (73,888) (53,697)
Exchanged into associated Funds:
Class A ...................... (162,725) (170,000)
Class D ...................... (6,993) (13,276)
--------- ---------
Total .......................... (1,563,165) (2,255,298)
--------- ---------
Increase (decrease) in shares .. 525,765 (912,941)
========= =========
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.
NATIONAL SERIES
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $8.01 $7.70 $7.58 $7.18 $8.72
----- ----- ----- ----- -----
Net investment income ............................................ 0.39 0.39 0.40 0.40 0.41
Net realized and unrealized
investment gain (loss) ......................................... 0.31 0.31 0.12 0.40 (1.04)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS .......................................... 0.70 0.70 0.52 0.80 (0.63)
Dividends paid or declared ....................................... (0.39) (0.39) (0.40) (0.40) (0.41)
Distributions from net gain realized ............................. -- -- -- -- (0.50)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.31 0.31 0.12 0.40 (1.54)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ..................................... $8.32 $8.01 $7.70 $7.58 $7.18
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 9.00% 9.40% 6.97% 11.48% (7.83)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 0.80% 0.84% 0.80% 0.86% 0.85%
Net investment income to average net assets ...................... 4.82% 5.05% 5.19% 5.46% 5.30%
Portfolio turnover ............................................... 18.00% 20.63% 33.99% 24.91% 24.86%
NET ASSETS, END OF YEAR
(000s omitted) ................................................... $101,909 $97,481 $98,767 $104,184 $111,374
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- ------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $8.02 $7.70 $7.57 $7.18 $8.20
----- ----- ----- ----- -----
Net investment income ............................................ 0.32 0.32 0.33 0.32 0.22
Net realized and unrealized
investment gain (loss) ......................................... 0.29 0.32 0.13 0.39 (1.02)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS .......................................... 0.61 0.64 0.46 0.71 (0.80)
Dividends paid or declared ....................................... (0.32) (0.32) (0.33) (0.32) (0.22)
Distributions from net gain realized ............................. -- -- -- -- --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.29 0.32 0.13 0.39 (1.02)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................... $8.31 $8.02 $7.70 $7.57 $7.18
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 7.76% 8.56% 6.13% 10.17% (9.96)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.71% 1.75% 1.67% 1.95% 1.76%+
Net investment income to average net assets ...................... 3.91% 4.15% 4.27% 4.40% 4.37%+
Portfolio turnover ............................................... 18.00% 20.63% 33.99% 24.91% 24.86%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................... $7,392 $2,279 $4,826 $1,215 $446
</TABLE>
- ---------------------
See footnotes on page 63.
51
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
COLORADO SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $7.42 $7.27 $7.30 $7.09 $7.76
----- ----- ----- ----- -----
Net investment income ............................................ 0.36 0.37 0.37 0.38 0.37
Net realized and unrealized
investment gain (loss) ......................................... 0.22 0.15 (0.03) 0.21 (0.59)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.58 0.52 0.34 0.59 (0.22)
Dividends paid or declared ....................................... (0.36) (0.37) (0.37) (0.38) (0.37)
Distributions from net gain realized ............................. -- -- -- -- (0.08)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.22 0.15 (0.03) 0.21 (0.67)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ..................................... $7.64 $7.42 $7.27 $7.30 $7.09
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 8.03% 7.30% 4.76% 8.56% (2.92)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 0.90% 0.90% 0.85% 0.93% 0.86%
Net investment income to average net assets ...................... 4.80% 5.01% 5.07% 5.31% 5.06%
Portfolio turnover ............................................... 28.66% 3.99% 12.39% 14.70% 10.07%
NET ASSETS, END OF YEAR
(000s omitted) ................................................... $45,583 $49,780 $52,295 $54,858 $58,197
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $7.42 $7.27 $7.29 $7.09 $7.72
----- ----- ----- ----- -----
Net investment income ............................................ 0.29 0.30 0.31 0.30 0.20
Net realized and unrealized
investment gain (loss) ......................................... 0.21 0.15 (0.02) 0.20 (0.63)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.50 0.45 0.29 0.50 (0.43)
Dividends paid or declared ....................................... (0.29) (0.30) (0.31) (0.30) (0.20)
Distributions from net gain realized ............................. -- -- -- -- --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.21 0.15 (0.02) 0.20 (0.63)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................... $7.63 $7.42 $7.27 $7.29 $7.09
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 6.90% 6.34% 3.95% 7.26% (5.73)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.80% 1.81% 1.75% 2.02% 1.78%+
Net investment income to average net assets ...................... 3.90% 4.10% 4.17% 4.23% 4.05%+
Portfolio turnover ............................................... 28.66% 3.99% 12.39% 14.70% 10.07%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................... $344 $238 $255 $193 $96
- ------------
See footnotes on page 63.
</TABLE>
52
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GEORGIA SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $8.12 $7.87 $7.81 $7.48 $8.43
----- ----- ----- ----- -----
Net investment income ............................................ 0.38 0.38 0.39 0.39 0.41
Net realized and unrealized investment
gain (loss) .................................................... 0.29 0.28 0.11 0.43 (0.86)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.67 0.66 0.50 0.82 (0.45)
Dividends paid or declared ....................................... (0.38) (0.38) (0.39) (0.39) (0.41)
Distributions from net gain realized ............................. (0.03) (0.03) (0.05) (0.10) (0.09)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.26 0.25 0.06 0.33 (0.95)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ..................................... $8.38 $8.12 $7.87 $7.81 $7.48
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 8.44% 8.65% 6.56% 11.66% (5.52)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 0.89% 0.89% 0.83% 0.91% 0.73%
Net investment income to average net assets ...................... 4.57% 4.82% 4.94% 5.26% 5.21%
Portfolio turnover ............................................... 2.92% 12.28% 16.24% 3.36% 19.34%
NET ASSETS, END OF YEAR
(000s omitted) ................................................... $48,424 $50,614 $50,995 $57,678 $61,466
Without management fee waiver:*
Net investment income per share ................................ $0.39 $0.40
Ratios:
Expenses to average net assets ................................. 0.96% 0.93%
Net investment income to average net assets .................... 5.21% 5.01%
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $8.13 $7.88 $7.82 $7.49 $8.33
----- ----- ----- ----- -----
Net investment income ............................................ 0.30 0.31 0.32 0.32 0.22
Net realized and unrealized
investment gain (loss) ......................................... 0.30 0.28 0.11 0.43 (0.84)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.60 0.59 0.43 0.75 (0.62)
Dividends paid or declared ....................................... (0.30) (0.31) (0.32) (0.32) (0.22)
Distributions from net gain realized ............................. (0.03) (0.03) (0.05) (0.10) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.27 0.25 0.06 0.33 (0.84)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................... $8.40 $8.13 $7.88 $7.82 $7.49
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 7.59% 7.67% 5.60% 10.58% (7.57)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.80% 1.79% 1.73% 1.90% 1.76%+
Net investment income to average net assets ...................... 3.66% 3.92% 4.03% 4.28% 4.28%+
Portfolio turnover ............................................... 2.92% 12.28% 16.24% 3.36% 19.34%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................... $2,809 $2,640 $2,327 $2,079 $849
Without management fee waiver:*
Net investment income per share ................................ $0.31 $0.21
Ratios:
Expenses to average net assets ................................. 1.95% 1.90%+
Net investment income to average net assets .................... 4.23% 4.15%+
</TABLE>
- ----------
See footnotes on page 63.
53
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $8.28 $8.16 $8.14 $7.94 $8.79
----- ----- ----- ----- -----
Net investment income ............................................ 0.41 0.41 0.42 0.43 0.44
Net realized and unrealized
investment gain (loss) ......................................... 0.24 0.23 0.08 0.34 (0.77)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.65 0.64 0.50 0.77 (0.33)
Dividends paid or declared ....................................... (0.41) (0.41) (0.42) (0.43) (0.44)
Distributions from net gain realized ............................. (0.01) (0.11) (0.06) (0.14) (0.08)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.23 0.12 0.02 0.20 (0.85)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ..................................... $8.51 $8.28 $8.16 $8.14 $7.94
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 8.08% 8.17% 6.32% 10.30% (3.83)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 0.88% 0.86% 0.82% 0.89% 0.87%
Net investment income to average net assets ...................... 4.86% 5.08% 5.15% 5.44% 5.31%
Portfolio turnover ............................................... 15.72% 16.08% 10.08% 4.82% 17.16%
NET ASSETS, END OF YEAR
(000s omitted) ................................................... $56,308 $56,199 $57,264 $61,988 $61,441
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $8.27 $8.16 $8.14 $7.94 $8.73
----- ----- ----- ----- -----
Net investment income ............................................ 0.33 0.34 0.35 0.35 0.24
Net realized and unrealized
investment gain (loss) ......................................... 0.24 0.22 0.08 0.34 (0.79)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.57 0.56 0.43 0.69 (0.55)
Dividends paid or declared ....................................... (0.33) (0.34) (0.35) (0.35) (0.24)
Distributions from net gain realized ............................. (0.01) (0.11) (0.06) (0.14) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.23 0.11 0.02 0.20 (0.79)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................... $8.50 $8.27 $8.16 $8.14 $7.94
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 7.11% 7.07% 5.37% 9.17% (6.45)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.78% 1.76% 1.72% 1.91% 1.78%+
Net investment income to average net assets ...................... 3.96% 4.18% 4.25% 4.41% 4.33%+
Portfolio turnover ............................................... 15.72% 16.08% 10.08% 4.82% 17.16%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................... $837 $509 $389 $465 $704
</TABLE>
- ----------
See footnotes on page 63.
54
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MARYLAND SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $8.14 $7.99 $7.96 $7.71 $8.64
----- ----- ----- ----- -----
Net investment income ............................................ 0.40 0.40 0.40 0.41 0.42
Net realized and unrealized
investment gain (loss) ......................................... 0.23 0.19 0.06 0.38 (0.76)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.63 0.59 0.46 0.79 (0.34)
Dividends paid or declared ....................................... (0.40) (0.40) (0.40) (0.41) (0.42)
Distributions from net gain realized ............................. (0.05) (0.04) (0.03) (0.13) (0.17)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.18 0.15 0.03 0.25 (0.93)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ..................................... $8.32 $8.14 $7.99 $7.96 $7.71
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 7.89% 7.64% 6.00% 10.90% (4.08)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 0.89% 0.90% 0.84% 0.96% 0.92%
Net investment income to average net assets ...................... 4.82% 4.99% 5.05% 5.31% 5.17%
Portfolio turnover ............................................... 7.59% 14.79% 5.56% 3.63% 17.68%
NET ASSETS, END OF YEAR
(000s omitted) ................................................... $54,891 $52,549 $54,041 $56,290 $57,263
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $8.15 $7.99 $7.97 $7.72 $8.46
----- ----- ----- ----- -----
Net investment income ............................................ 0.32 0.33 0.33 0.33 0.23
Net realized and unrealized
investment gain (loss) ......................................... 0.23 0.20 0.05 0.38 (0.74)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.55 0.53 0.38 0.71 (0.51)
Dividends paid or declared ....................................... (0.32) (0.33) (0.33) (0.33) (0.23)
Distributions from net gain realized ............................. (0.05) (0.04) (0.03) (0.13) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.18 0.16 0.02 0.25 (0.74)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................... $8.33 $8.15 $7.99 $7.97 $7.72
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 6.91% 6.80% 4.91% 9.75% (6.21)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.80% 1.81% 1.72% 2.02% 1.80%+
Net investment income to average net assets ...................... 3.91% 4.08% 4.14% 4.27% 4.26%+
Portfolio turnover ............................................... 7.59% 14.79% 5.56% 3.63% 17.68%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................... $3,128 $2,063 $2,047 $630 $424
</TABLE>
- ----------
See footnotes on page 63.
55
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $7.99 $7.85 $7.91 $7.66 $8.54
----- ----- ----- ----- -----
Net investment income ............................................ 0.38 0.40 0.41 0.42 0.44
Net realized and unrealized
investment gain (loss) ......................................... 0.37 0.22 0.05 0.28 (0.67)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.75 0.62 0.46 0.70 (0.23)
Dividends paid or declared ....................................... (0.38) (0.40) (0.41) (0.42) (0.44)
Distributions from net gain realized ............................. (0.09) (0.08) (0.11) (0.03) (0.21)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.28 0.14 (0.06) 0.25 (0.88)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ..................................... $8.27 $7.99 $7.85 $7.91 $7.66
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 9.80% 8.11% 5.97% 9.58% (2.94)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 0.80% 0.84% 0.80% 0.86% 0.85%
Net investment income to average net assets ...................... 4.72% 5.06% 5.24% 5.51% 5.46%
Portfolio turnover ............................................... 13.41% 29.26% 26.30% 16.68% 12.44%
NET ASSETS, END OF YEAR
(000s omitted) ................................................... $109,328 $110,011 $109,872 $115,711 $120,149
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $7.99 $7.84 $7.90 $7.66 $8.33
----- ----- ----- ----- -----
Net investment income ............................................ 0.31 0.33 0.34 0.34 0.24
Net realized and unrealized
investment gain (loss) ......................................... 0.36 0.23 0.05 0.27 (0.67)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.67 0.56 0.39 0.61 (0.43)
Dividends paid or declared ....................................... (0.31) (0.33) (0.34) (0.34) (0.24)
Distributions from net gain realized ............................. (0.09) (0.08) (0.11) (0.03) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.27 0.15 (0.06) 0.24 (0.67)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................... $8.26 $7.99 $7.84 $7.90 $7.66
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 8.68% 7.29% 5.01% 8.33% (5.34)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.71% 1.74% 1.70% 1.95% 1.78%+
Net investment income to average net assets ...................... 3.81% 4.16% 4.32% 4.47% 4.52%+
Portfolio turnover ............................................... 13.41% 29.26% 26.30% 16.68% 12.44%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................... $1,468 $1,245 $1,405 $809 $1,099
</TABLE>
- ----------
See footnotes on page 63.
56
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MICHIGAN SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $8.60 $8.46 $8.54 $8.28 $9.08
----- ----- ----- ----- -----
Net investment income ............................................ 0.41 0.43 0.45 0.46 0.46
Net realized and unrealized
investment gain (loss) ......................................... 0.30 0.23 0.06 0.30 (0.71)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.71 0.66 0.51 0.76 (0.25)
Dividends paid or declared ....................................... (0.41) (0.43) (0.45) (0.46) (0.46)
Distributions from net gain realized ............................. (0.07) (0.09) (0.14) (0.04) (0.09)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.23 0.14 (0.08) 0.26 (0.80)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ..................................... $8.83 $8.60 $8.46 $8.54 $8.28
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 8.63% 8.16% 6.16% 9.56% (2.90)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 0.79% 0.81% 0.78% 0.87% 0.84%
Net investment income to average net assets ...................... 4.78% 5.13% 5.29% 5.50% 5.32%
Portfolio turnover ............................................... 23.60% 10.98% 19.62% 20.48% 10.06%
NET ASSETS, END OF YEAR
(000s omitted) ................................................... $144,161 $143,370 $148,178 $151,589 $151,095
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $8.59 $8.45 $8.54 $8.28 $9.01
----- ----- ----- ----- -----
Net investment income ............................................ 0.33 0.36 0.37 0.37 0.25
Net realized and unrealized
investment gain (loss) ......................................... 0.30 0.23 0.05 0.30 (0.73)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.63 0.59 0.42 0.67 (0.48)
Dividends paid or declared ....................................... (0.33) (0.36) (0.37) (0.37) (0.25)
Distributions from net gain realized ............................. (0.07) (0.09) (0.14) (0.04) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.23 0.14 (0.09) 0.26 (0.73)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................... $8.82 $8.59 $8.45 $8.54 $8.28
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 7.66% 7.19% 5.09% 8.36% (5.47)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.70% 1.71% 1.68% 2.01% 1.75%+
Net investment income to average net assets ...................... 3.87% 4.23% 4.39% 4.40% 4.40%+
Portfolio turnover ............................................... 23.60% 10.98% 19.62% 20.48% 10.06%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................... $1,841 $1,845 $1,486 $1,172 $671
</TABLE>
- ----------
See footnotes on page 63.
57
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MINNESOTA SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $7.79 $7.68 $7.82 $7.72 $8.28
----- ----- ----- ----- -----
Net investment income ............................................ 0.38 0.40 0.42 0.45 0.45
Net realized and unrealized
investment gain (loss) ......................................... 0.20 0.11 (0.12) 0.11 (0.44)
----- ----- ----- ----- -----
INCREASE FROM INVESTMENT
OPERATIONS ..................................................... 0.58 0.51 0.30 0.56 0.01
Dividends paid or declared ....................................... (0.38) (0.40) (0.42) (0.45) (0.45)
Distributions from net gain realized ............................. (0.01) -- (0.02) (0.01) (0.12)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.19 0.11 (0.14) 0.10 (0.56)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ..................................... $7.98 $7.79 $7.68 $7.82 $7.72
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 7.68% 6.85% 3.99% 7.61% 0.12%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 0.81% 0.85% 0.81% 0.87% 0.85%
Net investment income to average net assets ...................... 4.87% 5.21% 5.47% 5.89% 5.70%
Portfolio turnover ............................................... 21.86% 6.88% 26.89% 5.57% 3.30%
NET ASSETS, END OF YEAR
(000s omitted) ................................................... $121,374 $121,674 $126,173 $132,716 $134,990
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $7.79 $7.68 $7.82 $7.73 $8.22
----- ----- ----- ----- -----
Net investment income ............................................ 0.31 0.33 0.35 0.38 0.25
Net realized and unrealized
investment gain (loss) ......................................... 0.20 0.11 (0.12) 0.10 (0.49)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ..................................................... 0.51 0.44 0.23 0.48 (0.24)
Dividends paid or declared ....................................... (0.31) (0.33) (0.35) (0.38) (0.25)
Distributions from net gain realized ............................. (0.01) -- (0.02) (0.01) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... 0.19 0.11 (0.14) 0.09 (0.49)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................... $7.98 $7.79 $7.68 $7.82 $7.73
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ........................... 6.71% 5.89% 3.06% 6.45% (3.08)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.72% 1.75% 1.71% 1.85% 1.74%+
Net investment income to average net assets ...................... 3.96% 4.31% 4.57% 4.92% 4.68%+
Portfolio turnover ............................................... 21.86% 6.88% 26.89% 5.57% 3.30%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................... $2,103 $1,799 $2,036 $2,237 $1,649
</TABLE>
- ----------
See footnotes on page 63.
58
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MISSOURI SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................. $7.82 $7.71 $7.70 $7.41 $8.31
----- ----- ----- ----- -----
Net investment income .......................................... 0.36 0.38 0.39 0.40 0.40
Net realized and unrealized
investment gain (loss) ....................................... 0.28 0.19 0.08 0.36 (0.79)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.64 0.57 0.47 0.76 (0.39)
Dividends paid or declared ..................................... (0.36) (0.38) (0.39) (0.40) (0.40)
Distributions from net gain realized ........................... (0.07) (0.08) (0.07) (0.07) (0.11)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.21 0.11 0.01 0.29 (0.90)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ................................... $8.03 $7.82 $7.71 $7.70 $7.41
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 8.41% 7.70% 6.27% 10.67% (4.85)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 0.89% 0.89% 0.86% 0.88% 0.74%
Net investment income to average net assets .................... 4.59% 4.93% 5.03% 5.31% 5.18%
Portfolio turnover ............................................. 21.26% 6.47% 8.04% 3.88% 14.33%
NET ASSETS, END OF YEAR
(000s omitted) ................................................. $49,949 $52,766 $49,941 $51,169 $52,621
Without management fee waiver:*
Net investment income per share .............................. $0.39 $0.39
Ratios:
Expenses to average net assets ............................... 0.93% 0.88%
Net investment income to average net assets .................. 5.26% 5.04%
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $7.82 $7.72 $7.70 $7.41 $8.20
----- ----- ----- ----- -----
Net investment income .......................................... 0.29 0.31 0.32 0.32 0.22
Net realized and unrealized
investment gain (loss) ....................................... 0.28 0.18 0.09 0.36 (0.79)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.57 0.49 0.41 0.68 (0.57)
Dividends paid or declared ..................................... (0.29) (0.31) (0.32) (0.32) (0.22)
Distributions from net gain realized ........................... (0.07) (0.08) (0.07) (0.07) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.21 0.10 0.02 0.29 (0.79)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................. $8.03 $7.82 $7.72 $7.70 $7.41
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 7.45% 6.60% 5.46% 9.49% (7.16)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 1.79% 1.80% 1.76% 1.98% 1.70%+
Net investment income to average net assets .................... 3.69% 4.02% 4.13% 4.23% 4.27%+
Portfolio turnover ............................................. 21.26% 6.47% 8.04% 3.88% 14.33%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................. $418 $474 $565 $515 $350
Without management fee waiver:*
Net investment income per share .............................. $0.32 $0.22
Ratios:
Expenses to average net assets ............................... 2.03% 1.80%+
Net investment income to average net assets .................. 4.18% 4.17%+
</TABLE>
- ----------
See footnotes on page 63.
59
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NEW YORK SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................. $8.28 $7.98 $7.86 $7.67 $8.75
----- ----- ----- ----- -----
Net investment income .......................................... 0.40 0.41 0.42 0.42 0.43
Net realized and unrealized
investment gain (loss) ....................................... 0.40 0.32 0.12 0.36 (0.88)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.80 0.73 0.54 0.78 (0.45)
Dividends paid or declared ..................................... (0.40) (0.41) (0.42) (0.42) (0.43)
Distributions from net gain realized ........................... (0.08) (0.02) -- (0.17) (0.20)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.32 0.30 0.12 0.19 (1.08)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ................................... $8.60 $8.28 $7.98 $7.86 $7.67
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 10.02% 9.45% 6.97% 10.93% (5.37)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 0.81% 0.82% 0.77% 0.88% 0.87%
Net investment income to average net assets .................... 4.74% 5.09% 5.24% 5.52% 5.31%
Portfolio turnover ............................................. 39.85% 23.83% 25.88% 34.05% 28.19%
NET ASSETS, END OF YEAR
(000s omitted) ................................................. $84,822 $83,528 $82,719 $83,980 $90,914
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $8.29 $7.98 $7.87 $7.67 $8.55
----- ----- ----- ----- -----
Net investment income .......................................... 0.32 0.34 0.34 0.34 0.23
Net realized and unrealized
investment gain (loss) ....................................... 0.39 0.33 0.11 0.37 (0.88)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.71 0.67 0.45 0.71 (0.65)
Dividends paid or declared ..................................... (0.32) (0.34) (0.34) (0.34) (0.23)
Distributions from net gain realized ........................... (0.08) (0.02) -- (0.17) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.31 0.31 0.11 0.20 (0.88)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................. $8.60 $8.29 $7.98 $7.87 $7.67
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 8.88% 8.60% 5.86% 9.87% (7.73)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 1.72% 1.73% 1.68% 1.96% 1.81%+
Net investment income to average net assets .................... 3.83% 4.18% 4.33% 4.42% 4.39%+
Portfolio turnover ............................................. 39.85% 23.83% 25.88% 34.05% 28.19%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................. $2,182 $1,572 $1,152 $885 $476
</TABLE>
60
- ----------
See footnotes on page 63.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................. $8.19 $8.09 $8.11 $7.90 $8.77
----- ----- ----- ----- -----
Net investment income .......................................... 0.40 0.42 0.43 0.44 0.44
Net realized and unrealized
investment gain (loss) ....................................... 0.29 0.17 0.02 0.28 (0.70)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.69 0.59 0.45 0.72 (0.26)
Dividends paid or declared ..................................... (0.40) (0.42) (0.43) (0.44) (0.44)
Distributions from net gain realized ........................... (0.11) (0.07) (0.04) (0.07) (0.17)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.18 0.10 (0.02) 0.21 (0.87)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ................................... $8.37 $8.19 $8.09 $8.11 $7.90
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 8.77% 7.54% 5.68% 9.59% (3.08)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 0.78% 0.81% 0.77% 0.84% 0.84%
Net investment income to average net assets .................... 4.92% 5.19% 5.32% 5.56% 5.34%
Portfolio turnover ............................................. 24.74% 11.76% 12.90% 2.96% 9.37%
NET ASSETS, END OF YEAR
(000s omitted) ................................................. $153,126 $154,419 $162,243 $170,191 $171,469
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $8.23 $8.13 $8.15 $7.92 $8.61
----- ----- ----- ----- -----
Net investment income .......................................... 0.33 0.35 0.36 0.36 0.24
Net realized and unrealized
investment gain (loss) ....................................... 0.29 0.17 0.02 0.30 (0.69)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.62 0.52 0.38 0.66 (0.45)
Dividends paid or declared ..................................... (0.33) (0.35) (0.36) (0.36) (0.24)
Distributions from net gain realized ........................... (0.11) (0.07) (0.04) (0.07) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.18 0.10 (0.02) 0.23 (0.69)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................. $8.41 $8.23 $8.13 $8.15 $7.92
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 7.78% 6.57% 4.74% 8.67% (5.36)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 1.69% 1.71% 1.67% 1.93% 1.78%+
Net investment income to average net assets .................... 4.01% 4.29% 4.42% 4.48% 4.41%+
Portfolio turnover ............................................. 24.74% 11.76% 12.90% 2.96% 9.37%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................. $1,103 $1,160 $1,011 $660 $324
</TABLE>
61
- ----------
See footnotes on page 63.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OREGON SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................. $7.87 $7.65 $7.66 $7.43 $8.08
----- ----- ----- ----- -----
Net investment income .......................................... 0.36 0.38 0.40 0.40 0.40
Net realized and unrealized
investment gain (loss) ....................................... 0.28 0.26 -- 0.25 (0.59)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.64 0.64 0.40 0.65 (0.19)
Dividends paid or declared ..................................... (0.36) (0.38) (0.40) (0.40) (0.40)
Distributions from net gain realized ........................... (0.10) (0.04) (0.01) (0.02) (0.06)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.18 0.22 (0.01) 0.23 (0.65)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ................................... $8.05 $7.87 $7.65 $7.66 $7.43
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 8.48% 8.60% 5.27% 9.05% (2.38)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 0.88% 0.90% 0.86% 0.86% 0.78%
Net investment income to average net assets .................... 4.60% 4.88% 5.18% 5.40% 5.20%
Portfolio turnover ............................................. 12.62% 19.46% 28.65% 2.47% 9.43%
NET ASSETS, END OF YEAR
(000s omitted) ................................................. $57,601 $55,239 $57,345 $59,549 $59,884
Without management fee waiver:*
Net investment income per share $0.40 $0.39
Ratios:
Expenses to average net assets 0.91% 0.89%
Net investment income to average net assets 5.35% 5.09%
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $7.87 $7.64 $7.65 $7.43 $8.02
----- ----- ----- ----- -----
Net investment income .......................................... 0.29 0.31 0.33 0.33 0.22
Net realized and unrealized
investment gain (loss) ....................................... 0.27 0.27 -- 0.24 (0.59)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.56 0.58 0.33 0.57 (0.37)
Dividends paid or declared ..................................... (0.29) (0.31) (0.33) (0.33) (0.22)
Distributions from net gain realized ........................... (0.10) (0.04) (0.01) (0.02) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.17 0.23 (0.01) 0.22 (0.59)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................. $8.04 $7.87 $7.64 $7.65 $7.43
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 7.37% 7.77% 4.33% 7.86% (4.76)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 1.79% 1.80% 1.76% 1.83% 1.72%+
Net investment income to average net assets .................... 3.69% 3.98% 4.28% 4.41% 4.32%+
Portfolio turnover ............................................. 12.62% 19.46% 28.65% 2.47% 9.43%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................. $2,650 $1,678 $1,540 $1,495 $843
Without management fee waiver:*
Net investment income per share $0.33 $0.22
Ratios:
Expenses to average net assets 1.88% 1.82%+
Net investment income to average net assets 4.36% 4.22%+
</TABLE>
62
- ----------
See footnotes on page 63.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SOUTH CAROLINA SERIES
CLASS A
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................. $8.16 $8.07 $7.97 $7.61 $8.52
----- ----- ----- ----- -----
Net investment income .......................................... 0.39 0.40 0.41 0.41 0.41
Net realized and unrealized
investment gain (loss) ....................................... 0.29 0.22 0.12 0.37 (0.79)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.68 0.62 0.53 0.78 (0.38)
Dividends paid or declared ..................................... (0.39) (0.40) (0.41) (0.41) (0.41)
Distributions from net gain realized ........................... (0.07) (0.13) (0.02) (0.01) (0.12)
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.22 0.09 0.10 0.36 (0.91)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ................................... $8.38 $8.16 $8.07 $7.97 $7.61
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 8.66% 7.99% 6.82% 10.69% (4.61)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 0.80% 0.84% 0.80% 0.88% 0.83%
Net investment income to average net assets .................... 4.74% 5.04% 5.15% 5.38% 5.12%
Portfolio turnover ............................................. 16.63% -- 20.66% 4.13% 1.81%
NET ASSETS, END OF YEAR
(000s omitted) ................................................. $106,328 $101,018 $108,163 $112,421 $115,133
CLASS D
----------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94**
----------------------------------------- TO
1998 1997 1996 1995 9/30/94
----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $8.16 $8.06 $7.97 $7.61 $8.42
----- ----- ----- ----- -----
Net investment income .......................................... 0.31 0.33 0.34 0.34 0.22
Net realized and unrealized
investment gain (loss) ....................................... 0.29 0.23 0.11 0.37 (0.81)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................... 0.60 0.56 0.45 0.71 (0.59)
Dividends paid or declared ..................................... (0.31) (0.33) (0.34) (0.34) (0.22)
Distributions from net gain realized ........................... (0.07) (0.13) (0.02) (0.01) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... 0.22 0.10 0.09 0.36 (0.81)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................................. $8.38 $8.16 $8.06 $7.97 $7.61
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ......................... 7.68% 7.15% 5.73% 9.63% (7.14)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 1.71% 1.75% 1.70% 1.85% 1.74%+
Net investment income to average net assets .................... 3.83% 4.13% 4.25% 4.40% 4.29%+
Portfolio turnover ............................................. 16.63% -- 20.66% 4.13% 1.81%++
NET ASSETS, END OF PERIOD
(000s omitted) ................................................. $5,594 $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.
63
<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, 1998, 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, 1998 by correspondence with the Fund's custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each Series of
Seligman Municipal Fund Series, Inc. as of September 30, 1998, 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 30, 1998
64
<PAGE>
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Corporation
ALICE S. ILCHMAN 3, 4
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
DIRECTOR, New York Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch,
Law Firm
JAMES Q. RIORDAN 3, 4
DIRECTOR, KeySpan Energy Corporation
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3, 4
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2, 4
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, CommScope, Inc.
DIRECTOR, C-SPAN
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR, ICIMutual Insurance Company
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT, J. & W. Seligman & Co. Incorporated
- ----------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
65
<PAGE>
EXECUTIVE OFFICERS
WILLIAM MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
THOMAS G. MOLES
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 Shareholder
Services
(212) 682-7600 Outside the
United States
(800) 622-4597 24-Hour Automated
Telephone Access
Service
66
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio. For tax purposes,
these profits may be taxed at different rates, primarily depending upon the
length of time the securities were owned by the fund.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES CHARGE (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC expires after a fixed time period).
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of a fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE (OP) -- The price at which a mutual fund's share can be
purchased. The offering price per share is the current net asset value plus any
sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, officers and directors, how shares are bought and
redeemed, fund fees and other charges, and the fund's financial statements.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains updated or more
detailed information about an investment company and that supplements the
prospectus. It is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- ----------
Adapted from the Investment Company Institute's 1998 Mutual Fund Fact Book.
67
<PAGE>
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF SHAREHOLDERS OR THOSE WHO
HAVE RECEIVED THE OFFERING PROSPECTUS COVERING SHARES OF CAPITAL STOCK OF
SELIGMAN MUNICIPAL FUND SERIES, INC., WHICH CONTAINS INFORMATION ABOUT THE
SALES CHARGES, MANAGEMENT FEE, AND OTHER COSTS. PLEASE READ THE PROSPECTUS
CAREFULLY BEFORE INVESTING OR SENDING MONEY.
SELIGMAN ADVISORS, INC.
AN AFFILIATE OF
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1865
100 PARK AVENUE, NEW YORK, NY 10017
TEA2 9/98 [LOGO] PRINTED ON RECYCLED PAPER
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
All Exhibits have been previously filed and are incorporated herein by
reference, except Exhibits marked with an asterisk (*) which are filed herewith.
(a) *Articles Supplementary dated May 24, 1999.
(a)(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.)
(b) Amended and Restated By-Laws of the Registrant. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 30 filed on
January 29, 1997.)
(c) Copy of Specimen certificate of Capital Stock for Class D Shares.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
31 filed on January 27, 1998.)
(d) 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.)
(e) *Addendum to Sales/Bank Agreement. (Incorporated by reference to
Post-Effective Amendment No. 57 to the Registration Statement of
Seligman Capital Fund, Inc. (File #811-1886) filed on May 28, 1999.)
(e)(1) *Form of Bank Agreement between Seligman Advisors, Inc. and Banks.
(Incorporated by reference to Post-Effective Amendment No. 57 to the
Registration Statement of Seligman Capital Fund, Inc. (File #811-1886)
filed on May 28, 1999.)
(e)(2) Distributing Agreement between Registrant and Seligman Advisors, Inc.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
30 filed on January 29, 1997.)
(e)(3) Sales Agreement between Dealers and Seligman Advisors, Inc.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
30 filed on January 29, 1997.)
(f) 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.)
(f)(1) Deferred Compensation Plan for Directors of Seligman Municipal Fund
Series. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 34 filed on January 29, 1999.)
(g) 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.)
(h) Not applicable.
(i) *Opinion and Consent of Counsel in respect of Class C shares.
(i)(1) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 30 filed on January 29, 1997.)
(j) *Consent of Independent Auditors.
(j)(1) *Consent of Colorado Counsel.
(j)(2) *Consent of Georgia Counsel.
C-1
<PAGE>
PART C. OTHER INFORMATION (continued)
(j)(3) *Consent of Louisiana Counsel.
(j)(4) *Consent of Maryland Counsel.
(j)(5) *Consent of Massachusetts Counsel.
(j)(6) *Consent of Michigan Counsel.
(j)(7) *Opinion and Consent of Minnesota Counsel.
(j)(8) *Consent of Missouri Counsel.
(j)(9) *Consent of New York Counsel.
(j)(10) *Consent of Ohio Counsel.
(j)(11) *Consent of Oregon Counsel.
(j)(12) *Consent of South Carolina Counsel.
(k) Not applicable.
(l) *Form of Purchase Agreement for Initial Capital for Class C shares.
(l)(1) 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.)
(m) *Amended Administration, Shareholder Services and Distribution Plan of
Registrant.
(m)(1) *Amended Administration, Shareholder Services and Distribution Agreement
between Seligman Advisors, Inc. and Dealers. (Incorporated by reference
to Post-Effective Amendment No. 57 to the Registration Statement of
Seligman Capital Fund, Inc. (File #811-1886) filed on May 28, 1999.)
(n) *Financial Data Schedules.
(o) *Plan of Multiple Classes of Shares (three Classes) pursuant to Rule
18f-3 under the Investment Company Act of 1940.
Other Exhibits: Powers of Attorney. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 31 filed on January 27, 1998.)
Item 24. Persons Controlled by or Under Common Control with Registrant -
None.
Item 25. 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.
C-2
<PAGE>
PART C. OTHER INFORMATION (continued)
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 26. 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 eighteenassociated 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.
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 March 31,
1999.
Item 27. 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.
C-3
<PAGE>
PART C. OTHER INFORMATION (continued)
(b) Name of each director, officer or partner of each principal underwriter
named in response to Item 21.
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of April 30, 1999
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board and Chief
Executive Officer
Brian T. Zino* Director President and Director
Ronald T. Schroeder* Director None
Fred E. Brown* Director Director Emeritus
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
Edward F. Lynch* Senior Vice President, National None
Sales Director
James R. Besher Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
Gerald I. Cetrulo, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
Matthew A. Digan* Senior Vice President, None
Domestic Funds
Jonathan G. Evans Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
Robert T. Hausler* Senior Vice President, International None
Funds
T. Wayne Knowles Senior Vice President, None
104 Morninghills Court Division Sales Director
Cary, NC 27511
Joseph Lam Senior Vice President, Regional None
Seligman International Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
Bradley W. Larson Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
Michelle L. McCann-Rappa* Senior Vice President, None
Retirement Plans
Scott H. Novak* Senior Vice President, Insurance None
Richard M. Potocki Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
</TABLE>
C-4
<PAGE>
PART C. OTHER INFORMATION (continued)
(b) Name of each director, officer or partner of each principal underwriter
named in response to Item 21.
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of April 30, 1999
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Bruce M. Tuckey Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
Andrew S. Veasey Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
Charles L. von Breitenbach, II* Senior Vice President, None
Managed Money
J. Brereton Young* Senior Vice President, Director None
of Sales Development
Jeffrey S. Dean* Vice President, Business Analysis None
Mason S. Flinn Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
Marsha E. Jacoby* Vice President, Offshore Business None
Manager
William W. Johnson* Vice President, Order Desk None
Joan M. O'Connell Vice President, Regional Retirement None
3707 Fifth Avenue #136 Plans Manager
San Diego, CA 92103
Ronald W. Pond* Vice President, Portfolio Advisor None
Jeffery C. Pleet* Vice President, Regional Retirement None
Plans Manager
Tracy A. Salomon* Vice President, Retirement Marketing None
Helen Simon* Vice President, Sales Administration None
Gary A. Terpening* Vice President, Director of Business None
Development
Charles E. Wenzel Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
Jeff Botwinick Regional Vice President None
11508 Foster Road
Overland Park, KS 66210
Kevin Casey Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
Richard B. Callaghan Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
Bradford C. Davis Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
Christopher J. Derry Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
</TABLE>
C-5
<PAGE>
PART C. OTHER INFORMATION (continued)
(b) Name of each director, officer or partner of each principal underwriter
named in response to Item 21.
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of April 30, 1999
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Kenneth Dougherty Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
Kelli A. Wirth Dumser Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
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
Carla A. Goehring Regional Vice President None
11426 Long Pine
Houston, TX 77077
Cathy Des Jardins Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302
Michael K. Lewallen Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
Judith L. Lyon Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
Tim O'Connell Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
George M. Palmer, Jr. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
Thomas Parnell Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
Craig Prichard Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
Nicholas 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
Eugene P. Sullivan Regional Vice President None
4858 Battery Lane Bethesda, MD 21814
</TABLE>
C-6
<PAGE>
PART C. OTHER INFORMATION (continued)
(b) Name of each director, officer or partner of each principal underwriter
named in response to Item 21.
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of April 30, 1999
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
James Taylor Regional Vice President None
1145 Kenilworth Circle
Naperville, IL 60540
Steve Wilson Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
Gail S. Cushing* Assistant Vice President, National None
Accounts Manager
Sandra G. Floris* Assistant Vice President, Order Desk None
Keith Landry* Assistant Vice President, Order Desk None
Albert A. Pisano* Assistant Vice President and None
Compliance Officer
Joyce Peress* Assistant Secretary Assistant Secretary
</TABLE>
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York, NY 10017.
(c) Not Applicable.
<TABLE>
<S> <C> <C>
Item 28. 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
</TABLE>
Item 29. Management Services - Not Applicable.
Item 30. 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, as amended 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.
C-7
<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 No. 35 pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 35 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 28th day of May, 1999.
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. 35 has been signed below by the following persons in the
capacities indicated on May 28, 1999.
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 )
C-8
<PAGE>
SELIGMAN MUNICIPAL FUND SERIES, INC.
Post-Effective Amendment No. 35 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
- ------------------ -----------
Item 23(a) Articles Supplementary
Item 23(i) Opinion and Consent of Counsel
Item 23(j) Consent of Independent Auditors
Item 23(j)(1) Consent of Colorado Counsel
Item 23(j)(2) Consent of Georgia Counsel
Item 23(j)(3) Consent of Louisiana Counsel
Item 23(j)(4) Consent of Maryland Counsel
Item 23(j)(5) Consent of Massachusetts Counsel
Item 23(j)(6) Consent of Michigan Counsel
Item 23(j)(7) Opinion and Consent of Minnesota Counsel
Item 23(j)(8) Consent of Missouri Counsel
Item 23(j)(9) Consent of New York Counsel
Item 23(j)(10) Consent of Ohio Counsel
Item 23(j)(11) Consent of Oregon Counsel
Item 23(j)(12) Consent of South Carolina Counsel
Item 23(l) Form of Purchase Agreement for Initial Capital
Item 23(m) Amended Administration, Shareholder Services
And Distribution Plan
Item 23(n) Financial Data Schedules
Item 23(o) Plan of Multiple Classes of Shares (three Classes)
C-9
SELIGMAN MUNICIPAL FUND SERIES, INC.
ARTICLES SUPPLEMENTARY
Seligman Municipal Fund Series, Inc., a Maryland corporation having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation") and registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: (a) The total number of shares of capital stock of all sub-classes
of the Colorado Municipal Class of the Corporation (the "Colorado Series") which
the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the
Colorado Series. The number of authorized shares of Class A Common Stock and
Class D Common Stock of the Colorado Series each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such sub-class and y
equaled one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the Colorado Series
shall not exceed the authorized number of shares of Common Stock of the Colorado
Series; and, in the event application of the formula above would have resulted,
at any time, in fractional shares, the applicable number of authorized shares of
each class was to have been rounded down to the nearest whole number of shares
of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Colorado Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of all classes of stock which the
Colorado Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the Colorado Series shall have three
subclasses of shares, which shall be designated Class A Common Stock, Class
C Common Stock and Class D Common Stock. The number of authorized shares of
Class A Common Stock, of Class C Common Stock and of Class D Common Stock
of the Colorado Series shall each consist of the sum of x and y, where x
equals the issued and outstanding shares of such subclass and y equals
one-third of the authorized but unissued shares of Common Stock of all
subclasses; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A, Class C and Class D Common Stock of the
Colorado Series shall not exceed the authorized number of shares of Common
Stock of the Colorado Series (i.e., 100,000,000 shares of Common Stock
until changed by further action of the Board of Directors in accordance
with Section 2-208.1 of the Maryland General Corporation Law, or any
successor provision); and, in the event
-1-
<PAGE>
application of the formula above would result, at any time, in fractional
shares, the applicable number of authorized shares of each class shall be
rounded down to the nearest whole number of shares of such class. Any
subclass of Common Stock of the Colorado Series shall be referred to herein
individually as a "Colorado Class" and collectively, together with any
further subclass or sub classes from time to time established, as the
"Colorado Classes".
(2) All Colorado Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Colorado Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Colorado Classes) shall be borne by that
Colorado Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Colorado Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Colorado Series, shares of a particular
Colorado Class may be automatically converted into shares of another
Colorado Class; provided, however, that such conversion shall be
subject to the continuing availability of an opinion of counsel to the
effect that such conversion does not constitute a taxable event under
Federal income tax law. The Board of Directors, in its sole
discretion, may suspend any conversion rights if such opinion is no
longer available.
-2-
<PAGE>
(F) As to any matter with respect to which a separate vote of any
Colorado Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Colorado Class shall apply in lieu of single Colorado Class voting,
and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the Colorado Classes shall vote together as a single Colorado
Class on any such matter that shall have the same effect on each such
Colorado Class. As to any matter that does not affect the interest of
a particular Colorado Class, only the holders of shares of the
affected Colorado Class shall be entitled to vote.
SECOND: (a) The total number of shares of capital stock of all sub-classes
of the Georgia Municipal Class of the Corporation (the "Georgia Series") which
the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the
Georgia Series. The number of authorized shares of Class A Common Stock and
Class D Common Stock of the Georgia Series each consisted of the sum of x and y,
where x equaled the issued and outstanding shares of such sub-class and y
equaled one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the Georgia Series
shall not exceed the authorized number of shares of Common Stock of the Georgia
Series; and, in the event application of the formula above would have resulted,
at any time, in fractional shares, the applicable number of authorized shares of
each class was to have been rounded down to the nearest whole number of shares
of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Georgia Series into the following subclasses, has provided
for the issuance of shares of such subclasses and has set the following terms of
such subclasses:
(1) The total number of shares of all classes of stock which the
Georgia Series has authority to issue is 100,000,000 shares of common stock
("Shares") of the par value of $.001 each having an aggregate par value of
$100,000. The Common Stock of the Georgia Series shall have three
subclasses of shares, which shall be designated Class A Common Stock, Class
C Common Stock and Class D Common Stock. The number of authorized shares of
Class A Common Stock, of Class C Common Stock and of Class D Common Stock
of the Georgia Series shall each consist of the sum of x and y, where x
equals the issued and outstanding shares of such subclass and y equals
one-third of the authorized but unissued shares of Common Stock of all
subclasses; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A, Class C and Class D Common Stock of the
Georgia Series shall not exceed the authorized number of shares of Common
Stock of the Georgia Series (i.e., 100,000,000 shares of Common Stock until
-3-
<PAGE>
changed by further action of the Board of Directors in accordance with
Section 2-208.1 of the Maryland General Corporation Law, or any successor
provision); and, in the event application of the formula above would
result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest whole
number of shares of such class. Any subclass of Common Stock of the Georgia
Series shall be referred to herein individually as a "Georgia Class" and
collectively, together with any further subclass or sub classes from time
to time established, as the "Georgia Classes".
(2) All Georgia Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Georgia Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Georgia Classes) shall be borne by that
Georgia Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Georgia Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Georgia Series, shares of a particular
Georgia Class may be automatically converted into shares of another
Georgia Class; provided, however, that such conversion shall be
subject to the continuing availability of an opinion of counsel to the
effect that such conversion does not constitute a taxable event under
Federal income tax law. The Board of
-4-
<PAGE>
Directors, in its sole discretion, may suspend any conversion rights
if such opinion is no longer available.
(F) As to any matter with respect to which a separate vote of any
Georgia Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Georgia Class shall apply in lieu of single Georgia Class voting, and,
if permitted by the Investment Company Act or any rules, regulations
or orders thereunder and the Maryland General Corporation Law, the
Georgia Classes shall vote together as a single Georgia Class on any
such matter that shall have the same effect on each such Georgia
Class. As to any matter that does not affect the interest of a
particular Georgia Class, only the holders of shares of the affected
Georgia Class shall be entitled to vote.
THIRD: (a) The total number of shares of capital stock of all sub-classes
of the Louisiana Municipal Class of the Corporation (the "Louisiana Series")
which the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the
Louisiana Series. The number of authorized shares of Class A Common Stock and
Class D Common Stock of the Louisiana Series each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such sub-class and y
equaled one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the Louisiana Series
shall not exceed the authorized number of shares of Common Stock of the
Louisiana Series; and, in the event application of the formula above would have
resulted, at any time, in fractional shares, the applicable number of authorized
shares of each class was to have been rounded down to the nearest whole number
of shares of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Louisiana Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of all classes of stock which the
Louisiana Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the Louisiana Series shall have
three subclasses of shares, which shall be designated Class A Common Stock,
Class C Common Stock and Class D Common Stock. The number of authorized
shares of Class A Common Stock, of Class C Common Stock and of Class D
Common Stock of the Louisiana Series shall each consist of the sum of x and
y, where x equals the issued and outstanding shares of such subclass and y
equals one-third of the authorized but unissued shares of Common Stock of
all subclasses; provided that at all
-5-
<PAGE>
times the aggregate authorized, issued and outstanding shares of Class A,
Class C and Class D Common Stock of the Louisiana Series shall not exceed
the authorized number of shares of Common Stock of the Louisiana Series
(i.e., 100,000,000 shares of Common Stock until changed by further action
of the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in the
event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Any subclass of Common Stock of the Louisiana Series shall be referred to
herein individually as a "Louisiana Class" and collectively, together with
any further subclass or sub classes from time to time established, as the
"Louisiana Classes".
(2) All Louisiana Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Louisiana Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Louisiana Classes) shall be borne by that
Louisiana Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Louisiana Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Louisiana Series, shares of a particular
Louisiana Class may be automatically converted into shares of another
Louisiana Class; provided, however, that such conversion shall be
subject to the
-6-
<PAGE>
continuing availability of an opinion of counsel to the effect that
such conversion does not constitute a taxable event under Federal
income tax law. The Board of Directors, in its sole discretion, may
suspend any conversion rights if such opinion is no longer available.
(F) As to any matter with respect to which a separate vote of any
Louisiana Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Louisiana Class shall apply in lieu of single Louisiana Class voting,
and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the Louisiana Classes shall vote together as a single Louisiana
Class on any such matter that shall have the same effect on each such
Louisiana Class. As to any matter that does not affect the interest of
a particular Louisiana Class, only the holders of shares of the
affected Louisiana Class shall be entitled to vote.
FOURTH: (a) The total number of shares of capital stock of all sub-classes
of the Maryland Municipal Class of the Corporation (the "Maryland Series") which
the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the
Maryland Series. The number of authorized shares of Class A Common Stock and
Class D Common Stock of the Maryland Series each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such sub-class and y
equaled one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the Maryland Series
shall not exceed the authorized number of shares of Common Stock of the Maryland
Series; and, in the event application of the formula above would have resulted,
at any time, in fractional shares, the applicable number of authorized shares of
each class was to have been rounded down to the nearest whole number of shares
of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Maryland Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of all classes of stock which the
Maryland Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the Maryland Series shall have three
subclasses of shares, which shall be designated Class A Common Stock, Class
C Common Stock and Class D Common Stock. The number of authorized shares of
Class A Common Stock, of Class C Common Stock and of Class D Common Stock
of the Maryland Series shall each consist of the sum of x and y, where x
-7-
<PAGE>
equals the issued and outstanding shares of such subclass and y equals
one-third of the authorized but unissued shares of Common Stock of all
subclasses; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A, Class C and Class D Common Stock of the
Maryland Series shall not exceed the authorized number of shares of Common
Stock of the Maryland Series (i.e., 100,000,000 shares of Common Stock
until changed by further action of the Board of Directors in accordance
with Section 2-208.1 of the Maryland General Corporation Law, or any
successor provision); and, in the event application of the formula above
would result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest whole
number of shares of such class. Any subclass of Common Stock of the
Maryland Series shall be referred to herein individually as a "Maryland
Class" and collectively, together with any further subclass or sub classes
from time to time established, as the "Maryland Classes".
(2) All Maryland Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Maryland Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Maryland Classes) shall be borne by that
Maryland Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Maryland Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Maryland Series, shares of
-8-
<PAGE>
a particular Maryland Class may be automatically converted into shares
of another Maryland Class; provided, however, that such conversion
shall be subject to the continuing availability of an opinion of
counsel to the effect that such conversion does not constitute a
taxable event under Federal income tax law. The Board of Directors, in
its sole discretion, may suspend any conversion rights if such opinion
is no longer available.
(F) As to any matter with respect to which a separate vote of any
Maryland Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Maryland Class shall apply in lieu of single Maryland Class voting,
and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the Maryland Classes shall vote together as a single Maryland
Class on any such matter that shall have the same effect on each such
Maryland Class. As to any matter that does not affect the interest of
a particular Maryland Class, only the holders of shares of the
affected Maryland Class shall be entitled to vote.
FIFTH: (a) The total number of shares of capital stock of all sub-classes
of the Massachusetts Municipal Class of the Corporation (the "Massachusetts
Series") which the Corporation has authority to issue is 100,000,000 shares,
which were previously classified by the Board of Directors of the Corporation
into two classes designated as Class A Common Stock and Class D Common Stock of
the Massachusetts Series. The number of authorized shares of Class A Common
Stock and Class D Common Stock of the Massachusetts Series each consisted of the
sum of x and y, where x equaled the issued and outstanding shares of such
sub-class and y equaled one-half of the authorized but unissued shares of Common
Stock of all sub-classes; provided that at all times the aggregate authorized,
issued and outstanding shares of Class A and Class D Common Stock of the
Massachusetts Series shall not exceed the authorized number of shares of Common
Stock of the Massachusetts Series; and, in the event application of the formula
above would have resulted, at any time, in fractional shares, the applicable
number of authorized shares of each class was to have been rounded down to the
nearest whole number of shares of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Massachusetts Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of all classes of stock which the
Massachusetts Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the Massachusetts Series shall have
three subclasses of shares, which shall be designated Class A Common Stock,
Class C Common Stock and Class D Common Stock. The
-9-
<PAGE>
number of authorized shares of Class A Common Stock, of Class C Common
Stock and of Class D Common Stock of the Massachusetts Series shall each
consist of the sum of x and y, where x equals the issued and outstanding
shares of such subclass and y equals one-third of the authorized but
unissued shares of Common Stock of all subclasses; provided that at all
times the aggregate authorized, issued and outstanding shares of Class A,
Class C and Class D Common Stock of the Massachusetts Series shall not
exceed the authorized number of shares of Common Stock of the Massachusetts
Series (i.e., 100,000,000 shares of Common Stock until changed by further
action of the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in the
event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Any subclass of Common Stock of the Massachusetts Series shall be referred
to herein individually as a "Massachusetts Class" and collectively,
together with any further subclass or sub classes from time to time
established, as the "Massachusetts Classes".
(2) All Massachusetts Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Massachusetts Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Massachusetts Classes) shall be borne by
that Massachusetts Class and shall be appropriately reflected (in the
manner determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Massachusetts Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive
-10-
<PAGE>
order applicable to the Corporation, and as may be determined by the
Board of Directors and disclosed in the then current prospectus of
Massachusetts Series, shares of a particular Massachusetts Class may
be automatically converted into shares of another Massachusetts Class;
provided, however, that such conversion shall be subject to the
continuing availability of an opinion of counsel to the effect that
such conversion does not constitute a taxable event under Federal
income tax law. The Board of Directors, in its sole discretion, may
suspend any conversion rights if such opinion is no longer available.
(F) As to any matter with respect to which a separate vote of any
Massachusetts Class is required by the Investment Company Act or by
the Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Massachusetts Class shall apply in lieu of single Massachusetts Class
voting, and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the Massachusetts Classes shall vote together as a single
Massachusetts Class on any such matter that shall have the same effect
on each such Massachusetts Class. As to any matter that does not
affect the interest of a particular Massachusetts Class, only the
holders of shares of the affected Massachusetts Class shall be
entitled to vote.
SIXTH: (a) The total number of shares of capital stock of all sub-classes
of the Michigan Municipal Class of the Corporation (the "Michigan Series") which
the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the
Michigan Series. The number of authorized shares of Class A Common Stock and
Class D Common Stock of the Michigan Series each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such sub-class and y
equaled one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the Michigan Series
shall not exceed the authorized number of shares of Common Stock of the Michigan
Series; and, in the event application of the formula above would have resulted,
at any time, in fractional shares, the applicable number of authorized shares of
each class was to have been rounded down to the nearest whole number of shares
of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Michigan Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of all classes of stock which the
Michigan Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value
-11-
<PAGE>
of $.001 each having an aggregate par value of $100,000. The Common Stock
of the Michigan Series shall have three subclasses of shares, which shall
be designated Class A Common Stock, Class C Common Stock and Class D Common
Stock. The number of authorized shares of Class A Common Stock, of Class C
Common Stock and of Class D Common Stock of the Michigan Series shall each
consist of the sum of x and y, where x equals the issued and outstanding
shares of such subclass and y equals one-third of the authorized but
unissued shares of Common Stock of all subclasses; provided that at all
times the aggregate authorized, issued and outstanding shares of Class A,
Class C and Class D Common Stock of the Michigan Series shall not exceed
the authorized number of shares of Common Stock of the Michigan Series
(i.e., 100,000,000 shares of Common Stock until changed by further action
of the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in the
event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Any subclass of Common Stock of the Michigan Series shall be referred to
herein individually as a "Michigan Class" and collectively, together with
any further subclass or sub classes from time to time established, as the
"Michigan Classes".
(2) All Michigan Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Michigan Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Michigan Classes) shall be borne by that
Michigan Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Michigan Class.
-12-
<PAGE>
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Michigan Series, shares of a particular
Michigan Class may be automatically converted into shares of another
Michigan Class; provided, however, that such conversion shall be
subject to the continuing availability of an opinion of counsel to the
effect that such conversion does not constitute a taxable event under
Federal income tax law. The Board of Directors, in its sole
discretion, may suspend any conversion rights if such opinion is no
longer available.
(F) As to any matter with respect to which a separate vote of any
Michigan Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Michigan Class shall apply in lieu of single Michigan Class voting,
and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the Michigan Classes shall vote together as a single Michigan
Class on any such matter that shall have the same effect on each such
Michigan Class. As to any matter that does not affect the interest of
a particular Michigan Class, only the holders of shares of the
affected Michigan Class shall be entitled to vote.
SEVENTH: (a) The total number of shares of capital stock of all sub-classes
of the Minnesota Municipal Class of the Corporation (the "Minnesota Series")
which the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the
Minnesota Series. The number of authorized shares of Class A Common Stock and
Class D Common Stock of the Minnesota Series each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such sub-class and y
equaled one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the Minnesota Series
shall not exceed the authorized number of shares of Common Stock of the
Minnesota Series; and, in the event application of the formula above would have
resulted, at any time, in fractional shares, the applicable number of authorized
shares of each class was to have been rounded down to the nearest whole number
of shares of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Minnesota Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
-13-
<PAGE>
(1) The total number of shares of all classes of stock which the
Minnesota Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the Minnesota Series shall have
three subclasses of shares, which shall be designated Class A Common Stock,
Class C Common Stock and Class D Common Stock. The number of authorized
shares of Class A Common Stock, of Class C Common Stock and of Class D
Common Stock of the Minnesota Series shall each consist of the sum of x and
y, where x equals the issued and outstanding shares of such subclass and y
equals one-third of the authorized but unissued shares of Common Stock of
all subclasses; provided that at all times the aggregate authorized, issued
and outstanding shares of Class A, Class C and Class D Common Stock of the
Minnesota Series shall not exceed the authorized number of shares of Common
Stock of the Minnesota Series (i.e., 100,000,000 shares of Common Stock
until changed by further action of the Board of Directors in accordance
with Section 2-208.1 of the Maryland General Corporation Law, or any
successor provision); and, in the event application of the formula above
would result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest whole
number of shares of such class. Any subclass of Common Stock of the
Minnesota Series shall be referred to herein individually as a "Minnesota
Class" and collectively, together with any further subclass or sub classes
from time to time established, as the "Minnesota Classes".
(2) All Minnesota Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Minnesota Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Minnesota Classes) shall be borne by that
Minnesota Class and shall be appropriately reflected (in the manner
-14-
<PAGE>
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Minnesota Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Minnesota Series, shares of a particular
Minnesota Class may be automatically converted into shares of another
Minnesota Class; provided, however, that such conversion shall be
subject to the continuing availability of an opinion of counsel to the
effect that such conversion does not constitute a taxable event under
Federal income tax law. The Board of Directors, in its sole
discretion, may suspend any conversion rights if such opinion is no
longer available.
(F) As to any matter with respect to which a separate vote of any
Minnesota Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Minnesota Class shall apply in lieu of single Minnesota Class voting,
and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the Minnesota Classes shall vote together as a single Minnesota
Class on any such matter that shall have the same effect on each such
Minnesota Class. As to any matter that does not affect the interest of
a particular Minnesota Class, only the holders of shares of the
affected Minnesota Class shall be entitled to vote.
EIGHTH: (a) The total number of shares of capital stock of all sub-classes
of the Missouri Municipal Class of the Corporation (the "Missouri Series") which
the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the
Missouri Series. The number of authorized shares of Class A Common Stock and
Class D Common Stock of the Missouri Series each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such sub-class and y
equaled one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the Missouri Series
shall not exceed the authorized number of shares of Common Stock of the Missouri
Series; and, in the event application of the formula above would have resulted,
at any time, in fractional shares, the applicable number of authorized shares of
each class was to have been rounded down to the nearest whole number of shares
of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Missouri Series into
-15-
<PAGE>
the following subclasses, has provided for the issuance of shares of such
subclasses and has set the following terms of such subclasses:
(1) The total number of shares of all classes of stock which the
Missouri Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the Missouri Series shall have three
subclasses of shares, which shall be designated Class A Common Stock, Class
C Common Stock and Class D Common Stock. The number of authorized shares of
Class A Common Stock, of Class C Common Stock and of Class D Common Stock
of the Missouri Series shall each consist of the sum of x and y, where x
equals the issued and outstanding shares of such subclass and y equals
one-third of the authorized but unissued shares of Common Stock of all
subclasses; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A, Class C and Class D Common Stock of the
Missouri Series shall not exceed the authorized number of shares of Common
Stock of the Missouri Series (i.e., 100,000,000 shares of Common Stock
until changed by further action of the Board of Directors in accordance
with Section 2-208.1 of the Maryland General Corporation Law, or any
successor provision); and, in the event application of the formula above
would result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest whole
number of shares of such class. Any subclass of Common Stock of the
Missouri Series shall be referred to herein individually as a "Missouri
Class" and collectively, together with any further subclass or sub classes
from time to time established, as the "Missouri Classes".
(2) All Missouri Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Missouri Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative
-16-
<PAGE>
expenses under an administration or service agreement, plan or other
arrangement, however designated, which may differ between the Missouri
Classes) shall be borne by that Missouri Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that Missouri Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Missouri Series, shares of a particular
Missouri Class may be automatically converted into shares of another
Missouri Class; provided, however, that such conversion shall be
subject to the continuing availability of an opinion of counsel to the
effect that such conversion does not constitute a taxable event under
Federal income tax law. The Board of Directors, in its sole
discretion, may suspend any conversion rights if such opinion is no
longer available.
(F) As to any matter with respect to which a separate vote of any
Missouri Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Missouri Class shall apply in lieu of single Missouri Class voting,
and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the Missouri Classes shall vote together as a single Missouri
Class on any such matter that shall have the same effect on each such
Missouri Class. As to any matter that does not affect the interest of
a particular Missouri Class, only the holders of shares of the
affected Missouri Class shall be entitled to vote.
NINTH: (a) The total number of shares of capital stock of all sub-classes
of the National Municipal Class of the Corporation (the "National Series") which
the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the
National Series. The number of authorized shares of Class A Common Stock and
Class D Common Stock of the National Series each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such sub-class and y
equaled one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the National Series
shall not exceed the authorized number of shares of Common Stock of the National
Series; and, in the event application of the formula above would have resulted,
at any time, in fractional shares, the applicable number of authorized shares of
each class was to have been rounded down to the nearest whole number of shares
of such sub-class.
-17-
<PAGE>
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the National Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of all classes of stock which the
National Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the National Series shall have three
subclasses of shares, which shall be designated Class A Common Stock, Class
C Common Stock and Class D Common Stock. The number of authorized shares of
Class A Common Stock, of Class C Common Stock and of Class D Common Stock
of the National Series shall each consist of the sum of x and y, where x
equals the issued and outstanding shares of such subclass and y equals
one-third of the authorized but unissued shares of Common Stock of all
subclasses; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A, Class C and Class D Common Stock of the
National Series shall not exceed the authorized number of shares of Common
Stock of the National Series (i.e., 100,000,000 shares of Common Stock
until changed by further action of the Board of Directors in accordance
with Section 2-208.1 of the Maryland General Corporation Law, or any
successor provision); and, in the event application of the formula above
would result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest whole
number of shares of such class. Any subclass of Common Stock of the
National Series shall be referred to herein individually as a "National
Class" and collectively, together with any further subclass or sub classes
from time to time established, as the "National Classes".
(2) All National Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
-18-
<PAGE>
(D) Expenses related solely to a particular National Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the National Classes) shall be borne by that
National Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
National Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of National Series, shares of a particular
National Class may be automatically converted into shares of another
National Class; provided, however, that such conversion shall be
subject to the continuing availability of an opinion of counsel to the
effect that such conversion does not constitute a taxable event under
Federal income tax law. The Board of Directors, in its sole
discretion, may suspend any conversion rights if such opinion is no
longer available.
(F) As to any matter with respect to which a separate vote of any
National Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
National Class shall apply in lieu of single National Class voting,
and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the National Classes shall vote together as a single National
Class on any such matter that shall have the same effect on each such
National Class. As to any matter that does not affect the interest of
a particular National Class, only the holders of shares of the
affected National Class shall be entitled to vote.
TENTH: (a) The total number of shares of capital stock of all sub-classes
of the New York Municipal Class of the Corporation (the "New York Series") which
the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the New
York Series. The number of authorized shares of Class A Common Stock and Class D
Common Stock of the New York Series each consisted of the sum of x and y, where
x equaled the issued and outstanding shares of such sub-class and y equaled
one-half of the authorized but unissued shares of Common Stock of all
sub-classes; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A and Class D Common Stock of the New York Series
shall not exceed the authorized number of shares of Common Stock of the New York
Series; and, in the event application of the formula above would have resulted,
at any time, in
-19-
<PAGE>
fractional shares, the applicable number of authorized shares of each class was
to have been rounded down to the nearest whole number of shares of such
sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the New York Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of all classes of stock which the New
York Series has authority to issue is 100,000,000 shares of common stock
("Shares") of the par value of $.001 each having an aggregate par value of
$100,000. The Common Stock of the New York Series shall have three
subclasses of shares, which shall be designated Class A Common Stock, Class
C Common Stock and Class D Common Stock. The number of authorized shares of
Class A Common Stock, of Class C Common Stock and of Class D Common Stock
of the New York Series shall each consist of the sum of x and y, where x
equals the issued and outstanding shares of such subclass and y equals
one-third of the authorized but unissued shares of Common Stock of all
subclasses; provided that at all times the aggregate authorized, issued and
outstanding shares of Class A, Class C and Class D Common Stock of the New
York Series shall not exceed the authorized number of shares of Common
Stock of the New York Series (i.e., 100,000,000 shares of Common Stock
until changed by further action of the Board of Directors in accordance
with Section 2-208.1 of the Maryland General Corporation Law, or any
successor provision); and, in the event application of the formula above
would result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest whole
number of shares of such class. Any subclass of Common Stock of the New
York Series shall be referred to herein individually as a "New York Class"
and collectively, together with any further subclass or sub classes from
time to time established, as the "New York Classes".
(2) All New York Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
-20-
<PAGE>
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular New York Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the New York Classes) shall be borne by that
New York Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
New York Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of New York Series, shares of a particular New
York Class may be automatically converted into shares of another New
York Class; provided, however, that such conversion shall be subject
to the continuing availability of an opinion of counsel to the effect
that such conversion does not constitute a taxable event under Federal
income tax law. The Board of Directors, in its sole discretion, may
suspend any conversion rights if such opinion is no longer available.
(F) As to any matter with respect to which a separate vote of any
New York Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
New York Class shall apply in lieu of single New York Class voting,
and, if permitted by the Investment Company Act or any rules,
regulations or orders thereunder and the Maryland General Corporation
Law, the New York Classes shall vote together as a single New York
Class on any such matter that shall have the same effect on each such
New York Class. As to any matter that does not affect the interest of
a particular New York Class, only the holders of shares of the
(G) affected New York Class shall be entitled to vote.
ELEVENTH: (a) The total number of shares of capital stock of all
sub-classes of the Ohio Municipal Class of the Corporation (the "Ohio Series")
which the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation into two
classes designated as Class A Common Stock and Class D Common Stock of the Ohio
Series. The number of authorized shares of Class A Common Stock and Class D
Common Stock of the Ohio Series each consisted of the sum of x and y, where x
equaled the issued and outstanding shares of such sub-class and y equaled
one-half of the authorized but unissued
-21-
<PAGE>
shares of Common Stock of all sub-classes; provided that at all times the
aggregate authorized, issued and outstanding shares of Class A and Class D
Common Stock of the Ohio Series shall not exceed the authorized number of shares
of Common Stock of the Ohio Series; and, in the event application of the formula
above would have resulted, at any time, in fractional shares, the applicable
number of authorized shares of each class was to have been rounded down to the
nearest whole number of shares of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Ohio Series into the following subclasses, has provided
for the issuance of shares of such subclasses and has set the following terms of
such subclasses:
(1) The total number of shares of all classes of stock which the Ohio
Series has authority to issue is 100,000,000 shares of common stock
("Shares") of the par value of $.001 each having an aggregate par value of
$100,000. The Common Stock of the Ohio Series shall have three subclasses
of shares, which shall be designated Class A Common Stock, Class C Common
Stock and Class D Common Stock. The number of authorized shares of Class A
Common Stock, of Class C Common Stock and of Class D Common Stock of the
Ohio Series shall each consist of the sum of x and y, where x equals the
issued and outstanding shares of such subclass and y equals one-third of
the authorized but unissued shares of Common Stock of all subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class A, Class C and Class D Common Stock of the Ohio Series
shall not exceed the authorized number of shares of Common Stock of the
Ohio Series (i.e., 100,000,000 shares of Common Stock until changed by
further action of the Board of Directors in accordance with Section 2-208.1
of the Maryland General Corporation Law, or any successor provision); and,
in the event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Any subclass of Common Stock of the Ohio Series shall be referred to herein
individually as a "Ohio Class" and collectively, together with any further
subclass or sub classes from time to time established, as the "Ohio
Classes".
(2) All Ohio Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the
-22-
<PAGE>
Board of Directors in accordance with the Investment Company Act and
applicable rules and regulations of the NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Ohio Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Ohio Classes) shall be borne by that Ohio
Class and shall be appropriately reflected (in the manner determined
by the Board of Directors) in the net asset value, dividends,
distribution and liquidation rights of the shares of that Ohio Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Ohio Series, shares of a particular Ohio
Class may be automatically converted into shares of another Ohio
Class; provided, however, that such conversion shall be subject to the
continuing availability of an opinion of counsel to the effect that
such conversion does not constitute a taxable event under Federal
income tax law. The Board of Directors, in its sole discretion, may
suspend any conversion rights if such opinion is no longer available.
(F) As to any matter with respect to which a separate vote of any
Ohio Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Ohio Class shall apply in lieu of single Ohio Class voting, and, if
permitted by the Investment Company Act or any rules, regulations or
orders thereunder and the Maryland General Corporation Law, the Ohio
Classes shall vote together as a single Ohio Class on any such matter
that shall have the same effect on each such Ohio Class. As to any
matter that does not affect the interest of a particular Ohio Class,
only the holders of shares of the affected Ohio Class shall be
entitled to vote.
TWELFTH: (a) The total number of shares of capital stock of all sub-classes
of the Oregon Municipal Class of the Corporation (the "Oregon Series") which the
Corporation has authority to issue is 100,000,000 shares, which were previously
classified by the Board of Directors of the Corporation into two classes
designated as Class A Common Stock and Class
-23-
<PAGE>
D Common Stock of the Oregon Series. The number of authorized shares of Class A
Common Stock and Class D Common Stock of the Oregon Series each consisted of the
sum of x and y, where x equaled the issued and outstanding shares of such
sub-class and y equaled one-half of the authorized but unissued shares of Common
Stock of all sub-classes; provided that at all times the aggregate authorized,
issued and outstanding shares of Class A and Class D Common Stock of the Oregon
Series shall not exceed the authorized number of shares of Common Stock of the
Oregon Series; and, in the event application of the formula above would have
resulted, at any time, in fractional shares, the applicable number of authorized
shares of each class was to have been rounded down to the nearest whole number
of shares of such sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the Oregon Series into the following subclasses, has provided
for the issuance of shares of such subclasses and has set the following terms of
such subclasses:
(1) The total number of shares of all classes of stock which the
Oregon Series has authority to issue is 100,000,000 shares of common stock
("Shares") of the par value of $.001 each having an aggregate par value of
$100,000. The Common Stock of the Oregon Series shall have three subclasses
of shares, which shall be designated Class A Common Stock, Class C Common
Stock and Class D Common Stock. The number of authorized shares of Class A
Common Stock, of Class C Common Stock and of Class D Common Stock of the
Oregon Series shall each consist of the sum of x and y, where x equals the
issued and outstanding shares of such subclass and y equals one-third of
the authorized but unissued shares of Common Stock of all subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class A, Class C and Class D Common Stock of the Oregon Series
shall not exceed the authorized number of shares of Common Stock of the
Oregon Series (i.e., 100,000,000 shares of Common Stock until changed by
further action of the Board of Directors in accordance with Section 2-208.1
of the Maryland General Corporation Law, or any successor provision); and,
in the event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Any subclass of Common Stock of the Oregon Series shall be referred to
herein individually as a "Oregon Class" and collectively, together with any
further subclass or sub classes from time to time established, as the
"Oregon Classes".
(2) All Oregon Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act and applicable rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
-24-
<PAGE>
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular Oregon Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the Oregon Classes) shall be borne by that
Oregon Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Oregon Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of Oregon Series, shares of a particular
Oregon Class may be automatically converted into shares of another
Oregon Class; provided, however, that such conversion shall be subject
to the continuing availability of an opinion of counsel to the effect
that such conversion does not constitute a taxable event under Federal
income tax law. The Board of Directors, in its sole discretion, may
suspend any conversion rights if such opinion is no longer available.
(F) As to any matter with respect to which a separate vote of any
Oregon Class is required by the Investment Company Act or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
Oregon Class shall apply in lieu of single Oregon Class voting, and,
if permitted by the Investment Company Act or any rules, regulations
or orders thereunder and the Maryland General Corporation Law, the
Oregon Classes shall vote together as a single Oregon Class on any
such matter that shall have the same effect on each such Oregon Class.
As to any matter that does not affect the interest of a particular
Oregon Class, only the holders of shares of the affected Oregon Class
shall be entitled to vote.
THIRTEENTH: (a) The total number of shares of capital stock of all
sub-classes of the South Carolina Municipal Class of the Corporation (the "South
Carolina Series") which the Corporation has authority to issue is 100,000,000
shares, which were previously classified by the
-25-
<PAGE>
Board of Directors of the Corporation into two classes designated as Class A
Common Stock and Class D Common Stock of the South Carolina Series. The number
of authorized shares of Class A Common Stock and Class D Common Stock of the
South Carolina Series each consisted of the sum of x and y, where x equaled the
issued and outstanding shares of such sub-class and y equaled one-half of the
authorized but unissued shares of Common Stock of all sub-classes; provided that
at all times the aggregate authorized, issued and outstanding shares of Class A
and Class D Common Stock of the South Carolina Series shall not exceed the
authorized number of shares of Common Stock of the South Carolina Series; and,
in the event application of the formula above would have resulted, at any time,
in fractional shares, the applicable number of authorized shares of each class
was to have been rounded down to the nearest whole number of shares of such
sub-class.
(b): Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Class A Common Stock and Class
D Common Stock of the South Carolina Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of all classes of stock which the South
Carolina Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the South Carolina Series shall have
three subclasses of shares, which shall be designated Class A Common Stock,
Class C Common Stock and Class D Common Stock. The number of authorized
shares of Class A Common Stock, of Class C Common Stock and of Class D
Common Stock of the South Carolina Series shall each consist of the sum of
x and y, where x equals the issued and outstanding shares of such subclass
and y equals one-third of the authorized but unissued shares of Common
Stock of all subclasses; provided that at all times the aggregate
authorized, issued and outstanding shares of Class A, Class C and Class D
Common Stock of the South Carolina Series shall not exceed the authorized
number of shares of Common Stock of the South Carolina Series (i.e.,
100,000,000 shares of Common Stock until changed by further action of the
Board of Directors in accordance with Section 2-208.1 of the Maryland
General Corporation Law, or any successor provision); and, in the event
application of the formula above would result, at any time, in fractional
shares, the applicable number of authorized shares of each class shall be
rounded down to the nearest whole number of shares of such class. Any
subclass of Common Stock of the South Carolina Series shall be referred to
herein individually as a "South Carolina Class" and collectively, together
with any further subclass or sub classes from time to time established, as
the "South Carolina Classes".
(2) All South Carolina Classes shall represent the same interest in
the Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter of
the Corporation to the contrary:
(A) Class A shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the
-26-
<PAGE>
Investment Company Act and applicable rules and regulations of the
National Association of Securities Dealers, Inc. (the "NASD").
(B) Class C shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(C) Class D shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(D) Expenses related solely to a particular South Carolina Class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated,
which may differ between the South Carolina Classes) shall be borne by
that South Carolina Class and shall be appropriately reflected (in the
manner determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
South Carolina Class.
(E) At such time as shall be permitted under the Investment
Company Act, any applicable rules and regulations thereunder and the
provisions of any exemptive order applicable to the Corporation, and
as may be determined by the Board of Directors and disclosed in the
then current prospectus of South Carolina Series, shares of a
particular South Carolina Class may be automatically converted into
shares of another South Carolina Class; provided, however, that such
conversion shall be subject to the continuing availability of an
opinion of counsel to the effect that such conversion does not
constitute a taxable event under Federal income tax law. The Board of
Directors, in its sole discretion, may suspend any conversion rights
if such opinion is no longer available.
(F) As to any matter with respect to which a separate vote of any
South Carolina Class is required by the Investment Company Act or by
the Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
subsection (D) above), such requirement as to a separate vote by the
South Carolina Class shall apply in lieu of single South Carolina
Class voting, and, if permitted by the Investment Company Act or any
rules, regulations or orders thereunder and the Maryland General
Corporation Law, the South Carolina Classes shall vote together as a
single South Carolina Class on any such matter that shall have the
same effect on each such South Carolina Class. As to any matter that
does not affect the interest of a particular South Carolina Class,
only the holders of shares of the affected South Carolina Class shall
be entitled to vote.
-27-
<PAGE>
FOURTEENTH: These Articles Supplementary do not change the total number of
authorized shares of the Corporation.
IN WITNESS WHEREOF, SELIGMAN MUNICIPAL FUND SERIES, INC. has caused these
Articles Supplementary to be signed in its name and on its behalf by its
President and witnessed by its Secretary, and each of said officers of the
Corporation has also acknowledged these Articles Supplementary to be the
corporate act of the Corporation and has stated under penalties of perjury that
to the best of his knowledge, information and belief that the matters and facts
set forth with respect to approval are true in all material respects, all on May
24, 1999.
SELIGMAN MUNICIPAL FUND SERIES, INC.
By: /s/ Brian T. Zino
--------------------------------
Brian T. Zino, President
Witness:
/s/ Frank J. Nasta
- ---------------------------------
Frank J. Nasta, Secretary
-28-
SULLIVAN & CROMWELL
May 27, 1999
Seligman Municipal Fund Series, Inc.,
100 Park Avenue,
New York, N.Y. 10017.
Dear Sirs:
In connection with Post-Effective Amendment No.35 to the Registration
Statement on Form N-1A (File No. 2-86008) of Seligman Municipal Fund Series,
Inc., a Maryland corporation (the "Fund"), which you expect to file under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to an
indefinite number of shares of capital stock, par value $0.001 per share, of the
class designated as Class C shares (the "Shares") of the series of the Fund
designated as 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
(collectively, the "Series"), we, as your counsel, have examined such corporate
records, certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.
The number of shares of each class of capital stock that each Series is
authorized to issue at any time is determined by adding to the number of shares
of such class then outstanding additional authorized shares in an amount
determined according to a formula set forth in the Fund's charter. The formula
allocates to each class an equal portion of the number of shares representing
the difference between the number of shares that the Series is authorized to
issue and the total number of shares of all classes of such Series outstanding
at such time.
<PAGE>
Upon the basis of such examination, we advise you that, in our opinion, the
Fund is authorized to issue the number of Shares of each Series determined in
accordance with the charter of the Fund as described above and, when the
Post-Effective Amendment referred to above has become effective under the
Securities Act and the Shares have been issued (a) for at least the par value
thereof in accordance with the Registration Statement referred to above, (b) so
as not to exceed the then authorized number of Shares of such Series and (c) in
accordance with the authorization of the Board of Directors, the Shares will be
duly and validly issued, fully paid and non-assessable.
The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of the State of Maryland, and we are expressing
no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment referred to above. 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.
Very truly yours,
SULLIVAN & CROMWELL
-2-
CONSENT OF INDEPENDENT AUDITORS
Seligman High Income Fund Series:
We consent to the use in Post-Effective Amendment No. 27 to Registration
Statement No. 2-93076 of our reports dated January 29, 1999, appearing in the
Annual Reports to Shareholders for the year ended December 31, 1998, which are
incorporated by reference in the Statement of Additional Information, which is
included in such Registration Statement, and to the references to us under the
captions "Financial Highlights" in each of the Prospectuses and "General
Information" in the Statement of Additional Information, which are also included
in such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
May 26, 1999
May 18, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 35 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 Colorado
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 "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.
/s/ Ireland, Stapleton, Pryor & Pascoe, P.C.
KING & SPALDING
191 Peachtree Street
Atlanta, Georgia 30303-1763
Telephone: 404/572-4600
Facsimile: 404/572-5100
May 24, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 35 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. Based upon such review, our opinion
concerning Georgia taxes as filed with the Securities and Exchange Commission
remains unchanged.
We consent to the filing of this letter as an exhibit to the Registration
Statement and to the reference to us under the heading "Georgia Taxes." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/KING & SPAULDING
KING & SPAULDING
LISKOW & LEWIS
A PROFESSIONAL LAW COPORATION
ATTORNEYS AT LAW
Writer's Direct Dial No. (504) 556-4112
New Orleans, Louisiana
May 26, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 100017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 35 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 Louisiana
Taxes in the Registration Statement. Subject to such review, our opinion as
delivered to you and as filed with the Securities and Exchange Commission
remains unchanged.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "Louisiana Taxes." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/ Robert S. Angelico
Robert S. Angelico
VENABLE, BAETJER AND HOWARD, LLP
Including professional corporations
Two Hopkins Plaza, Suite 1800
Baltimore, Maryland 21201-2978
(410)244-7400, Fax (410) 244-7742
www.venable.com
VENABLE
ATTORNEY AT LAW
May 19, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 35 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 Maryland
Taxes in the Registration Statement. Subject to such review, our opinion as
delivered to you and as filed with the Securities and Exchange Commission
remains unchanged.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "Maryland Taxes." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/S/ VENABLE, BAETJER AND HOWARD, LLP
Venable, Baetjer and Howard, LLP
PALMER & DODGE LLP
ONE BEACON STREET, BOSTON, MA 02108-3190
TELEPHONE: (617) 573-0100 FACSIMILE: (617) 227-4420
May 24, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment 35 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 LLP
PALMER & DODGE LLP
Dickinson
Wright PLLC
May 21, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 35 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 PLLC
Dickinson Wright PLLC
FAEGRE & BENSON LLP
2200 Norwest Center, 90 South Seventh Street
Minneapolis, Minnesota 55402-3901
TELEPHONE 612-336-3000
FACSIMILE 612-336-3026
May 18, 1999
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(g) of the Code. As such, you have
informed us that each of the classes of Seligman, including the Minnesota
Municipal Class, is, and intends to continue to qualify as, a separate regulated
investment company, and that Seligman has taken, and will take, all other action
so as to enable the Minnesota 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.
<PAGE>
Minn. Stat. ss.290.01, subd. 19, provides that the starting point for the
computation of Minnesota taxable income is federal taxable income, to which
various additions, subtractions, and modifications are then made. Minn. Stat.
ss.290.01, subd. 19(a), provides for certain additions in the case of
individuals, estates, and trusts, one of which is the following:
(1)(ii) exempt-interest dividends as defined in section 852(b)(5) of
the Internal Revenue Code, except the portion of the exempt- interest
dividends derived from interest income on obligations of the state of
Minnesota or its political or governmental subdivisions, municipalities,
governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all
shareholders represents 95 percent or more of the exempt-interest dividends
that are paid by the regulated investment company as defined in section
851(a) of the Internal Revenue Code, or the fund of the regulated
investment company as defined in section 851(g) 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 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
- ----------
(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>
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 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 generally 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, generally will be subject to the regular Minnesota personal
income tax.
In addition to imposing a regular personal income tax, Minnesota imposes an
alternative minimum tax (see Minn. Stat. ss.290.091) on individuals, estates,
and trusts that is based, in part, on such taxpayers' federal alternative
minimum taxable income, which includes federal tax preference items. The Code
provides that interest on specified private activity bonds is a federal tax
preference item, and that an exempt-interest dividend of a regulated investment
company constitutes a federal tax preference item to the extent of its
proportionate share of the interest on such private activity bonds. Accordingly,
exempt-interest dividends that are attributable to such private activity bond
interest, even though they are also attributable to the specified obligations
described in this letter, will be included in the base upon which such Minnesota
alternative minimum tax is computed. In addition, the entire portion of
exempt-interest dividends that is attributable to interest other than interest
on the specified obligations generally 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,
generally 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 reliance on such opinion will not be
challenged by the Department or rejected by a court.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
registration statement to be filed on or about May 24, 1999, 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
BRYAN CAVE LLP
3500 ONE KANSAS CITY PLACE
1200 MAIN STREET
KANSAS CITY, MISSOURI 64105-2100
May 21, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, NY 10017
RE: Seligman Municipal Fund Series/Missouri Fund
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 35 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 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.
Very truly yours,
/s/ Bryan Cave LLP
Bryan Cave LLP
[LETTERHEAD OF SULLIVAN & CROMWELL]
May 28, 1999
Seligman Municipal Fund Series, Inc.,
100 Park Avenue, 8th Floor,
New York, New York 10017.
Ladies and Gentlemen:
We hereby consent to the reference to us in the Registration Statement for
Seligman Municipal Fund Series, Inc. 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
Squire, Sanders & Dempsey
L.L.P.
May 17, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Re: Seligman Municipal Fund Series, Inc. - Post-Effective Amendment No. 35
Ladies and Gentlemen:
We have acted as Ohio tax counsel with respect to Post-Effective Amendment
No. 35 to the Registration Statement (the "Registration Statement") on Form N-1A
for Seligman Municipal Fund Series, Inc. (the "Fund"). We have reviewed the
material under the heading "Taxation of the Funds - Ohio Taxes" in the Statement
of Additional Information that is a part of 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 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
"Taxation of the Funds - Ohio Taxes" in the Statement of Additional Information
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 - Portland, Oregon 97204-3795
& WYATT Telephone: 503-222-9981 - Fax: 503-796-2900 - Telex: 650-686-1360
P.C.
ATTORNEYS
AT LAW
May 18 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Re: Post-Effective Amendment No. 35
Seligman Municipal Fund Series, Inc.
Our File No. 042878-042525
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 35 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 Oregon
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 "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.
Yours very truly,
/s/Schwabe Willimason & Wyatt, PC
Schwabe Willimason & Wyatt, PC
Sinkler & Boyd, P.A.
Attorney at Law
1426 Main Street, Suite 1200
Columbia, South Carolina 29201-2834
May 13, 1999
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 35 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 remains unchanged.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "South Carolina Taxes."
In giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/Sinkler & Boyd, P.A.
SINKLER & BOYD, P.A.
INVESTMENT LETTER
SELIGMAN MUNICIPAL FUND SERIES, INC.
Seligman Municipal Fund Series, Inc. (the "Fund"), an open-end,
non-diversified management investment company, and the undersigned
("Purchaser"), intending to be legally bound, hereby agree as follows:
1. The Fund hereby sells to Purchaser and Purchaser purchases 1 Class C share
of Capital Stock (par value $.001) of each of Seligman National Municipal
Series, Seligman Colorado Municipal Series, Seligman Georgia Municipal
Series, Seligman Louisiana Municipal Series, Seligman Maryland Municipal
Series, Seligman Massachusetts Municipal Series, Seligman Michigan
Municipal Series, Seligman Minnesota Municipal Series, Seligman Missouri
Municipal Series, Seligman New York Municipal Series, Seligman Ohio
Municipal Series, Seligman Oregon Municipal Series, and Seligman South
Carolina Municipal Series, each a series of the Fund, (the "Shares") each
at a price equivalent to the net asset value of one Class D share of the
same Series as of the close of business on May 27, 1999. The Fund hereby
acknowledges receipt from the Purchaser of funds in such amount in full
payment for the Shares.
2. Purchaser represents and warrants to the Fund that the Shares are being
acquired for investment and not with a view to distribution thereof, and
that Purchaser has no present intention to redeem or dispose of the Shares.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
28tfhday of May, 1999.
SELIGMAN MUNICIPAL FUND SERIES, INC.
By: ________________________________
Name: Lawrence P. Vogel
Title: Vice President
J. & W. SELIGMAN & CO. INCORPORATED
By: ________________________________
Name: Brian T. Zino
Title: President
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
As amended and restated through June 1, 1999
Section 1. Seligman Municipal Fund Series, Inc. (the "Fund") will pay fees
to Seligman Advisors, Inc., the principal underwriter of its shares (the
"Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class C and Class D shares of the Fund. As a result,
the Fund is adopting this Administration, Shareholder Services and Distribution
Plan (the "Plan") pursuant to Section 12(b) of the Investment Company Act of
1940, as amended (the "Act") and Rule 12b-1 thereunder.
Section 2. Pursuant to this Plan, each Series of the Fund may pay to the
Distributor a shareholder servicing fee of up to .25% on an annual basis of the
average daily net assets of the Series (payable quarterly with respect to Class
A and monthly with respect to Class C and Class D) and a distribution fee up to
.75% on an annual basis, payable monthly, of the average daily net assets of the
Series attributable to Class C and Class D shares. Such fees will be used in
their entirety by the Distributor to make payments for administration,
shareholder services and distribution assistance, including, but not limited to
(i) compensation to securities dealers and other organizations (each, a "Service
Organization" and collectively, the "Service Organizations"), for providing
distribution assistance with respect to assets invested in the Series, (ii)
compensation to Service Organizations for providing administration, accounting
and other shareholder services with respect to the Series' shareholders, and
(iii) otherwise promoting the sale of shares of the 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 the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Series. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Series shall be
deemed to include compensation for such services. The fees received from the
Series hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of and Series of the Fund may not be used to
subsidize the sale of shares of any other class. The fees payable to Service
Organizations from time to time shall, within such limits, be determined by the
Directors of the Fund.
Section 3. J. & W. Seligman & Co. Incorporated, the Fund's investment
manager (the "Manager"), in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Fund.
1
<PAGE>
Section 4. This Plan shall continue in effect through December 31 of each
year so long as such continuance is specifically approved at least annually by
vote of a majority of both (a) the Directors of the Fund and (b) the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval.
Section 5. The Distributor shall provide to the Fund's Directors, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated by the Fund with respect to any
class at any time by vote of a majority of the Qualified Directors, or by vote
of a majority of the outstanding voting securities of such class. If this Plan
is terminated in respect of a class, no amounts (other than amounts accrued but
not yet paid) would be owed by the Fund to the Distributor with respect to such
class.
Section 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Directors of the Fund
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval, provided, however, that the identity of a
particular Service Organization executing any such agreement may be ratified by
such a vote within 90 days of such execution. Any agreement related to this Plan
shall provide:
A. That such agreement may be terminated in respect of any class of any
Series of the Fund at any time, without payment of any penalty, by
vote of a majority of the Qualified Directors or by vote of a majority
of the outstanding voting securities of the class, on not more than 60
days' written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 8. This Plan may not be amended to increase materially the amount
of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Fund and (b) the Qualified Directors,
cast in person at a meeting called for the purpose of voting on such approval.
Section 9. The Fund is not obligated to pay any administration, shareholder
services or distribution expense in excess of the fee described in Section 2
hereof, and, in the case of Class A shares, any expenses of administration,
shareholder services and distribution of Class A shares of and Series of the
Fund accrued in one fiscal year of the Fund may not be paid from administration,
shareholder services and distribution fees received from the Fund in respect of
Class A shares in any other fiscal year.
2
<PAGE>
Section 10. As used in this Plan, (a) the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission and (b) the term "Qualified Directors" shall mean the
Directors of the Fund who are not "interested persons" of the Fund and have no
direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan.
3
SELIGMAN GROUP OF MUTUAL FUNDS
Plan for Multiple Classes of Shares (three classes)
THIS PLAN, as it may be amended from time to time, sets forth the separate
arrangement and expense allocation of each class of shares (a "Class") of each
registered open-end management investment company, or series thereof, in the
Seligman Group of Mutual Funds that offers three classes of shares (each, a
"Fund"). The Plan has been adopted pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940, as amended (the "Act"), by a majority of the
Board of Directors or Trustees, as applicable ("Directors"), of each Fund listed
on Schedule I hereto, including a majority of the Directors who are not
interested persons of such Fund within the meaning of Section 2(a)(19) of the
Act ("Disinterested Directors"). Any material amendment to this Plan is subject
to the prior approval of the Board of Directors of each Fund to which it
relates, including a majority of the Disinterested Directors.
1. General
A. Any Fund may issue more than one Class of voting stock, provided that
each Class:
i. Shall have a different arrangement for shareholder services or
the distribution of securities or both, and shall pay all of the
expenses of that arrangement;
ii. May pay a different share of other expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are actually
incurred in a different amount by that Class, or if the Class
receives services of a different kind or to a different degree
than other Classes of the same Fund ("Class Level Expenses");
iii. May pay a different advisory fee to the extent that any
difference in amount paid is the result of the application of the
same performance fee provisions in the advisory contract of the
Fund to the different investment performance of each Class;
iv. Shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement;
-1-
<PAGE>
v. Shall have separate voting rights on any matter submitted to
shareholders in which the interests of one Class differ from the
interests of any other Class; and
vi. Shall have in all other respects the same rights and obligations
as each other Class of the Fund.
B. i. Except as expressly contemplated by this paragraph B., no types
or categories of expenses shall be designated Class Level
Expenses.
ii. The Directors recognize that certain expenses arising in certain
sorts of unusual situations are properly attributable solely to
one Class and therefore should be borne by that Class. These
expenses ("Special Expenses") may include, for example: (i) the
costs of preparing a proxy statement for, and holding, a special
meeting of shareholders to vote on a matter affecting only one
Class; (ii) the costs of holding a special meeting of Directors
to consider such a matter; (iii) the costs of preparing a special
report relating exclusively to shareholders of one Class; and
(iv) the costs of litigation affecting one Class exclusively. J.
& W. Seligman & Co. Incorporated (the "Manager") shall be
responsible for identifying expenses that are potential Special
Expenses.
iii. Subject to clause iv. below, any Special Expense identified by
the Manager shall be treated as a Class Level Expense.
iv. Any Special Expense identified by the Manager that is material to
the Class in respect of which it is incurred shall be submitted
by the Manager to the Directors of the relevant Fund on a case by
case basis with a recommendation by the Manager as to whether it
should be treated as a Class Level Expense. If approved by the
Directors, such Special Expense shall be treated as a Class Level
Expense of the affected class.
C. i. Realized and unrealized capital gains and losses of a Fund shall
be allocated to each class of that Fund on the basis of the
aggregate net asset value of all outstanding shares ("Record
Shares") of the Class in relation to the aggregate net asset
value of Record Shares of the Fund.
-2-
<PAGE>
ii. Income and expenses of a Fund not charged directly to a
particular Class shall be allocated to each Class of that Fund on
the following basis:
a. For periodic dividend funds, on the basis of the aggregate
net asset value of Record Shares of each Class in relation
to the aggregate net asset value of Record Shares of the
Fund.
b. For daily dividend funds, on the basis of the aggregate net
asset value of Settled Shares of each Class in relation to
the aggregate net asset value of Settled Shares of the Fund.
"Settled Shares" means Record Shares minus the number of
shares of that Class or Fund that have been issued but for
which payment has not cleared and plus the number of shares
of that Class or Fund which have been redeemed but for which
payment has not yet been issued.
D. On an ongoing basis, the Directors, pursuant to their fiduciary
responsibilities under the Act and otherwise, will monitor each Fund
for the existence of any material conflicts among the interests of its
several Classes. The Directors, including a majority of the
Disinterested Directors, shall take such action as is reasonably
necessary to eliminate any such conflicts that may develop. The
Manager and Seligman Financial Services, Inc. (the "Distributor") will
be responsible for reporting any potential or existing conflicts to
the Directors. If a conflict arises, the Manager and the Distributor
will be responsible at their own expense for remedying such conflict
by appropriate steps up to and including separating the classes in
conflict by establishing a new registered management company to
operate one of the classes.
E. The plan of each Fund adopted pursuant to Rule 12b-1 under the Act
(the "Rule 12b-1 Plan") provides that the Directors will receive
quarterly and annual statements complying with paragraph (b)(3)(ii) of
Rule 12b-1, as it may be amended from time to time. To the extent that
the Rule 12b-1 Plan in respect of a specific Class is a reimbursement
plan, then only distribution expenditures properly attributable to the
sale of shares of that Class will be used in the statements to support
the Rule 12b-1 fee charged to shareholders of such Class. In such
cases expenditures not related to the sale of a specific Class will
not be presented to the Directors to support Rule 12b-1 fees charged
to shareholders of such Class. The statements, including the
allocations
-3-
<PAGE>
upon which they are based, will be subject to the review of the
Disinterested Directors.
F. Dividends paid by a Fund with respect to each Class, to the extent any
dividends are paid, will be calculated in the same manner, at the same
time and on the same day and will be in the same amount, except that
fee payments made under the Rule 12b-1 Plan relating to the Classes
will be borne exclusively by each Class and except that any Class
Level Expenses shall be borne by the applicable Class.
G. The Directors of each Fund hereby instruct such Fund's independent
auditors to review expense allocations each year as part of their
regular audit process, to inform the Directors and the Manager of any
irregularities detected and, if specifically requested by the
Directors, to prepare a written report thereon. In addition, if any
Special Expense is incurred by a Fund and is classified as a Class
Level Expense in the manner contemplated by paragraph B. above, the
independent auditors for such Fund, in addition to reviewing such
allocation, are hereby instructed to report thereon to the Audit
Committee of the relevant Fund and to the Manager. The Manager will be
responsible for taking such steps as are necessary to remedy any
irregularities so detected, and will do so at its own expense to the
extent such irregularities should reasonably have been detected and
prevented by the Manager in the performance of its services to the
Fund.
2. Specific Arrangements for Each Class
The following arrangements regarding shareholder services, expense
allocation and other indicated matters shall be in effect with respect to the
Class A shares, Class C shares and Class D shares of each Fund. The following
descriptions are qualified by reference to the more detailed description of such
arrangements set forth in the prospectus statement of additional information
relating to each Fund, as the same may from time to time be amended or
supplemented (collectively for each Fund, the "Relevant Prospectus"), provided
that no Relevant Prospectus may modify the provisions of this Plan applicable to
Rule 12b-1 fees or Class Level Expenses.
(a) Class A Shares
i. Class A shares are subject to an initial sales load which varies with
the size of the purchase, to a maximum of 4.75% of the public offering
price. Reduced sales loads shall apply in certain
-4-
<PAGE>
circumstances. Class A shares of Seligman Cash Management Fund, Inc.
shall not be subject to an initial sales load.
ii. Class A shares shall be subject to a Rule 12b-1 service fee of up to
0.25% of average daily net assets.
iii. Special Expenses attributable to the Class A shares, except those
determined by the Directors not to be Class Level Expenses of the
Class A shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class A shares. No other
expenses shall be treated as Class Level Expenses of the Class A
shares.
iv. The Class A shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.
(b) Class C Shares
i. Class C shares are subject to an initial sales load which varies with
the size of the purchase, to a maximum of 1.00% of the public offering
price, and a CDSL of 1% of the lesser of the current net asset value
or the original purchase price in certain cases if the shares are
redeemed within eighteen months of purchase. Reduced sales loads shall
apply in certain circumstances.
ii. Class C shares shall be subject to a Rule 12b-1 fee of up to 1.00% of
average daily net assets, consisting of an asset-based distribution
fee of up to 0.75% and a service fee of up to 0.25%.
iii. Special Expenses attributable to the Class C shares, except those
determined by the Directors not to be Class Level Expenses of the
Class C shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class C shares. No other
expenses shall be treated as Class Level Expenses of the Class C
shares.
iv. The Class C shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.
-5-
<PAGE>
(c) Class D Shares
i. Class D shares are sold without an initial sales load but are subject
to a CDSL of 1% of the lesser of the current net asset value or the
original purchase price in certain cases if the shares are redeemed
within one year.
ii. Class D shares shall be subject to a Rule 12b-1 fee of up to 1.00% of
average daily net assets, consisting of an asset-based distribution
fee of up to 0.75% and a service fee of up to 0.25%.
iii. Special Expenses attributable to the Class D shares, except those
determined by the Directors not to be Class Level Expenses of the
Class D shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class D shares. No other
expenses shall be treated as Class Level Expenses of the Class D
shares.
iv. The Class D shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.
-6-
<PAGE>
Schedule I
Seligman National Municipal Fund
Seligman California Quality Municipal Fund
Seligman California High-Yield Municipal Fund
Seligman Colorado Municipal Fund
Seligman Florida Municipal Fund
Seligman Georgia Municipal Fund
Seligman Louisiana Municipal Fund
Seligman Maryland Municipal Fund
Seligman Massachusetts Municipal Fund
Seligman Michigan Municipal Fund
Seligman Minnesota Municipal Fund
Seligman Missouri Municipal Fund
Seligman New Jersey Municipal Fund, Inc.
Seligman New York Municipal Fund
Seligman North Carolina Municipal Fund
Seligman Ohio Municipal Fund
Seligman Oregon Municipal Fund
Seligman Pennsylvania Municipal Fund Series
Seligman South Carolina Municipal Fund
-7-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>091
<NAME> SELIGMAN MUNICIPAL FUND SERIES - COLORADO CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 44521
<INVESTMENTS-AT-VALUE> 46964
<RECEIVABLES> 892
<ASSETS-OTHER> 126
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 47983
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 203
<TOTAL-LIABILITIES> 203
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45356
<SHARES-COMMON-STOCK> 6234<F1>
<SHARES-COMMON-PRIOR> 5968<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (20)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2443
<NET-ASSETS> 46896<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1263<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (210)<F1>
<NET-INVESTMENT-INCOME> 1053<F1>
<REALIZED-GAINS-CURRENT> 96
<APPREC-INCREASE-CURRENT> (817)
<NET-CHANGE-FROM-OPS> 344
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1053)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 662<F1>
<NUMBER-OF-SHARES-REDEEMED> (474)<F1>
<SHARES-REINVESTED> 78<F1>
<NET-CHANGE-IN-ASSETS> 1853
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (116)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 116<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 210<F1>
<AVERAGE-NET-ASSETS> 46725<F1>
<PER-SHARE-NAV-BEGIN> 7.64<F1>
<PER-SHARE-NII> .17<F1>
<PER-SHARE-GAIN-APPREC> (.12<F1>
<PER-SHARE-DIVIDEND> (.17)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.52<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>094
<NAME> SELIGMAN MUNICIPAL FUND SERIES - COLORADO CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 44521
<INVESTMENTS-AT-VALUE> 46964
<RECEIVABLES> 892
<ASSETS-OTHER> 126
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 47983
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 203
<TOTAL-LIABILITIES> 203
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45356
<SHARES-COMMON-STOCK> 117<F1>
<SHARES-COMMON-PRIOR> 45<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (20)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2443
<NET-ASSETS> 884<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (6)<F1>
<NET-INVESTMENT-INCOME> 12<F1>
<REALIZED-GAINS-CURRENT> 96
<APPREC-INCREASE-CURRENT> (817)
<NET-CHANGE-FROM-OPS> 344
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 83<F1>
<NUMBER-OF-SHARES-REDEEMED> (12)<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> 1853
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (116)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6<F1>
<AVERAGE-NET-ASSETS> 679<F1>
<PER-SHARE-NAV-BEGIN> 7.63<F1>
<PER-SHARE-NII> .14<F1>
<PER-SHARE-GAIN-APPREC> (.11)<F1>
<PER-SHARE-DIVIDEND> (.14)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.52<F1>
<EXPENSE-RATIO> 1.80<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>151
<NAME> SELIGMAN MUNICIPAL FUND SERIES-SOUTH CAROLINA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 102849
<INVESTMENTS-AT-VALUE> 109420
<RECEIVABLES> 1941
<ASSETS-OTHER> 127
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 111489
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 465
<TOTAL-LIABILITIES> 465
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104463
<SHARES-COMMON-STOCK> 12774<F1>
<SHARES-COMMON-PRIOR> 12682<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6571
<NET-ASSETS> 104543<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2814<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (439)<F1>
<NET-INVESTMENT-INCOME> 2375<F1>
<REALIZED-GAINS-CURRENT> 146
<APPREC-INCREASE-CURRENT> (1951)
<NET-CHANGE-FROM-OPS> 674
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2375)<F1>
<DISTRIBUTIONS-OF-GAINS> (835)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 496<F1>
<NUMBER-OF-SHARES-REDEEMED> (646)<F1>
<SHARES-REINVESTED> 242<F1>
<NET-CHANGE-IN-ASSETS> (898)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 724
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 262<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 439<F1>
<AVERAGE-NET-ASSETS> 105182<F1>
<PER-SHARE-NAV-BEGIN> 8.38<F1>
<PER-SHARE-NII> .19<F1>
<PER-SHARE-GAIN-APPREC> (.13)<F1>
<PER-SHARE-DIVIDEND> (.19)<F1>
<PER-SHARE-DISTRIBUTIONS> (.07)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.18<F1>
<EXPENSE-RATIO> .83<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>154
<NAME> SELIGMAN MUNICIPAL FUND SERIES-SOUTH CAROLINA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 102849
<INVESTMENTS-AT-VALUE> 109420
<RECEIVABLES> 1941
<ASSETS-OTHER> 127
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 111489
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 465
<TOTAL-LIABILITIES> 465
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104463
<SHARES-COMMON-STOCK> 793<F1>
<SHARES-COMMON-PRIOR> 668<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6571
<NET-ASSETS> 6481<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 154<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (50)<F1>
<NET-INVESTMENT-INCOME> 104<F1>
<REALIZED-GAINS-CURRENT> 146
<APPREC-INCREASE-CURRENT> (1951)
<NET-CHANGE-FROM-OPS> 674
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (104)<F1>
<DISTRIBUTIONS-OF-GAINS> (45)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 153<F1>
<NUMBER-OF-SHARES-REDEEMED> (42)<F1>
<SHARES-REINVESTED> 14<F1>
<NET-CHANGE-IN-ASSETS> (898)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 724
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50<F1>
<AVERAGE-NET-ASSETS> 5766<F1>
<PER-SHARE-NAV-BEGIN> 8.38<F1>
<PER-SHARE-NII> .15<F1>
<PER-SHARE-GAIN-APPREC> (.13)<F1>
<PER-SHARE-DIVIDEND> (.15)<F1>
<PER-SHARE-DISTRIBUTIONS> (.07)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.18<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>131
<NAME> SELIGMAN MUNICIPAL FUND SERIES-GEORGIA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 45867
<INVESTMENTS-AT-VALUE> 49798
<RECEIVABLES> 789
<ASSETS-OTHER> 102
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 50690
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 969
<TOTAL-LIABILITIES> 969
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45795
<SHARES-COMMON-STOCK> 5718<F1>
<SHARES-COMMON-PRIOR> 5777<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3931
<NET-ASSETS> 47043<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1280<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (214)<F1>
<NET-INVESTMENT-INCOME> 1066<F1>
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (669)
<NET-CHANGE-FROM-OPS> 447
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1066)<F1>
<DISTRIBUTIONS-OF-GAINS> (257)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 234<F1>
<NUMBER-OF-SHARES-REDEEMED> (402)<F1>
<SHARES-REINVESTED> 109<F1>
<NET-CHANGE-IN-ASSETS> (1512)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 267
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 120<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 214<F1>
<AVERAGE-NET-ASSETS> 48050<F1>
<PER-SHARE-NAV-BEGIN> 8.38<F1>
<PER-SHARE-NII> .18<F1>
<PER-SHARE-GAIN-APPREC> (.10)<F1>
<PER-SHARE-DIVIDEND> (.18)<F1>
<PER-SHARE-DISTRIBUTIONS> (.05)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.23<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>134
<NAME> SELIGMAN MUNICIPAL FUND SERIES-GEORGIA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 45867
<INVESTMENTS-AT-VALUE> 49798
<RECEIVABLES> 789
<ASSETS-OTHER> 102
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 50690
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 969
<TOTAL-LIABILITIES> 969
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45795
<SHARES-COMMON-STOCK> 324<F1>
<SHARES-COMMON-PRIOR> 334<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3931
<NET-ASSETS> 2678<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 75<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (25)<F1>
<NET-INVESTMENT-INCOME> 50<F1>
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (669)
<NET-CHANGE-FROM-OPS> 447
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (50)<F1>
<DISTRIBUTIONS-OF-GAINS> (15)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 56<F1>
<NUMBER-OF-SHARES-REDEEMED> (72)<F1>
<SHARES-REINVESTED> 6<F1>
<NET-CHANGE-IN-ASSETS> (1512)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 267
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 25<F1>
<AVERAGE-NET-ASSETS> 2812<F1>
<PER-SHARE-NAV-BEGIN> 8.40<F1>
<PER-SHARE-NII> .15<F1>
<PER-SHARE-GAIN-APPREC> (.10)<F1>
<PER-SHARE-DIVIDEND> (.15)<F1>
<PER-SHARE-DISTRIBUTIONS> (.05)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.25<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>071
<NAME> SELIGMAN MUNICIPAL FUND SERIES-LOUISIANA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 53841
<INVESTMENTS-AT-VALUE> 57204
<RECEIVABLES> 1310
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 58638
<PAYABLE-FOR-SECURITIES> 2748
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 541
<TOTAL-LIABILITIES> 3289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51854
<SHARES-COMMON-STOCK> 6592<F1>
<SHARES-COMMON-PRIOR> 6619<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 133
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3363
<NET-ASSETS> 54587<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1540<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (242)<F1>
<NET-INVESTMENT-INCOME> 1298<F1>
<REALIZED-GAINS-CURRENT> 138
<APPREC-INCREASE-CURRENT> (906)
<NET-CHANGE-FROM-OPS> 545
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1298)<F1>
<DISTRIBUTIONS-OF-GAINS> (742)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 98<F1>
<NUMBER-OF-SHARES-REDEEMED> (261)<F1>
<SHARES-REINVESTED> 136<F1>
<NET-CHANGE-IN-ASSETS> (1795)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 748
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 139<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 242<F1>
<AVERAGE-NET-ASSETS> 55788<F1>
<PER-SHARE-NAV-BEGIN> 8.51<F1>
<PER-SHARE-NII> .19<F1>
<PER-SHARE-GAIN-APPREC> (.12)<F1>
<PER-SHARE-DIVIDEND> (.19)<F1>
<PER-SHARE-DISTRIBUTIONS> (.11)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.28<F1>
<EXPENSE-RATIO> .87<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>074
<NAME> SELIGMAN MUNICIPAL FUND SERIES-LOUISIANA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 53841
<INVESTMENTS-AT-VALUE> 57204
<RECEIVABLES> 1310
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 58638
<PAYABLE-FOR-SECURITIES> 2748
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 541
<TOTAL-LIABILITIES> 3289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51854
<SHARES-COMMON-STOCK> 92<F1>
<SHARES-COMMON-PRIOR> 99<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 133
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3363
<NET-ASSETS> 762<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 22<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (7)<F1>
<NET-INVESTMENT-INCOME> 15<F1>
<REALIZED-GAINS-CURRENT> 138
<APPREC-INCREASE-CURRENT> (906)
<NET-CHANGE-FROM-OPS> 545
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15)<F1>
<DISTRIBUTIONS-OF-GAINS> (11)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7<F1>
<NUMBER-OF-SHARES-REDEEMED> (16)<F1>
<SHARES-REINVESTED> 2<F1>
<NET-CHANGE-IN-ASSETS> (1795)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 748
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15<F1>
<AVERAGE-NET-ASSETS> 785<F1>
<PER-SHARE-NAV-BEGIN> 8.50<F1>
<PER-SHARE-NII> .16<F1>
<PER-SHARE-GAIN-APPREC> (.11)<F1>
<PER-SHARE-DIVIDEND> (.16)<F1>
<PER-SHARE-DISTRIBUTIONS> (.11)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.28<F1>
<EXPENSE-RATIO> 1.78<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>021
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MASSACHUSETTS CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 98050
<INVESTMENTS-AT-VALUE> 104955
<RECEIVABLES> 1529
<ASSETS-OTHER> 142
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 106627
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 853
<TOTAL-LIABILITIES> 853
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98624
<SHARES-COMMON-STOCK> 12794<F1>
<SHARES-COMMON-PRIOR> 13227<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 245
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6905
<NET-ASSETS> 103400<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2820<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (441)<F1>
<NET-INVESTMENT-INCOME> 2379<F1>
<REALIZED-GAINS-CURRENT> 540
<APPREC-INCREASE-CURRENT> (2345)
<NET-CHANGE-FROM-OPS> 606
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2379)<F1>
<DISTRIBUTIONS-OF-GAINS> (643)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1428<F1>
<NUMBER-OF-SHARES-REDEEMED> (2088)<F1>
<SHARES-REINVESTED> 227<F1>
<NET-CHANGE-IN-ASSETS> (5021)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 357
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 266<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 441<F1>
<AVERAGE-NET-ASSETS> 106655<F1>
<PER-SHARE-NAV-BEGIN> 8.27<F1>
<PER-SHARE-NII> .18<F1>
<PER-SHARE-GAIN-APPREC> (.14)<F1>
<PER-SHARE-DIVIDEND> (.18)<F1>
<PER-SHARE-DISTRIBUTIONS> (.05)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.08<F1>
<EXPENSE-RATIO> .83<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>024
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MASSACHUSETTS CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 98050
<INVESTMENTS-AT-VALUE> 104955
<RECEIVABLES> 1529
<ASSETS-OTHER> 142
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 106627
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 853
<TOTAL-LIABILITIES> 853
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98624
<SHARES-COMMON-STOCK> 294<F1>
<SHARES-COMMON-PRIOR> 178<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 245
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6905
<NET-ASSETS> 2374<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 47<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (15)<F1>
<NET-INVESTMENT-INCOME> 32<F1>
<REALIZED-GAINS-CURRENT> 540
<APPREC-INCREASE-CURRENT> (2345)
<NET-CHANGE-FROM-OPS> 606
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (32)<F1>
<DISTRIBUTIONS-OF-GAINS> (9)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 143<F1>
<NUMBER-OF-SHARES-REDEEMED> (29)<F1>
<SHARES-REINVESTED> 2<F1>
<NET-CHANGE-IN-ASSETS> (5021)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 357
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15<F1>
<AVERAGE-NET-ASSETS> 1786<F1>
<PER-SHARE-NAV-BEGIN> 8.26<F1>
<PER-SHARE-NII> .14<F1>
<PER-SHARE-GAIN-APPREC> (.13)<F1>
<PER-SHARE-DIVIDEND> (.14)<F1>
<PER-SHARE-DISTRIBUTIONS> (.05)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.08<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>081
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MARYLAND CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 52012
<INVESTMENTS-AT-VALUE> 55863
<RECEIVABLES> 970
<ASSETS-OTHER> 67
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 56901
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 359
<TOTAL-LIABILITIES> 359
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52701
<SHARES-COMMON-STOCK> 6516<F1>
<SHARES-COMMON-PRIOR> 6598<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3851
<NET-ASSETS> 53490<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1502<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (241)<F1>
<NET-INVESTMENT-INCOME> 1261<F1>
<REALIZED-GAINS-CURRENT> 1
<APPREC-INCREASE-CURRENT> (572)
<NET-CHANGE-FROM-OPS> 750
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1261)<F1>
<DISTRIBUTIONS-OF-GAINS> (185)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 141<F1>
<NUMBER-OF-SHARES-REDEEMED> (331)<F1>
<SHARES-REINVESTED> 108<F1>
<NET-CHANGE-IN-ASSETS> (1477)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 185
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 136<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 241<F1>
<AVERAGE-NET-ASSETS> 54429<F1>
<PER-SHARE-NAV-BEGIN> 8.32<F1>
<PER-SHARE-NII> .19<F1>
<PER-SHARE-GAIN-APPREC> (.08)<F1>
<PER-SHARE-DIVIDEND> (.19)<F1>
<PER-SHARE-DISTRIBUTIONS> (.03)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.21<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>084
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MARYLAND CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 52012
<INVESTMENTS-AT-VALUE> 55863
<RECEIVABLES> 970
<ASSETS-OTHER> 67
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 56901
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 359
<TOTAL-LIABILITIES> 359
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52701
<SHARES-COMMON-STOCK> 371<F1>
<SHARES-COMMON-PRIOR> 375<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3851
<NET-ASSETS> 3052<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 89<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (29)<F1>
<NET-INVESTMENT-INCOME> 60<F1>
<REALIZED-GAINS-CURRENT> 1
<APPREC-INCREASE-CURRENT> (572)
<NET-CHANGE-FROM-OPS> 750
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (60)<F1>
<DISTRIBUTIONS-OF-GAINS> (11)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 43<F1>
<NUMBER-OF-SHARES-REDEEMED> (55)<F1>
<SHARES-REINVESTED> 8<F1>
<NET-CHANGE-IN-ASSETS> (1477)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 185
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29<F1>
<AVERAGE-NET-ASSETS> 3221<F1>
<PER-SHARE-NAV-BEGIN> 8.33<F1>
<PER-SHARE-NII> .15<F1>
<PER-SHARE-GAIN-APPREC> (.08)<F1>
<PER-SHARE-DIVIDEND> (.15)<F1>
<PER-SHARE-DISTRIBUTIONS> (.03)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.22<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>031
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MICHIGAN CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 130618
<INVESTMENTS-AT-VALUE> 139056
<RECEIVABLES> 2567
<ASSETS-OTHER> 63
<OTHER-ITEMS-ASSETS> 2
<TOTAL-ASSETS> 141688
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 488
<TOTAL-LIABILITIES> 488
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 132487
<SHARES-COMMON-STOCK> 16215<F1>
<SHARES-COMMON-PRIOR> 16333<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 275
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8438
<NET-ASSETS> 138558<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3835<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (571)<F1>
<NET-INVESTMENT-INCOME> 3264<F1>
<REALIZED-GAINS-CURRENT> 410
<APPREC-INCREASE-CURRENT> (2439)
<NET-CHANGE-FROM-OPS> 1277
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3264)<F1>
<DISTRIBUTIONS-OF-GAINS> (2565)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 401<F1>
<NUMBER-OF-SHARES-REDEEMED> (967)<F1>
<SHARES-REINVESTED> 448<F1>
<NET-CHANGE-IN-ASSETS> (4802)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2468
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 351<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 571<F1>
<AVERAGE-NET-ASSETS> 140809<F1>
<PER-SHARE-NAV-BEGIN> 8.83<F1>
<PER-SHARE-NII> .20<F1>
<PER-SHARE-GAIN-APPREC> (.12)<F1>
<PER-SHARE-DIVIDEND> (.20)<F1>
<PER-SHARE-DISTRIBUTIONS> (.16)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.55<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>034
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MICHIGAN CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 130618
<INVESTMENTS-AT-VALUE> 139056
<RECEIVABLES> 2567
<ASSETS-OTHER> 63
<OTHER-ITEMS-ASSETS> 2
<TOTAL-ASSETS> 141688
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 488
<TOTAL-LIABILITIES> 488
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 132487
<SHARES-COMMON-STOCK> 310<F1>
<SHARES-COMMON-PRIOR> 209<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 275
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8438
<NET-ASSETS> 2642<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 62<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (20)<F1>
<NET-INVESTMENT-INCOME> 42<F1>
<REALIZED-GAINS-CURRENT> 410
<APPREC-INCREASE-CURRENT> (2439)
<NET-CHANGE-FROM-OPS> 1277
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (42)<F1>
<DISTRIBUTIONS-OF-GAINS> (38)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113<F1>
<NUMBER-OF-SHARES-REDEEMED> (19)<F1>
<SHARES-REINVESTED> 7<F1>
<NET-CHANGE-IN-ASSETS> (4802)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2468
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20<F1>
<AVERAGE-NET-ASSETS> 2278<F1>
<PER-SHARE-NAV-BEGIN> 8.82<F1>
<PER-SHARE-NII> .16<F1>
<PER-SHARE-GAIN-APPREC> (.12)<F1>
<PER-SHARE-DIVIDEND> (.16)<F1>
<PER-SHARE-DISTRIBUTIONS> (.16)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.54<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>041
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MINNESOTA SERIES CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 113178
<INVESTMENTS-AT-VALUE> 119242
<RECEIVABLES> 1961
<ASSETS-OTHER> 81
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 121285
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 429
<TOTAL-LIABILITIES> 429
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 114345
<SHARES-COMMON-STOCK> 15230<F1>
<SHARES-COMMON-PRIOR> 15217<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 447
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6064
<NET-ASSETS> 118743<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3276<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (504)<F1>
<NET-INVESTMENT-INCOME> 2772<F1>
<REALIZED-GAINS-CURRENT> 459
<APPREC-INCREASE-CURRENT> (1722)
<NET-CHANGE-FROM-OPS> 1550
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2772)<F1>
<DISTRIBUTIONS-OF-GAINS> (1489)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 306<F1>
<NUMBER-OF-SHARES-REDEEMED> (679)<F1>
<SHARES-REINVESTED> 386<F1>
<NET-CHANGE-IN-ASSETS> (2621)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1504
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 299<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 504<F1>
<AVERAGE-NET-ASSETS> 119933<F1>
<PER-SHARE-NAV-BEGIN> 7.98<F1>
<PER-SHARE-NII> .18<F1>
<PER-SHARE-GAIN-APPREC> (.08)<F1>
<PER-SHARE-DIVIDEND> (.18)<F1>
<PER-SHARE-DISTRIBUTIONS> (.10)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.80<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>044
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MINNESOTA SERIES CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 113178
<INVESTMENTS-AT-VALUE> 119242
<RECEIVABLES> 1961
<ASSETS-OTHER> 81
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 121285
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 429
<TOTAL-LIABILITIES> 429
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 114345
<SHARES-COMMON-STOCK> 271<F1>
<SHARES-COMMON-PRIOR> 263<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 447
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6064
<NET-ASSETS> 2113<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 60<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (19)<F1>
<NET-INVESTMENT-INCOME> 41<F1>
<REALIZED-GAINS-CURRENT> 459
<APPREC-INCREASE-CURRENT> (1722)
<NET-CHANGE-FROM-OPS> 1550
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (41)<F1>
<DISTRIBUTIONS-OF-GAINS> (27)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 54<F1>
<NUMBER-OF-SHARES-REDEEMED> (52)<F1>
<SHARES-REINVESTED> 6<F1>
<NET-CHANGE-IN-ASSETS> (2621)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1504
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19<F1>
<AVERAGE-NET-ASSETS> 2173<F1>
<PER-SHARE-NAV-BEGIN> 7.98<F1>
<PER-SHARE-NII> .15<F1>
<PER-SHARE-GAIN-APPREC> (.08)<F1>
<PER-SHARE-DIVIDEND> (.15)<F1>
<PER-SHARE-DISTRIBUTIONS> (.10)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.80<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>101
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MISSOURI CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 46071
<INVESTMENTS-AT-VALUE> 48710
<RECEIVABLES> 939
<ASSETS-OTHER> 89
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 49739
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 169
<TOTAL-LIABILITIES> 169
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46929
<SHARES-COMMON-STOCK> 6297<F1>
<SHARES-COMMON-PRIOR> 6223<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2639
<NET-ASSETS> 48944<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1304<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (223)<F1>
<NET-INVESTMENT-INCOME> 1081<F1>
<REALIZED-GAINS-CURRENT> 9
<APPREC-INCREASE-CURRENT> (866)
<NET-CHANGE-FROM-OPS> 232
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1081)<F1>
<DISTRIBUTIONS-OF-GAINS> (737)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 139<F1>
<NUMBER-OF-SHARES-REDEEMED> (197)<F1>
<SHARES-REINVESTED> 132<F1>
<NET-CHANGE-IN-ASSETS> (797)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 736
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 123<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 223<F1>
<AVERAGE-NET-ASSETS> 49368<F1>
<PER-SHARE-NAV-BEGIN> 8.03<F1>
<PER-SHARE-NII> .17<F1>
<PER-SHARE-GAIN-APPREC> (.14)<F1>
<PER-SHARE-DIVIDEND> (.17)<F1>
<PER-SHARE-DISTRIBUTIONS> (.12)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.77<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>104
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MISSOURI CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 46071
<INVESTMENTS-AT-VALUE> 48710
<RECEIVABLES> 939
<ASSETS-OTHER> 89
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 49739
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 169
<TOTAL-LIABILITIES> 169
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46929
<SHARES-COMMON-STOCK> 81<F1>
<SHARES-COMMON-PRIOR> 52<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2639
<NET-ASSETS> 626<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (4)<F1>
<NET-INVESTMENT-INCOME> 8<F1>
<REALIZED-GAINS-CURRENT> 9
<APPREC-INCREASE-CURRENT> (866)
<NET-CHANGE-FROM-OPS> 232
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8)<F1>
<DISTRIBUTIONS-OF-GAINS> (6)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29<F1>
<NUMBER-OF-SHARES-REDEEMED> (2)<F1>
<SHARES-REINVESTED> 2<F1>
<NET-CHANGE-IN-ASSETS> (797)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 736
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4<F1>
<AVERAGE-NET-ASSETS> 471<F1>
<PER-SHARE-NAV-BEGIN> 8.03<F1>
<PER-SHARE-NII> .14<F1>
<PER-SHARE-GAIN-APPREC> (.14)<F1>
<PER-SHARE-DIVIDEND> (.14)<F1>
<PER-SHARE-DISTRIBUTIONS> (.12)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.77<F1>
<EXPENSE-RATIO> 1.80<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>051
<NAME> SELIGMAN MUNICIPAL FUND SERIES-NEW YORK CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 80314
<INVESTMENTS-AT-VALUE> 85736
<RECEIVABLES> 2662
<ASSETS-OTHER> 150
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 88549
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 281
<TOTAL-LIABILITIES> 281
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82799
<SHARES-COMMON-STOCK> 10311<F1>
<SHARES-COMMON-PRIOR> 9867<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5422
<NET-ASSETS> 84971<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2251<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (350)<F1>
<NET-INVESTMENT-INCOME> 1901<F1>
<REALIZED-GAINS-CURRENT> 55
<APPREC-INCREASE-CURRENT> (1598)
<NET-CHANGE-FROM-OPS> 404
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1901)<F1>
<DISTRIBUTIONS-OF-GAINS> (2032)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 866<F1>
<NUMBER-OF-SHARES-REDEEMED> (755)<F1>
<SHARES-REINVESTED> 333<F1>
<NET-CHANGE-IN-ASSETS> 1264
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2079
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 211<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 350<F1>
<AVERAGE-NET-ASSETS> 84622<F1>
<PER-SHARE-NAV-BEGIN> 8.60<F1>
<PER-SHARE-NII> .19<F1>
<PER-SHARE-GAIN-APPREC> (.15)<F1>
<PER-SHARE-DIVIDEND> (.19)<F1>
<PER-SHARE-DISTRIBUTIONS> (.21)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.24<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>054
<NAME> SELIGMAN MUNICIPAL FUND SERIES-NEW YORK CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 80314
<INVESTMENTS-AT-VALUE> 85736
<RECEIVABLES> 2662
<ASSETS-OTHER> 150
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 88549
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 281
<TOTAL-LIABILITIES> 281
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82799
<SHARES-COMMON-STOCK> 400<F1>
<SHARES-COMMON-PRIOR> 253<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5422
<NET-ASSETS> 3297<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 69<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (22)<F1>
<NET-INVESTMENT-INCOME> 47<F1>
<REALIZED-GAINS-CURRENT> 55
<APPREC-INCREASE-CURRENT> (1598)
<NET-CHANGE-FROM-OPS> 404
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (47)<F1>
<DISTRIBUTIONS-OF-GAINS> (55)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 144<F1>
<NUMBER-OF-SHARES-REDEEMED> (7)<F1>
<SHARES-REINVESTED> 10<F1>
<NET-CHANGE-IN-ASSETS> 1264
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2079
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22<F1>
<AVERAGE-NET-ASSETS> 2614<F1>
<PER-SHARE-NAV-BEGIN> 8.60<F1>
<PER-SHARE-NII> .15<F1>
<PER-SHARE-GAIN-APPREC> (.14)<F1>
<PER-SHARE-DIVIDEND> (.15)<F1>
<PER-SHARE-DISTRIBUTIONS> (.21)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.25<F1>
<EXPENSE-RATIO> 1.72<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>061
<NAME> SELIGMAN MUNICIPAL FUND SERIES-OHIO CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 140109
<INVESTMENTS-AT-VALUE> 149025
<RECEIVABLES> 2531
<ASSETS-OTHER> 152
<OTHER-ITEMS-ASSETS> 2
<TOTAL-ASSETS> 151710
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 864
<TOTAL-LIABILITIES> 864
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 141885
<SHARES-COMMON-STOCK> 18387<F1>
<SHARES-COMMON-PRIOR> 18304<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 44
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8916
<NET-ASSETS> 149197<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4175<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (609)<F1>
<NET-INVESTMENT-INCOME> 3566<F1>
<REALIZED-GAINS-CURRENT> 68
<APPREC-INCREASE-CURRENT> (2279)
<NET-CHANGE-FROM-OPS> 1380
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3566)<F1>
<DISTRIBUTIONS-OF-GAINS> (2413)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 271<F1>
<NUMBER-OF-SHARES-REDEEMED> (677)<F1>
<SHARES-REINVESTED> 489<F1>
<NET-CHANGE-IN-ASSETS> (3383)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2407
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 377<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 609<F1>
<AVERAGE-NET-ASSETS> 150940<F1>
<PER-SHARE-NAV-BEGIN> 8.37<F1>
<PER-SHARE-NII> .19<F1>
<PER-SHARE-GAIN-APPREC> (.13)<F1>
<PER-SHARE-DIVIDEND> (.19)<F1>
<PER-SHARE-DISTRIBUTIONS> (.13)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.11<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>064
<NAME> SELIGMAN MUNICIPAL FUND SERIES-OHIO CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 140109
<INVESTMENTS-AT-VALUE> 149025
<RECEIVABLES> 2531
<ASSETS-OTHER> 152
<OTHER-ITEMS-ASSETS> 2
<TOTAL-ASSETS> 151710
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 864
<TOTAL-LIABILITIES> 864
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 141885
<SHARES-COMMON-STOCK> 202<F1>
<SHARES-COMMON-PRIOR> 131<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 44
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8916
<NET-ASSETS> 1649<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 36<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (11)<F1>
<NET-INVESTMENT-INCOME> 25<F1>
<REALIZED-GAINS-CURRENT> 68
<APPREC-INCREASE-CURRENT> (2279)
<NET-CHANGE-FROM-OPS> 1380
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25)<F1>
<DISTRIBUTIONS-OF-GAINS> (18)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 100<F1>
<NUMBER-OF-SHARES-REDEEMED> (34)<F1>
<SHARES-REINVESTED> 5<F1>
<NET-CHANGE-IN-ASSETS> (3383)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2407
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11<F1>
<AVERAGE-NET-ASSETS> 1296<F1>
<PER-SHARE-NAV-BEGIN> 8.41<F1>
<PER-SHARE-NII> .16<F1>
<PER-SHARE-GAIN-APPREC> (.13)<F1>
<PER-SHARE-DIVIDEND> (.16)<F1>
<PER-SHARE-DISTRIBUTIONS> (.13)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.15<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>111
<NAME> SELIGMAN MUNICIPAL FUND SERIES-OREGON CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 56495
<INVESTMENTS-AT-VALUE> 60025
<RECEIVABLES> 1077
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4
<TOTAL-ASSETS> 61106
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 371
<TOTAL-LIABILITIES> 371
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56977
<SHARES-COMMON-STOCK> 7320<F1>
<SHARES-COMMON-PRIOR> 7159<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 228
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3530
<NET-ASSETS> 57957<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1531<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (256)<F1>
<NET-INVESTMENT-INCOME> 1275<F1>
<REALIZED-GAINS-CURRENT> 232
<APPREC-INCREASE-CURRENT> (825)
<NET-CHANGE-FROM-OPS> 729
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1275)<F1>
<DISTRIBUTIONS-OF-GAINS> (359)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 532<F1>
<NUMBER-OF-SHARES-REDEEMED> (507)<F1>
<SHARES-REINVESTED> 136<F1>
<NET-CHANGE-IN-ASSETS> 484
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 371
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 145<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 256<F1>
<AVERAGE-NET-ASSETS> 58047<F1>
<PER-SHARE-NAV-BEGIN> 8.05<F1>
<PER-SHARE-NII> .17<F1>
<PER-SHARE-GAIN-APPREC> (.08)<F1>
<PER-SHARE-DIVIDEND> (.17)<F1>
<PER-SHARE-DISTRIBUTIONS> (.05)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.92<F1>
<EXPENSE-RATIO> .88<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>114
<NAME> SELIGMAN MUNICIPAL FUND SERIES-OREGON CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 56495
<INVESTMENTS-AT-VALUE> 60025
<RECEIVABLES> 1077
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4
<TOTAL-ASSETS> 61106
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 371
<TOTAL-LIABILITIES> 371
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56977
<SHARES-COMMON-STOCK> 351<F1>
<SHARES-COMMON-PRIOR> 329<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 228
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3530
<NET-ASSETS> 2778<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 71<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (24)<F1>
<NET-INVESTMENT-INCOME> 47<F1>
<REALIZED-GAINS-CURRENT> 232
<APPREC-INCREASE-CURRENT> (825)
<NET-CHANGE-FROM-OPS> 729
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (47)<F1>
<DISTRIBUTIONS-OF-GAINS> (16)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40<F1>
<NUMBER-OF-SHARES-REDEEMED> (23)<F1>
<SHARES-REINVESTED> 5<F1>
<NET-CHANGE-IN-ASSETS> 484
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 371
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24<F1>
<AVERAGE-NET-ASSETS> 2675<F1>
<PER-SHARE-NAV-BEGIN> 8.04<F1>
<PER-SHARE-NII> .14<F1>
<PER-SHARE-GAIN-APPREC> (.08)<F1>
<PER-SHARE-DIVIDEND> (.14)<F1>
<PER-SHARE-DISTRIBUTIONS> (.05)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.91<F1>
<EXPENSE-RATIO> 1.78<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>011
<NAME> SELIGMAN MUNICIPAL FUND SERIES-NATIONAL CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 101660
<INVESTMENTS-AT-VALUE> 107302
<RECEIVABLES> 1567
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 108993
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 468
<TOTAL-LIABILITIES> 468
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104332
<SHARES-COMMON-STOCK> 12313<F1>
<SHARES-COMMON-PRIOR> 12255<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1449)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5642
<NET-ASSETS> 100557<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2820<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (423)<F1>
<NET-INVESTMENT-INCOME> 2397<F1>
<REALIZED-GAINS-CURRENT> 110
<APPREC-INCREASE-CURRENT> (2109)
<NET-CHANGE-FROM-OPS> 506
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2397<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1222<F1>
<NUMBER-OF-SHARES-REDEEMED> (1325)<F1>
<SHARES-REINVESTED> 161<F1>
<NET-CHANGE-IN-ASSETS> (776)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1559)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 255<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 423<F1>
<AVERAGE-NET-ASSETS> 102122<F1>
<PER-SHARE-NAV-BEGIN> 8.32<F1>
<PER-SHARE-NII> .19<F1>
<PER-SHARE-GAIN-APPREC> (.15)<F1>
<PER-SHARE-DIVIDEND> (.19)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.17<F1>
<EXPENSE-RATIO> .83<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>014
<NAME> SELIGMAN MUNICIPAL FUND SERIES-NATIONAL CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 101660
<INVESTMENTS-AT-VALUE> 107302
<RECEIVABLES> 1567
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 108993
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 468
<TOTAL-LIABILITIES> 468
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104332
<SHARES-COMMON-STOCK> 976<F1>
<SHARES-COMMON-PRIOR> 889<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1449)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5642
<NET-ASSETS> 7968<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 156<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (48)<F1>
<NET-INVESTMENT-INCOME> 108<F1>
<REALIZED-GAINS-CURRENT> 110
<APPREC-INCREASE-CURRENT> (2109)
<NET-CHANGE-FROM-OPS> 506
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (108<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 607<F1>
<NUMBER-OF-SHARES-REDEEMED> (528)<F1>
<SHARES-REINVESTED> 8<F1>
<NET-CHANGE-IN-ASSETS> (776)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1559)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 48<F1>
<AVERAGE-NET-ASSETS> 5645<F1>
<PER-SHARE-NAV-BEGIN> 8.31<F1>
<PER-SHARE-NII> .16<F1>
<PER-SHARE-GAIN-APPREC> (.15)<F1>
<PER-SHARE-DIVIDEND> (.16)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.16<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>
