SELIGMAN TAX EXEMPT SERIES TRUST, 485BPOS, 1995-02-01

SELIGMAN TAX EXEMPT SERIES TRUST
485BPOS, 1995-02-01

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File No. 2-92569

As filed with the Securities and Exchange Commission on February 1, 1995

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|

Pre-Effective Amendment No. __ |_|

Post-Effective Amendment No. 23 |X|

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|

Amendment No. 25 |X|

SELIGMAN TAX-EXEMPT SERIES TRUST
(Exact name of registrant as specified in charter)

100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)

Registrant's Telephone Number: 212-850-1864 or
Toll-Free 800-221-2450

THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)

It is proposed that this filing will become effective (check the
appropriate box).

|_| immediately upon filing pursuant to paragraph (b) of rule 485

|X| on February 1, 1995 pursuant to paragraph (b) of rule 485

|_| 60 days after filing pursuant to paragraph (a)(i) of rule 485

|_| on (date) pursuant to paragraph (a)(i) of rule 485

|_| 75 days after filing pursuant to paragraph (a)(ii) of rule 485

|_| on (date) pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:

|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice was
filed by Registrant on November 29, 1994.

<PAGE>

Post-Effective Amendment # 23
CROSS REFERENCE SHEET
Pursuant to Rule 481 (a)

Item in Part A of Form N-1A Location in Prospectus*
- --------------------------- -----------------------
<S> <C>
1. Cover Page Cover Page

2. Synopsis Summary of Series'/Fund Expenses

3. Condensed Financial Information Financial Highlights

4. General Description of Registrant Cover Page; Organization and Capitalization

5. Management of the Fund Management Services

6. Capital Stock and Other Securities Cover Page; Organization and Capitalization

7. Purchase of Securities Being Offered Alternative Distribution System; Purchase of Shares; Administration,
Shareholder Services and Distribution Plan

8. Redemption or Repurchase Telephone Transactions; Redemption of Shares; Exchange Privilege; Further
Information About Transactions in the Fund

9. Pending Legal Proceedings Not Applicable

Item in Part B of Form N-1A Location in Statement of Additional Information*
- --------------------------- ------------------------------------------------
10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History General Information; Organization and Capitalization (Prospectus)

13. Investment Objectives and Policies Investment Objectives, Policies and Risks; Investment Limitations

14. Management of the Registrant Management And Expenses

15. Control Persons and Principal Trustees and Officers; General Information
Holders of Securities

16. Investment Advisory and Other Services Management and Expenses; Distribution Services

17. Brokerage Allocation Portfolio Transactions; Administration, Shareholder Services and
Distribution Plan

18. Capital Stock and Other Securities General Information; Organization and Capitalization (Prospectus)

19. Purchase, Redemption and Pricing Purchase and Redemption of Fund Shares; Valuation
of Securities being Offered

20. Tax Status More About Taxes; Special Considerations Regarding Investments in
California Tax-Exempt Securities; Risk Factors Regarding Investments in
Florida Tax-Exempt Securities; Risk Factors Regarding Investments in North
Carolina Tax-Exempt Securities.

21. Underwriters Distribution Services

22. Calculation of Performance Data Performance Information

23. Financial Statements Financial Statements

</TABLE>

- ---------------
* Each of Registrant's three State Series has a separate Prospectus and
separate Statement of Additional Information.

<PAGE>

SELIGMAN NEW JERSEY TAX-EXEMPT FUND, INC.
SELIGMAN PENNSYLVANIA TAX-EXEMPT FUND SERIES
SELIGMAN TAX-EXEMPT FUND SERIES, INC.

National Tax-Exempt Series, Colorado Tax-Exempt Series, Georgia Tax-Exempt
Series, Louisiana Tax-Exempt Series, Maryland Tax-Exempt Series, Massachusetts
Tax-Exempt Series, Michigan Tax-Exempt Series, Minnesota Tax-Exempt Series,
Missouri Tax-Exempt Series, New York Tax-Exempt Series, Ohio Tax-Exempt Series,
Oregon Tax-Exempt Series and South Carolina Tax-Exempt Series

SELIGMAN TAX-EXEMPT SERIES TRUST

California Tax-Exempt High-Yield Series, California Tax-Exempt Quality Series,
Florida Tax-Exempt Series and North Carolina Tax-Exempt Series

100 Park Avenue o New York, N.Y. 10017
New York City Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450--all continental United States

February 1, 1995

This prospectus offers shares of nineteen different series (the "Series")
which include Seligman New Jersey Tax-Exempt Fund, Inc. (the "New Jersey Fund"),
Seligman Pennsylvania Tax-Exempt Fund Series (the "Pennsylvania Fund"), National
Tax-Exempt Series (the "National Series") and twelve individual state Series of
Seligman Tax-Exempt Fund Series, Inc. (the "Tax-Exempt Fund"), and four
individual state Series of Seligman Tax-Exempt Series Trust (the "Tax-Exempt
Trust" and collectively with the New Jersey Fund, the Pennsylvania Fund and the
Tax-Exempt Fund, the "Funds"). Each of the Funds is a non-diversified, open-end
management investment company.

The Tax-Exempt Fund offers the following state Series: Colorado Tax-Exempt
Series, Georgia Tax-Exempt Series, Louisiana Tax-Exempt Series, Maryland
Tax-Exempt Series, Massachusetts Tax-Exempt Series, Michigan Tax-Exempt Series,
Minnesota Tax-Exempt Series, Missouri Tax-Exempt Series, New York Tax-Exempt
Series, Ohio Tax-Exempt Series, Oregon Tax-Exempt Series and South Carolina
Tax-Exempt Series (collectively, the "Tax-Exempt Fund State Series"). The
Tax-Exempt Trust offers the following state Series: California Tax-Exempt
Quality Series, California Tax-Exempt High-Yield Series, Florida Tax-Exempt
Series and the North Carolina Tax-Exempt Series (collectively, the "Tax-Exempt
Trust State Series", and together with the Tax-Exempt Fund State Series, the New
Jersey Fund and the Pennsylvania Fund, the "State Series").

The New Jersey Fund seeks to maximize income exempt from federal income tax
and New Jersey personal income tax consistent with preservation of capital and
with consideration given to opportunities for capital gain by investing in
investment grade New Jersey tax-exempt securities. Throughout this Prospectus,
the New Jersey Gross Income Tax is referred to as the New Jersey personal income
tax.

(continued on following page)

SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

The Pennsylvania Fund seeks to provide a high level of income exempt from
federal and Pennsylvania income taxes consistent with preservation of capital by
investing primarily in Pennsylvania tax-exempt securities rated within the four
highest rating categories of Moody's Investors Service ("Moody's") and/or
Standard & Poor's Corporation ("S&P"). Capital appreciation is not a
consideration in the selection of investments. The Fund may also invest in
Pennsylvania tax-exempt securities that are unrated but are believed by the
Manager (as defined below) to be of comparable quality to securities rated
within the four highest rating categories.

The Tax-Exempt Fund's National Tax-Exempt Series seeks to provide to its
shareholders maximum income exempt from federal income taxes to the extent
consistent with preservation of capital and with consideration given to
opportunities for capital gain by investing in investment grade securities the
interest on which is exempt from federal income taxes. The investment objective
of each of the individual Tax-Exempt Fund State Series is to maximize income
exempt from federal income taxes and from personal income taxes in that state,
consistent with the preservation of capital and with consideration given to
opportunities for capital gain by investing in investment grade tax-exempt
securities of the designated state, its political subdivisions, municipalities
and public authorities.

The Tax-Exempt Trust State Series, except for the California Tax-Exempt
High-Yield Series, each seek high income exempt from federal income taxes and
from personal income taxes in their respective state (other than Florida which
does not incur an individual income tax) consistent with preservation of capital
and with consideration given to capital gain, by investing in the four highest
credit rating categories (or three highest with respect to the California
Tax-Exempt Quality Series) of Moody's and/or S&P.

The California Tax-Exempt High-Yield Series seeks the maximum amount of
tax-exempt income consistent with preservation of capital and with consideration
given to capital gain by investing primarily in California tax-exempt securities
that are rated in the medium and lower rating categories of Moody's and/or S&P
or which are unrated. Such securities generally offer a higher current yield
than those in the higher rating categories but also involve greater price
volatility and risk of loss of principal and income. The California Tax-Exempt
High-Yield Series invests primarily in high-yield, high risk securities and
therefore may not be suitable for all investors.

There can be no assurance that a Series will achieve its objective.

Investment advisory and management services are provided to the Funds by J.
& W. Seligman & Co. Incorporated (the "Manager") and each Fund's distributor is
Seligman Financial Services, Inc., an affiliate of the Manager. Each Series
offers two classes of shares. Class A shares are sold subject to an initial
sales load of up to 4.75% and an annual service fee currently charged at a rate
of up to .25 of 1% of the average daily net asset value of the Class A shares.
Class D shares are sold without an initial sales load but are subject to
contingent deferred sales loads of 1% imposed on certain redemptions within one
year of purchase, an annual distribution fee of up to .75 of 1% and an annual
service fee of up to .25 of 1% of the average daily net asset value of the Class
D shares. See "Alternative Distribution System." Shares of the Series may be
purchased through any authorized investment dealer.

This Prospectus sets forth concisely the information a prospective investor
should know about the Funds and each individual Series before investing. Please
read it carefully before you invest and keep it for future reference. Additional
information about the Funds, including a Statement of Additional Information,
has been filed with the Securities and Exchange Commission. A Statement of
Additional Information for each Series is available upon request and without
charge by calling or writing the Funds at the telephone numbers or the address
set forth above. Each Statement of Additional Information is dated the same date
as this Prospectus and is incorporated herein by reference in its entirety.

<PAGE>

SUMMARY OF FUND EXPENSES

The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of a Series bear directly or
indirectly. The sales load on Class A shares is a one-time charge paid at the
time of purchase of shares. Reductions in sales loads are available in certain
circumstances. The CDSL on Class D shares is a one-time charge paid only if
shares are redeemed within one year of purchase. For more information concerning
reduction in sales loads and for more complete descriptions of the various costs
and expenses see "Purchase Of Shares," "Redemption Of Shares" and "Management
Services" herein. Each Series' Administration, Shareholder Services and
Distribution Plan to which the caption "12b-1 Fees" relates is discussed under
"Administration, Shareholder Services And Distribution Plan" herein.

<TABLE>
<CAPTION>
NJ FUND PA FUND
-------------------------- --------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)

<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................ 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower) None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter

Redemption Fees................ None None None None
Exchange Fees.................. None None None None

Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating Expenses
for Fiscal Year Ended September 30,
1994 (as percentage of average net
assets)
Management Fees.............. .33%+ .38%+ .50% .50%
12b-1 Fees................... .23 1.00** .22 1.00**
Other Expenses............... .34 .37 .44 .50
--- ---- ---- ----
Total Series Operating Expenses .90% 1.75% 1.16% 2.00%
=== ==== ==== ====

</TABLE>
<TABLE>
<CAPTION>
NAT'L SERIES CO SERIES
-------------------------- --------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)

Redemption Fees................ None None None None
Exchange Fees.................. None None None None

Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating Expenses
for Fiscal Year Ended September 30,
1994 (as percentage of average net
assets)
Management Fees.............. .50% .50% .50% .50%
12b-1 Fees................... .08 1.00** .09 1.00**
Other Expenses............... .27 .26 .27 .28
--- ---- --- ----
Total Series Operating Expenses .85% 1.76% .86% 1.78%
=== ==== === ====
</TABLE>

In fiscal 1994, the Manager, in its discretion, waived a portion of its fee
from the New Jersey Fund. The management fee listed in the table for the New
Jersey Fund is net of voluntary fee waiver for the Series. Absent such waiver,
the management fee would have been .50% of the Fund's average daily net assets
and total operating expenses for Class A shares of the New Jersey Fund would
have been 1.07%. Annualized total operating expenses for Class D shares of the
New Jersey Fund would have been 1.87%. There can be no assurance that the
Manager will agree to waive any of its fee in future periods.

The following example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown and the
5% used in this example is a hypothetical rate.

<TABLE>
<CAPTION>
NJ FUND PA FUND NAT'L SERIES CO SERIES
------------------ ------------------ ------------------ ------------------
Example Class A Class D* Class A Class D* Class A Class D* Class A Class D*
- ------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 year ............ $ 56 $ 28++ $ 59 $ 30++ $ 56 $ 28++ $ 56 $ 28++
3 years ........... 75 55 83 63 73 55 74 56
5 years ........... 95 95 108 108 92 95 93 96
10 years ........... 153 206 182 233 147 207 149 209

</TABLE>

- ------------
* Annualized. Based on actual expenses incurred by the Series' Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.

** Includes an annual distribution fee of .75 of 1% and an annual service fee
of .25 of 1% (collectively, "distribution fee"). Pursuant to Rules of the
National Association of Securities Dealers, Inc., the aggregate deferred
sales loads and annual distribution fees on Class D shares of each Series
may not exceed 6.25% of total gross sales, subject to certain exclusions.
The 6.25% limitation is imposed on the Series rather than on a per
shareholder basis. Therefore, a long-term Class D shareholder of a Series
may pay more in total sales loads (including distribution fees) than the
economic equivalent of 6.25% of such shareholder's investment in the shares.

+ Net of fees waived.

++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: NJ--$18; PA--$20; NATL --$18;
CO--$18.

<PAGE>

SUMMARY OF FUND EXPENSES--(continued)

GA SERIES LA SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)

<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................. None None None None
Exchange Fees................... None None None None

Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average net assets)

Management Fees ............... .30%+ .36%+ .50% .50%
12b-1 Fees .................... .10 1.00** .10 1.00**
Other Expenses ................ .33 .40 .27 .28
--- ---- --- ----
Total Series Operating
Expenses .................... .73% 1.76% .87% 1.78%
=== ==== === ====

</TABLE>
<TABLE>
<CAPTION>

MD SERIES MA SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)

Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average net assets)

Management Fees ............... .50% .50% .50% .50%
12b-1 Fees .................... .09 1.00** .09 1.00**
Other Expenses ................ .33 .30 .26 .28
--- ---- --- ----
Total Series Operating
Expenses .................... .92% 1.80% .85% 1.78%
=== ==== === ====

</TABLE>

In fiscal 1994, the Manager, in its discretion, waived a portion of its fee
from the Georgia Series. The management fee listed in the table for the Georgia
Series is net of voluntary fee waiver for the Series. Absent such waiver, the
management fee would have been .50% of the Series' average daily net assets and
total operating expenses for Class A shares of the Georgia Series would have
been .93%. Annualized total operating expenses for Class D shares of the Georgia
Series would have been 1.90%. There can be no assurance that the Manager will
agree to waive any of its fee in future periods.

<TABLE>
<CAPTION>
GA FUND LA FUND MD SERIES MA SERIES
------------------ ------------------ ------------------ ------------------
Example Class A Class D* Class A Class D* Class A Class D* Class A Class D*
- ------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 year ............ $ 55 $ 28++ $ 56 $ 28++ $ 56 $ 28++ $ 56 $ 28++
3 years ........... 70 55 74 56 75 57 73 56
5 years ........... 86 95 93 96 96 97 92 96
10 years ........... 134 207 150 209 155 212 147 209

</TABLE>

- ------------
* Annualized. Based on actual expenses incurred by the Fund's Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.

+ Net of fees waived.

++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: GA--$18; LA--$18; MD --$18;
MA--$18.

4
<PAGE>

SUMMARY OF FUND EXPENSES--(continued)
<TABLE>
<CAPTION>

MI SERIES MN SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)

Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average
net assets)

Management Fees ............... .50% .50% .50% .50%
12b-1 Fees .................... .10 1.00** .10 1.00**
Other Expenses ................ .24 .25 .25 .24
--- ---- --- ----
Total Series Operating
Expenses .................... .84% 1.75% .85% 1.74%
=== ==== === ====

</TABLE>
<TABLE>
<CAPTION>

MO SERIES NY SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)

Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average
net assets)

Management Fees ............... .36%+ .40%+ .50% .50%
12b-1 Fees .................... .09 1.00** .08 1.00**
Other Expenses ................ .29 .30 .29 .31
--- ---- --- ----
Total Series Operating
Expenses .................... .74% 1.70% .87% 1.81%
=== ==== === ====

</TABLE>

In fiscal 1994, the Manager, in its discretion, waived a portion of its fee
from the Missouri Series. The management fee listed in the table for the
Missouri Series is net of voluntary fee waiver for the Series. Absent such
waiver, the management fee would have been .50% of the Series' average daily net
assets and total operating expenses for Class A shares of the Missouri Series
would have been .88%. Annualized total operating expenses for Class D shares of
the Missouri Series would have been 1.80%. There can be no assurance that the
Manager will agree to waive any of its fee in future periods.

<TABLE>
<CAPTION>
MI FUND MN FUND MO SERIES NY SERIES
------------------ ------------------ ------------------ ------------------
Example Class A Class D* Class A Class D* Class A Class D* Class A Class D*
- ------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 year ............ $ 56 $ 28++ $ 56 $ 28++ $ 55 $ 27++ $ 56 $ 28++
3 years ........... 73 55 73 55 70 54 74 57
5 years ........... 92 95 92 94 87 92 93 98
10 years ........... 146 206 147 205 135 201 150 213

</TABLE>

- ------------

* Annualized. Based on actual expenses incurred by the Fund's Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.

+ Net of fees waived.

++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: MI--$18; MN--$18; MO--$17;
NY--$18

5
<PAGE>

SUMMARY OF FUND EXPENSES--(continued)

OH SERIES OR SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)

Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average net assets)

Management Fees ............... .50% .50% .39%+ .40%+
12b-1 Fees .................... .10 1.00** .10 1.00**
Other Expenses ................ .24 .28 .29 .32
--- ---- --- ----
Total Series Operating
Expenses .................... .84% 1.78% .78% 1.72%
=== ==== === ====

</TABLE>
<TABLE>
<CAPTION>
CA
SC SERIES HIGH-YIELD SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)

Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average
net assets)

Management Fees ............... .50% .50% .50% .50%
12b-1 Fees .................... .10 1.00** .09 1.00**
Other Expenses ................ .23 .24 .26 .24
--- ---- --- ----
Total Series Operating
Expenses .................... .83% 1.74% .85% 1.74%
=== ==== === ====

</TABLE>

In fiscal 1994, the Manager, in its discretion, waived a portion of its
fees from the Oregon Series. The management fee listed in the table for the
Oregon Series is net of voluntary fee waiver for the Series. Absent such waiver,
the management fee would have been .50% of the Series' average daily net assets
and total operating expenses for Class A shares of the Oregon Series would have
been .89%. Annualized total operating expenses for Class D shares of the Oregon
Series would have been 1.82%. There can be no assurance that the Manager will
agree to waive any of its fee in future periods.

<TABLE>
<CAPTION>
CA
OH FUND OR FUND SC SERIES HIGH-YIELD SERIES
------------------ ------------------ ------------------ ------------------
Example Class A Class D* Class A Class D* Class A Class D* Class A Class D*
- ------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 year ............ $ 56 $ 28++ $ 55 $ 27++ $ 56 $ 28++ $ 56 $ 28++
3 years ........... 73 56 71 54 73 55 73 55
5 years ........... 92 96 89 93 91 94 92 94
10 years ........... 146 209 140 203 145 205 147 205

</TABLE>

- ------------
* Annualized. Based on actual expenses incurred by the Fund's Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.

+ Net of fees waived.

++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: OH--$18; OR--$17; SC--$18;
CA: High-Yield--$18

6
<PAGE>

SUMMARY OF FUND EXPENSES--(continued)

CA QUALITY SERIES FL SERIES NC SERIES
----------------------------- ----------------------------- -----------------------------
Class A Class D Class A Class D Class A Class D
Shares Shares Shares Shares Shares Shares
------------ ------------ ------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative) Alternative) Alternative)

<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during None 1% during
the first year, the first year, the first year,
None None None
thereafter thereafter thereafter
Redemption Fees................. None None None None None None
Exchange Fees................... None None None None None None

Class A Class D* Class A Class D* Class A Class D*
------------ ------------ ------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average
net assets)

Management Fees ............... .50% .50% .16%+ .16%+ .12%+ .12%+
12b-1 Fees .................... .09 1.00** .23 1.00** .24 1.00**
Other Expenses ................ .22 .27 .27 .34 .39 .45
--- ---- --- ---- --- ----
Total Series Operating
Expenses .................... .81% 1.77% .66% 1.50% .75% 1.57%
=== ==== === ==== === ====

</TABLE>

In fiscal 1994, the Manager, in its discretion, waived all or a portion of
its fees and reimbursed certain expenses of the North Carolina Series and the
Florida Series. In fiscal 1995, the Manager expects to waive a portion of its
fees for each of these Series, and as such, the expense information in the table
has been restated to reflect such waivers and the elimination of the
reimbursement of other expenses. Absent such waivers in fiscal 1995, the
management fee would be .50% of each Series' average daily net assets and
estimated total operating expenses for Class A shares and Class D shares of the
North Carolina Series will be 1.13% and 1.95%, respectively. Estimated total
operating expenses for Class A shares and Class D shares of the Florida Series
would be 1.00% and 1.84%, respectively. There can be no assurance that the
Manager will agree to waive any of its fee in future periods.

CA QUALITY SERIES FL SERIES NC SERIES
----------------------------- ----------------------------- -----------------------------
Example Class A Class D* Class A Class D* Class A Class D*
- ------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:

1 yr ............. $ 55 $ 28++ $ 54 $ 25++ $ 55 $ 26++
3 yrs ............ 72 56 68 47 70 50
5 yrs ............ 90 96 83 82 87 86
10 yrs ............ 143 208 126 179 136 187

</TABLE>

- ------------
* Annualized. Based on actual expenses incurred by the Fund's Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.

+ Net of fees waived.

++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: CA: Quality--$18; FL--$15;
NC--$16.

7
<PAGE>

FINANCIAL HIGHLIGHTS

Each Fund's financial highlights for Class A and Class D shares for the
periods presented below have been audited by Deloitte & Touche LLP, independent
auditors. This information, which is derived from the financial and accounting
records of the Funds, should be read in conjunction with the fiscal 1994
financial statements and notes contained in the fiscal 1994 Annual Report of
each Fund which may be obtained by calling or writing the Funds at the telephone
numbers or address provided on the cover page of this Prospectus.

The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from a Series' beginning
net asset value to the ending net asset value so that they may understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, the per share amounts are derived by
converting the actual dollar amounts incurred for each item, as disclosed in the
financial statements, to their equivalent per share amounts. The total return
based on net asset value measures performance assuming investors purchased
shares at the net asset value as of the beginning of the period, invested
dividends and capital gains paid at net asset value and then sold their shares
at net asset value per share on the last day of the period. The total return
computations do not reflect any sales charges investors may incur in purchasing
or selling shares. Total returns for periods of less than one year are not
annualized.

Increase
Net Realized (Decrease)
Net Asset Value Net & Unrealized from Dividends
Per Share Operating at Beginning Investment Investment Investment Paid or
Performance: of Period Income(1) Gain (Loss) Operations Declared
- ------------------- --------------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>

New Jersey--Class A
Year ended 9/30/94 ...... $8.24 $0.41 $(0.74) $(0.33) ($0.41)
Year ended 9/30/93 ...... 7.74 0.42 0.61 1.03 (0.42)
Year ended 9/30/92 ...... 7.49 0.44 0.27 0.71 (0.44)
Year ended 9/30/91 ...... 7.01 0.44 0.51 0.95 (0.44)
Year ended 9/30/90 ...... 7.17 0.45 (0.10) 0.35 (0.45)
Year ended 9/30/89 ...... 6.98 0.48 0.19 0.67 (0.48)
2/16/88*-9/30/88 ........ 7.14 0.30 (0.16) 0.14 (0.30)

New Jersey--Class D
2/1/94**-9/30/94......... 8.14 0.23 (0.66) (0.43) (0.23)

Pennsylvania--Class A
Year ended 9/30/94....... 8.61 0.39 (0.80) (0.41) (0.39)
Year ended 9/30/93....... 8.02 0.42 0.71 1.13 (0.42)
Year ended 9/30/92....... 7.74 0.46 0.30 0.76 (0.46)
Year ended 9/30/91....... 7.34 0.47 0.49 0.96 (0.47)
Year ended 9/30/90....... 7.50 0.47 (0.16) 0.31 (0.47)
Year ended 9/30/89....... 7.31 0.49 0.19 0.68 (0.49)
Year ended 9/30/88....... 6.76 0.50 0.56 1.06 (0.50)
Year ended 9/30/87....... 7.58 0.51 (0.81) (0.30) (0.51)
7/15/86*-9/30/86......... 7.14 0.10 0.44 0.54 (0.10)

Pennsylvania--Class D
2/1/94**-9/30/94......... 8.37 0.22 (0.83) (0.61) (0.22)

National Series--Class A
Year ended 9/30/94....... 8.72 0.41 (1.04) (0.63) (0.41)
Year ended 9/30/93....... 8.07 0.45 0.78 1.23 (0.45)
Year ended 9/30/92....... 7.90 0.48 0.20 0.68 (0.48)
Year ended 9/30/91....... 7.44 0.49 0.54 1.03 (0.49)
Year ended 9/30/90....... 7.73 0.51 (0.19) 0.32 (0.51)
Year ended 9/30/89....... 7.64 0.53 0.11 0.64 (0.53)
Year ended 9/30/88....... 7.41 0.54 0.55 1.09 (0.54)
Year ended 9/30/87....... 8.48 0.59 (0.74) (0.15) (0.59)
Year ended 9/30/86....... 7.47 0.64 1.20 1.84 (0.64)
Year ended 9/30/85....... 6.84 0.67 0.63 1.30 (0.67)

National Series--Class D
2/1/94** - 9/30/94 ...... 8.20 0.22 (1.02) (0.80) (0.22)

Colorado Series--Class A
Year ended 9/30/94....... 7.76 0.37 (0.59) (0.22) (0.37)
Year ended 9/30/93....... 7.34 0.39 0.49 0.88 (0.39)
Year ended 9/30/92....... 7.22 0.42 0.12 0.54 (0.42)
Year ended 9/30/91....... 6.91 0.44 0.31 0.75 (0.44)
Year ended 9/30/90....... 7.06 0.46 (0.15) 0.31 (0.46)
Year ended 9/30/89....... 6.87 0.46 0.19 0.65 (0.46)
Year ended 9/30/88....... 6.38 0.46 0.53 0.99 (0.46)
Year ended 9/30/87....... 7.07 0.47 (0.66) (0.19) (0.47)
5/1/86*-9/30/86.......... 7.14 0.19 (0.07) 0.12 (0.19)

Colorado Series--Class D
2/1/94** - 9/30/94....... 7.72 0.20 (0.63) (0.43) (0.20)

</TABLE>

Total Return Ratio of
Distributions Net Increase Net Asset Based on Expenses
Per Share Operating from Net (Decrease) in Value at Net Asset to Average
Performance: Gain Realized Net Asset Value End of Period Value Net Assets(1)
___________________ ------------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>

New Jersey--Class A
Year ended 9/30/94 ...... $(0.10) $(0.84) $7.40 (4.25)% 0.90%
Year ended 9/30/93 ...... (0.11) 0.50 8.24 14.02 0.86
Year ended 9/30/92 ...... (0.02) 0.25 7.74 9.70 0.85
Year ended 9/30/91 ...... (0.03) 0.48 7.49 13.97 0.81
Year ended 9/30/90 ...... (0.06) (0.16) 7.01 5.04 0.81
Year ended 9/30/89 ...... -- 0.19 7.17 9.91 0.57
2/16/88*-9/30/88 ........ -- (0.16) 6.98 1.96 0.40+

New Jersey--Class D
2/1/94**-9/30/94......... -- (0.66) 7.48 (5.47) 1.75+

Pennsylvania--Class A
Year ended 9/30/94....... (0.26) (1.06) 7.55 (5.00) 1.16
Year ended 9/30/93....... (0.12) 0.59 8.61 14.71 1.19
Year ended 9/30/92....... (0.02) 0.28 8.02 10.04 1.01
Year ended 9/30/91....... (0.09) 0.40 7.74 13.40 0.98
Year ended 9/30/90....... -- (0.16) 7.34 4.13 0.06
Year ended 9/30/89....... -- 0.19 7.50 9.53 0.92
Year ended 9/30/88....... (0.01) 0.55 7.31 16.20 0.83
Year ended 9/30/87....... (0.01) (0.82) 6.76 (4.21) 0.58
7/15/86*-9/30/86......... -- 0.44 7.58 7.19 --+

Pennsylvania--Class D
2/1/94**-9/30/94......... -- (0.83) 7.54 (7.50) 2.00+

National Series--Class A
Year ended 9/30/94....... (0.50) (1.54) 7.18 (7.83) 0.85
Year ended 9/30/93....... (0.13) 0.65 8.72 16.00 0.86
Year ended 9/30/92....... (0.03) 0.17 8.07 8.84 0.77
Year ended 9/30/91....... (0.08) 0.46 7.90 14.24 0.80
Year ended 9/30/90....... (0.10) (0.29) 7.44 4.10 0.78
Year ended 9/30/89....... (0.02) 0.09 7.73 8.62 0.78
Year ended 9/30/88....... (0.32) 0.23 7.64 16.43 0.83
Year ended 9/30/87....... (0.33) (1.07) 7.41 (2.37) 0.74
Year ended 9/30/86....... (0.19) 1.01 8.48 26.17 0.76
Year ended 9/30/85....... -- 0.63 7.47 19.18 0.88

National Series--Class D
2/1/94** - 9/30/94 ...... -- (1.02) 7.18 (9.96) 1.76+

Colorado Series--Class A
Year ended 9/30/94....... (0.08) (0.67) 7.09 (2.92) 0.86
Year ended 9/30/93....... (0.07) 0.42 7.76 12.54 0.90
Year ended 9/30/92....... -- 0.12 7.34 7.74 0.81
Year ended 9/30/91....... -- 0.31 7.22 11.15 0.84
Year ended 9/30/90....... -- (0.15) 6.91 4.38 0.85
Year ended 9/30/89....... -- 0.19 7.06 9.70 0.86
Year ended 9/30/88....... (0.04) 0.49 6.87 16.19 0.88
Year ended 9/30/87....... (0.03) (0.69) 6.38 (3.18) 0.77
5/1/86*-9/30/86.......... -- (0.07) 7.07 1.53 0.55+

Colorado Series--Class D
2/1/94** - 9/30/94....... -- (0.63) 7.09 (5.73) 1.78+

</TABLE>

Ratio of
Net
Investment Adjusted Net
Income Net Assets at Investment
Per Share Operating to Average Portfolio End of Period Income
Performance: Net Assets(1) Turnover (000's omitted) Per Share(1)
- ------------------- ------------- --------- --------------- ------------
<S> <C> <C> <C> <C>

New Jersey--Class A
Year ended 9/30/94 ...... 5.24% 12.13% $73,942 $0.40
Year ended 9/30/93 ...... 5.37 15.90 82,447 0.40
Year ended 9/30/92 ...... 5.74 27.13 74,256 0.42
Year ended 9/30/91 ...... 6.02 14.64 65,044 0.42
Year ended 9/30/90 ...... 6.32 37.26 54,287 0.43
Year ended 9/30/89 ...... 6.70 16.10 51,015 0.44
2/16/88*-9/30/88 ........ 6.92+ 8.20 35,563 0.26

New Jersey--Class D
2/1/94**-9/30/94......... 4.37+ 12.13++ 986 0.22

Pennsylvania--Class A
Year ended 9/30/94....... 4.91 7.71 34,943
Year ended 9/30/93....... 5.14 40.74 41,296
Year ended 9/30/92....... 5.79 32.87 39,431 0.45
Year ended 9/30/91....... 6.16 25.24 37,853 0.45
Year ended 9/30/90....... 6.24 40.64 35,572 0.45
Year ended 9/30/89....... 6.56 9.05 41,856 0.47
Year ended 9/30/88....... 6.96 4.14 30,796 0.48
Year ended 9/30/87....... 6.78 9.19 30,014 0.47
7/15/86*-9/30/86......... 5.92+ -- 19,306 0.07

Pennsylvania--Class D
2/1/94**-9/30/94......... 4.20+ 7.71++ 43

National Series--Class A
Year ended 9/30/94....... 5.30 24.86 111,374
Year ended 9/30/93....... 5.49 72.68 136,394
Year ended 9/30/92....... 6.02 63.99 132,130
Year ended 9/30/91....... 6.35 71.67 136,326
Year ended 9/30/90....... 6.64 55.01 133,412
Year ended 9/30/89....... 6.86 71.90 140,376
Year ended 9/30/88....... 7.35 40.58 135,667
Year ended 9/30/87....... 7.15 64.79 133,341
Year ended 9/30/86....... 7.81 62.28 110,428
Year ended 9/30/85....... 9.07 87.94 48,818 0.67

National Series--Class D
2/1/94** - 9/30/94 ...... 4.37+ 24.86++ 446

Colorado Series--Class A
Year ended 9/30/94....... 5.06 10.07 58,197
Year ended 9/30/93....... 5.21 14.09 67,912
Year ended 9/30/92....... 5.81 23.22 64,900
Year ended 9/30/91....... 6.19 14.60 64,310
Year ended 9/30/90....... 6.47 31.89 63,173
Year ended 9/30/89....... 6.56 -- 62,515
Year ended 9/30/88....... 6.89 12.95 66,257
Year ended 9/30/87....... 6.61 16.70 79,961 0.46
5/1/86*-9/30/86.......... 6.31+ 12.11 63,796 0.18

Colorado Series--Class D
2/1/94** - 9/30/94....... 4.05+ 10.07++ 96

</TABLE>

Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Per Share Operating Average Net to Average
Performance: Assets(1) Net Assets(1)
- ------------------- ----------- --------------
<S> <C> <C>

New Jersey--Class A
Year ended 9/30/94 ...... 1.07% 5.07%
Year ended 9/30/93 ...... 1.11 5.12
Year ended 9/30/92 ...... 1.10 5.49
Year ended 9/30/91 ...... 1.11 5.72
Year ended 9/30/90 ...... 1.12 6.01
Year ended 9/30/89 ...... 1.17 6.10
2/16/88*-9/30/88 ........ 1.36+ 5.96+

New Jersey--Class D
2/1/94**-9/30/94......... 1.87+ 4.25+

Pennsylvania--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92....... 1.16 5.64
Year ended 9/30/91....... 1.23 5.91
Year ended 9/30/90....... 1.31 5.99
Year ended 9/30/89....... 1.17 6.30
Year ended 9/30/88....... 1.08 6.71
Year ended 9/30/87....... 1.12 6.24
7/15/86*-9/30/86......... 1.80+ 4.17+

Pennsylvania--Class D
2/1/94**-9/30/94.........

National Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.91 9.05

National Series--Class D
2/1/94** - 9/30/94 ......

Colorado Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87....... 0.85 6.53
5/1/86*-9/30/86.......... 0.68+ 6.20+

Colorado Series--Class D
2/1/94** - 9/30/94.......

</TABLE>

- ------------
(1)During the periods stated, the Manager, at its discretion, reimbursed certain
expenses and/or waived all or portions of its fees. The adjusted net
investment income per share and adjusted ratios reflect what the results
would have been had the Manager not reimbursed certain expenses and/or not
waived its fees.

* Commencement of offering of Class A shares.

** Commencement of offering of Class D shares.

+ Annualized.

++ For the year ended 9/30/94.

8 & 9
<PAGE>

Georgia Series--Class A
Year ended 9/30/94....... $8.43 $0.41 $(0.86) $(0.45) $(0.41)
Year ended 9/30/93....... 7.85 0.43 0.62 1.05 (0.43)
Year ended 9/30/92....... 7.63 0.46 0.25 0.71 (0.46)
Year ended 9/30/91....... 7.18 0.47 0.46 0.93 (0.47)
Year ended 9/30/90....... 7.30 0.48 (0.10) 0.38 (0.48)
Year ended 9/30/89....... 7.09 0.48 0.22 0.70 (0.48)
Year ended 9/30/88....... 6.49 0.49 0.60 1.09 (0.49)
6/15/87*-9/30/87......... 7.14 0.13 (0.65) (0.52) (0.13)

Georgia Series--Class D
2/1/94** - 9/30/94....... 8.33 0.22 (0.84) (0.62) (0.22)

Louisiana Series--Class A
Year ended 9/30/94....... 8.79 0.44 (0.77) (0.33) (0.44)
Year ended 9/30/93....... 8.38 0.46 0.51 0.97 (0.46)
Year ended 9/30/92....... 8.18 0.49 0.24 0.73 (0.49)
Year ended 9/30/91....... 7.70 0.50 0.50 1.00 (0.50)
Year ended 9/30/90....... 7.88 0.52 (0.12) 0.40 (0.52)
Year ended 9/30/89....... 7.79 0.53 0.15 0.68 (0.53)
Year ended 9/30/88....... 7.36 0.55 0.49 1.04 (0.55)
Year ended 9/30/87....... 7.93 0.55 (0.49) 0.06 (0.55)
10/1/85*-9/30/86......... 7.14 0.58 0.79 1.37 (0.58)

Louisiana Series--Class D
2/1/94** - 9/30/94....... 8.73 0.24 (0.79) (0.55) (0.24)

Maryland Series--Class A
Year ended 9/30/94....... 8.64 0.42 (0.76) (0.34) (0.42)
Year ended 9/30/93....... 8.15 0.44 0.59 1.03 (0.44)
Year ended 9/30/92....... 7.94 0.46 0.24 0.70 (0.46)
Year ended 9/30/91....... 7.45 0.47 0.49 0.96 (0.47)
Year ended 9/30/90....... 7.59 0.48 (0.14) 0.34 (0.48)
Year ended 9/30/89....... 7.39 0.48 0.20 0.68 (0.48)
Year ended 9/30/88....... 6.87 0.47 0.56 1.03 (0.47)
Year ended 9/30/87....... 7.59 0.48 (0.72) (0.24) (0.48)
10/1/85*-9/30/86......... 7.14 0.54 0.45 0.99 (0.54)

Maryland Series--Class D
2/1/94** - 9/30/94 ...... 8.46 0.23 (0.74) (0.51) (0.23)

Massachusetts Series--Class A
Year ended 9/30/94....... 8.54 0.44 (0.67) (0.23) (0.44)
Year ended 9/30/93....... 8.06 0.47 0.55 1.02 (0.47)
Year ended 9/30/92....... 7.86 0.49 0.24 0.73 (0.49)
Year ended 9/30/91....... 7.26 0.50 0.62 1.12 (0.50)
Year ended 9/30/90....... 7.65 0.50 (0.31) 0.19 (0.50)
Year ended 9/30/89....... 7.62 0.52 0.08 0.60 (0.52)
Year ended 9/30/88....... 7.20 0.53 0.51 1.04 (0.53)
Year ended 9/30/87....... 8.07 0.55 (0.69) (0.14) (0.55)
Year ended 9/30/86....... 7.30 0.60 0.78 1.38 (0.60)
Year ended 9/30/85....... 6.89 0.63 0.41 1.04 (0.63)

Massachusetts Series--Class D
2/1/94** - 9/30/94 ...... 8.33 0.24 (0.67) (0.43) (0.24)

Michigan Series--Class A
Year ended 9/30/94....... 9.08 0.46 (0.71) (0.25) (0.46)
Year ended 9/30/93....... 8.68 0.47 0.59 1.06 (0.47)
Year ended 9/30/92....... 8.38 0.50 0.35 0.85 (0.50)
Year ended 9/30/91....... 7.89 0.51 0.51 1.02 (0.51)
Year ended 9/30/90....... 8.14 0.52 (0.16) 0.36 (0.52)
Year ended 9/30/89....... 7.94 0.54 0.23 0.77 (0.54)
Year ended 9/30/88....... 7.48 0.54 0.58 1.12 (0.54)
Year ended 9/30/87....... 8.54 0.56 (0.77) (0.21) (0.56)
Year ended 9/30/86....... 7.55 0.62 1.09 1.71 (0.62)
Year ended 9/30/85....... 7.07 0.64 0.48 1.12 (0.64)

Michigan Series--Class D
2/1/94** - 9/30/94....... 9.01 0.25 (0.73) (0.48) (0.25)

</TABLE>

Georgia Series--Class A
Year ended 9/30/94....... $(0.09) $(0.95) $7.48 (5.52)% 0.73%
Year ended 9/30/93....... (0.04) 0.58 8.43 13.96 0.63
Year ended 9/30/92....... (0.03) 0.22 7.85 9.64 0.47
Year ended 9/30/91....... (0.01) 0.45 7.63 13.30 0.59
Year ended 9/30/90....... (0.02) (0.12) 7.18 5.19 0.53
Year ended 9/30/89....... (0.01) 0.21 7.30 10.15 0.64
Year ended 9/30/88....... -- 0.60 7.09 17.51 0.36
6/15/87*-9/30/87......... -- (0.65) 6.49 (7.61) 0.17+

Georgia Series--Class D
2/1/94** - 9/30/94....... -- (0.84) 7.49 (7.57) 1.76+

Louisiana Series--Class A
Year ended 9/30/94....... (0.08) (0.85) 7.94 (3.83) 0.87
Year ended 9/30/93....... (0.10) 0.41 8.79 12.10 0.87
Year ended 9/30/92....... (0.04) 0.20 8.38 9.13 0.80
Year ended 9/30/91....... (0.02) 0.48 8.18 13.49 0.83
Year ended 9/30/90....... (0.06) (0.18) 7.70 5.20 0.81
Year ended 9/30/89....... (0.06) 0.09 7.88 9.04 0.84
Year ended 9/30/88....... (0.06) 0.43 7.79 14.69 0.85
Year ended 9/30/87....... (0.08) (0.57) 7.36 0.62 0.73
10/1/85*-9/30/86......... -- 0.79 7.93 19.47 0.62+

Louisiana Series--Class D
2/1/94** - 9/30/94....... -- (0.79) 7.94 (6.45) 1.78+

Maryland Series--Class A
Year ended 9/30/94....... (0.17) (0.93) 7.71 (4.08) 0.92
Year ended 9/30/93....... (0.10) 0.49 8.64 13.23 0.97
Year ended 9/30/92....... (0.03) 0.21 8.15 9.15 0.86
Year ended 9/30/91....... -- 0.49 7.94 13.26 0.88
Year ended 9/30/90....... -- (0.14) 7.45 4.47 0.87
Year ended 9/30/89....... -- 0.20 7.59 9.43 0.87
Year ended 9/30/88....... (0.04) 0.52 7.39 15.73 0.91
Year ended 9/30/87....... -- (0.72) 6.87 (3.41) 0.87
10/1/85*-9/30/86......... -- 0.45 7.59 14.11 0.59+

Maryland Series--Class D
2/1/94** - 9/30/94 ...... -- (0.74) 7.72 (6.21) 1.80+

Massachusetts Series--Class A
Year ended 9/30/94....... (0.21) (0.88) 7.66 (2.94) 0.85
Year ended 9/30/93....... (0.07) 0.48 8.54 13.18 0.88
Year ended 9/30/92....... (0.04) 0.20 8.06 9.75 0.77
Year ended 9/30/91....... (0.02) 0.60 7.86 15.84 0.83
Year ended 9/30/90....... (0.08) (0.39) 7.26 2.48 0.79
Year ended 9/30/89....... (0.05) 0.03 7.65 8.18 0.79
Year ended 9/30/88....... (0.09) 0.42 7.62 15.15 0.84
Year ended 9/30/87....... (0.18) (0.87) 7.20 (2.16) 0.79
Year ended 9/30/86....... (0.01) 0.77 8.07 19.49 0.78
Year ended 9/30/85....... -- 0.41 7.30 15.32 0.83

Massachusetts Series--Class D
2/1/94** - 9/30/94 ...... -- (0.67) 7.66 (5.34) 1.78+

Michigan Series--Class A
Year ended 9/30/94....... (0.09) (0.80) 8.28 (2.90) 0.84
Year ended 9/30/93....... (0.19) 0.40 9.08 12.97 0.83
Year ended 9/30/92....... (0.05) 0.30 8.68 10.55 0.76
Year ended 9/30/91....... (0.02) 0.49 8.38 13.34 0.80
Year ended 9/30/90....... (0.09) (0.25) 7.89 4.57 0.80
Year ended 9/30/89....... (0.03) 0.20 8.14 9.91 0.81
Year ended 9/30/88....... (0.12) 0.46 7.94 15.98 0.88
Year ended 9/30/87....... (0.29) (1.06) 7.48 (2.87) 0.79
Year ended 9/30/86....... (0.10) 0.99 8.54 23.73 0.82
Year ended 9/30/85....... -- 0.48 7.55 16.19 0.89

Michigan Series--Class D
2/1/94** - 9/30/94....... -- (0.73) 8.28 (5.47) 1.75+

</TABLE>
<TABLE>
<CAPTION>

Georgia Series--Class A
Year ended 9/30/94....... 5.21% 19.34% $61,466 $0.40
Year ended 9/30/93....... 5.34 12.45 64,650 0.40
Year ended 9/30/92....... 5.95 10.24 44,585 0.43
Year ended 9/30/91....... 6.30 6.07 28,317 0.43
Year ended 9/30/90....... 6.53 5.83 19,002 0.44
Year ended 9/30/89....... 6.59 -- 14,452 0.44
Year ended 9/30/88....... 7.15 6.32 9,752 0.43
6/15/87*-9/30/87......... 6.64+ 21.71 6,382 0.07

Georgia Series--Class D
2/1/94** - 9/30/94....... 4.28+ 19.34++ 849 0.21

Louisiana Series--Class A
Year ended 9/30/94....... 5.31 17.16 61,441
Year ended 9/30/93....... 5.40 9.21 67,529
Year ended 9/30/92....... 5.89 25.45 57,931
Year ended 9/30/91....... 6.31 20.85 50,089
Year ended 9/30/90....... 6.62 31.54 43,475
Year ended 9/30/89....... 6.82 12.94 43,908
Year ended 9/30/88....... 7.19 36.01 42,521
Year ended 9/30/87....... 7.02 10.20 49,661
10/1/85*-9/30/86......... 7.44+ 31.18 45,338 0.57

Louisiana Series--Class D
2/1/94** - 9/30/94....... 4.33+ 17.16++ 704

Maryland Series--Class A
Year ended 9/30/94....... 5.17 17.68 57,263
Year ended 9/30/93....... 5.28 14.10 64,472
Year ended 9/30/92....... 5.76 29.57 57,208
Year ended 9/30/91....... 6.09 18.84 54,068
Year ended 9/30/90....... 6.26 16.50 47,283
Year ended 9/30/89....... 6.38 2.19 46,643
Year ended 9/30/88....... 6.63 17.42 45,939
Year ended 9/30/87....... 6.45 21.48 50,580
10/1/85*-9/30/86......... 6.90+ 4.60 46,478 0.53

Maryland Series--Class D
2/1/94** - 9/30/94 ...... 4.26+ 17.68++ 424

Massachusetts Series--Class A
Year ended 9/30/94....... 5.46 12.44 120,149
Year ended 9/30/93....... 5.65 20.66 139,504
Year ended 9/30/92....... 6.27 27.92 128,334
Year ended 9/30/91....... 6.64 14.37 118,022
Year ended 9/30/90....... 6.66 19.26 110,246
Year ended 9/30/89....... 6.81 7.51 122,515
Year ended 9/30/88....... 7.02 21.77 126,150
Year ended 9/30/87....... 6.95 16.14 131,404
Year ended 9/30/86....... 7.50 27.39 131,732
Year ended 9/30/85....... 8.50 12.38 65,563 0.62

Massachusetts Series--Class D
2/1/94** - 9/30/94 ...... 4.52+ 12.44++ 1,099

Michigan Series--Class A
Year ended 9/30/94....... 5.32 10.06 151,095
Year ended 9/30/93....... 5.41 6.33 164,638
Year ended 9/30/92....... 5.93 32.12 144,524
Year ended 9/30/91....... 6.28 22.81 129,004
Year ended 9/30/90....... 6.47 26.36 112,689
Year ended 9/30/89....... 6.67 8.24 111,180
Year ended 9/30/88....... 7.06 34.00 104,904
Year ended 9/30/87....... 6.89 15.40 104,053
Year ended 9/30/86....... 7.41 40.68 99,013
Year ended 9/30/85....... 8.40 37.63 42,987 0.64

Michigan Series--Class D
2/1/94** - 9/30/94....... 4.40+ 10.06++ 671

</TABLE>

Georgia Series--Class A
Year ended 9/30/94....... 0.93% 5.01%
Year ended 9/30/93....... 0.93 5.04
Year ended 9/30/92....... 0.87 5.55
Year ended 9/30/91....... 1.09 5.80
Year ended 9/30/90....... 1.03 6.03
Year ended 9/30/89....... 1.19 6.04
Year ended 9/30/88....... 1.35 6.17
6/15/87*-9/30/87......... 2.87+ 3.94+

Georgia Series--Class D
2/1/94** - 9/30/94....... 1.90+ 4.15+

Louisiana Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
10/1/85*-9/30/86......... 0.71+ 7.35+

Louisiana Series--Class D
2/1/94** - 9/30/94.......

Maryland Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
10/1/85*-9/30/86......... 0.76+ 6.73+

Maryland Series--Class D
2/1/94** - 9/30/94 ......

Massachusetts Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85.......
0.88 8.45

Massachusetts Series--Class D
2/1/94** - 9/30/94 ......

Michigan Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.96 8.33

Michigan Series--Class D
2/1/94** - 9/30/94.......

</TABLE>

* Commencement of offering of Class A shares.

** Commencement of offering of Class D shares.

+ Annualized.

++ For the year ended 9/30/94.

10 & 11
<PAGE>

Minnesota Series--Class A
Year ended 9/30/94....... $8.28 $0.45 $(0.44) $(0.01) $(0.45)
Year ended 9/30/93....... 7.89 0.47 0.51 0.98 (0.47)
Year ended 9/30/92....... 7.81 0.49 0.09 0.58 (0.49)
Year ended 9/30/91....... 7.49 0.49 0.32 0.81 (0.49)
Year ended 9/30/90....... 7.60 0.49 (0.06) 0.43 (0.49)
Year ended 9/30/89....... 7.52 0.51 0.11 0.62 (0.51)
Year ended 9/30/88....... 7.12 0.51 0.48 0.99 (0.51)
Year ended 9/30/87....... 7.99 0.53 (0.66) (0.13) (0.53)
Year ended 9/30/86....... 7.15 0.58 0.88 1.46 (0.58)
Year ended 9/30/85....... 6.76 0.62 0.39 1.01 (0.62)

Minnesota Series--Class D
2/1/94** - 9/30/94 ...... 8.22 0.25 (0.49) (0.24) (0.25)

Missouri Series--Class A
Year ended 9/30/94....... 8.31 0.40 (0.79) (0.39) (0.40)
Year ended 9/30/93....... 7.80 0.42 0.57 0.99 (0.42)
Year ended 9/30/92....... 7.72 0.44 0.15 0.59 (0.44)
Year ended 9/30/91....... 7.22 0.46 0.50 0.96 (0.46)
Year ended 9/30/90....... 7.28 0.45 (0.06) 0.39 (0.45)
Year ended 9/30/89....... 7.10 0.47 0.18 0.65 (0.47)
Year ended 9/30/88....... 6.57 0.48 0.58 1.06 (0.48)
Year ended 9/30/87....... 7.32 0.47 (0.75) (0.28) (0.47)
7/1/86*-9/30/86.......... 7.14 0.11 0.18 0.29 (0.11)

Missouri Series--Class D
2/1/94** - 9/30/94 ...... 8.20 0.22 (0.79) (0.57) (0.22)

New York Series--Class A
Year ended 9/30/94....... 8.75 0.43 (0.88) (0.45) (0.43)
Year ended 9/30/93....... 8.13 0.45 0.74 1.19 (0.45)
Year ended 9/30/92....... 7.94 0.49 0.26 0.75 (0.49)
Year ended 9/30/91....... 7.40 0.50 0.54 1.04 (0.50)
Year ended 9/30/90....... 7.71 0.51 (0.26) 0.25 (0.51)
Year ended 9/30/89....... 7.57 0.52 0.17 0.69 (0.52)
Year ended 9/30/88....... 7.28 0.52 0.48 1.00 (0.52)
Year ended 9/30/87....... 8.24 0.55 (0.71) (0.16) (0.55)
Year ended 9/30/86....... 7.40 0.60 0.94 1.54 (0.60)
Year ended 9/30/85....... 6.97 0.63 0.43 1.06 (0.63)

New York Series--Class D
2/1/94** - 9/30/94 ...... 8.55 0.23 (0.88) (0.65) (0.23)

Ohio Series--Class A
Year ended 9/30/94....... 8.77 0.44 (0.70) (0.26) (0.44)
Year ended 9/30/93....... 8.28 0.46 0.56 1.02 (0.46)
Year ended 9/30/92....... 8.06 0.49 0.26 0.75 (0.49)
Year ended 9/30/91....... 7.62 0.51 0.45 0.96 (0.51)
Year ended 9/30/90....... 7.80 0.52 (0.08) 0.44 (0.52)
Year ended 9/30/89....... 7.71 0.54 0.11 0.65 (0.54)
Year ended 9/30/88....... 7.38 0.54 0.53 1.07 (0.54)
Year ended 9/30/87....... 8.09 0.57 (0.59) (0.02) (0.57)
Year ended 9/30/86....... 7.27 0.61 0.87 1.48 (0.61)
Year ended 9/30/85....... 6.83 0.63 0.44 1.07 (0.63)

Ohio Series--Class D
2/1/94** - 9/30/94 ...... 8.61 0.24 (0.69) (0.45) (0.24)

Oregon Series--Class A
Year ended 9/30/94....... 8.08 0.40 (0.59) (0.19) (0.40)
Year ended 9/30/93....... 7.60 0.42 0.48 0.90 (0.42)
Year ended 9/30/92....... 7.42 0.42 0.18 0.60 (0.42)
Year ended 9/30/91....... 6.96 0.44 0.46 0.90 (0.44)
Year ended 9/30/90....... 7.05 0.44 (0.09) 0.35 (0.44)
Year ended 9/30/89....... 6.83 0.44 0.22 0.66 (0.44)
Year ended 9/30/88....... 6.21 0.45 0.62 1.07 (0.45)
10/15/86*-9/30/87........ 7.14 0.43 (0.93) (0.50) (0.43)

Oregon Series--Class D
2/1/94**-9/30/94 ........ 8.02 0.22 (0.59) (0.37) (0.22)

</TABLE>

Minnesota Series--Class A
Year ended 9/30/94....... $(0.12) $(0.56) $7.72 0.12% 0.85%
Year ended 9/30/93....... (0.12) 0.39 8.28 13.06 0.90
Year ended 9/30/92....... (0.01) 0.08 7.89 7.71 0.80
Year ended 9/30/91....... -- 0.32 7.81 11.10 0.80
Year ended 9/30/90....... (0.05) (0.11) 7.49 5.79 0.81
Year ended 9/30/89....... (0.03) 0.08 7.60 8.34 0.83
Year ended 9/30/88....... (0.08) 0.40 7.52 14.76 0.87
Year ended 9/30/87....... (0.21) (0.87) 7.12 (1.94) 0.89
Year ended 9/30/86....... (0.04) 0.84 7.99 21.25 0.90
Year ended 9/30/85....... -- 0.39 7.15 15.04 0.89

Minnesota Series--Class D
2/1/94** - 9/30/94 ...... -- (0.49) 7.73 (3.08) 1.74+

Missouri Series--Class A
Year ended 9/30/94....... (0.11) (0.90) 7.41 (4.85) 0.74
Year ended 9/30/93....... (0.06) 0.51 8.31 13.17 0.71
Year ended 9/30/92....... (0.07) 0.08 7.80 7.87 0.83
Year ended 9/30/91....... -- 0.50 7.72 13.61 0.88
Year ended 9/30/90....... -- (0.06) 7.22 5.47 0.84
Year ended 9/30/89....... -- 0.18 7.28 9.33 0.96
Year ended 9/30/88....... (0.05) 0.53 7.10 16.74 0.86
Year ended 9/30/87....... -- (0.75) 6.57 (4.20) 0.82
7/1/86*-9/30/86.......... -- 0.18 7.32 3.87 0.86+

Missouri Series--Class D
2/1/94** - 9/30/94 ...... -- (0.79) 7.41 (7.16) 1.70+

New York Series--Class A
Year ended 9/30/94....... (0.20) (1.08) 7.67 (5.37) 0.87
Year ended 9/30/93....... (0.12) 0.62 8.75 15.26 0.94
Year ended 9/30/92....... (0.07) 0.19 8.13 9.80 0.79
Year ended 9/30/91....... -- 0.54 7.94 14.56 0.80
Year ended 9/30/90....... (0.05) (0.31) 7.40 3.19 0.79
Year ended 9/30/89....... (0.03) 0.14 7.71 9.35 0.80
Year ended 9/30/88....... (0.19) 0.29 7.57 14.74 0.86
Year ended 9/30/87....... (0.25) (0.96) 7.28 (2.42) 0.77
Year ended 9/30/86....... (0.10) 0.84 8.24 21.75 0.79
Year ended 9/30/85....... -- 0.43 7.40 15.42 0.77

New York Series--Class D
2/1/94** - 9/30/94 ...... -- (0.88) 7.67 (7.73) 1.81+

Ohio Series--Class A
Year ended 9/30/94....... (0.17) (0.87) 7.90 (3.08) 0.84
Year ended 9/30/93....... (0.07) 0.49 8.77 12.81 0.85
Year ended 9/30/92....... (0.04) 0.22 8.28 9.68 0.75
Year ended 9/30/91....... (0.01) 0.44 8.06 12.96 0.77
Year ended 9/30/90....... (0.10) (0.18) 7.62 5.70 0.77
Year ended 9/30/89....... (0.02) 0.09 7.80 8.74 0.79
Year ended 9/30/88....... (0.20) 0.33 7.71 15.76 0.83
Year ended 9/30/87....... (0.12) (0.71) 7.38 (0.66) 0.78
Year ended 9/30/86....... (0.05) 0.82 8.09 21.17 0.80
Year ended 9/30/85....... -- 0.44 7.27 15.92 0.85

Ohio Series--Class D
2/1/94** - 9/30/94 ...... -- (0.69) 7.92 (5.36) 1.78+

Oregon Series--Class A
Year ended 9/30/94....... (0.06) (0.65) 7.43 (2.38) 0.78
Year ended 9/30/93....... -- 0.48 8.08 12.21 0.78
Year ended 9/30/92....... -- 0.18 7.60 8.35 0.68
Year ended 9/30/91....... -- 0.46 7.42 13.25 0.71
Year ended 9/30/90....... -- (0.09) 6.96 4.99 0.72
Year ended 9/30/89....... -- 0.22 7.05 9.95 0.64
Year ended 9/30/88....... -- 0.62 6.83 17.89 0.54
10/15/86*-9/30/87........ -- (0.93) 6.21 (7.68) 0.52+

Oregon Series--Class D
2/1/94**-9/30/94 ........ -- (0.59) 7.43 (4.76) 1.72+

</TABLE>

Minnesota Series--Class A
Year ended 9/30/94....... 5.70% 3.30% $134,990
Year ended 9/30/93....... 5.89 5.73 144,600
Year ended 9/30/92....... 6.29 12.08 151,922
Year ended 9/30/91....... 6.28 2.61 182,979
Year ended 9/30/90....... 6.40 12.10 160,930
Year ended 9/30/89....... 6.61 7.55 148,425
Year ended 9/30/88....... 6.95 35.37 132,541
Year ended 9/30/87....... 6.85 16.76 118,093
Year ended 9/30/86....... 7.41 24.98 108,016
Year ended 9/30/85....... 8.49 20.79 53,139 $0.61

Minnesota Series--Class D
2/1/94** - 9/30/94 ...... 4.68+ 3.30++ 1,649

Missouri Series--Class A
Year ended 9/30/94....... 5.18 14.33 52,621 0.39
Year ended 9/30/93....... 5.29 17.03 56,861 0.41
Year ended 9/30/92....... 5.71 18.80 49,459
Year ended 9/30/91....... 6.10 16.30 47,659
Year ended 9/30/90....... 6.20 30.46 50,875
Year ended 9/30/89....... 6.43 32.81 49,162
Year ended 9/30/88....... 6.88 12.32 58,457
Year ended 9/30/87....... 6.51 11.53 59,122 0.47
7/1/86*-9/30/86.......... 5.21+ 0.18 45,107 0.10

Missouri Series--Class D
2/1/94** - 9/30/94 ...... 4.27+ 14.33++ 350 0.22

New York Series--Class A
Year ended 9/30/94....... 5.31 28.19 90,914
Year ended 9/30/93....... 5.37 27.90 104,685
Year ended 9/30/92....... 6.09 42.90 92,681
Year ended 9/30/91....... 6.57 44.57 83,684
Year ended 9/30/90....... 6.65 32.14 77,766
Year ended 9/30/89....... 6.78 47.69 75,471
Year ended 9/30/88....... 6.96 62.42 74,238
Year ended 9/30/87....... 6.90 20.42 72,782
Year ended 9/30/86....... 7.44 35.89 64,562
Year ended 9/30/85....... 8.47 58.56 35,897 0.62

New York Series--Class D
2/1/94** - 9/30/94 ...... 4.39+ 28.19++ 476

Ohio Series--Class A
Year ended 9/30/94....... 5.34 9.37 171,469
Year ended 9/30/93....... 5.44 30.68 190,083
Year ended 9/30/92....... 6.02 7.15 170,427
Year ended 9/30/91....... 6.42 13.95 156,179
Year ended 9/30/90....... 6.63 16.05 136,251
Year ended 9/30/89....... 6.91 12.72 131,900
Year ended 9/30/88....... 7.20 26.71 122,386
Year ended 9/30/87....... 7.05 15.00 119,703
Year ended 9/30/86....... 7.62 17.21 114,023
Year ended 9/30/85....... 8.61 25.95 50,712 0.62

Ohio Series--Class D
2/1/94** - 9/30/94 ...... 4.41+ 9.37++ 324

Oregon Series--Class A
Year ended 9/30/94....... 5.20 9.43 59,884 0.39
Year ended 9/30/93....... 5.35 8.08 62,095 0.41
Year ended 9/30/92....... 5.63 0.21 48,797 0.42
Year ended 9/30/91....... 6.06 7.60 39,350 0.42
Year ended 9/30/90....... 6.17 4.09 32,221 0.42
Year ended 9/30/89....... 6.34 0.19 30,510 0.42
Year ended 9/30/88....... 6.86 3.94 26,609 0.42
10/15/86*-9/30/87........ 6.44+ 20.16 24,434 0.39

Oregon Series--Class D
2/1/94**-9/30/94 ........ 4.32+ 9.43++ 843 0.22

</TABLE>

Minnesota Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.99% 8.40%

Minnesota Series--Class D
2/1/94** - 9/30/94 ......

Missouri Series--Class A
Year ended 9/30/94....... 0.88 5.04
Year ended 9/30/93....... 0.91 5.09
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87....... 0.89 6.43
7/1/86*-9/30/86.......... 1.07+ 5.42+

Missouri Series--Class D
2/1/94** - 9/30/94 ...... 1.80+ 4.17+

New York Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.90 8.33

New York Series--Class D
2/1/94** - 9/30/94 ......

Ohio Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.91 8.56

Ohio Series--Class D
2/1/94** - 9/30/94 ......

Oregon Series--Class A
Year ended 9/30/94....... 0.89 5.09
Year ended 9/30/93....... 0.93 5.20
Year ended 9/30/92....... 0.83 5.48
Year ended 9/30/91....... 0.91 5.86
Year ended 9/30/90....... 0.93 5.96
Year ended 9/30/89....... 0.96 6.03
Year ended 9/30/88....... 1.01 6.39
10/15/86*-9/30/87........ 1.11+ 5.85+

Oregon Series--Class D
2/1/94**-9/30/94 ........ 1.82+ 4.22+

</TABLE>

* Commencement of offering of Class A shares.

** Commencement of offering of Class D shares.

+ Annualized.

++ For the year ended 9/30/94.

12 & 13
<PAGE>

South Carolina Series--Class A
Year ended 9/30/94....... $8.52 $0.41 $(0.79) $(0.38) $(0.41)
Year ended 9/30/93....... 8.00 0.43 0.54 0.97 (0.43)
Year ended 9/30/92....... 7.71 0.45 0.31 0.76 (0.45)
Year ended 9/30/91....... 7.23 0.46 0.52 0.98 (0.46)
Year ended 9/30/90....... 7.37 0.48 (0.14) 0.34 (0.48)
Year ended 9/30/89....... 7.21 0.48 0.17 0.65 (0.48)
Year ended 9/30/88....... 6.67 0.50 0.54 1.04 (0.50)
6/30/87*-9/30/87......... 7.14 0.11 (0.47) (0.36) (0.11)

South Carolina Series--Class D
2/1/94** - 9/30/94 ...... 8.42 0.22 (0.81) (0.59) (0.22)

California High-Yield Series--Class A
Year ended 9/30/94....... 6.73 0.37 (0.34) 0.03 (0.37)
Year ended 9/30/93....... 6.65 0.39 0.28 0.67 (0.39)
Year ended 9/30/92....... 6.50 0.41 0.16 0.57 (0.41)
Year ended 9/30/91....... 6.18 0.42 0.33 0.75 (0.42)
Year ended 9/30/90....... 6.36 0.42 (0.07) 0.35 (0.42)
Year ended 9/30/89....... 6.27 0.44 0.15 0.59 (0.44)
Year ended 9/30/88....... 5.94 0.44 0.39 0.83 (0.44)
Year ended 9/30/87....... 6.73 0.46 (0.53) (0.07) (0.46)
Year ended 9/30/86....... 5.96 0.51 0.89 1.40 (0.51)
11/20/84*- 9/30/85....... 5.73 0.47 0.23 0.70 (0.47)

California High-Yield Series--Class D
2/1/94**-9/30/94......... 6.67 0.21 (0.36) (0.15) (0.21)

California Quality Series--Class A
Year ended 9/30/94....... 7.28 0.35 (0.73) (0.38) (0.35)
Year ended 9/30/93....... 6.85 0.37 0.54 0.91 (0.37)
Year ended 9/30/92....... 6.65 0.40 0.22 0.62 (0.40)
Year ended 9/30/91....... 6.22 0.40 0.46 0.86 (0.40)
Year ended 9/30/90....... 6.47 0.40 (0.13) 0.27 (0.40)
Year ended 9/30/89....... 6.29 0.42 0.19 0.61 (0.42)
Year ended 9/30/88....... 6.01 0.42 0.39 0.81 (0.42)
Year ended 9/30/87....... 6.73 0.45 (0.59) (0.14) (0.45)
Year ended 9/30/86....... 5.98 0.49 0.83 1.32 (0.49)
11/20/84*- 9/30/85....... 5.73 0.44 0.25 0.69 (0.44)

California Quality Series--Class D
2/1/94**-9/30/94 ........ 7.13 0.19 (0.75) (0.56) (0.19)

Florida Series--Class A
Year ended 9/30/94....... 8.20 0.42 (0.74) (0.32) (0.42)
Year ended 9/30/93....... 7.56 0.46 0.65 1.11 (0.46)
Year ended 9/30/92....... 7.37 0.47 0.19 0.66 (0.47)
Year ended 9/30/91....... 6.90 0.43 0.47 0.90 (0.43)
Year ended 9/30/90....... 6.99 0.45 (0.09) 0.36 (0.45)
Year ended 9/30/89....... 6.71 0.46 0.28 0.74 (0.46)
Year ended 9/30/88....... 6.02 0.47 0.69 1.16 (0.47)
11/17/86*-9/30/87........ 7.14 0.40 (1.12) (0.72) (0.40)

Florida Series--Class D
2/1/94**-9/30/94 ........ 8.10 0.24 (0.76) (0.52) (0.24)

North Carolina Series--Class A
Year ended 9/30/94....... 8.22 0.41 (0.87) (0.46) (0.41)
Year ended 9/30/93....... 7.61 0.43 0.63 1.06 (0.43)
Year ended 9/30/92....... 7.39 0.44 0.22 0.66 (0.44)
Year ended 9/30/91....... 7.04 0.45 0.35 0.80 (0.45)
8/27/90*-9/30/90......... 7.14 0.03 (0.10) (0.07) (0.03)

North Carolina Series--Class D
2/1/94**-9/30/94 ........ 8.17 0.23 (0.88) (0.65) (0.23)

</TABLE>

South Carolina Series--Class A
Year ended 9/30/94....... $(0.12) $(0.91) $7.61 (4.61)% 0.83%
Year ended 9/30/93....... (0.02) 0.52 8.52 12.52 0.85
Year ended 9/30/92....... (0.02) 0.29 8.00 10.08 0.81
Year ended 9/30/91....... (0.04) 0.48 7.71 13.95 0.81
Year ended 9/30/90....... -- (0.14) 7.23 4.48 0.73
Year ended 9/30/89....... (0.01) 0.16 7.37 9.41 0.68
Year ended 9/30/88....... -- 0.54 7.21 16.18 0.33
6/30/87*-9/30/87......... -- (0.47) 6.67 (5.37) 0.02+

South Carolina Series--Class D
2/1/94** - 9/30/94 ...... -- (0.81) 7.61 (7.14) 1.74+

California High-Yield Series--Class A
Year ended 9/30/94....... (0.09) (0.43) 6.30 0.41 0.85
Year ended 9/30/93....... (0.20) 0.08 6.73 10.66 0.88
Year ended 9/30/92....... (0.01) 0.15 6.65 9.00 0.82
Year ended 9/30/91....... (0.01) 0.32 6.50 12.53 0.83
Year ended 9/30/90....... (0.11) (0.18) 6.18 5.57 0.89
Year ended 9/30/89....... (0.06) 0.09 6.36 9.61 0.89
Year ended 9/30/88....... (0.06) 0.33 6.27 14.72 0.91
Year ended 9/30/87....... (0.26) (0.79) 5.94 (1.46) 0.83
Year ended 9/30/86....... (0.12) 0.77 6.73 24.79 0.66
11/20/84*- 9/30/85....... -- 0.23 5.96 12.22 0.41+

California High-Yield Series--Class D
2/1/94**-9/30/94......... -- (0.36) 6.31 (2.47) 1.74+

California Quality Series--Class A
Year ended 9/30/94....... (0.16) (0.89) 6.39 (5.46) 0.81
Year ended 9/30/93....... (0.11) 0.43 7.28 13.92 0.82
Year ended 9/30/92....... (0.02) 0.20 6.85 9.56 0.78
Year ended 9/30/91....... (0.03) 0.43 6.65 14.35 0.78
Year ended 9/30/90....... (0.12) (0.25) 6.22 4.22 0.83
Year ended 9/30/89....... (0.01) 0.18 6.47 9.86 0.85
Year ended 9/30/88....... (0.11) 0.28 6.29 14.37 0.86
Year ended 9/30/87....... (0.13) (0.72) 6.01 (2.59) 0.77
Year ended 9/30/86....... (0.08) 0.75 6.73 23.06 0.67
11/20/84*- 9/30/85....... -- 0.25 5.98 11.95 0.48+

California Quality Series--Class D
2/1/94**-9/30/94 ........ -- (0.75) 6.38 (8.01) 1.77+

Florida Series--Class A
Year ended 9/30/94....... (0.12) (0.86) 7.34 (3.99) 0.42
Year ended 9/30/93....... (0.01) 0.64 8.20 15.21 0.23
Year ended 9/30/92....... -- 0.19 7.56 9.24 0.17
Year ended 9/30/91....... -- 0.47 7.37 13.41 0.90
Year ended 9/30/90....... -- (0.09) 6.90 5.23 0.65
Year ended 9/30/89....... -- 0.28 6.99 11.28 0.69
Year ended 9/30/88....... -- 0.69 6.71 19.82 0.67
11/17/86*-9/30/87........ -- (1.12) 6.02 (10.74) 0.50+

Florida Series--Class D
2/1/94**-9/30/94 ........ -- (0.76) 7.34 (6.64) 1.29+

North Carolina Series--Class A
Year ended 9/30/94....... (0.05) (0.92) 7.30 (5.80) 0.44
Year ended 9/30/93....... (0.02) 0.61 8.22 14.46 0.23
Year ended 9/30/92....... -- 0.22 7.61 9.23 0.14
Year ended 9/30/91....... -- 0.35 7.39 11.97 0.07
8/27/90*-9/30/90......... -- (0.10) 7.04 (1.40) 0.94+

North Carolina Series--Class D
2/1/94**-9/30/94 ........ -- (0.88) 7.29 (8.15) 1.27+

</TABLE>

South Carolina Series--Class A
Year ended 9/30/94....... 5.12% 1.81% $115,133
Year ended 9/30/93....... 5.19 17.69 120,589
Year ended 9/30/92....... 5.71 3.37 82,882
Year ended 9/30/91....... 6.14 9.05 63,863 $0.45
Year ended 9/30/90....... 6.47 15.26 49,234 0.47
Year ended 9/30/89....... 6.48 0.03 46,487 0.46
Year ended 9/30/88....... 7.03 12.36 26,385 0.45
6/30/87*-9/30/87......... 6.34+ -- 12,033 0.08

South Carolina Series--Class D
2/1/94** - 9/30/94 ...... 4.29+ 1.81++ 1,478

California High-Yield Series--Class A
Year ended 9/30/94....... 5.74 8.36 48,007
Year ended 9/30/93....... 5.94 7.70 51,218
Year ended 9/30/92....... 6.20 45.50 49,448
Year ended 9/30/91....... 6.67 5.13 49,172
Year ended 9/30/90....... 6.68 17.66 49,312
Year ended 9/30/89....... 6.85 14.70 51,079
Year ended 9/30/88....... 7.17 20.79 53,037
Year ended 9/30/87....... 7.07 16.89 56,598
Year ended 9/30/86....... 7.88 54.08 51,046 0.50
11/20/84*- 9/30/85....... 7.67+ 88.69 29,649 0.44

California High-Yield Series--Class D
2/1/94**-9/30/94......... 4.73+ 8.36++ 650

California Quality Series--Class A
Year ended 9/30/94....... 5.20 22.16 99,020
Year ended 9/30/93....... 5.30 15.67 111,732
Year ended 9/30/92....... 5.86 34.25 93,557
Year ended 9/30/91....... 6.19 20.11 77,884
Year ended 9/30/90....... 6.31 28.61 61,854
Year ended 9/30/89....... 6.53 57.85 59,258
Year ended 9/30/88....... 6.74 46.47 58,608
Year ended 9/30/87....... 6.76 15.17 58,872
Year ended 9/30/86....... 7.36 28.66 53,388 0.48
11/20/84*- 9/30/85....... 7.10+ 57.28 24,957 0.41

California Quality Series--Class D
2/1/94**-9/30/94 ........ 4.39+ 22.16++ 812

Florida Series--Class A
Year ended 9/30/94....... 5.49 6.17 49,897 0.38
Year ended 9/30/93....... 5.82 16.42 52,855 0.40
Year ended 9/30/92....... 6.32 12.62 37,957 0.41
Year ended 9/30/91....... 6.00 -- 28,173 0.42
Year ended 9/30/90....... 6.44 13.08 24,025 0.44
Year ended 9/30/89....... 6.61 2.41 23,062 0.44
Year ended 9/30/88....... 7.18 1.07 20,457 0.45
11/17/86*-9/30/87........ 6.85+ 28.52 22,228 0.37

Florida Series--Class D
2/1/94**-9/30/94 ........ 4.61+ 6.17++ 244 0.21

North Carolina Series--Class A
Year ended 9/30/94....... 5.29 15.61 38,920 0.35
Year ended 9/30/93....... 5.44 3.13 38,828 0.35
Year ended 9/30/92....... 5.83 12.51 21,836 0.34
Year ended 9/30/91....... 6.10 -- 9,255 0.22
8/27/90*-9/30/90......... 4.48+ -- 1,377 0.01

North Carolina Series--Class D
2/1/94**-9/30/94 ........ 4.49+ 15.61++ 1,282 0.20

</TABLE>

South Carolina Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91....... 0.91% 6.04%
Year ended 9/30/90....... 0.84 6.35
Year ended 9/30/89....... 0.88 6.28
Year ended 9/30/88....... 1.00 6.36
6/30/87*-9/30/87......... 2.08+ 4.28+

South Carolina Series--Class D
2/1/94** - 9/30/94 ......

California High-Yield Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86....... 0.80 7.73
11/20/84*- 9/30/85....... 0.91+ 7.17+

California High-Yield Series--Class D
2/1/94**-9/30/94.........

California Quality Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86....... 0.80 7.23
11/20/84*- 9/30/85....... 0.98+ 6.61+

California Quality Series--Class D
2/1/94**-9/30/94 ........

Florida Series--Class A
Year ended 9/30/94....... 1.00 4.91
Year ended 9/30/93....... 1.03 5.01
Year ended 9/30/92....... 1.02 5.47
Year ended 9/30/91....... 1.15 5.75
Year ended 9/30/90....... 0.90 6.20
Year ended 9/30/89....... 0.94 6.36
Year ended 9/30/88....... 0.91 6.93
11/17/86*-9/30/87........ 1.01+ 6.35+

Florida Series--Class D
2/1/94**-9/30/94 ........ 1.84+ 4.06+

North Carolina Series--Class A
Year ended 9/30/94....... 1.13 4.60
Year ended 9/30/93....... 1.22 4.45
Year ended 9/30/92....... 1.40 4.57
Year ended 9/30/91....... 3.22 2.96
8/27/90*-9/30/90......... 4.48+ 1.04+

North Carolina Series--Class D
2/1/94**-9/30/94 ........ 1.95+ 3.82+

</TABLE>

* Commencement of offering of Class A shares.

** Commencement of offering of Class D shares.

+ Annualized.

++ For the year ended 9/30/94.

14 & 15
<PAGE>
ALTERNATIVE DISTRIBUTION SYSTEM

Each Series offers two classes of shares. Class A shares are sold to
investors who have concluded that they would prefer to pay an initial sales load
and have the benefit of lower continuing charges. Class D shares are sold to
investors choosing to pay no initial sales load, a higher distribution fee and,
with respect to redemptions within one year of purchase, a CDSL. The Alternative
Distribution System allows investors to choose the method of purchasing shares
that is most beneficial in light of the amount of the purchase, the length of
time the shares are expected to be held and other relevant circumstances.
Investors should determine whether under their particular circumstances it is
more advantageous to incur an initial sales load and be subject to lower ongoing
charges, as discussed below, or to have the entire initial purchase price
invested in a Series with the investment thereafter being subject to higher
ongoing charges and, for a one-year period, a CDSL.

Investors who qualify for reduced sales loads, as described under "Purchase
of Shares" below, might choose to purchase Class A shares because Class A shares
would be subject to lower ongoing fees. The amount invested in a Series,
however, is reduced by the initial sales load deducted at the time of purchase.

Investors who do not qualify for reduced initial sales loads but expect to
maintain their investment for an extended period of time might also purchase
Class A shares because over time the accumulated continuing distribution fee of
Class D shares may exceed the initial sales load and lower distribution fee of
Class A shares. This consideration must be weighed against the fact that the
amount invested in a Series will be reduced by the initial sales load deducted
at the time of purchase. Furthermore, the distribution fees will be offset to
the extent any return is realized on the additional funds initially invested
under the Class D alternative.

On the other hand, some investors might determine to have all of their funds
invested initially by purchasing Class D shares although remaining subject to a
higher continuing distribution fee and, for a one-year period, a CDSL as
described below. For example, an investor who does not qualify for reduced sales
loads would have to hold Class A shares for more than 6.33 years for the Class D
distribution fee to exceed the initial sales load plus the distribution fee on
Class A shares. This example does not take into account the time value of money
which further reduces the impact of the Class D shares' 1% distribution fee,
fluctuations in net asset value or the effect of the return on the investment
over this period of time.

The two classes of shares of a Series represent interests in the same
portfolio of investments, have the same rights and are generally identical in
all respects except that each class bears its separate distribution and certain
class expenses and has exclusive voting rights with respect to any matter to
which a separate vote of any class is required by the Investment Company Act of
1940, as amended (the "1940 Act"), or applicable state law. The net income
attributable to each class and dividends payable on the shares of each class
will be reduced by the amount of distribution fee of each class. Class D shares
bear a higher distribution fee which will cause the Class D shares to pay lower
dividends than the Class A shares. The two classes also have separate exchange
privileges.

Directors or Trustees of each Fund believe that no conflict of interest
currently exists between the Class A and Class D shares. On an ongoing basis,
they, in the exercise of their fiduciary duties under the 1940 Act and
applicable state law, will seek to ensure that no such conflict arises. For this
purpose, they will monitor for the existence of any material conflict among the
classes and will take such action as is reasonably necessary to eliminate any
such conflicts that may develop.

Differences Between Classes. The primary distinctions between Class A and
Class D shares are their sales load structures and ongoing expenses as set forth
below. Each class has advantages and disadvantages for different investors, and
investors should choose the class that best suits their circumstances and their
objectives.

16
<PAGE>

Annual 12b-1 Fees
(as a % of average
Sales Load daily net assets) Other Information
---------- ------------------ -----------------

Class A Maximum initial Service fee of Initial sales load
sales load of 4.75% .25%. waived or reduced
of the public for certain
offering price. purchases.

Class D None Service fee of CDSL of 1% on
.25%; Distribution redemptions within
fee of .75%. one year of
purchase.

INVESTMENT OBJECTIVE AND POLICIES

Tax-Exempt Securities

As used in this Prospectus, tax-exempt securities refers to short-term notes,
commercial paper and intermediate and long-term bonds issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia, and their political subdivisions (such as counties, cities, boroughs,
townships, school districts and authorities), agencies, and instrumentalities,
the interest on which is, in the opinion of counsel to the issuers, exempt from
regular federal income taxes and, in certain instances, applicable state or
local income taxes. Such securities are traded primarily in the over-the-counter
market.

The two principal classifications of tax-exempt bonds are "general obligation
bonds" and "revenue bonds." General obligation bonds are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source, but not from the general
taxing power. In addition, certain types of "industrial development bonds"
issued by or on behalf of public authorities to obtain funds for
privately-operated facilities are eligible for purchase, provided that the
interest paid thereon qualifies as exempt from federal income taxes and, in
certain instances, applicable state and/or local taxes. Tax-exempt industrial
development bonds do not generally carry the pledge of the credit of the issuing
municipality. Interest earned from certain tax-exempt securities (including
certain industrial development bonds) that are private activity bonds, as
defined in the Internal Revenue Code of 1986, is treated as a preference item
for purposes of the alternative minimum tax. In the event the Series invest in
tax-exempt securities whose interest is subject to the alternative minimum tax,
no more than 20% of each Series' assets would be invested in such securities,
together with securities the interest on which is subject to federal, state of
local income tax.

Tax-exempt notes generally are issued to provide for short-term capital needs
and generally have maturities of 5 years or less. They include such securities
as Tax Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes
and Construction Loan Notes. Tax-exempt commercial paper are short-term
obligations generally having a maturity of less than nine months.

It should be noted that tax-exempt securities may be adversely affected by
local political and economic conditions and developments within a particular
state. For example, adverse conditions in an industry that is significant to the
state could have a correspondingly adverse effect on specific issuers within the
state or on anticipated revenue of the issuing state; conversely, an improving
economic outlook for a significant industry may have a positive effect on such
issuers or revenue. The value of tax-exempt securities is dependent on a variety
of factors, including general conditions in the money markets or the municipal
bond markets, political and economic factors nationally or within a state, the
size of the particular offering, the supply of tax-exempt bonds, the maturity of
the obligation, the credit quality and rating of the issue and the assistance

17
<PAGE>

provided to the bond issuing authority by the applicable state. Under normal
market conditions, if general market interest rates are increasing, the prices
of bonds will decrease. In a market of decreasing interest rates, the opposite
will generally be true. In either case, the longer the maturity, the greater the
effect. A more detailed description of the tax-exempt securities in which each
Series may invest and special factors relating to them is set forth in the
Series' Statement of Additional Information.

Seligman New Jersey Tax-Exempt Fund, Inc.

The New Jersey Fund is a non-diversified, open-end management investment
company, as defined in the 1940 Act, or mutual fund, incorporated in Maryland on
March 13, 1987.

The New Jersey Fund seeks to maximize income exempt from federal income tax
and New Jersey personal income tax to the extent consistent with preservation of
capital and with consideration given to opportunities for capital gain by
investing in New Jersey tax-exempt securities that are rated investment grade on
the date of investment. The New Jersey Fund also may invest in New Jersey
tax-exempt securities that, while not rated as investment grade, are not rated
lower than B by S&P or Moody's, or if not rated, are believed, based upon credit
analysis by the Manager, to have at least comparable credit to B rated
securities. There can be no assurance that the Fund will be able to meet its
investment objective.

The Fund will attempt to invest 100% and as a matter of fundamental policy
will invest at least 80% of the value of its net assets in securities the
interest on which is exempt from federal income tax and New Jersey personal
income tax. However, in abnormal market conditions if, in the judgment of the
Manager, tax-exempt securities satisfying the Fund's objective may not be
purchased or for other temporary defensive purposes, the Fund may make
investments in securities the interest on which is exempt only from federal
income tax, such as securities issued by states other than New Jersey, or is
exempt only from New Jersey personal income tax, such as securities issued by
the U.S. Government (such as Treasury bills, notes and bonds), its agencies,
instrumentalities or authorities. Moreover, under such conditions, the Fund may
also make temporary investments in fixed-income securities the interest on which
is not exempt from either federal income tax or New Jersey personal income tax.
Such investments will be substantially in highly-rated corporate debt securities
(rated AA--, or better, by S&P or Aa3, or better, by Moody's) prime commercial
paper (rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of
"Acceptable Banking Institutions." Acceptable Banking Institutions are defined
as the 100 largest (based on assets) banks that are subject to regulatory
supervision by the U.S. Government or state governments and the 50 largest
(based on assets) foreign banks with branches or agencies in the United States.
Investments in certificates of deposit of foreign banks and foreign branches of
U.S. banks may involve certain risks, including different regulation, use of
different accounting procedures, political or other economic developments,
exchange controls, or possible seizure or nationalization of foreign deposits.
The Fund is permitted to purchase project notes and standby commitments;
however, the Fund has no present intention of investing in such securities.

Seligman Pennsylvania Tax-Exempt Fund Series

The Pennsylvania Fund is a non-diversified, open-end management investment
company organized as an unincorporated trust under the laws of the Commonwealth
of Pennsylvania by a Declaration of Trust dated May 13, 1986.

The Pennsylvania Fund seeks high tax-exempt income consistent with
preservation of capital by investing in Pennsylvania tax-exempt securities that
are rated investment grade on the date of investment. The Pennsylvania Fund also
may invest in unrated Pennsylvania tax-exempt securities if, based upon credit
analysis by the Manager, it is believed that such securities are of comparable
quality to investment grade securities. The securities which the Pennsylvania
Fund will hold ordinarily will have maturities in excess of one year. There can
be no assurance that the Fund will be able to meet its investment objective.

18
<PAGE>

Although the underlying value and quality of particular securities will be
considered in selecting investments for the Fund, capital appreciation will not
be a factor. However, the Fund may sell securities held in its portfolio and, as
a result, realize capital gain or loss, in order to eliminate unsafe investments
and investments not consistent with the preservation of the capital or tax
status of the Fund; honor redemption orders; meet anticipated redemption
requirements and negate gains from discount purchases; reinvest the earnings
from portfolio securities in like securities; or defray normal administration
expenses.

The Fund is authorized to purchase standby commitments; however, the Fund has
no present intention of investing in such securities.

Seligman Tax-Exempt Fund Series, Inc.

The Tax-Exempt Fund is a non-diversified, open-end management investment
company, as defined in the 1940 Act, incorporated in Maryland on August 8, 1983.
The Tax-Exempt Fund consists of a National Series and twelve state Series, as
described below. The Tax-Exempt Fund State Series offer investments in the
following states:

Colorado Minnesota
Georgia Missouri
Louisiana New York
Maryland Ohio
Massachusetts Oregon
Michigan South Carolina

Tax-Exempt Fund National Series seeks to maximize income exempt from federal
income taxes to the extent consistent with preservation of capital and with
consideration given to opportunities for capital gain. Under normal market
conditions, the National Series attempts to invest 100%, and as a matter of
fundamental policy will invest at least 80%, of the value of its net assets in
securities of states, territories and possessions of the United States and the
District of Columbia, and their political subdivisions, agencies and
instrumentalities, the interest on which is exempt from federal income taxes.
There can be no assurance that the Series will be able to meet its investment
objective.

Tax-Exempt Fund State Series each seek to maximize income exempt from federal
income taxes and from the personal income taxes of its designated state to the
extent consistent with preservation of capital and with consideration given to
opportunities for capital gain. Each State Series attempts to invest 100%, and
as a matter of fundamental policy invests at least 80%, of the value of its net
assets in securities the interest on which is exempt from federal income taxes
and from the personal income taxes of the designated state. Each State Series
may also invest in tax-exempt securities of issuers outside its designated state
if such securities bear interest that is exempt from federal income taxes and
personal income taxes of the state. If, in abnormal market conditions, in the
judgment of the Manager, tax-exempt securities satisfying the investment
objectives of any of the State Series are not available or for other defensive
purposes, such State Series may temporarily invest up to 20% of the value of its
net assets in instruments the interest on which is exempt from federal income
taxes, but not State personal income taxes. Such securities would

19
<PAGE>

include those set forth under Tax-Exempt Securities above, that would otherwise
meet the Series' objectives. There can be no assurance that a Series will be
able to meet its investment objective.

Each State Series and the National Series are expected to invest principally,
without percentage limitations, in tax-exempt securities that are rated
investment grade on the date of investment. Each Series also may invest in
unrated tax-exempt securities if, based upon credit analysis by the Manager, it
is believed that such securities are of comparable quality to investment grade
securities.

In unusual circumstances, the Tax-Exempt Fund may invest up to 20% of the
value of its net assets on a temporary basis in fixed-income securities, the
interest on which is subject to federal, state or local income tax, pending the
investment or reinvestment in tax-exempt securities of proceeds of sales of
shares or sales of portfolio securities or in order to avoid the necessity of
liquidating portfolio investments to meet redemptions of shares by investors or
where market conditions due to rising interest rates or other adverse factors
warrant temporary investing for defensive purposes. Investments in taxable
securities will be substantially in securities issued or guaranteed by the
United States Government (such as bills, notes and bonds), its agencies,
instrumentalities or authorities, highly-rated corporate debt securities (rated
AA-, or better, by S&P or Aa3, or better, by Moody's); prime commercial paper
(rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of
Acceptable Banking Institutions, as defined above. Investments in certificates
of deposit of foreign banks and foreign branches of U.S. banks may involve
certain risks, as described above.

Seligman Tax-Exempt Series Trust

The Tax-Exempt Trust is a non-diversified open-end management investment
company, organized as an unincorporated business trust under the laws of
Massachusetts on July 27, 1984. The Tax-Exempt Trust consists of Seligman North
Carolina Tax-Exempt Series, Seligman Florida Tax-Exempt Series, Seligman
California Tax-Exempt Quality Series and Seligman California Tax-Exempt
High-Yield Series.

Seligman North Carolina Tax-Exempt Series (the "North Carolina Series") and
Seligman Florida Tax-Exempt Series (the "Florida Series") each seek high income
exempt from federal income taxes (and with respect to the North Carolina Series,
North Carolina personal income taxes) consistent with preservation of capital
and with consideration given to capital gain by investing in North Carolina or
Florida tax exempt securities, as applicable, and investment grade commercial
paper rated within the two highest rating categories, on the date of investment.
Each Series also may invest in tax-exempt securities if, based upon credit
analysis by the Manager and under the supervision of the Trustees, it is
believed that such securities are of comparable quality to investment grade
securities.

Each series will attempt to invest 100% and as a matter of fundamental policy
will invest at least 80% of the value of its net assets in North Carolina or
Florida tax-exempt securities, as applicable, the interest on which is exempt
from federal taxes and, if applicable, North Carolina personal taxes. However,
in abnormal market conditions if, in the judgment of the Manager, North Carolina
or Florida tax-exempt securities satisfying the Series objective may not be
purchased, the Tax-Exempt Trust may make temporary investments in securities
issued by states other than North Carolina or Florida. Moreover, under such
conditions and for defensive purposes, a Series may make temporary investments
in high-quality securities, the interest on which is not exempt from federal
income tax or, if applicable, North Carolina personal taxes. Investments in
taxable securities will be substantially in securities issued or guaranteed by
the United States Government (such as bills, notes and bonds), its agencies,
instrumentalities or authorities, highly-rated corporate debt securities (rated
AA--, or better, by S&P or Aa3, or better, by Moody's); prime commercial paper
(rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of
Acceptable Banking Institutions, as defined above. Investments in certificates
of deposit of foreign banks and foreign branches of U.S. banks may involve
certain risks, as described above.

Each Series is permitted to purchase project notes and standby commitments;
however, neither Series has any present intention of investing in such
securities.

20
<PAGE>

Seligman California Tax-Exempt Quality Series (the "California Quality
Series") seeks high income exempt from federal income taxes and from the
personal income taxes of California income consistent with preservation of
capital and with consideration given to capital gain by investing in California
tax-exempt securities that on the date of investment are within the three
highest ratings of Moody's (Aaa, Aa, A for bonds; MIG1, MIG2, MIG3, for notes;
P-1 for commercial paper) or S&P (AAA, AA, A for bonds; SP-1, SP-2 for notes;
A-1+, A-1/A-2 for commercial paper). The Series also may invest in unrated
California tax-exempt securities if, based upon credit analysis by the Manager,
it is believed that such securities are of comparable quality to the rated
securities in which the series may invest. The securities held by the Series
ordinarily will have maturities in excess of one year. There can be no assurance
that the Series will be able to meet its investment objective.

Seligman California Tax-Exempt High-Yield Series (the "California High-Yield
Series") seeks the maximum income exempt from federal income taxes and from the
personal income taxes of California consistent with preservation of capital and
with consideration given to capital gain by investing in California tax-exempt
securities that on the date of investment have the following characteristics:

o Maturities ordinarily in excess of one year

o Rated within the medium to lower rating categories by Moody's (Baa or
lower for bonds; MIG3 or lower for notes; P-2 or lower for commercial
paper) or S&P (BBB or lower for bonds; A-2 or lower for commercial paper)

There can be no assurance that the Series will be able to meet its investment
objective.

The Series may invest in unrated California tax-exempt securities if, based
upon credit analysis by the Manager, it is believed that such securities are of
comparable quality to securities with a medium or low credit rating.

The securities in which this Series invests generally involve greater
volatility of price and risk of loss of principal and income than securities in
higher rating categories. Shares of this Series are appropriate for you only if
you can bear the risk inherent in seeking the highest tax-exempt yields.

During the fiscal year ended September 30, 1994 the weighted average ratings
of the California tax-exempt long-term securities held by the California
High-Yield Series were as follows:
Percentage of Total
S&P/Moody's Ratings Investments
------------------- -------------------
AAA/Aaa ................................................... 5%
AA/Aa ..................................................... 7%
A/A ....................................................... 37%
BBB/Baa ................................................... 11%
BB/Ba ..................................................... --
B/B ....................................................... --
CCC/Caa ................................................... --
Unrated ................................................... 36%

California tax-exempt securities in the fourth rating category of Moody's and
S&P, although commonly referred to as investment grade, may have some
speculative characteristics that may affect the issuer's ability to pay interest
and repay principal. California tax-exempt securities rated below the fourth
category are subject to greater risk of loss of principal and interest than
higher-rated securities, as they are predominantly speculative with respect to
the issuer's ability to pay interest and repay principal. California tax-exempt
securities rated below BBB by S&P or Baa by Moody's are also more susceptible to
price volatility due to general economic conditions and changes in interest
rates. Since tax-exempt securities are purchased from and sold to dealers,
prices at which these securities are sold will be affected by the degree of
interest of dealers to bid for them. In certain markets, dealers may be
unwilling to make bids for the securities of certain issuers that the seller
considers reasonable. Furthermore, because the net asset value of the Series'
shares reflects the degree of willingness of dealers to bid for California
tax-exempt securities, the price of the Series' shares may be subject to greater
fluctuation.

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<PAGE>

Moody's and S&P's ratings are generally accepted measures of credit risk.
They are, however, subject to certain limitations. The rating of an issuer is
based heavily on past developments and does not necessarily reflect probable
future conditions. Ratings also are not updated continuously. For a detailed
description of the ratings, see Appendix A to the Series' Statement of
Additional Information.

The Manager attempts to minimize the risks to the Series inherent in the
investment in lower-rated California tax-exempt securities through analysis of
the particular issuer and security, trends in interest rates and local and
general economic conditions, diversification and when appropriate by investing a
substantial portion of the Series' assets in California tax-exempt securities
rated in the fourth rating category or higher.

Each of the California Quality and California High-Yield Series will attempt
to invest 100% and as a matter of fundamental policy will invest at least 80% of
the value of its net assets in securities the interest on which is exempt from
federal and California personal income taxes. However, in abnormal market
conditions if, in the judgment of the Trust's Manager, tax-exempt securities
satisfying the Series' objectives may not be purchased, a Series may make
temporary investments in securities the interest on which is exempt only from
federal income tax, such as securities issued by states other than California.
Moreover, under such conditions, a Series may make temporary investments in
high-quality securities the interest on which is not exempt from either federal
or California personal income taxes. Investments in taxable securities will be
substantially in securities issued or guaranteed by the United States Government
(such as bills, notes and bonds), its agencies, instrumentalities or
authorities, highly-rated corporate debt securities (rated AA--, or better, by
S&P or Aa3, or better, by Moody's); prime commercial paper (rated A-1+/A-1 by
S&P or P-1 by Moody's) and certificates of deposit of Acceptable Banking
Institutions. Investments in certificates of deposit of foreign banks and
foreign branches of U.S. banks may involve certain risks, as described above.

Furthermore, when economic or market conditions warrant, the California
High-Yield Series may assume a temporary defensive position and invest up to 25%
of the value of its net assets in California tax-exempt securities rated within
the three highest rating categories of Moody's and/or S&P. The securities which
the Series will hold under this circumstance may have maturities of less than
one year.

Each of the California Quality Series and the California High-Yield Series
may enter into stand-by commitments. Under a stand-by commitment, a Series
obligates a dealer to repurchase at the Series' option specified securities at a
specified price. The exercise of a stand-by commitment is subject to the ability
of the dealer to make payment on demand. A Series would acquire stand-by
commitments solely to facilitate portfolio liquidity and not for trading
purposes. Prior to investing in stand-by commitments the Tax-Exempt Trust, if it
deems necessary based upon the advice of counsel, will apply to the Securities
and Exchange Commission for an exemptive order relating to such commitments and
the valuation thereof. There can be no assurance that the Securities and
Exchange Commission will provide such authorization.

The price which a Series would pay for tax-exempt securities with stand-by
commitments generally would be higher than the price which otherwise would be
paid for the tax-exempt securities alone. A Series will only purchase
obligations with stand-by commitments from sellers the Manager deems
creditworthy.

Stand-by commitments with respect to portfolio securities of a Series with
maturities of less than 60 days which are separate from the underlying portfolio
securities are not assigned a value. The cost of any such stand-by commitment is
carried as an unrealized loss from the time of purchase until it is exercised or
expires. Stand-by commitments with respect to portfolio securities of a Series
with maturities of 60 days or more which are separate from the underlying
portfolio securities and the underlying portfolio securities are valued at fair
value as determined in accordance with procedures established by the Board of
Trustees. The Board of Trustees would, in connection with the determination of
the value of such a stand-by commitment, consider among other factors the
creditworthiness of the writer of the stand-by commitment, the duration of the

22
<PAGE>

stand-by commitment, the dates on which or the periods during which the stand-by
commitment may be exercised and the applicable rules and regulations of the
Securities and Exchange Commission.

GENERAL

Investment grade bonds and notes are within the four highest credit rating
categories, and investment grade commercial paper is within the two highest
credit rating categories, of Moody's (Aaa, Aa, A, Baa for bonds; MIG 1, MIG 2,
MIG 3, MIG 4 for notes; P-1--P-2 for commercial paper) or S&P (AAA, AA, A, BBB
for bonds; SP-1--SP-2 for notes; A-1+, A-1/A-2 for commercial paper). Although
bonds and notes rated in the fourth credit rating category are commonly referred
to as investment grade they may have speculative characteristics. Such
characteristics may under certain circumstances lead to a greater degree of
market fluctuations in the value of such securities than do higher rated
tax-exempt securities of similar maturities. A detailed discussion of such
characteristics and circumstances and their effect upon each Series appears in
the Statements of Additional Information under the heading "Investment
Objectives, Policies And Risks." A description of the credit ratings is
contained in Appendix A to the Statements of Additional Information.

In addition, each Series may invest up to 15% of the value of its net assets
in illiquid securities including "restricted securities", i.e., securities that
must be registered under the Securities Act of 1933 before they may be offered
or sold to the public or securities that may be sold only in privately
negotiated transactions and certain participation interests in domestic banks.
The Fund may, however, invest without regard to the limitation on illiquid
securities in lease obligations which the Manager, in accordance with guidelines
that have been adopted by the Board of Directors or Trustees, as applicable, and
subject to their supervision, determines to be liquid. The Manager will deem
lease obligations liquid if they are publicly offered and have received an
investment grade rating of Baa or better by Moody's, or BBB or better by S&P.
Unrated lease obligations (or those below investment grade, where applicable)
will be considered liquid if the obligations come to the market through an
underwritten public offering and at least two dealers are willing to give
competitive bids. The Manager must, among other things, also review the
creditworthiness of the municipality obligated to make payment under the unrated
(or below investment grade, where applicable) lease obligation and consider such
factors as the existence of a rating or credit enhancement such as insurance,
the frequency of trades or quotes for the obligation and the willingness of
dealers to make a market in the obligation.

Each Fund, as a non-diversified investment company, is not limited by the
1940 Act as to the proportion of its assets that it may invest in the
obligations of a single issuer. However, each Series will comply with the
diversification requirements of the Internal Revenue Code of 1986, and has
therefore adopted an investment restriction, which may not be changed without
shareholder vote (except for the New Jersey Fund), prohibiting each Series from
purchasing with respect to 50% of the value of the respective Series' total
assets, securities of any issuer if immediately thereafter more than 5% of such
Series' total assets would be invested in the securities of any single issuer.
Furthermore, as a matter of policy, with respect to 75% of each Series' assets,
the respective Series may not purchase any revenue bonds if thereafter more than
5% of such Series' assets would be invested in revenue bonds of a single issuer.
This policy is not fundamental and may be changed by the Directors or Trustees,
as applicable, without shareholder approval. In the view of the Manager, the
above restriction and policy reduce the risk that might otherwise be associated
with an investment in a non-diversified investment company.

As a matter of policy, the Board or Trustees, as applicable, will not change
a Series' investment objectives without a vote of a majority of the outstanding
voting security of that Series. Under the 1940 Act, a "vote of a majority of the
outstanding voting securities" of a Series means the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of the Series or (2) 67%
or more of the shares of the Series present at a shareholder's meeting if more
than 50% of the outstanding shares of the Series are represented at the meeting
in person or by proxy.

23
<PAGE>

A more detailed list of each Series' investment policies, including a list of
those restrictions or investment activities that cannot be changed without a
vote of a majority of the outstanding voting securities of a Series appears in
each Series' Statement of Additional Information.

When Issued Securities

Each Series may purchase tax-exempt securities on a "when issued" basis,
which means that delivery of and payment for such securities normally take place
within 45 days after the date of the buyer's purchase commitment. The payment
obligation and the interest rate on when-issued securities are each fixed at the
time the purchase commitment is made, although no interest accrues to a
purchaser prior to the settlement of the purchase of the securities. As a result
the yields obtained and the market value on such securities may be higher or
lower on the date when the instruments are actually delivered to the buyer. A
Series will generally purchase a tax-exempt security sold on a when issued basis
with the intention of actually acquiring the securities on the settlement date.
Any gain realized from any such sale of securities will be subject to federal
and state taxes.

A separate account consisting of cash or high-grade liquid debt securities
equal to the amount of outstanding purchase commitments is established with the
Fund's Custodian in connection with any purchase of when issued securities. The
account is marked to market daily, with additional cash or liquid high-grade
debt securities added when necessary. A Series meets its respective obligation
to purchase when-issued securities from outstanding cash balances, sale of
securities held in the separate account, sale of other securities or, although
they would not normally expect to do so, from the sale of the when issued
securities themselves (which may have a greater or lesser value than the Series'
payment obligations).

Variable and Floating Rate Obligations

The interest rates payable on certain securities in which a Series may invest
are not fixed and may fluctuate based upon changes in market rates. The interest
rate on variable rate obligations is adjusted at predesignated periods and on
floating rate obligations whenever there is a change in the market rate of
interest on which the floating rate is based.

The interest rate is set as a specific percentage of a designated base rate,
such as the rate on a Treasury Bond or Bill or the prime rate at a major
commercial bank. Such a bond generally provides that a Series can demand payment
of the bond upon seven days' notice at an amount equal to par plus accrued
interest, which amount, in unusual cirumstances, may be more or less than the
amount a Series paid for the bond.

The maturity of floating or variable rate obligations (including
participation interests therein) is deemed to be the longer of (i) the notice
period required before a Series is entitled to receive payment of the obligation
upon demand or (ii) the period remaining until the obligation's next interest
rate adjustment. If not redeemed by a Series through the demand feature, the
obligations mature on a specified date which may range up to thirty years from
the date of issuance.

Participation Interests

From time to time, a Series may purchase from banks participation interest in
all or part of specific holdings of tax-exempt securities. Each participation
interest is backed by an irrevocable letter of credit or guarantee of the
selling bank. Participation interests will be purchased only if, in the opinion
of counsel, interest income on such interests will be tax-exempt when
distributed as dividends to shareholders of a Series.

Borrowings

Each Series may borrow money only from banks and only for temporary purposes
(such as meeting redemption requests or for extraordinary or emergency purposes
but not for the purchase of portfolio securities) in an amount not in excess of
10% of the value of its total assets at the time the borrowing is made (not
including the amount borrowed). Permitted borrowings may be secured or
unsecured. A Series will not purchase additional portfolio securities if such
Series has outstanding borrowings in excess of 5% of the value of its total
assets.

24
<PAGE>

MANAGEMENT SERVICES

The Board of Directors or Trustees, as applicable, provides broad supervision
over the affairs of the Funds. Pursuant to Management Agreements approved by the
Director or Trustees and the shareholders of each Series, the Manager manages
the investment of the assets of each Series and administers its business and
other affairs. The address of the Manager is 100 Park Avenue, New York, New York
10017.

In addition to serving the Funds, the Manager serves as manager of thirteen
other investment companies which, together with the Funds, make up the "Seligman
Group." The thirteen other companies are Seligman Capital Fund, Inc., Seligman
Cash Management Fund, Inc., Seligman Common Stock Fund, Inc., Seligman
Communications and Information Fund, Inc., Seligman Frontier Fund, Inc.,
Seligman Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc.,
Seligman High Income Fund Series, Seligman Income Fund, Inc., Seligman
Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman Select
Municipal Fund, Inc. and Tri-Continental Corporation. The aggregate assets of
the Seligman Group are approximately $6.6 billion. The Manager also provides
investment management or advice to individual and institutional accounts having
a value of approximately $3 billion.

Mr. William C. Morris is Chairman and President of the Manager and Chairman
of the Board and Chief Executive Officer of each Fund. Mr. Morris owns a
majority of the outstanding voting securities of the Manager.

The Manager also provides senior management for Seligman Data Corp., a wholly
owned subsidiary of certain investment companies in the Seligman Group, which
performs, at cost, certain recordkeep-ing functions for each Fund, maintains the
records of shareholder investment accounts and provides related services.

The Manager is entitled to receive a management fee for its services,
calculated daily and payable monthly, equal to .50% of the average daily net
assets of the Series on an annual basis. The Manager has from time to time
voluntarily waived a portion of its management fee with respect to one or more
of the Series. Each Fund pays all its expenses other than those assumed by the
Manager; expenses are allocated among the Series of the Tax-Exempt Fund and of
the Tax-Exempt Trust in a manner determined by the Directors or Trustees to be
fair and equitable. The management fee paid by each Series expressed as a
percentage of average daily net assets of that Series is presented in the
following table for the fiscal year ended September 30,1994. Total expenses for
each Series' Class A and D shares, expressed as an annualized percentage of
average daily net assets, are also presented in the following table for the
year/period ended September 30, 1994.

- --------------------------------------------------------------------------------

Annualized Expense
Management Fee Rate Ratios for
for the year ended the year/period ended
Series 9/30/94 9/30/94
------ ------------------- ------------------------
Class A Class D
-------- --------
New Jersey ...................... .33%* .90% 1.75%
Pennsylvania .................... .50% 1.16% 2.00%
National ........................ .50% .85% 1.76%
Colorado ........................ .50% .86% 1.78%
Georgia ......................... .30%* .73% 1.76%
Louisiana ....................... .50% .87% 1.78%
Maryland ........................ .50% .92% 1.80%
Massachusetts ................... .50% .85% 1.78%
Michigan ........................ .50% .84% 1.75%
Minnesota ....................... .50% .85% 1.74%
Missouri ........................ .36%* .74% 1.70%
New York ........................ .50% .87% 1.81%
Ohio ............................ .50% .84% 1.78%
Oregon .......................... .39%* .78% 1.72%
South Carolina .................. .50% .83% 1.74%
California
High-Yield .................... .50% .85% 1.74%
California Quality .............. .50% .81% 1.77%
Florida ......................... .01%* .42%** 1.29%**
North Carolina .................. --%* .44%** 1.27%**

* During the year/period ended September 30, 1994 the Manager, at its
discretion, waived all or a portion of its fees from the Florida, Georgia,
Missouri, New Jersey, North Carolina and Oregon Series.

** The Manager also reimbursed certain expenses for the Florida and North
Carolina Series.

- --------------------------------------------------------------------------------

Portfolio Manager

25
<PAGE>

and Senior Portfolio Manager of each of the Funds. He is responsible for more
than $2 billion in tax-exempt securities. Mr. Moles, with more than 22 years of
experience, has spearheaded Seligman's tax-exempt efforts since joining the
Manager in 1983.

The Manager's discussion of each Fund's performance as well as a line graph
illustrating comparative performance information between each Series of the Fund
and the Lehman Brothers Municipal Bond Index is included in the respective
Fund's fiscal 1994 Annual Report to shareholders. Copies of the Annual Report
may be obtained, without charge, by calling or writing the Funds at the
telephone numbers or address listed on the front page of this Prospectus.

Portfolio Transactions

Fixed income securities are generally traded on the over-the-counter market
on a "net" basis without a stated commission, through dealers acting for their
own account and not as brokers. Prices paid to dealers will generally include a
"spread", i.e., the difference between the prices at which a dealer is willing
to purchase or to sell the security at that time. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter.

The Management Agreements recognize that in the purchase and sale of
portfolio securities, the Manager will seek the most favorable price and
execution, and, consistent with that policy, may give consideration to the
research, statistical and other services furnished by dealers to the Manager for
its use in connection with its services to the Funds as well as other clients.

Consistent with the rules of the National Association of Securities Dealers,
Inc. and subject to seeking the most favorable price and execution available and
such other policies as the Directors may determine, the Manager may consider
sales of shares of the Funds (and, under applicable laws, of the other mutual
funds in the Seligman Group) as a factor in the selection of dealers to execute
portfolio transactions for the Fund.

Portfolio Turnover

A change in securities held by any Series is known as "portfolio turnover"
and may involve the payment by such Series of dealer spreads or underwriting
commissions and other transactions costs on the sale of the securities as well
as on the reinvestment of the proceeds in other securities. While it is the
policy of each Series to hold securities for investment, changes will be made
from time to time when the Manager believes such changes will strengthen the
Series' portfolio. The portfolio turnover of any Series is not expected to
exceed 100%.

PURCHASE OF SHARES

Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager, acts
as general distributor of the Funds' shares. Its address is 100 Park Avenue, New
York, New York 10017.

Each Series issues two classes of shares: Class A shares are sold to
investors choosing the initial sales load alternative; and Class D shares are
sold to investors choosing no initial sales load, a higher distribution fee and
a CDSL on redemptions within one year of purchase. See "Alternative Distribution
System" above.

Shares of the Series may be purchased through any authorized investment
dealer. All orders will be executed at the net asset value per share next
computed after receipt of the purchase order plus, in the case of Class A
shares, a sales load which, except for shares purchased under one of the reduced
sales load plans, will vary with the size of the purchase as shown in the
schedule under "Class A shares-Initial Sales Load" below.

The minimum amount for initial investment is $1,000; subsequent investments
must be in the minimum amount of $50 for each Series (except for investment of
dividends and capital gain distributions). The Funds reserve the right to return
investments that do not satisfy these minimums. Orders received by an authorized
dealer before the close of the New York Stock Exchange ("NYSE") (4:00 p.m. New
York City time) and accepted by SFSI before the close of business (5:00 p.m. New
York City time) on the same day will be executed at the Series' net asset value
determined as of the close of the NYSE on that day plus, in the case of Class A
shares, the applicable sales load. Orders accepted by dealers after the close of
the NYSE, or received by SFSI after the close of business, will be executed at

26
<PAGE>

the Series' net asset value next determined plus, in the case of Class A shares,
the applicable sales load. The authorized dealer through which the shareholder
purchases shares is responsible for forwarding the order to SFSI promptly.

Payment for dealer purchases may be made by check or by wire. To wire
payments, dealer orders must first be placed through SFSI's order desk and
assigned a purchase confirmation number. Funds in payment of the purchase may
then be wired to Mellon Bank, N.A., ABA #043000261, A/C (Name of Fund and
Series) (A or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE
CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER. Persons
other than dealers who wish to wire payment should contact Seligman Data Corp.
for specific wire instructions. Although the Funds make no charge for this
service, the transmitting bank may impose a wire service fee.

Existing shareholders may purchase additional shares at any time through
their dealers or by sending a check payable to (Name of Fund and Series)
directly to the Fund at P.O. Box 3936, New York, NY 10008-3936. Checks for
investment must be in U.S. dollars drawn on a domestic bank. The check should
include the shareholder's name, address, account number and class of shares.
Orders sent directly to Seligman Data Corp. will be executed at the offering
price next determined after your order is accepted plus, in the case of Class A
shares, the applicable sales load.

Seligman Data Corp. will charge a $10.00 processing fee for checks returned
to it marked "unpaid." This charge may be deducted from the account that
requested the purchase. For the protection of the Funds and their shareholders,
no redemption proceeds will be remitted to a shareholder with respect to shares
purchased by check (unless certified) until the Fund receives notice that the
check has cleared, which may be up to 15 days from the credit of the shares to
the shareholder's account.

Valuation

The net asset value of a Series is determined each day, Monday through
Friday, as of the close of the NYSE (currently 4:00 p.m. New York City time), on
each day that the NYSE is open. Net asset value is calculated separately for
each Series class. Net asset value is determined by dividing the value of the
total assets of the Series, less liabilities, by the number of shares
outstanding. Tax-exempt securities and short-term holdings maturing in more than
60 days are valued based on quotations provided by an independent pricing
service, approved by the Directors or Trustees, or in the absence thereof, at
fair value as determined in accordance with procedures approved by the Directors
or Trustees. Short-term holdings maturing in 60 days or less are generally
valued at amortized cost. Taxable securities are valued at market value, or in
the absence thereof, fair value as determined in accordance with procedures
approved by the Directors.

Class A Shares -- Initial Sales Load. Class A shares are subject to an
initial sales load which varies with the size of the purchase as shown in the
following schedule, and an annual service fee of up to .25% of the average daily
net asset value of Class A shares. See "Administration, Shareholder Services and
Distribution Plan" below.

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Class A Shares -- Sales Load Schedule

Sales Load as a
Percentage of Regular
----------------------- Dealer
Net Amount Discount
Invested as a % of
Offering (Net Asset Offering
Amount of Purchase Price Value) Price
------------------ --------- ---------- ---------

Less than $ 50,000 ........... 4.75% 4.99% 4.25%
$ 50,000- 99,999 ........... 4.00 4.17 3.50
100,000- 249,999 ........... 3.50 3.63 3.00
250,000- 499,999 ........... 2.50 2.56 2.25
500,000- 999,999 ........... 2.00 2.04 1.75
1,000,000- 3,999,999 ........... 1.00 1.01 .90
4,000,000- or more* ........... 0 0 0

* Dealers may receive a fee of .15% on sales made without a sales load.

- --------------------------------------------------------------------------------

Reduced Sales Loads. Reductions in sales loads apply to purchases of Class
A shares by a "single person," including an individual, members of a family unit
comprising husband, wife and minor children purchasing securities for their own
account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust. Purchases made by a trustee or other fiduciary for a
fiduciary account may not be aggregated with purchases made on behalf of any

27
<PAGE>

other fiduciary or individual account.

o Volume Discounts are provided if the total amount being invested in Class A
shares of a Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group that are sold with a sales load reaches levels
indicated in the above sales load schedule.

o The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the other mutual funds in the Seligman Group sold
with a sales load with the total net asset value of shares of those funds
already owned that were sold with a sales load and the total net asset value of
shares of Seligman Cash Management Fund that were acquired by an investor
through an exchange of shares of another mutual fund in the Seligman Group on
which there was a sales load to determine reduced sales loads in accordance with
the sales load schedule. An investor or a dealer must indicate if the investor
has existing accounts when making investments or opening new accounts.

o A Letter of Intent allows an investor to purchase Class A shares over a
13-month period at reduced sales loads, based upon the total amount the investor
intends to purchase plus the total net asset value of shares of the other mutual
funds in the Seligman Group already owned that were sold with a sales load and
the total net asset value of shares of Seligman Cash Management Fund that were
acquired by the investor through an exchange of shares of another mutual fund in
the Seligman Group on which there was a sales load. An investor or a dealer must
indicate if the investor has existing accounts when making investments or
opening new accounts. For more information concerning terms of Letters of
Intent, see "Terms and Conditions" on page 50.

Special Programs. Each Fund may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees (and their spouses
and minor children) of the Funds, the other investment companies in the Seligman
Group, the Manager and other companies affiliated with the Manager. Such sales
also may be made to employee benefit plans and thrift plans for such persons and
to any investment advisory, custodial, trust or other fiduciary account managed
or advised by the Manager or any affiliate.

Class A shares also may be issued without a sales load in connection with the
acquisition of cash and securities owned by other investment companies and
personal holding companies; to any registered unit investment trust which is the
issuer of periodic payment plan certificates, the net proceeds of which are
invested in Fund shares; to separate accounts established and maintained by an
insurance company which are exempt from registration under Section 3(c)(11) of
the 1940 Act; to registered representatives and employees (and their spouses and
minor children) of any dealer that has a sales agreement with SFSI; to
shareholders of mutual funds with objectives similar to a Fund who purchase
shares with redemption proceeds of such funds; to financial institution trust
departments; to registered investment advisers exercising investment
discretionary authority with respect to the purchase of Series shares, or
pursuant to sponsored arrangements with organizations which make recommendations
to or permit group solicitation of, its employees, members or participants in
connection with the purchase of shares of the Series; and to "eligible employee
benefit plans" of employers who have at least 2,000 U.S. employees to whom such
plan is made available and, regardless of the number of employees, if such plan
is established and maintained by any dealer that has a sales agreement with
SFSI. "Eligible employee benefit plans" means any plans or arrangements, whether
or not tax qualified, which provide for the purchase of a Fund's shares. Sales
of shares to such plans must be made in connection with a payroll deduction
system of plan funding or other system acceptable to Seligman Data Corp.

Class D Shares. Class D shares are sold without an initial sales load but are
subject to a CDSL if the shares are redeemed within one year, an annual
distribution fee of up to .75 of 1% and an annual service fee of up to .25 of 1%
of the average daily net asset value of Class D shares. SFSI will make a 1%
payment to dealers in respect of purchases of Class D shares.

A CDSL will be imposed on any redemption of Class D shares which were
purchased during the preceding twelve months; however, no such charge will be
imposed on shares acquired through the investment of dividends or distributions

28
<PAGE>

from any Class D shares within the Seligman Group. The amount of any CDSL will
be paid to and retained by SFSI.

To minimize the application of CDSL to a redemption, shares acquired pursuant
to the investment of dividends and distributions (which are not subject to a
CDSL) will be redeemed first; followed by shares purchased at least one year
prior to the redemption. Shares held for the longest period of time within the
applicable one year period will then be redeemed. Additionally, for those shares
determined to be subject to the CDSL, the application of the 1% CDSL will be
made to the current net asset value or original purchase price, whichever is
less.

For example, assume an investor purchased 100 shares in January at a price of
$10.00 per share. During the first year, 5 additional shares were acquired
through investment of dividends and distributions. In January of the following
year, an additional 50 shares are purchased at a price of $12.00 per share. In
March of that year, the investor chooses to redeem $1,500.00 from the account
which now holds 155 shares with a total value of $1,898.75 ($12.25 per share).
The CDSL for this transaction would be calculated as follows:

Total shares to be redeemed
(122.449 @ $12.25) as follows: $1,500.00
=========
Dividend/Distribution shares
(5 @ $12.25) $ 61.25
Shares over 1 year old
(100 @ $12.25) 1,225.00
Shares less than 1 year old subject to
CDSL (17.449 @ $12.25) 213.75
---------
Gross proceeds of redemption $1,500.00
Less CDSL (17.449 shares @ $12.00 =
$209.39 x 1% = $2.09) (2.09)
---------
Net proceeds of redemption $1,497.91
=========

For federal income tax purposes, the amount of the CDSL will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.

The CDSL will be waived or reduced in the following instances:

(a) on redemptions following the death or disability of a shareholder, as
defined in section 72(m)(7) of the Internal Revenue Code of 1986, as amended;
(b) in connection with (i) distributions from retirement plans qualified under
section 401(a) of the Code when such redemptions are necessary to make
distributions to plan participants (such payments include, but are not limited
to death, disability, retirement, or separation of service), (ii) distributions
from a custodial account under Code section 403(b)(7) or an individual
retirement account ("IRA") due to death, disability, or attainment of age 591/2,
and (iii) a tax-free return of an excess contribution to an IRA; (c) in whole or
in part, in connection with shares sold to current and retired Directors or
Trustees of the Funds; (d) in whole or in part, in connection with shares sold
to any state, county, or city or any instrumentality, department, authority, or
agency thereof, which is prohibited by applicable investment laws from paying a
sales load or commission in connection with the purchase of shares of any
registered investment management company; (e) pursuant to an automatic cash
withdrawal service; (f) in connection with the redemption of Class D shares of a
Fund if it is combined with another mutual fund in the Seligman Group, or
another similar reorganization transaction; and (g) in connection with a Fund's
right to redeem or liquidate an account that holds below a certain minimum
number or dollar amount of shares (currently $500).

If, with respect to a redemption of any Class D shares sold by a dealer, the
CDSL is waived because the redemption qualifies for a waiver as set forth above,
the dealer shall remit to SFSI promptly upon notice an amount equal to the 1%
payment or a portion of the 1% payment paid on such shares.

SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the Seligman Mutual Funds. SFSI may from time to time pay a bonus or
other incentive to dealers that sell shares of the Seligman Mutual Funds. In
some instances, these bonuses or incentives may be offered only to certain
dealers which employ a registered representative who has sold or may sell a

29
<PAGE>

significant amount of shares of a Fund and/or certain other Funds managed by the
Manager during a specified period of time. Such bonus or other incentive may
take the form of payment for travel expenses, including lodging, incurred in
connection with trips taken by qualifying registered representatives and members
of their families to places within or outside the United States. The cost to
SFSI of such promotional activities and payments will not exceed the amounts of
the sales loads retained by SFSI in respect of sales of shares of the Funds and
the other Seligman Mutual Funds effected through participating dealers and shall
be consistent with the rules of the National Association of Securities Dealers,
Inc., as then in effect.

TELEPHONE TRANSACTIONS

A shareholder whose account has either an individual or joint tenancy
registration may elect to effect the following transactions via telephone by
completing the Telephone Service Election portion of the Account Application or
a separate Telephone Service Election Form: (i) redemption of shares of a Fund,
(ii) exchange of shares of a Fund for shares of another Seligman Mutual Fund,
(iii) change of a dividend and/or capital gain distribution option, and (iv)
change of address. IRA accounts may only elect to effect exchanges or address
changes. By completing the appropriate section of the Account Application or
separate Election Form, all mutual funds with the same account number (i.e.,
registered exactly the same), including any new mutual fund in which the
shareholder invests in the future, will automatically include telephone
services. All telephone transactions are effected through Seligman Data Corp. at
(800) 221-2450.

For accounts registered as joint tenancies, each joint tenant, by electing
telephone transaction services, authorizes each of the other tenants to effect
telephone transactions on his or her behalf.

During times of drastic economic or market changes, a shareholder may
experience difficulty in contacting Seligman Data Corp. to request a redemption
or exchange of shares of a Fund. In these circumstances, the shareholder should
consider using other redemption or exchange procedures. Use of these other
redemption or exchange procedures will result in your redemption request being
processed at a later time than if telephone transactions had been used, and a
Series' net asset value may fluctuate during such periods.

Each Fund and Seligman Data Corp. will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These will
include: recording all telephone calls requesting account activity, requiring
that the caller provide certain requested personal and/or account information at
the time of the call for the purpose of establishing the caller's identity, and
sending a written confirmation of redemptions, exchanges or address changes to
the address of record each time activity is initiated by telephone. As long as
each Fund and Seligman Data Corp. follow instructions communicated by telephone
that were reasonably believed to be genuine at the time of their receipt,
neither they nor any of their affiliates will be liable for any loss to the
shareholder caused by an unauthorized transaction. Shareholders are, of course,
under no obligation to apply for telephone transaction services. In any instance
where a Fund or Seligman Data Corp. is not reasonably satisfied that
instructions received by telephone are genuine, the requested transaction will
not be executed, and neither they nor any of their affiliates will be liable for
any losses which may occur due to a delay in implementing the transaction. If a
Fund or Seligman Data Corp. does not follow the procedures described above, a
Fund or Seligman Data Corp. may be liable for any losses due to unauthorized or
fraudulent instructions. Telephone services must be effected through a
representative of Seligman Data Corp., i.e., requests may not be communicated
via Seligman Data Corp.'s automated telephone answering system. Telephone
transaction services may be terminated by a shareholder at any time by sending a
written request to Seligman Data Corp. Written acknowledgment of termination of
telephone transaction services will be sent to the shareholder.

REDEMPTION OF SHARES

Regular Redemption Procedure. A shareholder may redeem shares held in book
credit form without charge (except the CDSL, if applicable) at any time by
sending a written request to Seligman Data Corp., 100 Park Avenue, New York, New

30
<PAGE>

York 10017. The redemption request must be signed by all persons in whose name
the shares are registered. A shareholder may redeem shares that are not in book
credit form, by surrendering certificates in proper form to the same address.
Certificates should be sent by registered mail. Share certificates must be
endorsed for transfer or accompanied by an endorsed stock power signed by all
shareowners exactly as their name(s) appear(s) on the account registration. The
shareholder's letter of instruction or endorsed stock power should specify the
name of the Series, the account number, class of shares (A or D), number of
shares or dollar amount to be redeemed. The Funds cannot accept conditional
redemption requests. If the redemption proceeds are (i) $50,000 or more, (ii) to
be paid to someone other than the shareholder of record (regardless of the
amount) or (iii) to be mailed to other than the address of record (regardless of
the amount), the signature(s) of the shareholder(s) must be guaranteed by an
eligible financial institution including, but not limited to, the following:
banks, trust companies, credit unions, securities brokers and dealers, savings
and loan associations and participants in the Securities Transfer Association
Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP) or the
New York Stock Exchange Medallion Signature Program (MSP). A Fund reserves the
right to reject a signature guarantee where it is believed that the Fund will be
placed at risk by accepting such guarantee. A signature guarantee is also
necessary in order to change the account registration. Notarization by a notary
public is not an acceptable signature guarantee. Additional documentation may
also be required by Seligman Data Corp. in the event of a redemption by
corporations, executors, administrators, trustees, custodians or retirement
plans. For further information with respect to necessary redemption
requirements, please contact the Shareholder Services Department of Seligman
Data Corp. for assistance. In the case of Class A shares, and in the case of
Class D shares redeemed after one year, a shareholder will receive the net asset
value per share next determined after receipt of a request in good order. If
Class D shares are redeemed within one year of purchase, a shareholder will
receive the net asset value per share next determined after receipt of a request
in good order, less a CDSL of 1% as described under "Purchase Of Shares -- Class
D Shares" above.

A shareholder may also "sell" shares to a Fund through an investment dealer
and, in that way, be certain, providing the order is timely, of receiving the
net asset value established at the end of the day on which the dealer is given
the repurchase order. The Funds make no charge for this transaction, but the
dealer may charge a service fee. "Sell" or repurchase orders received from an
authorized dealer before the close of the NYSE and received by SFSI, the
repurchase agent, before the close of business on the same day will be executed
at the net asset value per share determined at the close of the NYSE on that
day. Repurchase orders received from authorized dealers after the close of the
NYSE or not received by SFSI prior to the close of business, will be executed at
the net asset value determined as of the close of the NYSE on the next trading
day. Shares held in a "street name" account with a broker/dealer may be sold to
a Fund only through a broker/dealer.

Check Redemption Service. The Check Redemption Service allows a shareholder
of Class A shares who owns or purchases shares in a Series worth $25,000 or more
to request Seligman Data Corp. to provide redemption checks to be drawn on the
account associated with the Series in which the shareholder is invested, in
amounts of $500 or more. The shareholder may elect to use this Service on the
Account Application or by later written request to Seligman Data Corp. Shares
for which certificates have been issued will not be available for redemption
under this Service. Dividends continue to be earned through the date preceding
the date the check clears for payment. Use of this Service is subject to Mellon
Bank, N.A. rules and regulations covering checking accounts. Separate checkbooks
will be furnished for each Series.

There is no charge for use of checks. When honoring a check that was
processed for payment, Mellon Bank, N.A. will cause a Fund to redeem exactly
enough full and fractional shares from an account to cover the amount of the
check. If shares are owned jointly, redemption checks will need to be signed by

31
<PAGE>

all persons, unless otherwise elected under Section 5 of the Account
Application, in which case a single signature will be acceptable.

In view of daily fluctuations in share value, the shareholder should be
certain that the amount of shares in the account is sufficient in a Series to
cover the amount of checks written on that Series. If insufficient shares are in
the account, the check will be returned marked "insufficient funds." The Funds
will not redeem shares in one Series to cover a check written on another Series.
Seligman Data Corp. will charge a $10.00 processing fee for any check redemption
draft returned marked "unpaid." This charge may be debited from the account the
check was drawn against.

Check Redemption books cannot be reordered unless the shareholder's account
has a value of $25,000 or more and Seligman Data Corp. has a certified tax
identification number on file.

Cancelled checks will be returned to a shareholder under separate cover the
month after they clear. The Check Redemption Service may be terminated at any
time by the Fund or Mellon Bank, N.A. See "Terms and Conditions" on page 50 for
further information. The Check Redemption Service is not available with respect
to Class D shares.

For the protection of the Funds and their shareholders, no proceeds of a
check redemption will be remitted to a shareholder with respect to shares
purchased by check (unless certified) until Seligman Data Corp. has received
notice that the check has cleared, which may be up to 15 days from the credit of
the shares to such shareholder's account.

Telephone Redemptions. Telephone redemptions of uncertificated shares may be
made in an amount of up to $50,000 per day, per account. One telephone
redemption request per day is permitted. Telephone redemption requests must be
received by Seligman Data Corp. at (800) 221-2450 between 8:30 a.m. and 4:00
p.m. New York time, on any business day and will be processed as of the close of
business on that day. Redemption requests by telephone will not be accepted
within 30 days following an address change. Keogh Plans, IRAs or other
retirement plans are not eligible for telephone redemptions. Each Fund reserves
the right to suspend or terminate its telephone redemption service at any time
without notice.

For more information about telephone redemptions, including the procedure for
electing such service and the circumstances under which shareholders may bear
the risk of loss for a fraudulent transaction, see "Telephone Transactions"
above.

General

Whether shares are redeemed or repurchased, a check for the proceeds will be
sent to the address of record within seven calendar days after acceptance of the
redemption or repurchase order and will be made payable to all of the registered
owners on the account. The Funds will not mail redemption proceeds with respect
to shares purchased by check (unless certified) until Seligman Data Corp. has
received notice that the check has cleared which may be up to 15 days from the
credit of the shares to the shareholder's account. The proceeds of a redemption
or repurchase may be more or less than the investors' cost.

The Funds reserves the right to redeem shares owned by a shareholder whose
investment in a Fund has a value of less than the minimum specified by the
Fund's Directors or Trustees which is presently $500. Shareholders are sent a
notice before such redemption is processed stating that the value of their
investment is less than the specified minimum and that they have sixty days to
make an additional investment.

Reinstatement Privilege

If a shareholder redeems Class A shares and then decides not to redeem them,
or to shift the investment to one of the other Series or to one of the other
mutual funds in the Seligman Group, a shareholder may, within 120 calendar days
of the date of redemption, use all or any part of the proceeds of the redemption
to reinstate, free of sales load, all or any part of the investment in shares of
such Series; or if the shares redeemed have been held for seven calendar days or
longer a shareholder may reinstate them in shares of any of the other Series of
the Fund or any of the other mutual funds in the Seligman Group. If a
shareholder redeems Class D shares and the redemption was subject to a CDSL, the

32
<PAGE>

shareholder may reinstate the investment in shares of the same class of the
Series or any of the other mutual funds in the Seligman Group within 120
calendar days of the date of redemption and receive a credit for the CDSL paid.
Such investment will be reinstated at the net asset value per share established
as of the close of the NYSE on the day the request is accepted. Seligman Data
Corp. must be informed that the purchase is a reinstated investment. Reinstated
shares must be registered exactly and be of the same class as the shares
previously redeemed.

Generally, exercise of the Reinstatement Privilege does not alter the federal
income tax status of any capital gain realized on a sale of a Series' shares,
but to the extent that any shares are sold at a loss and the proceeds are
reinvested in shares of the same Series some or all of the loss will not be
allowed as a deduction, depending upon the percentage of the proceeds
reinvested.

ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN

Under an Administration, Shareholder Services and Distribution Plan (the
"Plan"), each Series may pay to Seligman Financial Services, Inc. ("SFSI"), the
Funds' general distributor, an administration, shareholder services and
distribution fee in respect of each Series' Class A and Class D shares. Payments
under the Plan may include, but are not limited to: (i) compensation to
securities dealers and other organizations ("Service Organizations") for
providing distribution assistance with respect to assets invested in a Series,
(ii) compensation to Service Organizations for providing administration,
accounting and other shareholder services with respect to Series' shareholders,
and (iii) otherwise promoting the sale of shares of each Series, including
paying for the preparation of advertising and sales literature and the printing
and distribution of such promotional materials and prospectuses to prospective
investors and defraying SFSl's costs incurred in connection with its marketing
efforts with respect to shares of the Series. The Manager, in its sole
discretion, may also make similar payments to SFSI from its own resources, which
may include the management fee that the Manager receives from each Series.

Under the Plans, each Series reimburses SFSI for its expenses with respect to
Class A shares at an annual rate of up to .25% of the average daily net asset
value of a Series' Class A shares. It is expected that the proceeds from the fee
in respect of Class A shares will be used primarily to compensate Service
Organizations which enter into agreements with SFSI. Such Service Organizations
will receive from SFSI a continuing fee of up to .25% on an annual basis,
payable quarterly, of the average daily net assets of a Series' Class A shares
attributable to the particular Service Organization for providing personal
service and/or the maintenance of shareholder accounts. The fee payable from
time to time is, within such limit, determined by the Directors or Trustees of
the Funds.

The Plan as it relates to the Class A shares of the New Jersey Fund, was
first approved by the Directors on January 12, 1988 and by the shareholders on
December 16, 1988. The Plan as it relates to the Class A shares of the
Pennsylvania Fund, was first approved by the Trustees on June 10, 1986 and by
the shareholders on April 23, 1987. The Plan as it relates to the Class A shares
of the California High-Yield Series and the California Quality Series, was first
approved by the Trustees on July 21, 1992 and by the shareholders on November
23, 1992. The Plan as it relates to the Class A shares of the Florida Series,
was first approved by the Trustees on June 21, 1990 and by the shareholders on
December 7, 1990. The Plan as it relates to Class A shares of the North Carolina
Series, was first approved by the Trustees on June 21, 1990 and by the
shareholders on April 11, 1991. Each Plan as it relates to Class A shares of the
other Series, was first approved by the Directors or Trustees on July 21, 1992
and by the shareholders of each Series on November 23, 1992. The Plans are
reviewed by the Directors or Trustees annually. The total amounts paid for the
year ended September 30, 1994 in respect of each Series' Class A shares, average

33
<PAGE>

daily net assets pursuant to the Plans were as follows:

% of
Average
Series Net Assets
------ ----------
New Jersey...................................................... .23%
Pennsylvania.................................................... .22
National........................................................ .08
Colorado........................................................ .09
Georgia......................................................... .10
Louisiana....................................................... .10
Maryland........................................................ .09
Massachusetts................................................... .09
Michigan........................................................ .10
Minnesota....................................................... .10
Missouri........................................................ .09
New York........................................................ .08
Ohio............................................................ .10
Oregon.......................................................... .10
South Carolina.................................................. .10
California High-Yield........................................... .09
California Quality.............................................. .09
Florida......................................................... .23
North Carolina.................................................. .24

Under the Plans, each Series reimburses SFSI for its expenses with respect to
Class D shares at an annual rate of up to 1% of the average daily net asset
value of the Class D shares. Proceeds from a Series' Class D distribution fee
are used primarily to compensate Service Organizations for administration,
shareholder services and distribution assistance (including a continuing fee of
up to .25% on an annual basis of the average daily net asset value of a Series'
Class D shares attributable to particular Service Organizations for providing
personal services and/or the maintenance of shareholder accounts) and will
initially be used by SFSI to defray the expense of the 1% payment to be made by
it to Service Organizations at the time of the sale of Class D shares. The
amounts expended by SFSI in any one year upon the initial purchase of Class D
shares may exceed the amounts received by it from Plan payments retained.
Expenses of administration, shareholder services and distribution of a Series'
Class D shares in one fiscal year may be paid from a Series' Class D Plan fees
received in any other fiscal year. Each Plan, as it relates to Class D shares,
was approved by the Directors or Trustees on November 18, 1993 and became
effective February 1, 1994. Each Plan is reviewed by the Directors or Trustees
annually. The total amount paid for the period February 1, 1994 to September 30,
1994, in respect of each Series' Class D shares pursuant to the Plan was 1.00%
per annum of each Series' average daily net assets of the Class D shares.

EXCHANGE PRIVILEGE

A shareholder for seven calendar days or more, may, without charge, exchange
at net asset value any or all of an investment in a Series for shares of another
Series or for shares of the other mutual funds in the Seligman Group. Exchanges
may be made by mail or by telephone if telephone services are elected by the
shareholder.

Class A and Class D shares may be exchanged only for Class A and Class D
shares, respectively, of another Series or another mutual fund in the Seligman
Group on the basis of relative net asset value.

If Class D shares that are subject to a CDSL for Class D shares of another
Series or fund, for purposes of assessing the CDSL payable upon disposition of
the exchanged Class D shares, the one year holding period shall be reduced by
the holding period of the original Class D shares.

Aside from the Series described in this Prospectus, the mutual funds in the
Seligman Group available under the Exchange Privilege are:

o Seligman Capital Fund, Inc: seeks aggressive capital appreciation. Current
income is not an objective.

o Seligman Cash Management Fund, Inc: invests in high quality money market
instruments. Shares are sold at net asset value.

o Seligman Common Stock Fund, Inc: seeks favorable current income and
long-term growth of both income and capital value without exposing capital to
undue risk.

o Seligman Communications and Information Fund, Inc: invests in shares of
companies in the communications, information and related industries to produce
capital gain. Income is not an objective.

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<PAGE>

o Seligman Frontier Fund, Inc: seeks to produce growth in capital value,
income may be considered but will only be incidental to the fund's investment
objective.

o Seligman Growth Fund, Inc: seeks longer-term growth in capital value and an
increase in future income.

o Seligman Henderson Global Fund Series, Inc: consists of the Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global Technology
Fund and the Seligman Henderson International Fund all of which seek long-term
capital appreciation primarily through investing in companies either globally or
internationally.

o Seligman High Income Fund Series: seeks high current income by investing in
debt securities. The Fund consists of the U.S. Government Securities Series and
the High-Yield Bond Series.

o Seligman Income Fund, Inc: seeks high current income and the possibility of
improvement of future income and capital value.

All permitted exchanges will be based on the then current net asset values of
the respective funds. Telephone requests for exchanges must be received between
8:30 a.m. and 4:00 p.m. New York time on any business day, by Seligman Data
Corp. at (800) 221-2450 and will processed as of the close of business on that
day. The registration of an account into which an exchange is made must be
identical to the registration of the account from which shares are exchanged.
When establishing a new account by an exchange of shares, the shares being
exchanged must have a value of at least the minimum initial investment required
by the mutual fund into which the exchange is being made. The method of
receiving distributions, unless otherwise indicated, will be carried over to the
new Fund account. Account services, such as Invest-A-Check(R) Service, Directed
Dividends and Automatic Cash Withdrawal Service will not be carried over to the
new Fund account unless specifically requested and permitted by the new Fund.
Exchange orders may be placed to effect an exchange of a specific number of
shares, an exchange of shares equal to a specific dollar amount or an exchange
of all shares held. Shares for which certificates have been issued may not be
exchanged via telephone and may be exchanged only upon receipt of an exchange
request together with certificates representing shares to be exchanged in form
for transfer.

Telephone exchanges are only available to shareholders whose accounts are
registered individually, as joint tenancies or IRAs. The Exchange Privilege via
mail is generally applicable to investments in an IRA and other retirement
plans, although some restrictions may apply. The terms of the exchange offer
described herein may be modified at any time; and not all of the mutual funds in
the Seligman Group are available to residents of all states. Before making any
exchange, contact your authorized investment dealer or Seligman Data Corp. to
obtain prospectuses of any of the mutual funds in the Seligman Group.

A broker/dealer of record will be able to effect exchanges on behalf of a
shareholder only if the broker/dealer has entered into a Telephone Exchange
Agreement with SFSI wherein the broker/dealer must agree to indemnify SFSI and
the Funds from any loss or liability incurred as a result of the acceptance of
telephone exchange orders. Written confirmation of all exchanges will be
forwarded to the shareholder to whom the exchanged shares are registered and a
duplicate confirmation will be sent to the dealer of record listed on the
account. SFSI reserves the right to reject a telephone exchange request. Each
Fund reserves the right to reject any telephone requests for transactions with a
share value exceeding $250,000. Any rejected telephone exchange order may be
processed by mail. For more information about telephone exchanges, including the
procedure for electing such service and the circumstances under which
shareholders may bear the risk of loss for a fraudulent transaction, see
"Telephone Transactions" above.

Exchanges of shares are sales and may result in a gain or loss for federal
and state income tax purposes.

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FURTHER INFORMATION ABOUT
TRANSACTIONS IN THE FUNDS

Because excessive trading (including short-term, "market timing" trading) can
hurt a Series' performance, a Fund, on behalf of a Series, may refuse any
exchange (1) from any shareholder account from which there have been two
exchanges in the preceding three month period, or (2) where the exchanged shares
equal in value the lesser of $1,000,000 or 1% of the Series' net assets. A Fund
may also refuse any exchange or purchase order from any shareholder account if
the shareholder or the shareholder's broker/dealer has been advised that
previous patterns of purchases and redemptions or exchanges have been considered
excessive. Accounts under common ownership or control, including those with the
same taxpayer ID number and those administered so as to redeem or purchase
shares based upon certain predetermined market indicators, will be considered
one account for this purpose. Additionally, each Fund reserves the right to
refuse any order for the purchase of shares.

DIVIDENDS AND DISTRIBUTIONS

Each Series intends to declare dividends of net investment income daily.
Dividends are paid in additional shares on the 17th day of each month. If the
17th day of the month falls on a weekend or holiday on which the NYSE is closed,
the dividend will be distributed on the previous business day. Payments vary in
amount depending on income received from portfolio securities, expenses of
operation and the number of days in the period.

Shares will begin earning dividends on the day on which a Series receives
payment and shares are issued. Shares continue to earn dividends through the
date preceding the date they are redeemed or delivered subsequent to repurchase.

Each Series distributes substantially all of any taxable net long-term and
short-term gain realized on investments to shareholders at least annually in
accordance with requirements under the Internal Revenue Code of 1986, as
amended, and other applicable statutory and regulatory requirements.

Shareholders may elect: (1) to receive both dividends and gain distributions
in shares; (2) to receive dividends in cash and gain distributions in shares;
(3) to receive both dividends and gain distributions in cash. In the case of
prototype retirement plans, dividends and gain distributions are reinvested in
additional shares. Unless another election is made, dividends and gain
distributions will be credited to shareholder accounts in additional shares.
Class D shares acquired through a dividend or gain distribution and credited to
the account are not subject to a CDSL. Dividends and gain distributions paid in
shares are invested at the net asset value on the payable date. Shareholders may
elect to change their dividend and gain distribution options by writing Seligman
Data Corp. at the address listed below. If the shareholder has elected telephone
services, changes may also be telephoned to Seligman Data Corp. between 8:30
a.m. and 5:30 p.m. New York time, by either the shareholder or the broker/dealer
of record on the account. For information about electing telephone services, see
"Telephone Transactions." These elections must be received by Seligman Data
Corp. at least five business days before the payable date, otherwise payment
will be made in accordance with the current option on the shareholder's account.

The per share dividends from net investment income on a Series' Class D
shares will be lower than the per share dividends on a Series' Class A shares as
a result of the higher distribution fee applicable with respect to a Series'
Class D shares. Per share dividends of the two classes may also differ as a
result of differing class expenses (e.g., transfer agency expenses).
Distributions of net capital gains, if any, will be paid in the same amount for
Class A and Class D shares.

Shareholders exchanging into another mutual fund in the Seligman Group will
continue to receive dividends and gains as elected prior to such exchange unless
otherwise specified.

TAXES

Federal Income Taxes

Each Series intends to continue to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended ("Code"). Thus

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<PAGE>

qualified, each Series will be relieved of federal income tax on income
distributed to shareholders provided that it distributes each year to its
shareholders at least 90% of its net investment income and net short-term
capital gains, if any.

If, at the close of each quarter of its taxable year, at least 50% of each
Series' total assets is invested in obligations exempt from federal income tax
the Series will be eligible to pay dividends that are excludable by shareholders
from gross income for federal income tax purposes ("exempt interest dividends").
The total amount of exempt interest dividends paid by a Series to shareholders
with respect to any taxable year cannot exceed the amount of federally
tax-exempt interest received by a Series during the year less any expenses
allocable to such interest.

Distributions of net capital gain, i.e., the excess of net long-term capital
gains over net short-term capital losses ("capital gain distributions") are
taxable to shareholders as long-term capital gain, whether received in shares or
cash, regardless of how long a shareholder has held shares in the Series, except
that the portion of net capital gains representing accrued market discount on
tax-exempt obligations acquired after April 30, 1993 will be taxable as ordinary
income. Individual shareholders will be subject to federal income tax on net
capital gains at a maximum rate of 28%. Net long-term capital gain of a
corporate shareholder is taxed at the same rate as ordinary income.
Distributions from a Series' other investment income (other than exempt interest
dividends) or from net realized short-term gain will be taxable to shareholders
as ordinary income, whether received in cash or in additional shares.
Distributions will not, generally, be eligible for the dividends-received
deduction for corporations. Shareholders receiving distributions in the form of
additional shares issued by a Series will be treated for federal income tax
purposes as having received a distribution in an amount equal to the fair market
value on the date of distribution of the shares received.

Interest on indebtedness incurred or continued to purchase or carry shares of
any Series will not be deductible for federal income tax purposes to the extent
that the Series distributions are exempt from federal income tax.

Any gain or loss realized upon a sale or redemption of shares of a Series by
a shareholder who is not a dealer in securities generally will be treated as a
long-term capital gain or loss if the shares have been held for more than twelve
months and otherwise as a short-term capital gain or loss. However, if shares on
which a long-term capital gain distribution has been received are subsequently
sold or redeemed and such shares have been held for six months or less, any loss
realized will be treated as long-term capital loss to the extent that it offsets
the long-term capital gain distribution. Moreover, any loss realized by a
shareholder upon the sale of shares of a Series held six months or less will be
disallowed to the extent of any exempt-interest dividends received by the
shareholders with respect to such shares.

In determining gain or loss on shares of a Series, that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales load incurred
in acquiring such shares to the extent of any subsequent reduction of the sales
load by reason of the Exchange or Reinstatement Privilege offered by a Fund. Any
sales load not taken into account in determining the tax basis of shares sold or
exchanged within 90 days after acquisition will be added to the shareholder's
tax basis in the shares acquired pursuant to the Exchange or Reinstatement
Privilege.

Shareholders are urged to consult their tax advisers concerning the effect of
federal income taxes in their individual circumstances. In particular, persons
who may be "substantial users" (or "related persons" of substantial users) of
facilities financed by industrial development bonds or private activity bonds
should consult their tax advisers before purchasing shares of any Series.

Unless a shareholder includes a taxpayer identification number (social
security number for individuals) on the Account Application and certifies that
such shareholder is not subject to backup withholding, each Fund is required to
withhold and remit to the U.S. Treasury a portion of non-exempt distributions
and other reportable payments to the shareholder. The rate of backup withholding

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<PAGE>

is 31%. Shareholders should be aware that, under regulations promulgated by the
Internal Revenue Service, a Fund may be fined up to $50 annually for each
account for which a certified taxpayer identification number is not provided. In
the event that such a fine is imposed with respect to any uncertified account in
any year, a corresponding charge may be made against that account.

California Taxes

In the opinion of Sullivan & Cromwell, counsel to the Funds, provided that at
the end of each quarter of its taxable year at least 50% of the total assets of
the California Quality or California High-Yield Series consist of federally
tax-exempt obligations of the State of California and its political subdivisions
("California Tax-Exempt Securities"), shareholders of each such Series who are
subject to California State taxation on dividends will not be subject to
California personal income taxes on dividends from that Series attributable to
interest received by each such Series on California Tax-Exempt Securities as
well as on certain other federally tax-exempt obligations the interest on which
is exempt from California personal income taxes. To the extent that the
distributions are derived from other income, including long- or short-term
capital gains, such distributions will not be exempt from California personal
income taxation, and, further to the extent that they constitute long-term
capital dividends they will be taxed as long-term gain to a shareholder.

Interest on indebtedness incurred or continued to purchase or carry shares of
the California Quality or California High Yield Series will not be deductible
for California personal income tax purposes to the extent such Series'
distributions are exempt from California personal income tax.

Prospective investors should be aware that an investment in these Series may
not be suitable for persons who are not residents of the State of California or
who do not receive income subject to income taxes of the State.

Colorado Taxes

In the opinion of Ireland, Stapleton, Pryor & Pascoe, Colorado tax counsel to
the Tax-Exempt Fund, individuals, trusts, estates and corporations who are
holders of the Colorado Series and who are subject to the Colorado income tax
will not be subject to Colorado income tax on Colorado Series dividends to the
extent that such distributions qualify as exempt-interest dividends of a
regulated investment company under Section 852(b)(5) of the Code, that are
derived from interest income received by the Colorado Series on (a) obligations
of the State of Colorado or its political subdivisions which are issued on or
after May 1,1980, and if issued before May 1,1980, to the extent such interest
is specifically exempt from income taxation under the laws of the State of
Colorado authorizing the issuance of such obligations, (b) obligations of the
United States and its possessions to the extent included in federal taxable
income, and (c) obligations of territories and possessions of the United States
to the extent federal law exempts interest on such obligations from taxation by
states. To the extent that Colorado Series distributions are attributable to
sources not described in the preceding sentence, such as long or short-term
capital gains, such distributions will not be exempt from Colorado income tax.
There are no municipal income taxes in Colorado. As intangibles, shares in the
Colorado Series are exempt from Colorado property taxes.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Colorado Series, at least 80% of the value of the net assets
of the Colorado Series will be maintained in debt obligations which are exempt
from federal income tax and Colorado income tax.

The Colorado Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Colorado obligations and
exempt from the Colorado income tax.

Florida Taxes

Florida does not presently impose an income tax on individuals and thus
individual shareholders of the Florida Series will not be subject to any Florida
state income tax on distributions received from the Florida Series. However,
Florida imposes an intangible personal property tax on shares of the Florida
Series owned by a Florida resident on January 1 of each year unless such shares

38
<PAGE>

qualify for an exemption from that tax. The Tax-Exempt Trust has received a
Technical Assistance Advisement from the State of Florida, Department of
Revenue, to the effect that shares of the Florida Series owned by a Florida
resident will be exempt from the intangible personal property tax so long as the
Florida Series' portfolio includes on December 31 of each year only assets, such
as Florida Tax-Exempt Securities and United States Government securities, which
are exempt from that tax. Corporate shareholders may be subject to Florida
income taxes depending on the portion of the income related to the Florida
Series that is allocable to Florida under applicable Florida law.

Georgia Taxes

In the opinion of King & Spalding, Georgia tax counsel to the Tax-Exempt
Fund, under existing Georgia law, shareholders of the Georgia Series will not be
subject to Georgia income taxes on dividends with respect to shares of the
Georgia Series to the extent that such distributions represent "exempt-interest
dividends" for federal income tax purposes that are attributable to
interest-bearing obligations issued by or on behalf of the State of Georgia or
its political subdivisions, or by the governments of Puerto Rico, the Virgin
Islands or Guam (collectively, "Georgia Obligations"), which are held by the
Georgia Series. Dividends, if any, derived from capital gains or other sources
generally will be taxable to shareholders of the Georgia Series for Georgia
income tax purposes. For purposes of the Georgia intangibles tax, shares of the
Georgia Series are taxable to shareholders who are otherwise subject to the
Georgia intangibles tax.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Georgia Series, at least 80% of the value of the net assets
of the Georgia Series will be maintained in debt obligations which are exempt
from federal income tax and Georgia income taxes.

The Georgia Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Georgia Obligations and exempt
from Georgia income taxes.

Louisiana Taxes

In the opinion of Liskow & Lewis, Louisiana tax counsel to the Tax-Exempt
Fund, based upon a private ruling obtained from the Louisiana Department of
Revenue and Taxation (the "Department"), and subject to the current policies of
the Department, shareholders of the Louisiana Series who are either corporations
or individuals and residents of the State of Louisiana and who are otherwise
subject to Louisiana income tax will not be subject to Louisiana income tax on
Louisiana Series dividends to the extent that such dividends are attributable to
interest on tax-exempt obligations of the State of Louisiana or its political or
governmental subdivisions, its governmental agencies or instrumentalities. To
the extent that distributions on the Louisiana Series are attributable to
sources other than those described in the preceding sentence, such
distributions, including but not limited to, long-term or short-term capital
gains, will not be exempt from Louisiana income tax.

Non-resident individuals maintaining their domicile other than in the State
of Louisiana will not be subject to Louisiana income tax on their Louisiana
Series dividends.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Louisiana Series, the Tax-Exempt Fund will maintain at least
80% of the value of the net assets of the Louisiana Series in debt obligations
which are exempt from federal income tax and exempt from Louisiana income tax.

The Louisiana Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Louisiana obligations and
exempt from Louisiana income tax.

Maryland Taxes

In the opinion of Venable, Baetjer and Howard, LLP, Maryland tax counsel to
the Tax-Exempt Fund, as long as dividends paid by the Maryland Series qualify as
interest excludable under Section 103 of the Code and the Maryland Series
qualifies as a "regulated investment company" under the Code, the portion of
exempt-interest dividends that represents interest received by the Maryland
Series on obligations (a) of Maryland or its political subdivisions and

39
<PAGE>

authorities, or (b) of the United States or an authority, commission,
instrumentality, possession or territory of the United States, will be exempt
from Maryland state and local income taxes when allocated or distributed to a
shareholder of the Maryland Series.

Gain realized by the Maryland Series from the sale or exchange of a bond
issued by Maryland or a political subdivision of Maryland, or of the United
States or an authority, commission or instrumentality of the United States will
not be subject to Maryland state and local income taxes.

To the extent that distributions of the Maryland Series are attributable to
sources other than those described in the preceding sentences, such as interest
received by the Maryland Series on obligations issued by states other than
Maryland, income earned on repurchase contracts, or gains realized by a
shareholder upon a redemption or exchange of Maryland Series shares, such
distributions will be subject to Maryland state and local income taxes.

Income earned on certain private activity bonds will constitute a Maryland
tax preference for individual shareholders.

Interest on indebtedness incurred or continued (directly or indirectly) by a
shareholder of the Maryland Series to purchase or carry shares of the Maryland
Series will not be deductible for Maryland state and local income tax purposes
to the extent such interest is allocable to exempt-interest dividends.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Maryland Series, at least 80% of the value of the net assets
of the Maryland Series will be maintained in debt obligations which are exempt
from federal income tax and are exempt from Maryland state and local income
taxes.

The Maryland Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Maryland obligations and
exempt from Maryland state and local income taxes.

Massachusetts Taxes

In the opinion of Palmer & Dodge, Massachusetts tax counsel to the Tax-Exempt
Fund, assuming that the Tax-Exempt Fund gives the notices described at the end
of this section, holders of the Massachusetts Series who are subject to the
Massachusetts personal income tax will not be subject to tax on distributions
from the Massachusetts Series to the extent that these distributions qualify as
exempt-interest dividends of a regulated investment company under Section
852(b)(5) of the Code which are directly attributable to interest on obligations
issued by the Commonwealth of Massachusetts, its instrumentalities or its
political subdivisions or by the government of Puerto Rico or by its authority,
by the government of Guam or by its authority, or by the government of the
Virgin Islands or its authority (collectively, "Massachusetts Obligations").
Except to the extent excluded as capital gain, distributions of income to
Massachusetts holders of the Massachusetts Series that are attributable to
sources other than those described in the preceding sentence will be includable
in the Massachusetts income of the holders of the Massachusetts Series.
Distributions will not be subject to tax to the extent that they qualify as
capital gain dividends which are attributable to obligations issued by the
Commonwealth of Massachusetts, its instrumentalities or political subdivisions
under any provision of law which exempts capital gain on the obligation from
Massachusetts income taxation. Distributions which qualify as capital gain
dividends under Section 852(b)(3)(C) of the Code and which are includable in
Federal gross income will be includable in the Massachusetts income of a holder
of the Massachusetts Series as capital gain.

Massachusetts Series dividends are not excluded in determining the
Massachusetts excise tax on corporations.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Massachusetts Series, the Tax-Exempt Fund will maintain at
least 80% of the value of the net assets of the Massachusetts Series in debt
obligations which are exempt from federal income tax and Massachusetts personal
income tax.

The Massachusetts Series will notify its shareholders within 60 days after
the close of the year as to the interest and capital gains derived from
Massachusetts Obligations and exempt from Massachusetts personal income tax.

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<PAGE>

Michigan Taxes

In the opinion of Dickinson, Wright, Moon, Van Dusen & Freeman, Michigan tax
counsel to the Tax-Exempt Fund, holders of the Michigan Series who are subject
to the Michigan income tax or single business tax will not be subject to the
Michigan income tax or single business tax on Michigan Series dividends to the
extent that such distributions qualify as exempt-interest dividends of a
regulated investment company under Section 852(b)(5) of the Code which are
attributable to interest on tax-exempt obligations of the State of Michigan, or
its political or governmental subdivisions, its governmental agencies or
instrumentalities (as well as certain other federally tax-exempt obligations,
the interest on which is exempt from Michigan tax, such as, for example, certain
obligations of Puerto Rico) (collectively, "Michigan Obligations"). To the
extent that distributions on the Michigan Series are attributable to sources
other than those described in the preceding sentence, such distributions,
including, but not limited to, long or short-term capital gains, will not be
exempt from Michigan income tax or single business tax. The Michigan Department
of Treasury has issued a bulletin stating that holders of interests in regulated
investment companies who are subject to the Michigan intangibles tax will be
exempt from the tax to the extent that the investment portfolio consists of U.S.
obligations and obligations of the State of Michigan or of its political
subdivisions. In addition, Michigan Series shares owned by certain financial
institutions or by certain other persons subject to the Michigan single business
tax are not subject to the Michigan intangibles tax. To the extent the
distributions on the Michigan Series are not subject to Michigan income tax,
they are not subject to the uniform city income tax imposed by certain Michigan
cities.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Michigan Series, at least 80% of the value of the net assets
of the Michigan Series will be maintained in debt obligations which are exempt
from federal income tax and Michigan income and single business taxes.

The Michigan Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Michigan Obligations and
exempt from Michigan income tax.

Minnesota Taxes

In the opinion of Faegre & Benson Professional Limited Liability Partnership,
Minnesota tax counsel to the Tax-Exempt Fund, provided that the Minnesota Series
qualifies as a "regulated investment company" under the Code, shareholders of
the Minnesota Series who are individuals, estates, or trusts and who are subject
to the regular Minnesota personal income tax will not be subject to such regular
Minnesota tax on Minnesota Series dividends to the extent that such
distributions qualify as exempt-interest dividends of a regulated investment
company under Section 852(b)(5) of the Code which are derived from interest on
tax-exempt obligations of the State of Minnesota, or its political or
governmental subdivisions, municipalities, governmental agencies or
instrumentalities. The foregoing will apply, however, only if the portion of the
exempt-interest dividends from such Minnesota sources that is paid to all
shareholders represents 95% or more of the exempt-interest dividends that are
paid by the Minnesota Series. If the 95% test is not met, all exempt-interest
dividends that are paid by the Minnesota Series will be subject to the regular
Minnesota personal income tax. Even if the 95% test is met, to the extent that
exempt-interest dividends that are paid by the Minnesota Series are not derived
from the Minnesota sources described in the first sentence of this paragraph,
such dividends will be subject to the regular Minnesota personal income tax.
Other distributions of the Minnesota Series, including distributions from net
short-term and long-term capital gains, are generally not exempt from the
regular Minnesota personal income tax.

Minnesota presently imposes an alternative minimum tax on individuals,
estates, and trusts that is based, in part, on such taxpayers' federal
alternative minimum taxable income, which includes federal tax preference items.
The Code provides that interest on specified private activity bonds is a federal
tax preference item, and that an exempt-interest dividend of a regulated
investment company constitutes a federal tax preference item to the extent of
its proportionate share of the interest on such private activity bonds.

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Accordingly, shareholders of the Minnesota Series who are individuals, estates,
or trusts may be subject to the Minnesota alternative minimum tax as a result of
the receipt of exempt-interest dividends that are attributable to such private
activity bond interest, even though they are also derived from the Minnesota
sources described in the paragraph above. In addition, the entire portion of
exempt-interest dividends that is received by such shareholders and that is
derived from sources other than the Minnesota sources described in the paragraph
above is subject to the Minnesota alternative minimum tax. Further, should the
95% test that is described in the paragraph above fail to be met, all of the
exempt-interest dividends that are paid by the Minnesota Series, including all
of those that are derived from the Minnesota sources described in the paragraph
above, will be subject to the Minnesota alternative minimum tax, in the case of
shareholders of the Minnesota Series who are individuals, estates or trusts.

Subject to certain limitations that are set forth in the Minnesota rules,
Minnesota Series dividends, if any, that are derived from interest on certain
United States obligations are not subject to the regular Minnesota personal
income tax or the Minnesota alternative minimum tax, in the case of shareholders
of the Minnesota Series who are individuals, estates, or trusts.

Minnesota Series distributions, including exempt-interest dividends, are not
excluded in determining the Minnesota franchise tax on corporations that is
measured by taxable income and alternative minimum taxable income. Minnesota
Series distributions may also be taken into account in certain cases in
determining the minimum fee that is imposed on corporations, S corporations, and
partnerships.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Minnesota Series, at least 80% of the value of the net assets
of the Minnesota Series will be maintained in debt obligations which are exempt
from the federal income tax and the Minnesota personal income tax. The Minnesota
Series will invest so that the 95% test described in the paragraphs above is
met.

The Minnesota Series will notify its shareholders within 30 days after the
close of the year as to the interest derived from Minnesota obligations and
exempt from the Minnesota personal income tax.

Missouri Taxes

In the opinion of Bryan Cave, Missouri tax counsel to the Tax-Exempt Fund,
dividends distributed to individual shareholders of the Missouri Series will be
exempt from the Missouri personal income tax imposed by Chapter 143 of the
Missouri Revised Statutes to the extent that such dividends qualify as exempt
interest dividends of a regulated investment company under Section 852(b)(5) of
the Code and are derived from interest on obligations of the State of Missouri
or any of its political subdivisions or authorities or obligations issued by the
government of Puerto Rico or its authority (collectively, "Missouri
Obligations"). Capital gain dividends, as defined in Section 852(b)(3) of the
Code, distributable by the Fund to individual resident shareholders of the
Missouri Series, to the extent includable in federal adjusted gross income, will
be subject to Missouri income taxation. Shares in the Missouri Series are not
subject to Missouri personal property taxes.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Missouri Series, at least 80% of the value of the net assets
of the Missouri Series will be maintained in debt obligations which are exempt
from federal income tax and Missouri personal income tax.

The Missouri Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Missouri Obligations and
exempt from the Missouri personal income tax.

New Jersey Taxes

In the opinion of McCarter & English, New Jersey counsel to the New Jersey
Fund, income distributions paid from a "qualified investment fund" are exempt
from the New Jersey personal income tax, to the extent attributable to
tax-exempt obligations specified by New Jersey law. As defined in N.J.S.A.
54A:6-14.1, a "qualified investment fund" is any investment or trust company, or

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series of such investment company or trust registered with the Securities and
Exchange Commission, which for the calendar year in which a distribution is
paid, which has no investments other than interest-bearing obligations,
obligations issued at a discount, and cash and cash items, including
receivables, and which has at least 80% of the aggregate principal amount of all
its investments, excluding cash and cash items, including receivables, invested
in obligations issued by New Jersey, or in obligations that are free from state
or local taxation under New Jersey and federal laws such as obligations issued
by the governments of Puerto Rico, Guam or the Virgin Islands ("Tax-Exempt
Securities"). Interest income and gains realized by the New Jersey Fund upon
disposition of obligations and distributed to the shareholders are exempt from
the New Jersey personal income tax to the extent attributable to Tax-Exempt
Securities. Gains resulting from the redemption or sale of shares of the New
Jersey Fund would also be exempt from the New Jersey personal income tax.

The New Jersey personal income tax is not applicable to corporations. For all
corporations subject to the New Jersey Corporate Business Tax, interest on
Tax-Exempt Securities is included in the net income tax base for purposes of
computing the corporation business tax. Furthermore, any gain upon the
redemption or sale of shares by a corporate shareholder is also included in the
net income tax base for purposes of computing the Corporation Business Tax.

The New Jersey Fund will notify shareholders by February 15 of each calendar
year as to the amounts of all such dividends and distributions which are exempt
from federal income taxes and New Jersey personal income tax and the amounts, if
any, which are subject to such taxes. Shareholders are, however, urged to
consult with their own tax advisors as to the federal, state or local tax
consequences in their specific circumstances.

Prospective investors should be aware that an investment in a state
tax-exempt fund may not be suitable for persons who do not receive income
subject to income taxes of such state.

New York State and City Taxes

In the opinion of Sullivan & Cromwell, counsel to the Funds, holders of the
New York Series who are subject to New York State and City tax on dividends will
not be subject to New York State and City personal income taxes on New York
Series dividends to the extent that such distributions qualify as
exempt-interest dividends under Section 852(b)(5) of the Code and represent
interest income attributable to federally tax-exempt obligations of the State of
New York and its political subdivisions (as well as certain other federally
tax-exempt obligations the interest on which is exempt from New York State and
City personal income taxes such as, for example, certain obligations of Puerto
Rico) (collectively, "New York Obligations"). To the extent that distributions
on the New York Series are derived from other income, including long or
short-term capital gains, such distributions will not be exempt from State or
City personal income taxes.

Dividends on the New York Series are not excluded in determining New York
State or City franchise taxes on corporations and financial institutions.

Except during temporary defensive periods or when acceptable investments are
unavailable to the New York Series, the Tax-Exempt Fund will maintain at least
80% of the value of the net assets of the New York Series in debt obligations
which are exempt from federal income tax and New York State and City personal
income taxes.

The Series will notify its shareholders within 45 days after the close of the
year as to the interest derived from New York Obligations and exempt from New
York State and City personal income taxes.

North Carolina Taxes

In the opinion of Horack, Tally, Pharr & Lowndes, tax counsel to the North
Carolina Series, distributions from the North Carolina Series to shareholders
subject to North Carolina income taxes will not be taxable for North Carolina
income tax purposes to the extent the distributions either (i) qualify as
exempt-interest dividends of a regulated investment company under the Code and
are attributable to interest on obligations issued by the State of North

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<PAGE>

Carolina and its political subdivisions or (ii) are dividends attributable to
interest on direct obligations of the United States government and agencies and
possessions of the United States, so long as in both cases the North Carolina
Series provides a supporting statement to the shareholders designating the
portion of the dividends of the North Carolina Series attributable to interest
on obligations issued by the State of North Carolina and its political
subdivisions or direct obligations of the United States government and agencies
and possessions of the United States. In the absence of such a statement, the
total amount of the dividends will be taxable for North Carolina income tax
purposes. Distributions attributable to other sources, including exempt-interest
dividends attributable to interest on obligations of states other than North
Carolina and the political subdivisions of such other states as well as capital
gains, will be taxable for North Carolina income tax purposes.

The North Carolina Series will notify its shareholders within sixty days
after the close of its taxable year as to the amount of dividends and
distributions to the shareholders of the North Carolina Series which are exempt
from North Carolina income taxes and the dollar amount, if any, which is subject
to North Carolina income taxes.

For purposes of the North Carolina tax on the value of intangible personal
property, there will be allowed a percentage reduction in the value of the
shares of the North Carolina Series equal to the percentage of the North
Carolina Series invested in direct obligations of the United States government
and agencies and possessions of the United States and obligations of the State
of North Carolina and its political subdivisions and agencies. In order for this
percentage reduction to apply, information regarding the composition of the
investments of the North Carolina Series must be submitted annually to the North
Carolina Department of Revenue by the North Carolina Series. The North Carolina
Series will provide such information and the percentage reduction in the value
of the shares of the North Carolina Series for North Carolina intangibles tax
purposes to the shareholders annually.

Ohio Taxes

In the opinion of Squire, Sanders & Dempsey, Ohio tax counsel to the
Tax-Exempt Fund, holders of the Ohio Series who are subject to the Ohio personal
income tax, the net income base of the Ohio corporation franchise tax, or school
district or municipal income taxes in Ohio will not be subject to such taxes on
dividend distributions with respect to shares of the Ohio Series to the extent
that such distributions are properly attributable to interest (including accrued
original issue discount) on obligations issued by or on behalf of the State of
Ohio, political subdivisions thereof, or agencies or instrumentalities thereof
("Ohio Obligations"), or by the government of Puerto Rico, the Virgin Islands or
Guam, provided that the Ohio Series qualifies as a "regulated investment
company" for federal income tax purposes and that at all times at least 50% of
the value of the total assets of the Ohio Series consists of Ohio Obligations or
similar obligations of other states or their subdivisions. It is assumed for
purposes of this discussion of Ohio taxes that these requirements are satisfied.
Shares of the Ohio Series will be included in a corporation's tax base for
purposes of computing the Ohio corporation franchise tax on the net worth basis.

Dividends on shares of the Ohio Series that are attributable to gain from the
sale, exchange or other disposition of Ohio Obligations held by the Ohio Series
are not subject to the Ohio personal income tax, the net income base of the Ohio
corporation franchise tax, or school district or municipal income taxes in Ohio.

The Ohio Series is not subject to the Ohio personal income tax, Ohio school
district income taxes, the Ohio corporation franchise tax, or the Ohio dealers
in intangibles tax, provided that, with respect to the Ohio corporation
franchise tax and the Ohio dealers in intangibles tax, the Tax-Exempt Fund
complies with certain reporting requirements.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Ohio Series, the Tax-Exempt Fund will maintain at least 80%
of the value of the net assets of the Ohio Series in debt obligations which are
exempt from federal income tax and the Ohio personal income tax and the net

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<PAGE>

income base of the Ohio corporation franchise tax.

The Ohio Series will notify its shareholders within 60 days after the close
of the year as to the status for Ohio tax purposes of distributions with respect
to shares of the Ohio Series.

Oregon Taxes

In the opinion of Schwabe, Williamson & Wyatt, Oregon tax counsel to the
Tax-Exempt Fund, under present law, individual shareholders of the Oregon Series
will not be subject to Oregon personal income taxes on distributions received
from the Oregon Series to the extent that such distributions (1) qualify as
"exempt-interest dividends" under Section 852 (b)(5) of the Code and (2) are
derived from interest on obligations of the State of Oregon or any of its
political subdivisions or authorities or from interest on obligations of the
governments of Puerto Rico, Guam, the Virgin Islands or the Northern Mariana
Islands (collectively, "Oregon Obligations"). Other distributions, including any
long-term and short-term capital gains, will generally not be exempt from
personal income taxes in Oregon.

No portion of distributions from the Oregon Series are exempt from Oregon
excise tax on corporations. However, shares of the Oregon Series are not subject
to Oregon property tax.

Except during temporary defensive periods or when acceptable investments are
unavailable to the Oregon Series, at least 80% of the value of the net assets of
the Oregon Series will be maintained in debt obligations, the interest payments
of which are exempt from federal income tax and Oregon personal income taxes.

The Oregon Series will notify its shareholders within 60 days after the close
of the year as to the interest derived from Oregon Obligations and exempt from
Oregon personal income taxes.

Pennsylvania Taxes

In the opinion of Ballard Spahr Andrews & Ingersoll, Pennsylvania tax counsel
to the Pennsylvania Fund, individual shareholders of the Pennsylvania Fund who
are subject to the Pennsylvania personal income tax will not be subject to
Pennsylvania personal income tax on distributions from the Pennsylvania Fund to
the extent that such distributions are attributable to interest paid on
Pennsylvania Tax-Exempt Securities or U.S. Government obligations. Distributions
attributable to most other sources, including distributions attributable to gain
on the sale of such instruments, will not be exempt from Pennsylvania personal
income tax.

The same rules apply under the tax imposed by the Philadelphia School
District on the unearned income of Philadelphia residents, except that all
capital gain distributions are exempt from the School District tax regardless of
the source from which they are paid.

Corporate shareholders who are subject to the Pennsylvania corporate net
income tax will not be subject to corporate net income tax on distributions from
the Pennsylvania Fund that qualify as "exempt-interest dividends" for federal
income tax purposes or are derived from interest on U.S. Government obligations.

Individual shareholders of the Pennsylvania Fund who are subject to the
Pennsylvania personal property tax will be exempt from Pennsylvania personal
property tax on their shares of the Pennsylvania Fund to the extent that the
Pennsylvania Fund portfolio consists of Pennsylvania Tax-Exempt Securities and
U.S. Government obligations on the annual assessment date. Corporations are not
subject to Pennsylvania personal property taxes.

Shareholders will receive an annual Statement of Account and information
regarding the federal and Pennsylvania income tax status of all distributions
made during the year. Information will also be provided to individual
Pennsylvania shareholders regarding the portion of the value of their shares, if
any, subject to Pennsylvania personal property tax.

Prospective investors should be aware that an investment in the Pennsylvania
Fund may not be suitable for persons who are not residents of the State of
Pennsylvania or who do not receive income subject to income taxes of the State.

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South Carolina Taxes

In the opinion of Sinkler & Boyd, South Carolina tax counsel to the
Tax-Exempt Fund, shareholders of the South Carolina Series who are subject to
South Carolina individual or corporate income taxes will not be subject to such
taxes on South Carolina Series' dividends to the extent that such dividends
qualify as either (1) exempt-interest dividends of a regulated investment
company under Section 852(b)(5) of the Code, which are derived from interest on
tax-exempt obligations of the State of South Carolina or any of its political
subdivisions or on obligations of the Government of Puerto Rico that are exempt
from federal income tax; or (2) dividends derived from interest or dividends on
obligations of the United States and its possessions or on obligations or
securities of any authority or commission exempt from state income taxes under
the laws of the United States (collectively, "South Carolina Obligations"). To
the extent that South Carolina Series' distributions are attributable to other
sources, such as long or short-term capital gains, such distributions will not
be exempt from South Carolina taxes.

Except during temporary defensive periods or when acceptable investments are
unavailable to the South Carolina Series, at least 80% of the value of the net
assets of the South Carolina Series will be maintained in debt obligations which
are exempt from federal income tax and South Carolina income tax.

The South Carolina Series will notify its shareholders within 60-days after
the close of the year as to the interest derived from South Carolina Obligations
and exempt from South Carolina income taxes.

Other State and Local Taxes

The exemption of interest on tax-exempt securities for federal income tax
purposes does not necessarily result in exemption under the income tax laws of
any state or city. Except as noted above with respect to a particular state,
distributions from a Fund may be taxable to investors under state and local law
even though all or a part of such distributions may be derived from federally
tax-exempt sources or from obligations which, if received directly, would be
exempt from such income tax. In some states, shareholders of the National Series
may be afforded tax-exempt treatment on distributions to the extent they are
derived from tax-exempt securities issued by that state or its localities.
Prospective investors should be aware that an investment in a certain State
Series may not be suitable for persons who are not residents of the designated
state or who do not receive income subject to income taxes in that state.
Shareholders should consult their own tax advisers.

SHAREHOLDER INFORMATION

Shareholders will be sent semi-annual reports regarding their Fund. General
information about the Funds may be requested by writing the Corporate
Communications/Investor Relations Department, J. & W. Seligman & Co.
Incorporated, 100 Park Avenue, New York, New York 10017 or telephoning the
Corporate Communications/ Investor Relations Department toll-free by dialing
800-221-7844 from all continental United States, except New York or (212)
850-1864 in New York State and the Greater New York City area. Information about
shareholder accounts may be requested by writing Shareholder Services, Seligman
Data Corp., at the same address or by toll-free telephone by dialing
800-221-2450 from all continental United States. Seligman Data Corp. may be
telephoned Monday through Friday (except holidays), between the hours of 8:30
a.m. and 5:30 p.m. Eastern time and calls will be answered by our service
representatives. 24-hour automated telephone access is available by dialing
1-800-622-4597 on a touchtone phone which provides instant access to price,
yield, account balance, most recent transaction and other information. In
addition, account statements, Form 1099 DIVS and checkbooks can be ordered. To
insure prompt delivery of checks, account statements and other information,
Seligman Data Corp., should be notified immediately in writing of any address
change. Address changes may be telephoned to Seligman Data Corp. if the
shareholder has elected telephone services. For more information about telephone
services, see "Telephone Transactions" above.

Account Services. Shareholders are sent confirmation of financial
transactions.

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<PAGE>

Other investor services are available. These include:

o Invest-A-Check(R) enables a shareholder to authorize checks to be drawn on
a checking account at regular intervals for fixed amounts of $50 or more, to
purchase shares. (See "Terms and Conditions" on page 50.)

o Automatic Dollar-Cost-Averaging Service. The Automatic
Dollar-Cost-Averaging Service permits a shareholder of Seligman Cash
Management Fund to exchange a specified amount, of at least $100, into Class
A shares of a Fund at regular monthly or quarterly intervals. The shares of
Seligman Cash Management Fund and the Fund must be registered in the same
name. If the shareholder is opening a new fund account through this service,
a minimum exchange of $1,000 is required.

o Dividends From Other Investments permits a shareholder to order dividends
payable on shares of other companies to be paid to and invested in additional
shares of the Series. (Dividend checks must meet or exceed the required
minimum purchase amount and include the shareholder's name, the name of the
Series and the class of shares in which the investment is to be made and the
shareholder's Series' account number.)

o Automatic CD Transfer Service permits a shareholder to instruct a bank to
invest the proceeds of a maturing bank certificate of deposit ("CD") in
shares of any designated Seligman Mutual Fund. Shareholders who wish to use
this service, should contact Seligman Data Corp. or a broker to obtain the
necessary documentation. Banks may charge a penalty on CD assets withdrawn
prior to maturity. Accordingly, it will not normally be advisable to
liquidate a CD before its maturity.

o Payments at Regular Intervals can be made to a shareholder who owns or
purchases Class A shares worth $5,000 or more and they are held as book
credits under the Automatic Cash Withdrawal Service. Holders of Class D
shares may elect to use this service with respect to shares that have been
held for at least one year. (See "Terms and Conditions" on page 50.)

o Directed Dividends allows a shareholder to pay dividends to another person
or to be directed to another mutual fund in the Seligman Group for purchase
at net asset value. Dividends on Class A and Class D shares may be directed
only to shares of the same class of another mutual fund in the Seligman
Group.

o Overnight Delivery to service shareholder requests is available for a
$15.00 fee which may be deducted from a shareholder's account, if requested.

o Copies of Account Statements will be sent to each shareholder free of
charge for the current year and most recent prior year. Copies of year-end
statements for years prior thereto are available for a fee of $10.00 per
year, per account, with a maximum charge of $150 per account. Statement
requests should be forwarded, along with a check to Seligman Data Corp.

ADVERTISING A FUND'S PERFORMANCE

From time to time, a Series advertises its "yield," "tax equivalent yield,"
"average annual total return" and "total return" each of which are calculated
separately for each Series' Class A and Class D shares. These figures are based
on historical earnings and are not intended to indicate future performance. The
"yield" of a Series' class refers to the income generated by an investment in
the Series over a 30-day period. This income is then "annualized." That is, the
amount of income generated by the investment during that 30-day period is
assumed to be generated each 30-day period for twelve periods and is shown as a
percentage of the investment. The income earned on the investment is also
assumed to be reinvested at the end of the sixth 30-day period. The "tax
equivalent yield" is calculated similarly to the "yield," except that the yield
is increased using a stated income tax rate to demonstrate the taxable yield
necessary to produce an after-tax yield equivalent to the Series. The "average
annual total return" is the annual rate required for the initial payment to grow
to the amount which would be received at the end of the specified period (one
year, five years, and ten years or since the inception of the Series), i.e., the
average annual compound rate of return, assuming the payment of the maximum
sales load, if any, when the investment was first made and that all

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<PAGE>

distributions and dividends by the Series were reinvested on the reinvestment
dates during the period. Total return is calculated with these same assumptions
and shows the aggregate return on an investment in a class over a specified
period (one year, five years and ten years or since the inception of the
Series). Class A total return and average annual total return quoted from time
to time are not adjusted for periods prior to commencement dates, December 27,
1990, in the case of the Florida Series, and January 1, 1993, in the case of the
California High-Yield Series, California Quality Series, and each Series of the
Tax-Exempt Fund, for the annual administration, shareholder services and
distribution fee. Such fee, if reflected, would reduce the performance quoted.
The waiver by the Manager of its fees and reimbursement of certain expenses
during certain periods (as set forth under "Financial Highlights" herein) would
positively affect the performance results quoted.

From time to time, reference may be made in advertising or promotional
material to mutual fund rankings prepared by Lipper Analytical Service, Inc.
("Lipper"), an independent reporting service that monitors the performance of
mutual funds. Lipper ranks funds in various categories by making comparative
calculations using total return. Each Series may quote its Lipper ranking in the
Municipal Bond Fund category or the Single State Municipal Bond Fund category or
its Lipper ranking for all municipal bond funds monitored by Lipper. In
addition, each class of a Series may compare its total return over a certain
period with the average performance of all funds in these Lipper categories for
the same period. As is the case, in calculating the total return of a Series'
Class A and Class D shares, the Lipper analysis assumes investment of all
dividends and distributions paid but does not take into account applicable sales
loads. A Series may also refer in advertisements, or in other promotional
material to articles, comments, listings and columns in the financial and other
press pertaining to a Series' performance. Examples of such financial and other
press publications include Barron's, Business Week, CDA/Wiesenberger Mutual
Funds Investment Report, Christian Science Monitor, Financial Planning,
Financial Times, Financial World, Forbes, Fortune, Individual Investor,
Investment Advisor, Investors Business Daily, Kiplinger's, Los Angeles Times,
MONEY Magazine, Morningstar, Inc., Pensions and Investments, Smart Money, The
New York Times, The Wall Street Journal, USA Today, U.S. News and World Report,
Washington Post, Worth Magazine and Your Money.

ORGANIZATION AND CAPITALIZATION

Each Fund is a non-diversified, open-end management investment company, as
defined in the 1940 Act. The New Jersey Fund was incorporated in Maryland on
March 13, 1987. The Pennsylvania Fund was organized as an unincorporated trust
under the laws of the Commonwealth of Pennsylvania by a Declaration of Trust
dated May 13, 1986. The Tax-Exempt Fund was incorporated in Maryland on August
8, 1983. The Tax-Exempt Trust was established under the laws of the Commonwealth
of Massachusetts by a Declaration of Trust dated July 27, 1984.

The Directors or Trustees of the Funds have authority to create and classify
shares of capital stock or beneficial interest in separate Series, without
further action by shareholders. The Declarations of Trust of the Pennsylvania
Fund and the Tax-Exempt Trust permit the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest in separate Series. To
date, shares of thirteen Series of the Tax-Exempt Fund, four Series of
Tax-Exempt Trust, one Series of the New Jersey Fund and one Series of the
Pennsylvania Fund have been authorized, which shares constitute the interests in
the Series described herein. Further series may be added in the future. Each of
the Series capital stock or shares of beneficial interest has a par value of
$.001 per share and is divided into two classes. Each share of each Series'
Class A and Class D common stock or beneficial interest, is equal as to
earnings, assets and voting privileges, except that each class bears its own
separate distribution and certain other class expenses and has exclusive voting
rights with respect to any matter to which a separate vote of any class is
required by the 1940 Act or applicable state law. Each Fund has received an
order from the Securities and Exchange Commission permitting the issuance and
sale of multiple classes of common stock or beneficial interests. The 1940 Act

48
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requires that where more than one class exists, each class must be preferred
over all other classes in respect of assets specifically allocated to such
class. In accordance with the Articles of Incorporation or Declaration of Trust
of each Fund, the Board of Directors or Trustees may authorize the creation of
additional classes of common stock or beneficial interest with such
characteristics as are permitted by the order received from the Securities and
Exchange Commission. Shares entitle their holders to one vote per share. Shares
have noncumulative voting rights, do not have preemptive or subscription rights
and are transferable.

It is the intention of the Funds not to hold Annual Meetings of Shareholders.
The Directors or Trustees may call Special Meetings of Shareholders for action
by shareholder vote as may be required by the 1940 Act, or a Fund's Declaration
of Trust or Articles of Incorporation. Pursuant to the 1940 Act, shareholders
have to approve the adoption of any management contract, distribution plan and
any changes in fundamental investment policies. Shareholders also have the right
to call a meeting of shareholders for the purpose of voting on the removal of
one or more Directors or Trustees.

The shareholders of a Massachusetts business trust (the Tax-Exempt Trust) or
a Pennsylvania trust (the Pennsylvania Fund), could, under certain
circumstances, be held personally liable as partners of its obligations.
However, the Declaration of Trust of each of the Tax-Exempt Trust and the
Pennsylvania Fund, contains an express disclaimer of shareholder liability for
acts or obligations of the Trusts and also provides, for idemnification and
reimbursement of expenses out of the Trusts, or Series thereof, for any
shareholder held personally liable for obligations of the Trust, or Series
thereof.

There is a possibility that one Fund might be liable for any misstatement,
inaccuracy, or incomplete disclosure in this Prospectus concerning any other
Fund contained herein. Based on the advice of counsel, however, the Funds
believe that the potential liability of each Fund with respect to the disclosure
in this Prospectus extends only to the disclosure relating to that Fund.

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<PAGE>

TERMS AND CONDITIONS

General Account Information

Investments will be made in as many shares of a Series, including fractions
to the third decimal place, as can be purchased at the net asset value plus a
sales load, if applicable, at the close of business on the day payment is
received. If your check received in payment of a purchase of shares is
dishonored for any reason, Seligman Data Corp. may cancel the purchase and may
also redeem additional shares, if any, held in your account in an amount
sufficient to reimburse the Fund for any loss it may have incurred and charge a
$10.00 return check fee. Shareholders will receive dividends from investment
income and any distributions from gain realized on investments in shares or in
cash according to the option elected. Dividend and gain options may be changed
by notifying Seligman Data Corp. in writing at least five business days prior to
the payable date. Stock certificates will not be issued unless requested.
Replacement stock certificates will be subject to a surety fee.

Invest-A-Check(R) Service

The Invest-A-Check(R) Service is available to all shareholders. Your
application is subject to acceptance by your bank and Seligman Data Corp. Checks
in the amount specified will be drawn automatically on your bank on the fifth
day of each month (or on the prior business day if the fifth day of the month
falls on a weekend or holiday) in which an investment is scheduled and invested
at the public offering price at the close of business on the same date. After
the initial investment, the value of shares held in your Account must equal not
less than two regularly scheduled investments. If a check is not honored by your
bank, or if the value of shares held falls below the required minimum, the
Service will be suspended. In the event that a check is returned marked
"unpaid," Seligman Data Corp. will cancel the purchase, redeem shares held in
your account for an amount sufficient to reimburse the Fund for any loss it may
have incurred as a result, and charge a $10.00 return check fee. This fee may be
debited from your account. Service will be reinstated upon written request
indicating that the cause of interruption has been corrected. The Service may be
terminated by you or Seligman Data Corp. at any time by written notice. You
agree to hold the Funds and their agents free from all liability which may
result from acts done in good faith and pursuant to these terms. Instructions
for establishing Invest-A-Check(R) Service are given on the Account Application.
In the event you exchange all of your shares from one mutual fund in the
Seligman Group to another, you must re-apply for the Invest-A-Check(R) Service
in the Seligman Fund into which your exchange was made. In the event of a
partial exchange, the Invest-A-Check(R) Service will be continued, subject to
the above conditions, in the Seligman Fund from which the exchange was made.

Automatic Cash Withdrawal Service

Automatic Cash Withdrawal Service is available to Class A shareholders and
to Class D shareholders with respect to Class D shares held for one year or
more. A sufficient number of full and fractional shares will be redeemed to
provide the amount required for a scheduled payment. Redemptions will be made at
the asset value at the close of business on the 15th day of each month (or on
the prior business day if the 15th falls on a weekend or holiday). You may
change the amount of scheduled payments or you may suspend payments by written
notice to Seligman Data Corp. at least ten days prior to the effective date of
such a change or suspension. Your Service may be terminated by you or Seligman
Data Corp. at any time by written notice. It will be terminated upon proper
notification of the death or legal incapacity of the shareholder. This Service
is considered terminated in the event a withdrawal of shares, other than to make
scheduled withdrawal payments, reduces the value of shares remaining on deposit
to less than $5,000. Continued payments in excess of dividend income invested
will reduce and ultimately exhaust capital. Withdrawals, concurrent with
purchases of shares of this or any other investment company, will be
disadvantageous to you because of the payment of duplicative sales loads, if
applicable. For this reason, additional purchases of Fund shares are discouraged
when the Withdrawal Service is in effect.

Letter of Intent -- Class A Shares Only

Seligman Financial Services, Inc. will hold in escrow shares equal to 5% of
the minimum purchase amount specified. Dividends and distributions on the
escrowed shares will be paid to you or credited to your Account. Upon completion
of the specified minimum purchase within the thirteen-month period, all shares
held in escrow will be deposited in your Account or delivered to you. You may
include the total asset value of shares of the Seligman Funds (on which a sales
load was paid) owned as of the date of a Letter of Intent toward the completion
of the Letter. If the total amount invested within the thirteen-month period
does not equal or exceed the specified minimum purchase, you will be requested
to pay the difference between the amount of the sales load paid and the amount
of the sales load applicable to the total purchase made. If, within 20 days
following the mailing of a written request, you have not paid this additional
sales load to Seligman Financial Services, sufficient escrowed shares will be
redeemed for payment of the additional sales load. Shares remaining in escrow
after this payment will be released to your Account. The intended purchase
amount may be increased at any time during the thirteen-month period by filing a
revised Agreement for the same period, provided that your Dealer furnishes
evidence that an amount representing the reduction in sales load under the new
Agreement, which becomes applicable on purchases already made under the original
Agreement, will be refunded to you and that the required additional escrowed
shares are being furnished by you.

Shares of Seligman Cash Management Fund, Inc. which have been acquired by an
exchange of shares of another Mutual Fund on which there is a sales load may be
taken into account in completing a Letter of Intent, or for Right of
Accumulation. However, shares of the Fund which have been purchased directly may
not be used for purposes of determining reduced sales loads on additional
purchases of the other Mutual Funds in the Seligman Group.

Check Redemption Service -- Class A Shares Only

If shares are held in joint names, all shareholders must sign Section 5 of
the Account Application. All checks will require all signatures unless a lesser
number is indicated on the face of the application. Accounts in the names of
corporations, trusts, partnerships, etc. must list all authorized signatories.

In all cases, each signature guarantees the genuineness of the other
signatures. Checks may not be drawn for less than $500.

I hereby authorize Mellon Bank, N.A. to honor checks drawn by me on my
account of Class A shares and to effect a redemption of sufficient shares in my
Fund account to cover payment of the check. I understand that shares in one
Series cannot be redeemed to cover a check written on another Series.

Mellon Bank, N.A. shall be liable only for its own negligence. The Fund will
not be liable for any loss, expense or cost arising out of check redemptions.
Each Fund reserves the right to change, modify or terminate this service at any
time upon notification mailed to the address of record of the shareholder(s).

SELIGMAN DATA CORP. WILL CHARGE A $10.00 PROCESSING FEE FOR ANY CHECK
REDEMPTION DRAFT RETURNED MARKED "UNPAID." THIS CHARGE MAY BE DEBITED FROM A
SHAREHOLDER'S ACCOUNT. NO REDEMPTION OF SHARES PURCHASED BY CHECK (UNLESS
CERTIFIED) WILL BE PERMITTED UNTIL THE FUND RECEIVES NOTICE THAT THE CHECK HAS
CLEARED WHICH MAY BE UP TO 15 DAYS FROM THE CREDIT OF THOSE SHARES TO A
SHAREHOLDER'S ACCOUNT.

2/95

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ACCOUNT APPLICATION

Please check one:
/ / Seligman New Jersey Tax-Exempt Fund, Inc. Please check one:
/ / Seligman Pennsylvania Tax-Exempt Fund Series / / Class A Shares
/ / Seligman Tax-Exempt Fund Series, Inc.--(Name of Series)______________ / / Class D Shares
/ / Seligman Tax-Exempt Series Trust--(Name of Series)___________________

Mail to: Seligman Data Corp., 100 Park Avenue, New York, NY 10017
(800) 221-2450 All Continental States

-------------------------------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION
-------------------------------------------------------------------------------------------------------------------------------
TYPE OF / / Individuals / / Multiple Owners / / Transfer to Minor / / Other (Corporations, Trusts, Organizations,
Partnerships, etc.)
ACCOUNT Use Line 1 Use Lines 1, 2 & 3 Use Line 4 Use Line 5

Multiple Owners will be registered as Joint Tenants with Right of Survivorship.

The first name and Social Security or Taxpayer ID Number on line 1 or 5 of this Account Registration will be used for IRS
reporting.

NAME (Minors cannot be legal owners) PLEASE PRINT OR TYPE

1. __________________________________________________________________________________________________________________________
First Middle Last Social Security Number Birthdate

2. __________________________________________________________________________________________________________________________
First Middle Last Social Security Number Birthdate

3. __________________________________________________________________________________________________________________________
First Middle Last Social Security Number Birthdate

4. ___________________________________, as custodian for ___________________________ under the _________________
Custodian (one only) Minor (one only) State

Uniform Transfers to Minors Act ________________________________ until age ______________________ _____________________
Minor's Social Security Number (Not more than 21) Minor's Birthdate

5. _______________________________________________________________________________________ _________________________________
Name of Corporation or Other Entity. If a Trust, also complete Trust Section below. Taxpayer ID Number

ADDRESS TELEPHONE

________________________________________________ (_______)____________________ (_______)___________________
Street Address or P.O. Box Daytime Evening

___________________________________________________________ U.S. CITIZEN? / / Yes / / No_ ______________________
City State Zip If no, indicate country

- -----------------------------------------------------------------------------------------------------------------------------------
Enclosed is my check payable to (Please indicate below):
/ / Seligman New Jersey Tax-Exempt Fund / / Seligman Tax-Exempt Fund Series, Inc.--
/ / Seligman Pennsylvania Tax-Exempt Fund Series (Name of Series)____________
/ / Seligman Tax-Exempt Series Trust--
INITIAL (Name of Series)____________
INVESTMENT / / Class A Shares for $_____________ / / Class D Shares for $______________
($1,000 MINIMUM) ---------------------------------------------------------------------------------------------------------------
NO REDEMPTION OF SHARES PURCHASED BY CHECK (UNLESS CERTIFIED) WILL BE PERMITTED UNTIL THE FUND HAS RECEIVED
NOTICE THAT THE CHECK HAS CLEARED, WHICH MAY BE UP TO 15 DAYS FROM THE CREDIT OF THOSE SHARES TO YOUR ACCOUNT.

-------------------------------------------------------------------------------------------------------------------------------
2. TRUST ACCOUNTS
-------------------------------------------------------------------------------------------------------------------------------
TYPE OF ACCOUNT: / / Trust / / Guardianship / / Conservatorship / / Estate / / Other________________________
Trustee/Fiduciary Name______________________________ Trustee Name_________________________________

Trust Name_______________________________, for the benefit of (FBO)_________________________________

Trust Date_______________________________
-------------------------------------------------------------------------------------------------------------------------------
3. SIGNATURE AND CERTIFICATION
-------------------------------------------------------------------------------------------------------------------------------

Under penalties of perjury I certify that the number shown on this form is my correct Taxpayer Identification Number (Social
Security Number) and that I am not subject to backup withholding either because I have not been notified that I am subject to
backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue Service has notified
me that I am no longer subject to backup withholding. I certify to my legal capacity to purchase or redeem shares of the Fund
for my own Account, or for the Account of the organization named below. I have received a current Prospectus of the Funds and
appoint Seligman Data Corp. as my agent to act in accordance with my instructions herein.

A. __________________________________________________________________________________________________________________________
Date Signature of Investor

B. __________________________________________________________________________________________________________________________
Date Signature of Co-Investor, if any

</TABLE>

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<TABLE>
<S> <C>
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4. BROKER/DEALER OR FINANCIAL ADVISOR DESIGNATION
-------------------------------------------------------------------------------------------------------------------------------

__________________________________________________________________________________________________________________________
Firm Name

_____________________________________________________________(_________)__________________________________________________
Branch Address Area Code Telephone Number

__________________________________________________________________________________________________________________________
Representative Name Representative Number

-------------------------------------------------------------------------------------------------------------------------------
5. ACCOUNT OPTIONS AND SERVICES
-------------------------------------------------------------------------------------------------------------------------------

DIVIDENDS I elect to receive: / / 1. Dividends in shares, gain distributions in shares.
AND GAIN / / 2. Dividends in cash, gain distributions in shares.
DISTRIBUTIONS / / 3. Dividends in cash, gain distributions in cash.
Please NOTE: IF NO ELECTION IS MADE, OPTION NO. 1 AUTOMATICALLY WILL BE PUT INTO EFFECT.
check one All dividend and/or gain distributions taken in shares will be invested at net asset value.
- -----------------------------------------------------------------------------------------------------------------------------------
/ / Please arrange with my bank to draw pre-authorized checks and invest $_____________ in my Account every:
INVEST-A- / / Month / / 3 Months
CHECK(R) I understand that my checks will be invested on the fifth day of the month for the period designated. I have
($50 MINIMUM) completed the "Bank Authorization to Honor Pre-Authorized Checks" on the following page.
- -----------------------------------------------------------------------------------------------------------------------------------

/ / Please send a check for $__________ beginning on the ____ day of ________________ 19____, and thereafter on
the ________ day specified of every:
AUTOMATIC / / Month / / 3rd Month / / 6th Month / / 12th Month
CASH
WITHDRAWAL Make payments to: Name______________________________________________________________________________________
(Class A or
Class D only Address___________________________________________________________________________________
after Class D
shares are held City________________________________ State____________________________ Zip____________
for one year)

Shares having a current value at offering price of $5,000 or more must be held in the Account at initiation of
Service, and all shares must be in "book credit" form.
- -----------------------------------------------------------------------------------------------------------------------------------

I intend to purchase, although I am not obligated to do so, shares of the above designated Series within a
LETTER 13-month period which, together with the total asset value of shares owned, will aggregate at least:
OF INTENT / / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000 / / $4,000,000
(Class A only) I agree to the escrow provision listed under "Terms and Conditions"in the back of the Prospectus.

- -----------------------------------------------------------------------------------------------------------------------------------
Accounts eligible for the Right of Accumulation or to be used toward completion of a Letter of Intent.

Please check applicable box:

/ / I am a trustee for the following accounts, which are held by the same trust, estate, or under the terms of
RIGHT a pension, profit sharing or other employee benefit trust qualified under section 401 of the Internal
OF Revenue Code.
ACCUMULATION
(Class A only) / / In calculating my holdings for Right of Accumulation or Letter of Intent purposes, I am including the
following additional accounts which are registered in my name, in my spouse's name, or in the name(s) of my
child(ren) under the age of 21.

Name____________________________ Fund______________________________ Account Number_____________________

Name____________________________ Fund______________________________ Account Number_____________________
- -----------------------------------------------------------------------------------------------------------------------------------

If you wish to have your dividend payments made to another party or Seligman Fund, please complete the
following. I hereby authorize and request that my dividend payments be made to:

DIVIDEND Name___________________________________________ Seligman Fund_______________________________________________
DIRECTION
OPTION Address________________________________________

City___________________________________________ Account Number______________________________________________

State, Zip_____________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

INVEST-A-CHECK(R) SERVICE

(Please indicate below)
<TABLE>
<S> <C>

/ / Seligman New Jersey Tax-Exempt Fund, Inc. / / Seligman Tax-Exempt Fund Series, Inc.--(Name of Series)_______________
/ / Seligman Pennsylvania Tax-Exempt Fund Series / / Seligman Tax-Exempt Series Trust--(Name of Series)____________________
Please check one:
/ / Class A shares / / Class D shares
</TABLE>

Mail To: Seligman Data Corp., 100 Park Avenue, New York, NY 10017

To start your Invest-A-Check(R) Service, fill out Section A and the "Bank
Authorization to Honor Pre-Authorized Checks" below, and forward it with an
unsigned bank check from your regular checking account (marked "void", if you
wish).

- -------------------------------------------------------------------------------
A. INVEST-A-CHECK(R)

/ / Please arrange with my bank to draw pre-authorized checks and invest ($50
minimum) $____________ in my Account every:

/ / Month / / ___ Months

I understand that my checks will be dated on the fifth day of the month for the
period designated. I have completed the "Bank Authorization to Honor
Pre-Authorized Checks" below and have read and agree to the terms and conditions
applicable to the Invest-A-Check(R) Service as set forth in the Prospectus and
the Account Application included in the Prospectus.

__________________________________
Signature(s) of Investor(s)

__________________________________
- -------------------------------------------------------------------------------
BANK AUTHORIZATION TO HONOR PRE-AUTHORIZED CHECKS
- -------------------------------------------------------------------------------

To:____________________________________________________________________________
(Name of Bank)

_______________________________________________________________________________
Address of Bank or Branch (Street, City, State and Zip)

Please honor pre-authorized checks drawn on my account by Seligman Data Corp.,
100 Park Avenue, New York, N.Y. 10017, to the order of the Series designated and
charge them to my regular checking account. Your authority to do so shall
continue until you receive written notice from me revoking it. You may terminate
your participation in this arrangement at any time by written notice to me. I
agree that your rights with respect to each pre-authorized check shall be the
same as if it were a check drawn and signed by me. I further agree that should
any such check be dishonored, with or without cause, intentionally or
inadvertently, you shall be under no liability whatsoever.

_________________________ _________________________________________________
Checking Account Number Name(s) of Depositor(s) -- Please Print

_________________________________________________
Signature(s) of Depositor(s) -- As Carried by Bank

_________________________________________________

===============================================================================
Address (Street) (City) (State, Zip)

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
To the Bank Designated above:

Your depositor(s) named in the above form has instructed us to establish
the Invest-A-Check(R) Service for his convenience. Under the terms of the
Service, your depositor(s) has pre-authorized checks to be drawn against his
account in a specific amount at regular intervals to the order of the designated
Series. Checks presented to you will be magnetic-ink coded and will otherwise
conform to specifications of the American Bankers Association.

A letter of indemnification addressed to you and signed by Seligman
Financial Services, Inc., general distributor of the Series, appears below.

If there is anything we can do to help you in giving your depositor(s) this
additional Service which he has requested, please let us know.

SELIGMAN DATA CORP.

INDEMNIFICATION AGREEMENT

To the Bank designated above:

SELIGMAN FINANCIAL SERVICES, INC., distributor of the shares of the Series,
hereby agrees:

(1) To indemnify and hold you harmless against any loss, damage, claim or
suit, and any costs or expenses reasonably incurred in connection therewith,
either (a) arising as a consequence of your actions in connection with the
execution and issuance of any check or draft, whether or not genuine, purporting
to be executed by Seligman Data Corp. and received by you in the regular course
of business for the purpose of payment, or (b) resulting from the dishonor of
any such check or draft, with or without cause and intentionally or
inadvertently, even though such dishonor results in suspension or termination of
the Invest-A-Check(R) Service pursuant to which such checks or drafts are drawn.

(2) To refund to you any amount erroneously paid by you on any such check
or draft, provided claim for any such payment is made within 12 months after the
date of payment.

SELIGMAN FINANCIAL SERVICES, INC.

/s/ Stephen J. Hodgdon
President
- -------------------------------------------------------------------------------

2/95

C
<PAGE>

----------------------------------------------------------------------------
5. ACCOUNT OPTIONS AND SEVICES (continued)
----------------------------------------------------------------------------
TELEPHONE SERVICE ELECTION
By completing this section, I understand that I may place the following
requests by telephone:
o Redemptions up to $50,000 o Exchanges
o Address Changes o Dividend and/or Capital Gain
Distribution Option Changes

AUTHORIZATION
I understand that the telephone services are optional and that by signing
this Form I authorize the Funds, all other Seligman Funds with the same account
number and registration which I currently own or which I invest in the future,
and Seligman Data Corp. ("SDC"), to act upon instructions received by telephone
from me or any other person in accordance with the provisions regarding
telephone services as set forth in the current prospectus of each such Fund, as
amended from time to time. I understand that redemptions of uncertificated
shares of up to $50,000 will be sent only to my account address of record, and
only if such address has not changed within the 30 days preceding such request.

Any telephone instructions given in respect of this account and any account
into which exchanges are made are hereby ratified and I agree that neither the
Fund(s) nor SDC will be liable for any loss, cost or expense for acting upon
such telephone instructions reasonably believed to be genuine and in accordance
with the procedures described in the prospectus, as amended from time to time.
Such procedures include recording of telephone instructions, requesting personal
and/or account information to verify a caller's identity and sending written
confirmations of transactions. As a result of this policy, I may bear the risk
of any loss due to unauthorized or fraudulent telephone instructions; provided,
however, that if the Fund(s) or SDC fail to employ such procedures, the Fund(s)
and/or SDC may be liable. Please sign your name(s) as it appears on the first
page of this Account Application.

X___________________________________ X___________________________________
Date Date
- -------------------------------------------------------------------------------

2/95

- -------------------------------------------------------------------------------
CHECK REDEMPTION SERVICE -- Class A only

Available to shareholders who own or purchase shares having a value of at
least $25,000.00 on deposit with Seligman Data Corp.

If you wish to use this service, you must complete Section 3 and the
Signature Card below. Shareholders electing this service are subject to the
conditions of the Terms and Conditions in the back of the Prospectus.

- -------------------------------------------------------------------------------

CHECK WRITING SIGNATURE CARD
Authorized Signatures
_____________________________________ 1.___________________________________
Name of Fund
_____________________________________ 2.___________________________________
Account Number (If known)
_____________________________________ 3.___________________________________
Account Registration (Please Print)
_____________________________________ 4.___________________________________

/ / Check here if only one signature is required on checks.
/ / Check here if a combination of signatures is required and specify the
number: ________.

ACCOUNTS IN THE NAMES OF CORPORATIONS, TRUSTS, PARTNERSHIPS, ETC., MUST INDICATE
THE LEGAL TITLES OF ALL AUTHORIZED SIGNATORIES. SHAREHOLDERS ELECTING THIS
SERVICE ARE SUBJECT TO THE TERMS AND CONDITIONS LISTED IN THE PROSPECTUS.

<PAGE>

[THIS SECTION LEFT BLANK INTENTIONALLY]

- -------------------------------------------------------------------------------

Managed by

LOGO

J. & W. SELIGMAN & CO.
INCORPORATED
Investment Managers and Advisors
ESTABLISHED 1864

<PAGE>
- ------------------------------------------------------------------------------

Seligman New Jersey
Tax-Exempt Fund, Inc.

Seligman Pennsylvania
Tax-Exempt Fund Series

Seligman Tax-Exempt
Fund Series, Inc.

Seligman Tax-Exempt
Series Trust

- ------------------------------------------------------------------------------

100 Park Avenue
New York, New York 10017

TABLE OF CONTENTS
Page
----
Summary Of Fund Expenses................................................. 3
Financial Highlights .................................................... 8
Alternative Distribution System.......................................... 16
Investment Objective And Policies........................................ 17
Management Services...................................................... 25
Purchase Of Shares ...................................................... 26
Telephone Transactions................................................... 30
Redemption Of Shares..................................................... 31
Administration, Shareholder Services
And Distribution Plan.................................................. 33
Exchange Privilege....................................................... 34
Further Information About
Transactions In The Funds.............................................. 36
Dividends And Distributions ............................................. 36
Taxes.................................................................... 37
Shareholder Information ................................................. 46
Advertising A Fund's Performance ........................................ 47
Organization And Capitalization ......................................... 48

This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.

This prospectus is intended to constitute an offer by each Fund only of the
securities of which it is the issuer and is not intended to constitute an offer
by any Fund of the securities of any other Fund whose securities are also
offered by this prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this prospectus relating to any
other Fund.

TEA1 2/95

- -------------------------------------------------------------------------------

Seligman New Jersey
Tax-Exempt Fund, Inc.

Seligman Pennsylvania
Tax-Exempt Fund Series

Seligman Tax-Exempt
Fund Series, Inc.

Seligman Tax-Exempt
Series Trust

- -------------------------------------------------------------------------------

[Photo]

Prospectus
February 1, 1995

LOGO

- -------------------------------------------------------------------------------

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
February 1, 1995

SELIGMAN CALIFORNIA TAX-EXEMPT HIGH-YIELD SERIES
("High-Yield Series")
SELIGMAN CALIFORNIA TAX-EXEMPT QUALITY SERIES ("Quality Series")
(collectively, the "Series")

100 Park Avenue
New York, N.Y. 10017
New York City Telephone (212) 850-1864
Toll-Free Telephone:
(800) 221-2450 - all continental states

This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus of the Series, dated
February 1, 1995. It should be read in conjunction with the Prospectus, which
may be obtained by writing or calling the Series at the above address or
telephone numbers. This Statement of Additional Information, although not in
itself a Prospectus, is incorporated by reference into the Prospectus in its
entirety.

The High-Yield Series and Quality Series each offer two classes of
shares. Class A shares may be purchased at net asset value plus a sales load of
up to 4.75%. Class D shares may be purchased at net asset value and are subject
to a contingent deferred sales load ("CDSL") of 1% if redeemed within one year.

Each share of Class A and Class D represents an identical legal
interest in the investment portfolio of each Series and has the same rights
except for certain class expenses and except that Class D shares bear a higher
distribution fee that generally will cause the Class D shares to have a higher
expense ratio and pay lower dividends than Class A shares. Each Class has
exclusive voting rights with respect to its distribution plan. Although holders
of Class A and Class D shares have identical legal rights, the different
expenses borne by each Class will result in different dividends. The two classes
also have different exchange privileges.

TABLE OF CONTENTS

Page
Seligman Tax-Exempt Series Trust ................................ 2
Investment Objectives, Policies And Risks ....................... 2
Investment Limitations .......................................... 5
Trustees And Officers ........................................... 6
Management And Expenses ......................................... 10
Administration, Shareholder Services
And Distribution Plan ......................................... 11
Portfolio Transactions .......................................... 11
Purchase and Redemption Of Series' Shares ....................... 11
Distribution Services ........................................... 14
More About Taxes ................................................ 14
Valuation ....................................................... 15
Performance Information ......................................... 15
General Information ............................................. 18
Special Considerations Regarding Investments
In California Tax-Exempt Securities ............................ 19
Financial Statements ............................................ 24
Appendix A ...................................................... 24
Appendix B ...................................................... 27

TEBCA1A
-1-
<PAGE>

SELIGMAN TAX-EXEMPT SERIES TRUST

The Quality Series and High-Yield Series are series of Seligman Tax-Exempt
Series Trust (the "Trust"), a non-diversified open-end management investment
company, or mutual fund, organized as an unincorporated business trust under the
laws of Massachusetts that commenced operations in 1984.

INVESTMENT OBJECTIVES, POLICIES AND RISKS

As stated in the Prospectus, the Quality Series and High-Yield Series each
seek to provide income exempt from federal income taxes and the personal income
taxes of California consistent with preservation of capital with consideration
given to capital gain.

California Tax-Exempt Securities

California Tax-Exempt Securities include notes, bonds and commercial paper
issued by or on behalf of the State of California, its political subdivisions,
agencies, and instrumentalities, the interest on which is exempt from federal
income taxes and California state personal income taxes. Such securities are
traded primarily in an over-the-counter market. Each Series may invest no more
than 20% of its net assets in certain private activity bonds, the interest on
which is treated as a preference item for purposes of the alternative minimum
tax. See "California Tax-Exempt Securities" in the Prospectus.

Under the Investment Company Act of 1940 (the "Act"), the identification of
the issuer of tax-exempt bonds, notes or commercial paper depends on the terms
and conditions of the obligation. If the assets and revenues of an agency,
authority, instrumentality or other political subdivision are separate from
those of the government creating the subdivision and the obligation is backed
only by the assets and revenues of the subdivision, such subdivision is regarded
as the sole issuer. Similarly, in the case of an industrial development revenue
bond or pollution control revenue bond, if the bond is backed only by the assets
and revenues of the nongovernmental user, the nongovernmental user is regarded
as the sole issuer. If in either case the creating government or another entity
guarantees an obligation, the security is treated as an issue of such guarantor
to the extent of the value of the guarantee.

Tax-exempt bonds are issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets, water and sewer works, and gas and electric utilities. Tax-exempt bonds
also may be issued in connection with the refunding of outstanding obligations,
obtaining funds to lend to other public institutions, and for general operating
expenses. Industrial development bonds, which are considered tax-exempt bonds if
the interest paid thereon is exempt from federal income tax, are issued by or on
behalf of public authorities to obtain funds to provide various
privately-operated facilities for business and manufacturing, housing, sports,
pollution control, and for airport, mass transit, port and parking facilities.

The two principal classifications of tax-exempt 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.

Tax-Exempt Notes generally are used to provide for short-term capital needs
and generally have maturities of one year or less. Tax-Exempt Notes include:

1. Tax Anticipation Notes. Tax Anticipation Notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various tax revenues, such as income, sales, use and business
taxes, and are payable from these specific future taxes.

-2-

<PAGE>

2. Revenue Anticipation Notes. Revenue Anticipation Notes are issued in
expectation of receipt of other kinds of revenue, such as federal revenues
available under the Federal Revenue Sharing Programs.

3. 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.

4. Construction Loan Notes. Construction Loan Notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of Construction Loan Notes, is sometimes provided by a commitment
by the Government National Mortgage Association ("GNMA") to purchase the loan
notes, accompanied by a commitment by the Federal Housing Administration to
insure mortgage advances thereunder. In other instances, permanent financing is
provided by commitments of banks to purchase the loan notes.

Issues of Tax-Exempt Commercial Paper typically represent short-term,
unsecured, negotiable promissory notes. These obligations are issued by agencies
of state and local governments to finance seasonal working capital needs of
municipalities or to provide interim construction financing and are paid from
general revenues of municipalities or are refinanced with long-term debt. In
most cases, Tax-Exempt Commercial Paper is backed by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions.

When-Issued Securities

Each Series may purchase tax-exempt securities on a when-issued basis, in
which case delivery and payment normally take place 15 to 45 days after the date
of the commitment to purchase. The payment obligation and the interest rate that
will be received on the tax-exempt securities are each fixed at the time the
buyer enters into the commitment. Although a Series will only purchase a
tax-exempt security on a when-issued basis with the intention of actually
acquiring the securities, the Series may sell these securities before the
settlement date if it is deemed advisable.

Tax-exempt securities purchased on a when-issued basis and the securities
held in each Series are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates (which will generally result in
similar changes in value, i.e., both experiencing appreciation when interest
rates decline and depreciation when interest rates rise). Therefore, to the
extent a Series remains substantially fully invested at the same time that it
has purchased securities on a when-issued basis, there will be a greater
possibility that the market value of a Series' assets will vary. Purchasing a
tax-exempt security on a when-issued basis can involve a risk that the yields
available in the market when the delivery takes place may be higher than those
obtained on the security so purchased.

A separate account of each Series consisting of cash or liquid debt
securities equal to the amount of the when-issued commitments will be
established with the Custodian and marked to market daily, with additional cash
or liquid debt securities added when necessary. When the time comes to pay for
when-issued securities, the Series will meet their respective obligations from
then available cash, sale of securities held in the separate account, sale of
other securities or, although they would not normally expect to do so, sale of
the when-issued securities themselves (which may have a value greater or lesser
than the Series' payment obligations). Sale of securities to meet such
obligations carries with it a potential for the realization of capital gain,
which is not exempt from federal or California income taxes.

Floating Rate and Variable Rate Securities

Each Series may purchase floating rate and variable rate securities,
including participation interests therein. Investments in floating or variable
rate securities normally will involve industrial development or revenue bonds
which provide that the rate of interest is set as a specific percentage of a
designated base rate, such as rates on Treasury Bonds or Bills or the prime rate
at a major commercial bank, and that a Series can demand payment of the
obligations on short notice at par plus accrued interest, which amount may be
more or less than the amount a Series paid for them. 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, as the case may be, must be
equivalent to the standards set forth with respect to taxable investments listed
below.

-3-
<PAGE>

Stand-By Commitments

As stated in the Prospectus, the Series may acquire stand-by commitments
with respect to securities they hold. These commitments would obligate a dealer
to repurchase, at the Series' option, specified securities at a specified price.

The price which a Series would pay for tax-exempt securities with stand-by
commitments generally would be higher than the price which otherwise would be
paid for the municipal securities alone. A Series would use stand-by commitments
for liquidity purposes in order to permit it to remain more fully invested than
would otherwise be the case by providing a ready market for certain of its
portfolio securities at an acceptable price. The stand-by commitment generally
is for a shorter term than the maturity of the security and does not restrict in
any way the Series' right to dispose of or retain the security. There is a risk
that the seller may not be able to repurchase the security upon the exercise of
the right to resell by the Series. To minimize such risks, a Series would only
purchase obligations with stand-by commitments from sellers the Manager deems
creditworthy.

Portfolio Turnover

Portfolio transactions will be undertaken principally to accomplish a
Series' objective in relation to anticipated movements in the general level of
interest rates but a Series 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 Manager believes to be a temporary disparity in the normal yield
relationship between the two securities.

The Series' investment policies may lead to frequent changes in
investments, particularly in periods of rapidly fluctuating interest rates. A
change in securities held by a Series is known as "portfolio turnover" and may
involve the payment by the Series of dealer spreads or underwriting commissions,
and other transaction costs, on the sale of securities, as well as on the
reinvestment of the proceeds in other securities. Portfolio turnover rate for a
fiscal year is the ratio of the lesser of purchases or sales of portfolio
securities to the monthly average of the value of portfolio securities.
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
the Quality Series for the fiscal years ended September 30, 1993 and 1994 were
15.67% and 22.16%. For the same periods, the portfolio turnover rates for the
High-Yield Series were 7.70% and 8.36%. A Series portfolio turnover rate will
not be a limiting factor when the Series deems it desirable to sell or purchase
securities.

Taxable Investments

Under normal market conditions, each Series will attempt to invest 100% and
as a matter of fundamental policy will invest at least 80% of the value of its
net assets in securities the interest on which is exempt from federal and
California personal income tax. However in abnormal market conditions, if, in
the judgment of the Manager, the tax-exempt securities satisfying the Series'
investment objectives may not be purchased, a Series may, for defensive
purposes, temporarily invest in instruments the interest on which is exempt from
federal income taxes, but not California personal income taxes. Such securities
would include those described under "California Tax-Exempt Securities" above
that would otherwise meet the Series' objectives.

Also, in abnormal market conditions, a Series may invest on a temporary
basis in fixed-income securities, the interest on which is subject to federal,
state or local income taxes, pending the investment or reinvestment in
tax-exempt securities of proceeds of sales of shares or sales of portfolio
securities, in order to avoid the necessity of liquidating portfolio investments
to meet redemptions of shares by investors or where market conditions due to
rising interest rates or other adverse factors warrant temporary investing for
defensive purposes. Investments in taxable securities will be substantially in
securities issued or guaranteed by the United States Government (such as bills,
notes and bonds), its agencies, instrumentalities or authorities; highly-rated
corporate debt securities (rated AA-, or better, by Standard & Poor's or Aa3, or
better, by Moody's); prime commercial paper (rated A-1+/A-1 by Standard & Poor's
or P-1 by Moody's); and certificates of deposit of the 100 largest domestic
banks in terms of assets which are subject to regulatory supervision by the U.S.
Government or state governments and the 50 largest foreign banks in terms of
assets with branches or agencies in the United States. Investments in

-4-
<PAGE>

certificates of deposit of foreign banks and foreign branches of U.S. banks may
involve certain risks, including different regulation, use of different
accounting procedures, political or other economic developments, exchange
controls, or possible seizure or nationalization of foreign deposits.

Such temporary investments in federal but not state tax-exempt securities
and fully taxable securities will be limited as a matter of fundamental policy
to 20% of the value of a Series' net assets under normal market conditions.

INVESTMENT LIMITATIONS

Under each Series' fundamental policies, which cannot be changed except by
vote of a majority of the outstanding voting securities of the Series, the
Series may not:

- - Borrow money, except from banks for temporary purposes (such as meeting
redemption requests or for extraordinary or emergency purposes but not for
the purchase of portfolio securities) in an amount not to exceed 10% of the
value of its total assets at the time the borrowing is made (not including
the amount borrowed). A Series will not purchase additional portfolio
securities if such Series has outstanding borrowings in excess of 5% of the
value of its total assets;

- - Mortgage or pledge any of its assets, except to secure permitted borrowings
noted above;

- - Invest more than 25% of total assets at market value in any one industry;
except that tax-exempt securities and securities of the U.S. Government,
its agencies and instrumentalities are not considered an industry for
purposes of this limitation.

- - As to 50% of the value of its total assets, purchase securities of any
issuer if immediately thereafter more than 5% of total assets at market
value would be invested in the securities of any issuer (except that this
limitation does not apply to obligations issued or guaranteed as to
principal and interest by the U.S. Government or its agencies or
instrumentalities);

- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;

- - Purchase or hold any real estate, except that the Series 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,
trustees or officers of the Trust 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, except that the Series may be deemed an underwriter in connection
with the purchase and sale of portfolio securities;

- - Purchase or sell commodities or commodity contracts including futures
contracts; or

- - Make loans, except to the extent that the purchase of notes, bonds or other
evidences of indebtedness or deposits with banks may be considered loans.

As a matter of policy with respect to 75% of a Series' assets, no revenue
bond will be purchased by each respective Series if as a result of such purchase
more than 5% of such Series' assets would be invested in the securities of a
single issuer. This policy is not fundamental and may be changed by the Trustees
without shareholder approval.

Under the Act, a "vote of a majority of the outstanding voting securities"
of the Trust or of a particular series of the Trust means the affirmative vote
of the lesser of (1) more than 50% of the outstanding shares of the Trust or of
a series or (2) 67% or more of the shares of the Trust or of a series present at
a shareholders' meeting if more than 50% of the outstanding shares of the Trust
or of a series are represented at the meeting in person or by proxy.

-5-
<PAGE>

TRUSTEES AND OFFICERS

Trustees and officers of the Trust, together with information as to their
principal business occupations during the past five years are shown below. Each
Trustee who is an "interested person" of the Trust, as defined in the Act, is
indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.

WILLIAM C. MORRIS* Trustee, Chairman of the Board, Chief Executive
(56) Officer and Chairman of the Executive Committee

Managing Director, Chairman and President, J. & W.
Seligman & Co. Incorporated, investment managers
and advisors; and Seligman Advisors, Inc.,
advisors; Chairman and Chief Executive Officer,
the Seligman Group of Investment Companies;
Chairman, Seligman Financial Services, Inc.,
distributor; Seligman Holdings, Inc., holding
company; Seligman Services, Inc., broker/dealer;
J. & W. Seligman Trust Company, trust company; and
Carbo Ceramics Inc., ceramic proppants for oil and
gas industry; Director or Trustee, Seligman Data
Corp. (formerly, Union Data Service Center Inc.),
shareholder service agent; Daniel Industries,
Inc., manufacturer of oil and gas metering
equipment; Kerr-McGee Corporation, diversified
energy company; and Sarah Lawrence College; and a
Member of the Board of Governors of the Investment
Company Institute; formerly, Chairman, Seligman
Securities, Inc., broker/dealer.

RONALD T. SCHROEDER* Trustee, President and Member of the Executive
(47) Committee

Director, Managing Director and Chief Investment
Officer, J. & W. Seligman & Co. Incorporated,
investment managers and advisors; Managing
Director and Chief Investment Officer, Seligman
Advisors, Inc., advisors; Director or Trustee and
President and Chief Investment Officer,
Tri-Continental Corporation, closed-end investment
company and the open-end investment companies in
the Seligman Family of Mutual Funds; Director and
President, Seligman Holdings, Inc., holding
company; Director, Seligman Financial Services,
Inc., distributor; Director, Seligman Data Corp.,
shareholder service agent; Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc., closed-end investment companies;
Seligman Henderson Co., advisors; and Seligman
Services, Inc., broker/dealer; formerly, Director,
J. & W. Seligman Trust Company, trust company; and
Seligman Securities, Inc., broker/dealer.

FRED E. BROWN* Trustee
(81)
Director and Advisor, J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Director or Trustee, Tri-Continental Corporation,
closed-end investment company; the open-end
investment companies in the Seligman Family of
Mutual Funds; Director, Seligman Financial
Services, Inc., distributor; Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc., closed-end investment companies;
Seligman Services, Inc., broker/dealer; Trustee,
Trudeau Institute, non-profit biological research
organization; Lake Placid Center for the Arts,
cultural organization; and Lake Placid Education
Foundation, education foundation; formerly,
Director, J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.

-6-
<PAGE>

ALICE E. ILCHMAN Trustee
(59)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; NYNEX, telephone company; The
Rockefeller Foundation, charitable foundation; and
the Committee for Economic Development; The Markle
Foundation, philanthropic organization;
International Research and Exchange Board,
intellectual exchanges. Sarah Lawrence College,
Bronxville, New York 10708

JOHN E. MEROW* Trustee
(65)
Chairman and Senior Partner, Sullivan & Cromwell,
law firm; Director or Trustee, the Seligman Group
of Investment Companies; 457 Madison Avenue
Corporation, real estate; The Municipal Art
Society of New York; the United States Council for
International Business and the United States-New
Zealand Council; Elizabeth Blackwell Foundation;
New York Downtown Hospital; NYH Downtown, Inc.;
and The Society of the New York Hospital Fund,
Inc.; Chairman and Director, American Australian
Association; Chairman, The New York
Hospital-Cornell Medical Center Advisory Board;
and Member of the Board of Governors of the
Foreign Policy Association; Member of the Board of
Governors, New York Hospital; Member, Council on
Foreign Relations. 125 Broad Street, New York, NY
10004

BETSY S. MICHEL Trustee
(52)
Attorney; Director or Trustee, the Seligman Group
of Investment Companies; National Association of
Independent Schools (Boston), education; Chairman
of the Board of Trustees of St. George's School
(Newport, RI). St. Bernard's Road, Gladstone, NJ
07934

DOUGLAS R. NICHOLS, JR. Trustee
(74)
Management Consultant; Director or Trustee, the
Seligman Group of Investment Companies; formerly,
Trustee, Drew University. 790 Andrews Avenue,
Delray Beach, FL 33483

JAMES C. PITNEY Trustee
(68)
Partner, Pitney, Hardin, Kipp & Szuch, law firm;
Director or Trustee, the Seligman Group of
Investment Companies; Public Service Enterprise
Group, public utility; formerly Director, The
Howard Savings Bank, savings bank. Park Avenue at
Morris County, P.O. Box 1945, Morristown, NJ
07962-1945

JAME Q. RIORDAN Trustee
(67)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; The Brooklyn Museum; The Brooklyn Union
Gas Company; The Committee for Economic
Development; Dow Jones & Co. Inc.; Public
Broadcasting Service; and Co-Chairman of the
Policy Committee of the Tax Foundation; formerly,
Vice Chairman of Mobil Corporation; and Director
and President, Bekaert Corporation. 675 Third
Avenue, Suite 3004, New York, NY 10017

-7-
<PAGE>

HERMAN J. SCHMIDT Trustee
(78)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; H. J. Heinz Company; HON Industries,
Inc.; and MAPCO, Inc; formerly, Director of
MetLife Series Fund, Inc. and MetLife Portfolios,
Inc.; Macmillan, Inc. and Ryder System, Inc. 15
Oakley Lane, Greenwich, CT 06830

ROBERT L. SHAFER Trustee
(68)
Vice President, Pfizer Inc., pharmaceuticals;
Director or Trustee, the Seligman Group of
Investment Companies; and USLIFE Corporation, life
insurance. 235 East 42nd Street, New York, NY
10017

JAMES N. WHITSON Trustee
(60)

Executive Vice President, Chief Operating Officer
and Director, Sammons Enterprises, Inc., Director
or Trustee, the Seligman Group of Investment
Companies, Director of, C-SPAN; formerly,
President, Sammons Communications, Inc. 300
Crescent Court, Suite 700, Dallas, TX 75202

BRIAN T. ZINO* Trustee
(42)
Managing Director (formerly, Chief Administrative
and Financial Officer), J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Director or Trustee, the Seligman Group of
Investment Companies; Chairman, Seligman Data
Corp., shareholder service agent; Director,
Seligman Financial Services, Inc., distributor;
Seligman Services, Inc., broker/dealer; and J. &
W. Seligman Trust Company, trust company; Senior
Vice President, Seligman Henderson Co., advisor;
formerly, Director, Seligman Securities, Inc.,
broker/dealer; Director and Secretary, Chuo
Trust-JWS Advisors, Inc., advisor.

THOMAS G. MOLES Vice President
(52)
Director, Managing Director, (formerly, Vice
President and Portfolio Manager), J. & W. Seligman
& Co. Incorporated, investment managers and
advisors; Vice President and Portfolio Manager,
three other open-end investment companies in the
Seligman Family of Mutual Funds; President and
Portfolio Manager, Seligman Quality Municipal
Fund, Inc. and Seligman Select Municipal Fund,
Inc., closed-end investment companies; Director,
Seligman Financial Services, Inc., distributor;
Seligman Services, Inc., broker/dealer; and J. &
W. Seligman Trust Company, trust company;
formerly, Director, Seligman Securities, Inc.,
broker/dealer.

LAWRENCE P. VOGEL Vice President
(38)
Senior Vice President, Finance, J. & W. Seligman &
Co. Incorporated, investment managers and
advisors; Seligman Financial Services, Inc.,
distributor; and Seligman Advisors, Inc.,
advisors; Vice President (formerly Treasurer), the
Seligman Group of Investment Companies; Senior
Vice President, Finance (formerly, Treasurer),
Seligman Data Corp., shareholder service agent;
Treasurer, Seligman Holdings, Inc., holding
company; and Seligman Henderson Co., advisors;
formerly, Senior Vice President, Seligman
Securities, Inc., broker/dealer; Vice President,
Finance, J. & W. Seligman Trust Company; and
Senior Audit Manager, Price Waterhouse,
independent accountants.

-8-
<PAGE>

FRANK J. NASTA Secretary
(30)
Secretary, the Seligman Group of Investment
Companies; J. & W. Seligman & Co. Incorporated,
investment managers and advisors; Seligman
Financial Services, Inc., distributor; Seligman
Henderson Co., advisors; Chuo Trust - JWS
Advisors, Inc., advisors; and Seligman Data Corp.,
shareholder service agent; Seligman Services,
Inc., broker/dealer; Vice President, Law and
Regulation, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; formerly,
attorney, Seward & Kissel.

THOMAS G. ROSE Treasurer
(37)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc. and the American
Investors Family of Funds.

The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Trust for
which no market valuation is available and to elect or appoint officers of the
Trust to serve until the next meeting of the Board.
<TABLE>
<CAPTION>

Compensation Table

Pension or Total Compensation
Aggregate Retirement Benefits from Registrant and
Compensation Accrued as part of Fund Complex Paid
Position with Registrant from Registrant (1) Fund Expenses to Trustees(2)
------------------------ ------------------- ------------- --------------
<S> <C> <C> <C>
William C. Morris, Trustee N/A N/A N/A
Ronald T. Schroeder, Trustee N/A N/A N/A
Fred E. Brown, Tristee N/A N/A N/A
Alice S. Ilchman, Trustee $3,002.16 N/A $67,000.00
John E. Merow, Trustee $2,966.44(d) N/A $66,000.00(d)
Betsy S. Michel, Trustee $2,966.44 N/A $66,000.00
Douglas R. Nichols, Jr., Trustee $2,966.44 N/A $66,000.00
James C. Pitney, Trustee $3,002.16 N/A $67,000.00
James Q. Riordan, Trustee $2,966.44 N/A $66,000.00
Herman J. Schmidt, Trustee $2,966.44 N/A $66,000.00
Robert L. Shafer, Trustee $2,966.44 N/A $66,000.00
James N. Whitson, Trustee $2,966.44(d) N/A $66,000.00(d)
Brian T. Zino, Trustee N/A N/A N/A
</TABLE>

(1) Based on remunerations received by the Trustees for the Trust's four series
for the year ended December 31, 1994.

(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.

(d) Deferred.

The Trust has a compensation arrangement under which outside trustees may
elect to defer receiving their fees. Under this arrangement, interest is accrued
on the deferred balances. The annual cost of such interest is included in the
trustees' fees and expenses, and the accumulated balance thereof is included in
other liabilities in the Series' financial statements.

-9-
<PAGE>

Trustees and officers of the Trust are also trustees, directors and
officers of some or all of the other investment companies in the Seligman Group.

No trustees and officers of the Trust owned any shares of the Series at
December 31, 1994.

MANAGEMENT AND EXPENSES

As indicated in the Prospectus, under the Management Agreements, each dated
December 29, 1988, subject to the control of the Trustees, the Manager manages
the investment of the assets of each Series, including making purchases and
sales of portfolio securities consistent with the Series' investment objectives
and policies, and administers its business and other affairs. The Manager
provides the Trust with such office space, administrative and other services and
executive and other personnel as are necessary for Trust operations. The Manager
pays all of the compensation of Trustees of the Trust who are employees or
consultants of the Manager and the officers and employees of the Trust. The
Manager also provides senior management for Seligman Data Corp., the Trust's
shareholder service agent. The Manager is entitled to receive a management fee
from each of the Series calculated daily and payable monthly equal to 0.50% of
each Series' average daily net assets on an annual basis. The chart below
indicates the management fees paid by each Series as well as the percentage such
fee represents of each Series' respective average daily net assets for the
fiscal years ended September 30, 1994, 1993 and 1992.

% of Average Management
Daily Net Assets Fee Paid
----------------- ---------
High-Yield Series
Year Ended 9/30/94 .50% $248,761
Year Ended 9/30/93 .50 246,890
Year Ended 9/30/92 .50 245,631

Quality Series
Year Ended 9/30/94 .50% $532,542
Year Ended 9/30/93 .50 510,934
Year Ended 9/30/92 .50 430,777

The Trust pays all its expenses other than those assumed by the Manager
including brokerage commissions, if any, fees and expenses of independent
attorneys and auditors, taxes and governmental fees including fees and expenses
of qualifying the Trust and its shares under federal and state securities laws,
cost of stock certificates and expenses of repurchase or redemption of shares,
expenses of printing and distributing reports, notices and proxy materials to
existing shareholders, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of shareholders' meetings,
expenses of corporate data processing and related services, shareholder
recordkeeping and shareholder account services fees and disbursements of
transfer agents and custodians, expenses of disbursing dividends and
distributions, fees and expenses of Trustees of the Trust not employed by or
serving as a Trustee of the Manager or its affiliates, insurance premiums and
extraordinary expenses such as litigation expenses. The Trust's expenses are
allocated between the Series in a manner determined by the Trustees to be fair
and equitable.

The Manager has undertaken to certain state securities administrators, so
long as required, to reimburse the Trust for each year in the amount by which
total expenses, including the management fee, but excluding interest, taxes,
brokerage commissions and extraordinary expenses, exceed 2 1/2% of the first
$30,000,000 of average net assets, 2% of the next $70,000,000 of average net
assets and 1 1/2% of the remaining average net assets thereafter. Any such
reimbursement will be allocated between the Series in proportion to the relative
expenses of each Series.

On December 29, 1988, a majority of the outstanding voting securities of
the Manager was purchased by Mr. William C. Morris and a simultaneous
recapitalization of the Manager occurred.

Each Management Agreement is dated December 29, 1988, and was unanimously
approved by the Trustees at a Meeting held on October 11, 1988 and was approved
by the shareholders of each Series at a meeting held on December 15, 1988. Each
Agreement will continue in effect from year to year thereafter if such
continuance is approved in the manner required by the Act (i.e. (1) by a vote of
a majority of the Trustees or of the outstanding voting securities of the Series
and (2) by a vote of a majority of the Trustees who are not parties to the

-10-
<PAGE>

Management Agreement or interested persons of any such party) and if the Manager
shall not have notified the Series at least 60 days prior to the anniversary
date of the previous continuance that it does not desire such continuance. The
Agreement may be terminated by the Series, without penalty, on 60 days' written
notice to the Manager and will terminate automatically in the event of its
assignment. Each Series has agreed to change its name upon termination of its
Management Agreement if continued use of the name would cause confusion in the
context of the Manager's business.

The Manager is a successor firm to an investment banking business founded
in 1864 which has thereafter provided investment services to individuals,
families, institutions and corporations. See Appendix B.

ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN

As indicated in the Prospectus, an Administration, Shareholder Services and
Distribution Plan (the "Plan") for the Series is in effect under Section 12(b)
of the Act and Rule 12b-1 thereunder.

The Plan was approved on July 16, 1992 by the Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
Act) of the Series and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the "Qualified
Trustees") and was approved by shareholders of the Series at a Special Meeting
of Shareholders held on November 23, 1992. The Plan became effective on January
1, 1993 and 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 Trustees
and the Qualified Trustees of the Trust, cast in person at a meeting called for
the purpose of voting on such approval. Amendments to the Plan were approved in
respect of the Class D shares on November 18, 1993 by the Trustees, including a
majority of the Qualified Trustees, and became effective with respect to the
Class D shares on February 1, 1994. The Plan may not be amended to increase
materially the amounts payable to Service Organizations without the approval of
a majority of the outstanding voting securities of the Series and no material
amendment to the Plan may be made except by a majority of both the Trustees and
Qualified Trustees.

The Plan requires that the Treasurer of the Trust shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Plan. Rule 12b-1 also
requires that the selection and nomination of Trustees who are not "interested
persons" of the Series be made by such disinterested Trustees.

PORTFOLIO TRANSACTIONS

No brokerage commissions were paid by the Series during the fiscal years
ended September 30, 1992, 1993 or 1994. When two or more Series of the Trust or
two or more of the investment companies in the Seligman Group or other
investment advisory clients of the Manager desire to buy or sell the same
security at the same time, the securities purchased or sold are allocated by the
Manager in a manner believed to be equitable to each. There may be possible
advantages or disadvantages of such transactions with respect to price or the
size of positions already obtainable or saleable.

PURCHASE AND REDEMPTION OF SERIES SHARES

The High-Yield Series and Quality Series each issues two classes of shares:
Class A shares may be purchased at a price equal to the next determined net
asset value per share, plus a sales load. Class D shares may be purchased at a
price equal to the next determined net asset value without an initial sales
load, but a CDSL may be charged on certain redemptions within one year of
purchase. See "Alternative Distribution System," "Purchase Of Shares," and
"Redemption Of Shares" in the Series' Prospectus.

Specimen Price Make-Up

Under the current distribution arrangements between the Trust and the
Distributor, Class A shares are sold at a maximum sales load of 4.75% and Class
D shares are sold at net asset value.* Using each Series' net asset value at
September 30, 1994, the maximum offering price of a Series' shares is as
follows:

-11-
<PAGE>

HIGH-YIELD SERIES

Class A

Net asset value per share .......................................... $ 6.30

Maximum sales load (4.75% of offering price) ....................... .31
-----

Maximum offering price per share ................................... $ 6.61
=====

Class D

Net asset value and maximum offering price per share* .............. $ 6.31
=====

QUALITY SERIES

Class A

Net asset value per share .......................................... $ 6.39

Maximum sales load (4.75% of offering price) ....................... .32
-----

Maximum offering price per share ................................... $ 6.71
=====

Class D

Net asset value and maximum offering price per share* .............. $ 6.38
=====

- --------
* Class D shares are subject to a CDSL of 1% on certain redemptions within
one year of purchase. See "Redemption Of Shares" in the Series Prospectus.

Class A Shares - Reduced Sales Loads

Reductions Available. Shares of any Seligman mutual fund sold with a sales load
in a continuous offering will be eligible for the following reductions:

Volume Discounts are provided if the total amount being invested in Class A
shares of the High-Yield Series and Quality Series alone, the other series of
the Trust or in any combination of shares of the other mutual funds in the
Seligman Group which are sold with a sales load, reaches levels indicated in the
sales load schedule set forth in the Prospectuses.

The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of High-Yield Series and Quality Series, the other
series of the Trust, Seligman Capital Fund, Seligman Common Stock Fund, Seligman
Communications and Information Fund, Seligman Frontier Fund, Seligman Growth
Fund, Seligman Henderson Global Fund Series, Seligman High Income Fund Series,
Seligman Income Fund, Seligman New Jersey Tax-Exempt Fund, Seligman Pennsylvania
Tax-Exempt Fund Series or Seligman Tax-Exempt Fund Series that were sold with a
sales load with the total net asset value of shares of those Seligman mutual
funds already owned that were sold with a sales load and the total net asset
value of shares of Seligman Cash Management Fund which were acquired through an
exchange of shares of another mutual fund in the Seligman Group on which there
was a sales load at the time of purchase to determine reduced sales loads in
accordance with the schedule in the Prospectuses. The value of the shares owned,
including the value of shares of Seligman Cash Management Fund acquired in an
exchange of shares of another mutual fund in the Seligman Group on which there
is a sales load at the time of purchase will be taken into account in orders
placed through a dealer, however, only if Seligman Financial Services, Inc.
("SFSI") is notified by an investor or a dealer of the amount owned at the time
a purchase is made and is furnished sufficient information to permit
confirmation.

A Letter of Intent allows an investor to purchase Class A shares of the

-12-
<PAGE>

High-Yield Series and Quality Series over a 13-month period at reduced sales
loads in accordance with the schedule in the Prospectuses, based on the total
amount of Class A shares that the letter states the investor intends to purchase
plus the total net asset value of shares that were sold with a sales load of the
other series of the Trust, Seligman Capital Fund, Seligman Common Stock Fund,
Seligman Communications and Information Fund, Seligman Frontier Fund, Seligman
Growth Fund, Seligman Henderson Global Fund Series, Seligman High Income Fund
Series, Seligman Income Fund, Seligman New Jersey Tax-Exempt Fund, Seligman
Pennsylvania Tax-Exempt Fund Series and Seligman Tax-Exempt Fund Series already
owned and the total net asset value of shares of Seligman Cash Management Fund
which were acquired through an exchange of shares of another mutual fund in the
Seligman Group on which there was a sales load at the time of purchase. Reduced
sales loads also may apply to purchases made within a 13-month period starting
up to 90 days before the date of execution of a letter of intent. For more
information concerning the terms of the letter of intent, see "Terms and
Conditions - Letter of Intent" accompanying the Account Application in the
Series' Prospectus.

Persons Entitled to Reductions. Reductions in sales loads apply to purchases of
Class A shares of each Series by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code,
tax-exempt organizations under Section 501 (c)(3) or (13), and non-qualified
employee benefit plans that satisfy uniform criteria are considered "single
persons" for this purpose. The uniform criteria are as follows:

1. Employees must authorize the employer, if requested by the Series', to
receive in bulk and to distribute to each participant on a timely basis the
Series' prospectuses, reports and other shareholder communications.

2. Employees participating in a plan will be expected to make regular periodic
investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Series 12
months and 30 days after the last regular investment in his account. In such
event, the dropped participant would lose the discount on share purchases to
which the plan might then be entitled.

3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.

Eligible Employee Benefit Plans. The table of sales loads in the Prospectuses
applies to sales to "eligible employee benefit plans," except that each Series
may sell shares at net asset value to "eligible employee benefit plans," of
employers who have at least 2,000 U.S. employees to whom such plan is made
available or, regardless of the number of employees, if such plan is established
or maintained by any dealer which has a sales agreement with Seligman Financial
Services, Inc. Such sales must be made in connection with a payroll deduction
system of plan funding or other systems acceptable to Union Data Service Center,
the Trust's shareholder service agent. Such sales are believed to require
limited sales effort and sales related expenses and therefore are made at net
asset value. Contributions or account information for plan participation also
should be transmitted to Seligman Data Corp. by methods which it accepts.
Additional information about "eligible employee benefit plans" is available from
investment dealers or SFSI. The term "eligible employee benefit plan" means any
plan or arrangement, whether or not tax qualified, which provides for the
purchase of Series shares.

Further Types of Reductions. Class A shares of each Series may be issued without
a sales load in connection with the acquisition of cash and securities owned by
other investment companies and personal holding companies to financial
institution trust departments, to registered investment advisers exercising
investment discretionary authority with respect to the purchase of Series
shares, or pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitation of, its employees, members or
participants in connection with the purchase of shares of the Series, to
separate accounts established and maintained by an insurance company which are
exempt from registration under Section 3(c)(11) of the 1940 Act, to registered
representatives and employees (and their spouses and minor children) of any
dealer that has a sales agreement with SFSI, to shareholders of mutual funds
with investment objectives similar to the Series' who purchase shares with
redemption proceeds of such funds and to certain unit investment trusts as
described in the Series' Prospectus.

Class A shares of the Series' may be sold at net asset value to these
persons since such sales require less sales effort and lower sales related
expenses as compared with sales to the general public.

-13-
<PAGE>

Payment in Securities. In addition to cash, each Series may accept securities in
payment for Series shares sold at the applicable public offering price.
Generally, a Series will only consider accepting securities (1) to increase its
holdings in a portfolio security of the Series, or (2) if the Manager determines
that the offered securities are a suitable investment in a sufficient amount for
efficient management. Although no minimum has been established, it is expected
that each Series would not accept securities with a value of less than $100,000
per issue in payment for shares. A Series may reject in whole or in part offers
to pay for shares with securities, may require partial payment in cash for
applicable sales loads, and may discontinue accepting securities as payment for
shares at any time without notice. In accordance with Texas securities
regulations, should the Fund accept securities in payment for Series shares,
such transactions would be limited to a bonafide reorganization, statutory
merger, or to other acquisitions of portfolio securities (except for municipal
debt securities issued by state political subdivisions or their agencies or
instrumentalities) which meet the investment objectives and policies of a
Series; are acquired for investment and not for resale; are liquid securities
which are not restricted as to transfer either by law or liquidity of market;
and have a value which is readily ascertainable (and not established only be
evaluation procedures) as evidenced by a listing on the American Stock Exchange,
the New York Stock Exchange or NASDAQ. The Series have no present intention of
accepting securities in payment for shares.

More About Redemptions. The procedures for redemption of the Series' shares
under ordinary circumstances are set forth in the Prospectus. Whether shares are
redeemed pursuant to the Regular or the Expedited Redemption Service (less than
$1,000), a check for the proceeds ordinarily will be sent within seven calendar
days following redemption. Payment may be made in securities, subject to the
review of some state securities commissions, or postponed, if the orderly
liquidation of portfolio securities is prevented by the closing of, or
restricted trading on, the New York Stock Exchange during periods of emergency,
or during such other periods as orders by the Securities and Exchange
Commission. If payment were to be made in securities, shareholders receiving
securities could incur certain transaction costs. The Trust will not accept
orders from securities dealers for the repurchase of shares.

DISTRIBUTION SERVICES

Seligman Financial Services Inc. ("SFSI"), an affiliate of the Manager, acts
as general distributor of the shares of the Trust and of the other mutual funds
in the Seligman Group. As general distributor of the Trust's Shares of
Beneficial Interest, SFSI allows concessions to all dealers on the Quality
Series and High-Yield Series up to 4.25% on purchases of Class A shares of Class
A shares to which the 4.75% sales load applies. SFSI receives the balance of
sales loads and any CDSL paid on Class D shares, of applicable, paid by
investors. The Trust and SFSI are parties to a Distributing Agreement dated
January 1, 1993.

The total sales loads paid by shareholders of both Series for the fiscal
year ended September 30, 1994 amounted to $394,675, with allowance of $346,536
as concessions to dealers; for the fiscal year ended September 30, 1993 amounted
to $690,570, with allowance of $608,368 as concessions to dealers; for September
30, 1992 amounted to $805,855, with allowance of $708,613 as concessions to
dealers; and for September 30, 1991 amounted to $650,860, with allowance of
$564,875 as concessions to dealers. For the period February 1, 1994 through
September 30, 1994, SFSI retained CDSL charges of $643 for both Series.

Class A shares of the High-Yield Series and Quality Series may be sold at
net asset value to present and retired Trustees, directors, officers, employees
(and family members) of the Trust, the other investment companies in the
Seligman Group, the Manager and other companies affiliated with the Manager.
Such sales also may be made to employee benefit plans for such persons and to
any investment advisory, custodial, trust or other fiduciary account managed or
advised by the Manager or any affiliate. These sales may be made for investment
purposes only, and shares may be resold only to the Series.

MORE ABOUT TAXES

Under the Tax Reform Act of 1986, each Series of the Trust will be treated
as a separate corporation for federal income tax purposes. As a result,
determininations of net investment income, exempt-interest dividends and net
long-term and short-term capital gain and loss will be made separately for each
Series.

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As indicated in the Prospectus, each Series intends to qualify and elect to
be treated as a regulated investment company under the Internal Revenue Code and
thus to be relieved of federal income tax on amounts distributed to
shareholders; provided that it distributes at least 90% of its net investment
income and net short-term capital gains, if any.

Qualification as a regulated investment company under the Internal Revenue
Code requires among other things, that (a) at least 90% of the annual gross
income of the Series be derived from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of stocks or
securities or foreign currencies, or other income (including but not limited to
gains from options, futures, and forward contracts) derived with respect to its
business of investing in such stocks, securities or currencies; (b) the Series
derive less than 30% of its gross annual income from gains from the sale or
other disposition of stocks, securities and certain other assets held for less
than three months; and (c) the Series diversifies its holdings so that, at the
end of each quarter of the taxable year, (i) at least 50% of the market value of
the Series assets is represented by cash, United States Government securities
and other securities limited in respect of any one issuer to an amount not
greater than 5% of the Series assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any one issuer (other than U.S. Government
securities).

VALUATION

The High-Yield Series and the Quality Series net asset values are determined
as of the close of the New York Stock Exchange ("NYSE") (currently, 4:00 p.m.
New York City time), on each day that the NYSE is open. The Trust and the NYSE
are currently closed on New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Trust
will also determine net asset value on each day in which there is a sufficient
degree of trading in a Series' portfolio securities that the net asset value of
a Series might be materially affected. It is computed by dividing the value of
the net assets of the Series (i.e., the value of its assets less liabilities) by
the total number of outstanding shares of such Series. All expenses of the
Series, including the Manager's fee, are accrued daily and taken into account
for the purpose of determining its net asset value.

The High-Yield and Quality Series tax-exempt securities are valued on the
basis of quotations provided by an independent pricing service, approved by the
Trustees, which uses information with respect to transactions in bonds,
quotations from bond dealers, market transactions in comparable securities and
various relationships between securities in determining value. In the absence of
such quotations, in accordance with fair value as determined in accordance with
procedures approved by the Trustees. Short-term notes having remaining
maturities of 60 days or less are generally valued at amortized cost.

Generally, trading in certain securities such as tax-exempt securities,
corporate bonds, U.S. Government securities, and money market instruments is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in determining the net asset value of
the Series' shares are computed as of such times. Occasionally, events affecting
the value of such securities may occur between such times and the close of the
NYSE which will not be reflected in the computation of the Series' net asset
value. If events materially affecting the value of such securities occur during
such period, then these securities and other assets will be valued at their fair
market value as determined in good faith by the Trustees.

PERFORMANCE INFORMATION

Class A shares of the High-Yield Series and the Quality Series annualized
yield for the 30-day period ended September 30, 1994 was 5.19% and 4.95%,
respectively. The annualized yield was computed by dividing the Series' net
investment income per share earned during the 30-day period by the maximum
offering price per share (i.e., the net asset value plus the maximum sales load
of 4.75% of the net amount invested) on September 30, 1994, which was the last
day of this period. The average number of Class A shares of the High-Yield
Series and Quality Series was 7,603,819 and 15,553,532, respectively which was
the average daily number of shares outstanding during the 30-day period that
were eligible to receive dividends. Income was computed by totaling the interest
earned on all debt obligations during the 30-day period and subtracting from
that amount the total of all recurring expenses incurred during the period. The
30-day yield was then annualized on a bond-equivalent basis assuming semi-annual
reinvestment and compounding of net investment income, as described in the
Prospectus.

Class A shares of the Quality Series and High-Yield Series tax equivalent
annualized yields for the 30-day period ended September 30, 1994 were 9.65% and

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9.19%, respectively. 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 46.24% (46.24% being the assumed maximum combined federal and state
income tax rate for individual taxpayers that are subject to California personal
income taxes). Then the small portion of the yield attributable to securities
the income of which was exempt only for federal income tax purposes was
determined. This portion of the yield was then divided by one minus 39.6% (39.6%
being the maximum federal income tax rate). These two calculations were then
added to the portion of the yield, if any, that was not attributable to
securities, the income of which was not tax exempt.

The Quality Series' and High-Yield Series' Class A shares average annual
total returns for the one-year period ended September 30, 1994 were (9.91)% and
(4.42)%, respectively; for the five-year period ended September 30, 1994 were
6.03% and 6.50%, respectively and; since inception through the period ended
September 30, 1994 were 8.60% and 9.17%, respectively. These amounts were
computed by assuming a hypothetical initial payment of $1,000. 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 paid by the
Series over the relevant time period were reinvested. It was then assumed that
at the end of the one-year period, five-year period and since inception of the
Series, the entire amount was redeemed. The average annual total return was then
calculated by calculating the annual rate required for the initial payment to
grow to the amount which would have been received upon redemption (i.e., the
average annual compound rate of return).

The annualized yield for the 30-day period ended September 30, 1994 for the
Quality Series and High-Yield Series Class D shares were 4.45% and 4.23%. The
annualized yield was computed by dividing a Series' net investment income per
share earned during this 30-day period by the maximum offering price per share
(i.e., the net asset value) on September 30, 1994, which was the last day of
this period. The average number of Class D shares were California
High-Yield-102,884, and California Quality-125,743 which was the average daily
number of shares outstanding during the 30-day period that were eligible to
receive dividends.

The tax equivalent annualized yield for the 30-day period ended September
30, 1994 for the Quality Series and High-Yield Series Class D shares of were
8.28% and 7.86%. The tax equivalent annualized yield was computed as discussed
above for Class A shares.

The total return for the period from February 1, 1994 through September 30,
1994 for the Quality and High-Yield Series' Class D shares were (8.91)% and
(3.42)%. These amounts were computed by assuming a hypothetical initial payment
of $1,000 in Class D shares of each Series and that all of the dividends and
distributions by the Series' Class D shares over the relevant time period were
reinvested. It was then assumed that at the end of the period, the entire amount
was redeemed, subtracting the applicable 1% CDSL.

The tables below illustrate the total returns on a $1,000 investment in
Class A and Class D shares of each of the Series from the commencement of their
operations through September 30, 1994, assuming investment of all dividends and
capital gain distributions.

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CLASS A SHARES

Value of Capital Value Total Value
Period Initial Gain of of Total
Ended 1 Investment 2 Distributions Dividends Investment 2 Return 1,3
- ------- ------------ ------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
HIGH-YIELD
9/30/85 $ 990 $ - $ 78 $ 1,068
9/30/86 1,118 24 191 1,333
9/30/87 987 68 258 1,313
9/30/88 1,042 87 378 1,507
9/30/89 1,056 103 493 1,652
9/30/90 1,027 127 590 1,744
9/30/91 1,080 135 747 1,962
9/30/92 1,105 141 893 2,139
9/30/93 1,118 209 1,040 2,367
9/30/94 1,047 224 1,105 2,376 137.64%

QUALITY
9/30/85 $ 993 $ - $ 73 $1,066
9/30/86 1,118 17 176 1,311
9/30/87 998 37 242 1,277
9/30/88 1,045 66 350 1,461
9/30/89 1,075 69 461 1,605
9/30/90 1,033 95 545 1,673
9/30/91 1,105 111 697 1,913
9/30/92 1,138 120 837 2,095
9/30/93 1,209 164 1,014 2,387
9/30/94 1,061 192 1,004 2,257 125.69%

CLASS D SHARES

HIGH-YIELD
9/30/94 $ 937 $ - $ 29 $ 966 (3.42)%

QUALITY
9/30/94 $ 886 $ - $ 25 $ 911 (8.91)%

</TABLE>

1 From commencement of operations of Class A shares on November 20, 1984;
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 load, assumes that all dividends and capital
gain distributions were taken in cash and reflects the effect of the
maximum sales load and changes in the net asset value of the shares
purchased with the hypothetical initial investment. "Total Value of
Investment" assumes investment of all dividends and capital gain
distributions.

3 Total return for each Series is calculated by assuming a hypothetical
initial investment of $1,000 at the beginning of the period specified,
subtracting the maximum sales load or CDSL, if applicable; determining
total value of all dividends and distributions that would have been paid
during the period on such shares assuming that each dividend or
distribution was invested in additional shares at net asset value;
calculating the total value of the investment at the end of the period; and
finally, by dividing the difference between the amount of the hypothetical
initial investment at the beginning of the period and its value at the end
of the period by the amount of the hypothetical initial investment.

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The waiver by the Manager of its fees and reimbursement of certain expenses
(as set forth under "Management and Expenses" herein and "Financial Highlights"
in the Prospectus) during certain of the periods for which the performance
results have been provided in this section positively affected such results.

A Series' Class A total return and average annual total return quoted does
not reflect the deduction of the administration, shareholder services and
distribution fee for period prior to January 1, 1993, which fee if reflected
would reduce the performance quoted.

GENERAL INFORMATION

The Trustees are authorized to classify or reclassify and issue any shares
of beneficial interest of the Trust into any number of other classes without
further action by shareholders. The 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.

As a general matter, the Trust will not hold annual or other meetings of
the shareholders. This is because the Declaration of Trust provides for
shareholder voting only (a) for the election or removal of one or more Trustees
if a meeting is called for that purpose, (b) with respect to any contract as to
which shareholder approval is required by the Act, (c) with respect to any
termination or reorganization of the Trust or any series, including the Fund, to
the extent and as provided in the Declaration of Trust, (d) with respect to any
amendment of the Declaration of Trust (other than amendments establishing and
designating new series, abolishing series when there are no units thereof
outstanding, changing the name of the Trust or the name of any series, supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
provision thereof which is internally inconsistent with any other provision
thereof or which is defective or inconsistent with the Act or with the
requirements of the Internal Revenue Code of 1986, as amended, or applicable
regulations for the Fund's obtaining the most favorable treatment thereunder
available to regulated investment companies), which amendments require approval
by a majority of the Shares entitled to vote, (e) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding, or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the shareholders,
and (f) with respect to such additional matters relating to the Trust as may be
required by the Act, the Declaration of Trust, the By-laws of the Trust, any
registration of the Trust with the Securities and Exchange Commission or any
state, or as the Trustees may consider necessary or desirable. Each Trustee
serves until the next meeting of shareholders, if any, called for the purpose of
considering the election or reelection of such Trustee or of a successor to such
Trustee, and until the election and qualification of his successor, if any,
elected at such meeting, or until such Trustee sooner dies, resigns, retires or
is removed by the shareholders or two-thirds of the Trustees.

The shareholders of the Trust have the right, upon the declaration in
writing or vote of more than two-thirds of the Trust's outstanding shares, to
remove a Trustee. The Trustees will call a meeting of shareholders to vote on
the removal of a Trustee upon the written request of the record holders of ten
percent of its shares. In addition, whenever ten or more shareholders of record
who have been such for at least six months preceding the date of application,
and who hold in the aggregate either shares having a net asset value of at least
$25,000 or at least 1 per centum of the outstanding shares, whichever is less,
shall apply to the Trustees in writing, stating that they wish to communicate
with other shareholders with a view to obtaining signatures to a request for a
meeting for the purpose of voting upon the question of removal of any Trustee or
Trustees and accompanied by a form of communication and request which they wish
to transmit, the Trustee shall within five business days after receipt of such
application either: (1) afford to such applicants access to a list of the names
and addresses of all shareholders as recorded on the books of the Trust; or (2)
inform such applicants as to the approximate number of shareholders of record,
and the approximate cost of mailing to them the proposed communication and form
of requests. If the Trustees elect to follow the latter course, the Trustees,
upon the written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all shareholders of record at their
addresses as recorded on the books, unless within five business days after such
tender the Trustees shall mail to such applicants and file with the Securities
and Exchange Commission (the "Commission"), together with a copy of the material
to be mailed, a written statement signed by at least a majority of the Trustees
to the effect that in their opinion either such material contains untrue
statements of fact or omits to state facts necessary to make the statements
contained therein not misleading, or would be in violation of applicable law,
and specifying the basis of such opinion. After opportunity for hearing upon the
objections specified in the written statement so filed, the Commission may, and
if demanded by the Trustees or by such applicants shall, enter an order either
sustaining one or more of such objections or refusing to sustain any of them. If
the Commission shall enter an order refusing to sustain any of such objections,

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or if, after the entry of an order sustaining one or more of such objections,
the Commission shall find, after notice and opportunity for hearing, that all
objections so sustained have been met, and shall enter an order so declaring,
the Trustees shall mail copies of such material to all shareholders with
reasonable promptness after the entry of such order and the renewal of such
tender.

Rule 18f-2 under the Act provides that any matter required to be submitted
by the provisions of the Act or applicable state law, or otherwise, to the
holders of the outstanding voting securities of an investment company such as
the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each series
affected by such matter. Rule 18f-2 further provides that a series shall be
deemed to be affected by a matter unless it is clear that the interests of each
series in the matter are substantially identical or that the matter does not
significantly affect any interest of such series. However, the Rule exempts the
selection of independent public accountants, the approval of principal
distributing contracts and the election of trustees from the separate voting
requirements of the Rule.

The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust. The Declaration of Trust also
provides for indemnification and reimbursement of expenses out of a series'
assets for any shareholder held personally liable for obligations of such
series.

Custodian. Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, serves as custodian for the Fund. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset value for the Fund.

Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, NY
10281.

SPECIAL CONSIDERATIONS REGARDING INVESTMENTS
IN CALIFORNIA TAX-EXEMPT SECURITIES

The following information as to certain California considerations is
given to investors in view of the Fund's policy of investing primarily in
securities of California issuers. Such information is derived from sources that
are generally available to investors and is believed by the Manager to be
accurate. Such information constitutes only a brief summary, does not purport to
be a complete description and is based on information from official statements
relating to securities offerings of California issuers except for information
regarding the Orange County filing for protection under Chapter 9 of the
Bankruptcy Code, which is based on newspaper articles.

California's economy is the largest among the 50 states and one of the
largest in the world. The State's population of almost 32 billion represents
over 12.0 percent of the total United States population and total personal
income in the State, estimated at $683 billion in 1993, accounts for 12.7
percent of all personal income in the nation. Total employment is about 14
million, the majority of which is in the service, trade and manufacturing
sectors.

The State is subject to an annual appropriations limit imposed by
Article XIII B of the State Constitution (the "Appropriations Limit"). Article
XIII B prohibits the State from spending "appropriations subject to limitation"
in excess of the Appropriations Limit. Article XIII B, originally adopted in
1979, was modified substantially by Propositions 98 and 111 in 1988 and 1990,
respectively. "Appropriations subject to limitation", with respect to the State,
are authorizations to spend "proceeds of taxes", which consist of tax revenues,
and certain other funds, including proceeds from regulatory licenses, user
charges or other fees to the extent that such proceeds exceed "the cost
reasonably borne by that entity in providing the regulation, product or
service", but "proceeds of taxes" exclude most state subventions to local
governments, tax refunds and some benefits payments such as unemployment
insurance. No limit is imposed on appropriations of funds which are not
"proceeds of taxes", such as reasonable user charges or fees, and certain other
non-tax funds.

Not included in the Appropriations Limit are appropriations for the
debt service costs of bonds existing or authorized by January 1, 1979, or
subsequently authorized by the voters, appropriations required to comply with
mandates of courts or the federal government and, pursuant to Proposition 111,
appropriations for qualified capital outlay projects and appropriations of
revenues derived from any increase in gasoline taxes and motor vehicle weight
fees above January 1, 1990 levels. In addition, a number of recent and proposed
initiatives are structured to create new tax revenues dedicated to certain

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specific uses, with such new taxes expressly exempted from the Article XIII B
limits. The Appropriations Limit may also be exceeded in cases of emergency.
However, unless the emergency arises from civil disturbance or natural disaster
declared by the Governor, and the appropriations are approved by two-thirds of
the Legislature, the Appropriations Limit for the next three years must be
reduced by the amount of the excess.

The State's Appropriations Limit in each year is based on the limit for
the prior year, adjusted annually for changes in California per capita personal
income and changes in population, and adjusted, when applicable, for any
transfer of financial responsibility of providing services to or from another
unit of government. As amended by Proposition 111, the Appropriations Limit is
tested over consecutive two-year periods. Any excess of the aggregate "proceeds
of taxes" received over such two-year period above the combined Appropriations
Limit for those two years is divided equally between transfers to local school
and community college ("K-14") districts and refunds to taxpayers.

As originally enacted in 1979, the State's Appropriations Limit was
based on 1978-79 Fiscal Year authorizations to expend proceeds of taxes and was
adjusted annually to reflect changes in cost of living and population. Since in
the 1990-91 Fiscal Year, the State's Appropriations Limit has been recalculated
by taking the actual 1986-87 limit and applying the annual adjustments as if
Proposition 111 had been in effect. This recalculation has resulted in an
increase of $1 billion to the State's Appropriations Limit in 1990-91. The
Legislature has enacted legislation to implement Article XIII B which defines
certain terms used in Article XIII B and sets forth the methods for determining
the Appropriations Limit. Government Code Section 7912 requires an estimate of
the Appropriations Limit to be included in the Governor's Budget and thereafter
to be subject to the budget process and established in the Budget Act.

For the 1993-94 Fiscal Year, the State Appropriations Limit and the
Appropriations Subject to Limit were $36.6 and $28.2 billion, respectively,
resulting in an amount under the limit of approximately $8.4 billion. For the
1994-95 fiscal year, the State Appropriations Limit and Appropriations Subject
to Limit are estimated to be $37.5 and $29.2 billion, respectively, resulting in
an amount under the limit of approximately $8.3 billion.

In 1994 the Legislature enacted a two-year plan to retire the
accumulated State Budget Deficit through Section 12467 of the California
Government Code, enacted by Chapter 135, Statutes of 1994 (the "Budget
Adjustment Law"). Pursuant to the Budget Adjustment Law on November 15, 1994,
the State Controller issued a report which determined that there would be no
1995 cash shortfall and, therefore, no implementation of the Budget Adjustment
Law in the 1994-95 Fiscal Year. On October 15, 1995, the State Controller will,
in conjunction with the Legislative Analyst's Office review the estimated cash
condition of the General Fund for the 1995-96 Fiscal Year. The "1996 cash
shortfall" shall be the amount necessary to bring the balance of unused
borrowable resources on June 30, 1996 to zero. On or before December 1, 1995,
legislation must be enacted providing for sufficient General Fund expenditure
reductions, revenue increases, or both to offset any such 1996 cash shortfall
identified by the State Controller. If such legislation is not enacted, within
five days thereafter the Director of Finance must reduce all General Fund
appropriations for the 1995-96 Fiscal Year, except certain Required
Appropriations, by the percentage equal to the ratio of said 1996 cash shortfall
to total remaining General Fund appropriations for the 1995-96 Fiscal Year,
excluding the Required Appropriations.

Proposition 98

On November 8, 1988, voters of the State approved Proposition 98, a
combined initiative constitutional amendment and statute called the "Classroom
Instructional Improvement and Accountability Act". Proposition 98 (as modified
by Proposition 111, which was enacted on June 5, 1990), changed State funding of
public education below the university level, and the operation of the State
Appropriations Limit, primarily by guaranteeing K-14 schools a minimum share of
General Fund revenues. Proposition 98 permits the Legislature, by two-thirds
vote of both houses and with the Governor's concurrence, to suspend the K-14
schools' minimum funding formula for a one-year period. Proposition 98 also
contains provisions transferring certain State tax revenues in excess of the
Article XIII B limit to K-14 schools.

The 1994-95 Budget Act projects the Proposition 98 minimum funding
level at $14.4 billion based on the "Test 2" calculation where the guarantee is
determined by the amount appropriated to K-14 schools in the prior year,
adjusted for changes in the cost of living and enrollment. This amount also
takes into account increased property taxes transferred to school districts from
other local governments.

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<PAGE>

Fiscal Years Prior to 1992-93

In the years following the enactment of the Federal Tax Reform Act of
1986 and conforming changes to the State's tax laws, taxpayer behavior became
much more difficult to predict, and the State experienced a series of fiscal
years in which revenue came in significantly higher or lower than original
estimates. The 1989-90 Fiscal Year ended with revenues below estimate, so that
the State's budget reserve (the Special Fund for Economic Uncertainties or
"SFEU") was fully depleted by June 30, 1990. This date essentially coincided
with the start of the current recession, and the State has subsequently
accumulated a budget deficit in the SFEU approaching $2.8 billion at its peak.
The State's budget problems in recent years have also been caused by a
structural imbalance which has been identified by the current and previous
Administrations. The largest General Fund Programs--K-14 education, health,
welfare and corrections--were increasing faster than the revenue base, driven by
the State's rapid population increases.

Starting in the 1990-91 Fiscal Year, each budget required multibillion
dollar actions to bring projected revenues and expenditures into balance and to
close large "budget gaps" which were identified. The Legislature and Governor
eventually agreed on significant cuts in program expenditures, some transfers of
program responsibilities and funding from the State to local governments,
revenue increases (particularly in the 1991-92 Fiscal Year budget), and various
one-time adjustments and accounting changes. However, as the recession took hold
and deepened after the summer of 1990, revenues dropped sharply and expenditures
for heath and welfare programs increased as job losses mounted, so that the
State ended each of the 1990-91 and 1991-92 Fiscal Years with an unanticipated
deficit in the budget reserve, the SFEU, as compared to projected positive
balances.

As a result of the revenue shortfalls accumulating for the previous two
fiscal years, the State Controller in April 1992 indicated that cash resources
(including borrowing from Special Funds) would not be sufficient to meet all
General Fund Obligations due on June 30 and July 1, 1992. On June 25, 1992, the
State Controller issued $475 million of 1992 Revenue Anticipation Warrants (the
"1992 Warrants") in order to provide funds to cover all necessary payments from
the General Fund at the end of the 1991-92 Fiscal Year and on July 1, 1992. The
1992 Warrants were paid on July 24, 1992. In addition to the 1992 Warrants the
State Controller reported that as of June 30, 1992, the General Fund had
borrowed $1.336 billion from the SFEU and $4.699 billion from other Special
Funds, using all but about $183 million of borrowable cash resources.

1992-93 Fiscal Year

To balance the 1992-93 Governor's Budget, program reductions totalling
$4.365 billion and revenue and transfer increases of $872 million were proposed
for the 1991-92 and 1992-93 Fiscal Years. Economic performance in the State
continued to be sluggish after the 1992-93 Governor's Budget was prepared. By
the time of the May Revision, issued on May 20, 1992, the Administration
estimated that the 1992-93 Budget needed to address a gap of about $7.9 billion,
much of which was needed to repay the accumulated budget deficits of the
previous two years.

The severity of the budget actions needed led to a long delay in
adopting the budget. With the failure to adopt a budget by July 1, 1992 which
would have allowed the State to carry out its normal annual cash flow borrowing,
the State Controller was forced to issue registered warrants to pay a variety of
obligations representing prior years' or continuing appropriations, and mandates
from court orders. Available funds were used to make constitutionally-mandated
payments, such as debt service on bonds and the 1992 Warrants. Between July 1
and September 4, 1992 the State Controller issued a total of approximately $3.8
billion of registered warrants. After that date, all remaining outstanding
registered warrants (about $2.9 billion) were called for redemption from the
proceeds of the issuance of 1992 Interim Notes after the budget was adopted.

From July 1, 1992 until the Budget Act was signed on September 2, 1992
many State vendors went unpaid for services rendered or supplies delivered
during this period. Certain obligations, such as employee salaries, welfare
payments, school apportionments, debt service and Medi-Cal reimbursements, were
paid (although in many cases with registered warrants) based on continuing or
special appropriations, or court orders. The level of these payments was
consistent with, and reflected in, the 1992-93 Budget Act. State employees
successfully filed suit against the State alleging that payment of their
salaries with registered warrants violated federal labor laws.

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<PAGE>

The Legislature enacted the 1992-93 Budget Act on August 29, 1992, and
it was signed by the Governor on September 2, 1992. The 1992-93 Budget Act
provided for expenditures of $57.4 billion and consisted of General Fund
expenditures of $40.8 billion and Special Fund and Bond Fund expenditures of
$16.6 billion. Following enactment of the 1992-93 Budget Act, the State
immediately undertook its regular cash flow borrowing program for the 1992-93
Fiscal Year.

The $7.9 billion budget gap was closed primarily through cuts in
program expenditures (principally for health and welfare programs, aid to
schools and support for higher education), together with some increases in
revenue from accelerated collections and changes in tax laws to conform to
federal law changes, and a variety of one-time inter-fund transfers and
deferrals. The other major component of the budget compromise was a law
requiring local governments to transfer a total of $1.3 billion to K-12 school
and community college districts, thereby reducing by that amount General Fund
support for those districts under Proposition 98.

1993-94 Fiscal Year

The Governor's Budget introduced on January 8, 1993 disclosed that the
continuing recession made further budget cuts necessary. To balance the budget
in the face of declining revenues, the Governor proposed a series of revenue
shifts from local government, reliance on increased federal aid, and reductions
in State spending.

The May Revision of the Governor's Budget, released on May 20, 1993,
projected the State would have an accumulated deficit of about $2.75 billion by
about June 30, 1993, essentially unchanged from the prior year. The Governor
proposed to eliminate this deficit over an 18-month period. Unlike previous
years, the Governor's Budget and May Revision did not calculate a "gap" to be
closed, but rather set forth revenue and expenditure forecasts and proposals
designed to produce a balanced budget.

The 1993-94 Budget Act was signed by the Governor on June 30, 1993,
along with implementing legislation. The 1993-94 Budget Act included General
Fund expenditures of $38.5 billion and Special Fund expenditures of 12.1
billion. With enactment of the 1993-94 Budget Act, the State carried out its
regular cash flow borrowing program for the fiscal year, with the issuance of
$2.0 billion of revenue anticipation notes maturing June 28, 1994.

1994-95 Fiscal Year

Background

The 1994-95 Fiscal Year represents the fourth consecutive year the
Governor and Legislature were faced with a very difficult budget environment to
produce a balanced budget. Many program cuts and budgetary adjustments have
already been made in the last three years. The Governor's Budget Proposal, as
updated in May and June, 1994, recognized that the accumulated deficit could not
be repaid in one year, and proposed a two-year solution. The budget proposal
sets forth revenue and expenditure forecasts and revenue and expenditure
proposals which result in operating surpluses for the budget for both 1994-95
and 1995-96, and lead to the elimination of the accumulated budget deficit,
estimated at about $2.0 billion at June 30, 1994, by June 30, 1996.

Revenues. The 1994-95 Budget Act, signed by the Governor on July 8,
1994, projects revenues and transfers of $41.9 billion, $2.1 billion higher than
revenues in 1993-94. This reflects the Administration's forecast of an improving
economy. Also included in this figure is a projected receipt of about $360
million from the federal government to reimburse the State's cost of
incarcerating undocumented immigrants. The State will not know how much the
federal government will actually provide until the federal Fiscal Year 1995
Budget is completed. Completion of the federal budget is expected by October
1994. The Legislature took no action on a proposal in the January 1994-95
Governor's Budget to undertake and expansion of the transfer of certain programs
to counties, which would also have transferred to counties 0.5 percent of the
State's current sales tax.

The 1994-95 Budget Act projects Special Fund revenues of $12.1 billion,
a decrease of 2.4 percent from 1993-94 estimated revenues.

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Expenditures. The 1994-95 Budget Act projects General Fund expenditures
of $40.9 billion, and increase of $1.6 billion over the 1993-94 Fiscal Year. The
1994-95 Budget Act also projects Special Fund expenditures of $12.3 billion, a
4.7 percent decrease from the 1993-94 Fiscal Year estimated expenditures. The
principal features of the 1994-95 Budget Act were the following:

(i) Receipt of additional federal aid in the 1994-95 Fiscal Year of
about $400 million for costs of refugee assistance and medical care for
undocumented immigrants, thereby offsetting a similar General Fund cost. The
State will not know how much or these funds it will receive until the federal
Fiscal Year 1995 Budget is passed;

(ii) Reductions of approximately $1.1 billion in health and welfare
costs. A 2.3 percent reduction in AFDC payments (equal to about $56 million for
the entire fiscal year) has been temporarily suspended by court order;

(iii) A General Fund increase of approximately $38 million in support
for the University of California and $56 million for California State
University. It is anticipated that student fees for both the University of
California and California State University will increase up to 10%;

(iv) Proposition 98 funding for k-14 schools is increased by $526
million from 1993-94 Fiscal Year levels, representing an increase for enrollment
growth and inflation. Consistent with previous budget agreements, Proposition 98
funding provides approximately $4,217 per student for K-12 schools, equal to the
level in the past three years;

(v) Legislation enacted with the 1994-95 Budget Act clarifies laws
passed in 1992 and 1993 which require counties and other local agencies to
transfer funds to local school districts, thereby reducing State aid. Some
counties had implemented a method of making such transfers which provided less
money for schools if there were redevelopment agency projects. The new
legislation bans this method of transfer. If all counties had implemented this
method, General Fund aid to K-12 schools would have been $300 million higher in
each of the 1994-95 and 1995-96 school years.

(vi) The 1994-95 Budget Act provides funding for anticipated growth in
the State's prison inmate population, including provisions for implementing
recent legislation (the so-called "Three Strikes" law) which requires mandatory
life prison terms for certain third-time felony offenders.

(vii) Additional miscellaneous cuts ($500 million) and fund transfers
($255 million) totaling in the aggregate approximately $755 million.

The 1994-95 Budget Act contains no tax increases. Under legislation
enacted for the 1993-94 Budget Act, the renters' tax credit was suspended for
two years (1993 and 1994). A ballot proposition to permanently restore the
renters' tax credit after this year failed at the June 1994 election. The
Legislature enacted a further one-year suspension of the renters' tax credit for
1995, saving about $390 million for the 1995-96 Fiscal Year.

The 1994-95 Budget Act assumes that the State will use a cash flow
borrowing program in 1994-95 which combines one-year notes and two-year
warrants, which have now been issued. Issuance of the warrants allows the State
to defer repayment of approximately $1.0 billion of its accumulated budget
deficit into the 1995-96 Fiscal Year. The Budget Adjustment Law enacted with the
1994-95 Budget Act is designed to ensure that the warrants will be repaid in the
1995-96 Fiscal Year.

Subsequent Developments

The Department of Finance Bulletin for November, 1994 reports that
revenues for the first four months of the Fiscal Year were, in the aggregate,
about $372 million, or 3.2 percent, above forecast. The largest increase was in
bank and corporation tax receipts, which were $187 million, or 13.3 percent,
above forecast. With June and September as important dates for estimated tax
payments, these results appear to indicate improving business profits. Personal
income tax receipts were, for the four months, within 1 percent of projections,
and withholding and estimated tax payments are tracking forecasts very well.
Sales tax receipts have been somewhat volatile in recent months as compared to
projections, in part because a large refund was paid earlier than expected. In
October, sales tax receipts were $217 million above forecast, but a large part
of that is attributed to timing factors, so the excess is expected to be offset
in November. The Department feels that year to date, sales taxes are tracking

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forecast. The Department reports that about $210 million of the $372 million
excess revenues for the first four months reflects these cash flow factors in
sales tax revenues. Receipts for the first four months usually represent about
29 percent of annual receipts.

Initial analysis of the federal Fiscal Year 1995 budget by the
Department of Finance indicated that about $98 million was appropriated for
California to offset costs of incarceration of undocumented immigrants, less
than the $356 million which was assumed in the State's 1994-95 Budget Act.
Because of timing considerations in applying for these federal funds, the
Department estimates that about $33 million of these funds will be received
during the State's 1994-95 Fiscal Year, with the balance received in the
following fiscal year. It does not appear that the federal budget contains any
of the additional $400 million in funding for refugee assistance and health
costs which were also assumed in the 1994-95 Budget Act, but the Department
expects the State to continue its efforts to obtain some or all of these federal
funds.

Litigation

Certain litigation is pending against California or its officer or
employees that, if decided adversely, could require the State to make
significant future expenditures or could impair future revenue sources. Among
the more significant of these cases are those that involve: (i) liability
stemming from the Yuba River flood litigation which could range from $800
million to $1.5 billion; (ii) the 2.3 percent reduction in AFDC payments
included in the 1994-95 Budget Act; and (iii) the question of whether the United
States Department of Health and Human Services violated the Administrative
Procedures Act in granting the State a waiver from complying with requirements
for state participation in the Medicaid program.

Orange County Bankruptcy

On December 6, 1994, Orange County filed for protection under Chapter 9
of the federal Bankruptcy Code. The bankruptcy filing was triggered by losses
estimated at $1.5 billion to $2 billion in the County's investment pool.
Participants in the investment pool include, in addition to Orange County, 180
public agencies such as the county Transportation Agency, school districts and
municipalities and these losses raise questions about these agencies financial
stability. The Securities and Exchange Commission and the Commodity Futures
Trading Commission have both launched investigations into the fund's losses. The
Fund is unable to predict whether the events in Orange County will directly
affect the State's finances, but the State's borrowing requirements may increase
if the State determines to provide aid to Orange County or any of the investors
in the County's investment pool.

FINANCIAL STATEMENTS

The Annual Report to Shareholders for the fiscal year ended September 30,
1994 is incorporated by reference into this Statement of Additional Information.
The Annual Report contains a schedule of the investments of each of the Series
as of September 30, 1994, as well as certain other financial information as of
that date. The Annual Report will be furnished, without charge, to investors who
request copies of the Series' Statement of Additional Information.

APPENDIX A

Moody's Investors Service
Tax-Exempt Bonds

Aaa: Tax-Exempt bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa: Tax-exempt bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than Aaa bonds because margins
of protection may not be as large or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.

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A: Tax-exempt bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Baa: Tax-exempt bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be characteristically lacking or may be
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact may have speculative characteristics as well.

Ba: Tax-exempt bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and thereby
not well safeguarded during other good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

B: Tax-exempt bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa: Tax-exempt bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.

Ca: Tax-exempt bonds which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or have other
marked shortcomings.

C: Tax-exempt bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.

Tax-Exempt Notes

Moody's ratings for tax-exempt notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG 1 are of the best quality, enjoying strong protection by
established cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing. Loans bearing the designation
MIG 2 are of high quality, with margins of protection ample although not so
large as in the preceding group. Loans bearing the designation MIG 3 are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Market access for refinancing in
particular, is likely to be less well established. Notes bearing the designation
MIG 4 are judged to be of adequate quality, carrying specific risk but having
protection commonly regarded as required of an investment security and not
distinctly or predominantly speculative.

Commercial Paper

Moody's Commercial Paper Ratings are opinions of the ability of issuers to
repay punctually promissory senior debt obligations not having an original
maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the
highest quality repayment capacity of the rated issue.

The designation "Prime-2" or "P-2" indicates that the issuer has a strong
capacity for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.

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The designation "Prime-3" or "P-3" indicates that the issuer has an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.

Issues rated "Not Prime" do not fall within any of the Prime rating
categories.

Standard & Poor's Corporation ("S&P")

Tax-Exempt Bonds

AAA: Tax-exempt bonds rated AAA are highest grade obligations. Capacity to
pay interest and repay principal is extremely strong.

AA: Tax-exempt bonds rated AA have a very high degree of safety and very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree.

A: Tax-exempt bonds rated A are regarded as upper medium grade. They have a
strong degree of safety and capacity to pay interest and repay principal
although it is somewhat more susceptible in the long term to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.

BBB: Tax-exempt bonds rated BBB are regarded as having a satisfactory
degree of safety and capacity to pay interest and re-pay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and re-pay principal for bonds in this category than for bonds in
higher rated categories.

BB, B, CCC, CC: Tax-exempt bonds rated BB, B, CCC and CC are regarded on
balance, as predominantly speculative with respect to capacity to pay interest
and pre-pay principal in accordance with the terms of the bond. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposure to adverse
conditions.

C: The rating C is reserved for income bonds on which no interest is being
paid.

D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.

Municipal Notes

SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.

SP-2: Satisfactory capacity to pay principal and interest.

Commercial Paper

S&P Commercial Paper ratings are current assessments of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.

A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.

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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.

APPENDIX B

HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED

Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest
of eight brothers, arrived in the United States from Germany. He earned his
living as a pack peddler in Pennsylvania, and began sending for his brothers.
The Seligmans became successful merchants, establishing business in the South
and East.

Backed by nearly thirty years of business success - culminating in the sale
of government securities to help finance the Civil War - Joseph Seligman, with
his brothers, established the international banking and investment firm of J. &
W. Seligman & Co. In the years that followed, Seligman played a major role in
the geographical expansion and industrial development of the United States.

Seligman:

... Prior to 1900

o Helps finance America's fledgling railroads.
o Is admitted to the New York Stock Exchange in 1869.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistant to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and Urban
development.

... 1900-1910

o Helps Congress finance the building of the Panama Canal.

... 1910s

o Participates in raising billions for Great Britain, France and Italy,
helping finance World War I.

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... 1920s

o Participates in hundreds of successful underwritings including those for
some of the Country's most important companies: Briggs Manufactoring, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nations largest,
diversified closed-end equity investment company, and one of its oldest,
with over $2 billion in assets.

... 1930s

o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund.
o Establishes Investment Advisory Service.

... 1940s

o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund.

... 1950-1989

o Develops new open-end investment companies. Today, manages 43 mutual fund
portfolios.
o Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-free funds.
o Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations
Corporation.

... 1990s

o Introduces Seligman Select Municipal Fund and Seligman Quality Municipal
Fund, two high quality, closed-end municipal bond funds.
o In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global investment
products.
o Introduces two small-cap mutual funds: Seligman Frontier Fund and Seligman
Henderson Global Smaller Companies Fund.

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STATEMENT OF ADDITIONAL INFORMATION
February 1, 1995
SELIGMAN FLORIDA TAX-EXEMPT SERIES
100 Park Avenue
New York, N.Y. 10017
New York City Telephone (212) 850-1864
Toll-Free Telephone:
(800) 221-2450 - all continental states

This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus of Seligman Florida
Tax-Exempt Series (the "Fund"), dated February 1, 1995. It should be read in
conjunction with the Prospectus, which may be obtained by writing or calling the
Fund at the above address or telephone numbers. This Statement of Additional
Information, although not in itself a Prospectus, is incorporated by reference
into the Prospectus in its entirety.

The Fund offers two classes of shares. Class A shares may be purchased
at net asset value plus a sales load of up to 4.75%. Class D shares may be
purchased at net asset value and are subject to a contingent deferred sales load
("CDSL") of 1% if redeemed within one year.

Each share of Class A and Class D represents an identical legal
interest in the investment portfolio of the Fund and has the same rights except
for certain class expenses and except that Class D shares bear a higher
distribution fee that generally will cause the Class D shares to have a higher
expense ratio and pay lower dividends than Class A shares. Each Class has
exclusive voting rights with respect to its distribution plan. Although holders
of Class A and Class D shares have identical legal rights, the different
expenses borne by each Class will result in different dividends. The two classes
also have different exchange privileges.

TABLE OF CONTENTS

Page
Seligman Florida Tax-Exempt Series .............................. 2
Investment Objectives, Policies
And Risks ...................................................... 2
Investment Limitations .......................................... 5
Trustees And Officers ........................................... 6
Management And Expenses ......................................... 10
Administration, Shareholder Services
And Distribution Plan .......................................... 11
Portfolio Transactions .......................................... 12
Purchase And Redemption Of Fund Shares .......................... 12
Distribution Services ........................................... 14
More About Taxes ................................................ 14
Valuation ....................................................... 15
Performance Information ......................................... 15
General Information ............................................. 17
Risk Factors Regarding Investments
In Florida Tax-Exempt Securities ............................... 18
Financial Statements ............................................ 19
Appendix A ...................................................... 20
Appendix B ...................................................... 22

TEB1A

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SELIGMAN FLORIDA TAX-EXEMPT SERIES

The Fund is a series of Seligman Tax-Exempt Series Trust (the "Trust"), a
non-diversified open-end management investment company, or mutual fund,
organized as an unincorporated business trust under the laws of Massachusetts
that commenced operations in 1984.

INVESTMENT OBJECTIVES, POLICIES AND RISKS

As stated in the Prospectus, the Fund seeks to provide high income exempt
from federal income taxes consistent with preservation of capital. The Fund also
invests with consideration given to capital gain.

The Fund is expected to invest principally, without percentage limitations,
in tax-exempt securities which on the date of investment are within the four
highest ratings of Moody's Investors Service ("Moody's") (Aaa, Aa, A, Baa for
bonds; MIG 1, MIG 2, MIG 3, MIG 4 for notes; P-1 for commercial paper) or
Standard & Poor's Corporation ("S&P") (AAA, AA, A, BBB for bonds; SP-1 - SP-2
for notes; A-1+, A-1/A-2 for commercial paper). Tax-exempt securities rated in
these categories are commonly referred to as investment grade. The Fund may
invest in tax-exempt securities which are not rated, or which do not fall into
the credit ratings noted above if, based upon credit analysis by the Manager, it
is believed that such securities are of comparable quality. In determining
suitability of investment in a lower rated or unrated security, the Manager will
take into consideration asset and debt service coverage, the purpose of the
financing, history of the issuer, existence of other rated securities of the
issuer and other considerations as may be relevant, including comparability to
other issuers.

Although securities rated in the fourth rating category are commonly
referred to as investment grade, investment in such securities could involve
risks not usually associated with bonds rated in the first three categories.
Bonds rated BBB by S&P are more likely as a result of adverse economic
conditions or changing circumstance to exhibit a weakened capacity to pay
interest and re-pay principal than bonds in higher rating categories and bonds
rated Baa by Moody's lack outstanding investment characteristics and in fact
have speculative characteristics according to Moody's. Tax-exempt securities in
the fourth rating category of S&P or Moody's will generally provide a higher
yield than do higher rated tax-exempt securities of similar maturities; however,
they are subject to a greater degree of fluctuation in value as a result of
changing interest rates and economic conditions. The market value of the
tax-exempt securities will also be affected by the degree of interest of dealers
to bid for them, and in certain markets dealers may be more unwilling to trade
tax-exempt securities rated in the fourth rating categories than in the higher
rating categories.

A description of the credit ratings in which the Fund may invest is
contained in the Appendix to this Statement.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on tax-exempt securities and for providing state and local governments
with federal credit assistance. Reevaluation of the Fund's investment objectives
and structure might be necessary in the future due to market conditions which
may result from future changes in the tax laws.

Florida Tax-Exempt Securities

Florida Tax-Exempt Securities include notes, bonds and commercial paper
issued by or on behalf of the State of Florida, its political subdivisions,
agencies, and instrumentalities, the interest on which is exempt from federal
income taxes. Such securities are traded primarily in an over-the-counter
market. The Fund may invest no more than 20% of its net assets in certain
private activity bonds, the interest on which is treated as a preference item
for purposes of the alternative minimum tax. See "Florida Tax-Exempt Securities"
in the Prospectus.

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<PAGE>

bond or pollution control revenue bond, if the bond is backed only by the assets
and revenues of the nongovernmental user, the nongovernmental user is regarded
as the sole issuer. If in either case the creating government or another entity
guarantees an obligation, the security is treated as an issue of such guarantor
to the extent of the value of the guarantee.

Tax-Exempt Notes generally are used to provide for short-term capital needs
and generally have maturities of one year or less. Tax-Exempt Notes include:

When-Issued Securities

The Fund may purchase tax-exempt securities on a when-issued basis, in which
case delivery and payment normally take place 15 to 45 days after the date of

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<PAGE>

the commitment to purchase. The payment obligation and the interest rate that
will be received on the tax-exempt securities are each fixed at the time the
buyer enters into the commitment. Although the Fund will only purchase a
tax-exempt security on a when-issued basis with the intention of actually
acquiring the securities, the Fund may sell these securities before the
settlement date if it is deemed advisable.

Tax-exempt securities purchased on a when-issued basis and the securities
held in the 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 the 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
tax-exempt security on a when-issued basis can involve a risk that the yields
available in the market when the delivery takes place may be higher than those
obtained on the security so purchased.

A separate account consisting of cash or liquid high-grade debt securities
equal to the amount of the when-issued commitments will be established with the
Custodian and marked to market daily, with additional cash or liquid debt
securities added when necessary. When the time comes to pay for when-issued
securities, the Fund will meet its obligations from then available cash, sale of
securities held in the separate account, sale of other securities or, although
it would not normally expect to do so, sale of the when-issued securities
themselves (which may have a value greater or lesser than the Fund's payment
obligations). Sale of securities to meet such obligations carries with it a
potential for the realization of capital gain, which is not exempt from taxes.

Floating Rate and Variable Rate Securities

The Fund may purchase floating rate and variable rate securities, including
participation interests therein. Investments in floating or variable rate
securities normally will involve industrial development or revenue bonds which
provide that the rate of interest is set as a specific percentage of a
designated base rate, such as rates on Treasury Bonds or Bills or the prime rate
at a major commercial bank, and that the Fund can demand payment of the
obligations on short notice at par plus accrued interest, which amount may be
more or less than the amount the Fund paid for them. 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, as the case may be, must be
equivalent to the standards set forth with respect to taxable investments on
page 5.

Stand-By Commitments

Under a stand-by commitment, the Fund obligates a dealer to repurchase at
the Fund's option specified securities at a specified price. The exercise of a
stand-by commitment is subject to the ability of the dealer to make payment on
demand. The Fund would acquire stand-by commitments solely to facilitate
portfolio liquidity and not for trading purposes. Prior to investing in stand-by
commitments the Fund, if it deems necessary based upon the advice of counsel,
will apply to the Securities and Exchange Commission for an exemptive order
relating to such commitments and the valuation thereof. There can be no
assurance that the Securities and Exchange Commission will issue such an
authorization.

The price which the Fund would pay for tax-exempt securities with stand-by
commitments generally would be higher than the price which otherwise would be
paid for the tax-exempt securities alone. The Fund will only purchase
obligations with stand-by commitments from sellers the Manager deems
creditworthy.

Stand-by commitments with respect to portfolio securities of the Fund with
maturities of less than 60 days which are separate from the underlying portfolio
securities are not assigned a value. The cost of any such stand-by commitment is
carried as an unrealized loss from the time of purchase until it is exercised or
expires. Stand-by commitments with respect to portfolio securities of the Fund
with maturities of 60 days or more which are separate from the underlying
portfolio securities and the underlying portfolio securities are valued at fair
value as determined in accordance with procedures established by the Board of
Trustees. The Board of Trustees would, in connection with the determination of
the value of such a stand-by commitment, consider among other factors the
creditworthiness of the writer of the stand-by commitment, the duration of the
stand-by commitment, the dates on which or the periods during which the stand-by
commitment may be exercised and the applicable rules and regulations of the
Securities and Exchange Commission.

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<PAGE>

Portfolio Turnover

Portfolio transactions will be undertaken principally to accomplish the
Fund's objective in relation to anticipated movements in the general level of
interest rates but the 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 Manager believes to be a temporary disparity in the normal yield
relationship between the two securities.

The Fund's investment policies may lead to frequent changes in investments,
particularly in periods of rapidly fluctuating interest rates. A change in
securities held by the Fund is known as "portfolio turnover" and may involve the
payment by the Fund of dealer spreads or underwriting commissions, and other
transaction costs, on the sale of securities, as well as on the reinvestment of
the proceeds in other securities. Portfolio turnover rate for a fiscal year is
the ratio of the lesser of purchases or sales of portfolio securities to the
monthly average of the value of portfolio securities. Securities whose maturity
or expiration date at the time of acquisition were one year or less are excluded
from the calculation. The Fund's portfolio turnover rates for the fiscal years
ended September 30, 1993 and 1994, respectively, were 16.42% and 6.17%,
respectively. The fluctuation of portfolio turnover ratios during 1993 and 1994
result from conditions in the state and the market in general. The Fund's
portfolio turnover rate will not be a limiting factor when the Fund deems it
desirable to sell or purchase securities.

Taxable Investments

Under normal market conditions, the Fund will attempt to invest 100% and as
a matter of fundamental policy will invest at least 80% of the value of its net
assets in Florida Tax-Exempt Securities the interest on which is exempt from
federal tax. However in abnormal market conditions, if, in the judgment of the
Manager, Florida Tax-Exempt Securities satisfying the Fund's investment
objectives may not be purchased, the Fund may, for defensive purposes invest in
securities other than Florida Tax-Exempt Securities including those described
under "Florida Tax-Exempt Securities" above that would otherwise meet the Fund's
objectives.

Also, in abnormal market conditions, the 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
tax-exempt securities of proceeds of sales of shares or sales of portfolio
securities, in order to avoid the necessity of liquidating portfolio investments
to meet redemption of shares by investors or where market conditions due to
rising interest rates or other adverse factors warrant temporary investing for
defensive purposes. Investments in taxable securities will be substantially in
securities issued or guaranteed by the United States Government (such as bills,
notes and bonds), its agencies, instrumentalities or authorities; highly-rated
corporate debt securities (rated AA-, or better, by Standard & Poor's or Aa3, or
better, by Moody's); prime commercial paper (rated A-1+/A-1 by Standard & Poor's
or P-1 by Moody's); and certificates of deposit of the 100 largest domestic
banks in terms of assets which are subject to regulatory supervision by the U.S.
Government or state governments and the 50 largest foreign banks in terms of
assets with branches or agencies in the United States. Investments in
certificates of deposit of foreign banks and foreign branches of U.S. banks may
involve certain risks, including different regulation, use of different
accounting procedures, political or other economic developments, exchange
controls, or possible seizure or nationalization of foreign deposits.

INVESTMENT LIMITATIONS

Under the Fund's fundamental policies, which cannot be changed except by
vote of a majority of the outstanding voting securities of the Fund, the Fund
may not:

- - Borrow money, except from banks for temporary purposes (such as meeting
redemption requests or for extraordinary or emergency purposes but not for
the purchase of portfolio securities) in an amount not to exceed 10% of the
value of its total assets at the time the borrowing is made (not including
the amount borrowed). 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;

- - Mortgage or pledge any of its assets, except to secure permitted borrowings
noted above;

-5-
<PAGE>

- - Invest more than 25% of total assets at market value in any one industry;
except that tax-exempt securities and securities of the U.S. Government, its
agencies and instrumentalities are not considered an industry for purposes of
this limitation.

- - 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 as to principal and interest by
the U.S. Government or its agencies or instrumentalities);

- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;

- - Purchase or hold any real estate, 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, trustees
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"; underwrite the securities of other issuers, except
that the Fund may be deemed an underwriter in connection with the purchase
and sale of portfolio securities;

- - Purchase or sell commodities or commodity contracts including futures
contracts; or

- - Make loans, except to the extent that the purchase of notes, bonds or other
evidences of indebtedness or deposits with banks may be considered loans.

As a matter of policy, with respect to 75% of the Fund's assets, no revenue
bond will be purchased by the Fund if as a result of such purchase more than 5%
of the Fund's assets would be invested in the securities of a single issuer.
This policy is not fundamental and may be changed by the Trustees without
shareholder approval.

Under the Act, a "vote of a majority of the outstanding voting securities"
of the Trust or of a particular series of the Trust, such as the Fund, means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Trust or of a series or (2) 67% or more of the shares of the Trust or of a
series present at a shareholders' meeting if more than 50% of the outstanding
shares of the Trust or of a series are represented at the meeting in person or
by proxy.

TRUSTEES AND OFFICERS

WILLIAM C. MORRIS* Trustee, Chairman of the Board, Chief (56)
(56) Executive Officer and Chairman of the Executive
Committee

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<PAGE>

RONALD T. SCHROEDER* Trustee, President and Member of the Executive
(47) Committee

-7-
<PAGE>

JAMES N. WHITSON Trustee
(60)

-8-
<PAGE>

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 Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.

-9-
<PAGE>

Compensation Table

Pension or Total Compensation
Aggregate Retirement Benefits from Registrant and
Compensation Accrued as part of Fund Complex Paid
Position with Registrant from Registrant (1) Fund Expenses to Trustees (2)
------------------------ ------------------- ------------- ---------------
<S> <C> <C> <C>
William C. Morris, Trustee N/A N/A N/A
Ronald T. Schroeder, Trustee N/A N/A N/A
Fred E. Brown, Trustee N/A N/A N/A
Alice S. Ilchman, Trustee $3,002.16 N/A $67,000.00
John E. Merow, Trustee $2,966.44(d) N/A $66,000.00(d)
Betsy S. Michel, Trustee $2,966.44 N/A $66,000.00
Douglas R. Nichols, Jr., Trustee $2,966.44 N/A $66,000.00
James C. Pitney, Trustee $3,002.16 N/A $67,000.00
James Q. Riordan, Trustee $2,966.44 N/A $66,000.00
Herman J. Schmidt, Trustee $2,966.44 N/A $66,000.00
Robert L. Shafer, Trustee $2,966.44 N/A $66,000.00
James N. Whitson, Trustee $2,966.44(d) N/A $66,000.00(d)
Brian T. Zino, Trustee N/A N/A N/A
</TABLE>

(1) Based on remuneration received by Trustees for the Trust's four series for
the year ended December 31, 1994.

(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.

(d) Deferred.

Trustees and officers of the Trust are also trustees, directors and officers
of some or all of the other investment companies in the Seligman Group.

Trustees and officers of the Fund as a group owned directly or indirectly
37,834 shares or less than 1% of the Capital Stock of the Fund at December 31,
1994.

MANAGEMENT AND EXPENSES

As indicated in the Prospectus, under the Management Agreement, dated June
21, 1990, subject to the control of the Trustees, the Manager manages the
investment of the assets of the Fund, including making purchases and sales of
portfolio securities consistent with the Fund's investment objectives and
policies, and administers its business and other affairs. The Manager provides
the Fund with such office space, administrative and other services and executive
and other personnel as are necessary for Fund operations. The Manager pays all
of the compensation of Trustees of the Trust who are employees or consultants of
the Manager and the officers and employees of the Fund. The Manager also
provides senior management for Seligman Data Corp., the Fund's shareholder
service agent. The Manager is entitled to receive a management fee from the Fund
calculated daily and payable monthly equal to 0.50% of the Fund's average daily
net assets on an annual basis. For the fiscal years ended 1992, 1993 and 1994,
the Manager at its discretion, waived all or portions of its fee and reimbursed
certain expenses of the Fund. For the fiscal year ended September 30, 1994, the
management fee paid amounted to $2,630 or .01% of the Fund's average net assets
and reimbursment of certain expenses was equal to $45,165.

-10-
<PAGE>

cost of stock certificates and expenses of repurchase or redemption of shares,
expenses of printing and distributing reports, notices and proxy materials to
existing shareholders, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of shareholders' meetings,
expenses of corporate data processing and related services, shareholder
recordkeeping and shareholder account services fees and disbursements of
transfer agents and custodians, expenses of disbursing dividends and
distributions, fees and expenses of Trustees of the Fund not employed by or
serving as a Trustee of the Manager or its affiliates, insurance premiums and
extraordinary expenses such as litigation expenses. The Trust's expenses are
allocated between each series of the Trust in a manner determined by the
Trustees to be fair and equitable.

The Manager has undertaken to certain state securities administrators, so
long as required, to reimburse the Fund for each year in the amount by which
total expenses, including the management fee, but excluding interest, taxes,
brokerage commissions and extraordinary expenses, exceed 2 1/2% of the first
$30,000,000 of average net assets, 2% of the next $70,000,000 of average net
assets and 1 1/2% of the remaining average net assets thereafter.

On December 29, 1988, a majority of the outstanding voting securities of the
Manager was purchased by Mr. William C. Morris and a simultaneous
recapitalization of the Manager occurred.

The Fund's Management Agreement was approved by the Trustees at a meeting
held on June 21, 1990 and was approved by the Florida shareholders at a Special
Meeting of the Fund held on December 7, 1990. The Agreement will continue in
effect from year to year thereafter if such continuance is approved in the
manner required by the Act (i.e. (1) by a vote of a majority of the Trustees or
of the outstanding voting securities of the Fund and (2) by a vote of a majority
of the Trustees who are not parties to the Management Agreement or interested
persons of any such party) and if the Manager shall not have notified the Fund
at least 60 days prior to the anniversary date of the previous continuance that
it does not desire such continuance. The Agreement may be terminated by the
Fund, without penalty, on 60 days' written notice to the Manager and will
terminate automatically in the event of its assignment. The Fund has agreed to
change its name upon termination of its Management Agreement if continued use of
the name would cause confusion in the context of the Manager's business.

The Manager is a successor firm to an investment banking business founded in
1864 which has thereafter provided investment services to individuals, families,
institutions and corporations. See Appendix B.

ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN

As indicated in the Prospectus, an Administration, Shareholder Services and
Distribution Plan (the "Plan") for the Fund will be in effect from the date
hereof under Section 12(b) of the Act and Rule 12b-1 thereunder.

The Plan was approved on June 21, 1990 by the Trustees, including a majority
of the Trustees who are not "interested persons" (as defined in the Act) of the
Fund and who have no direct or indirect financial interest in the operation of
the Plan or in any Agreement related to the Plan (the "Qualified Trustees") and
by the shareholders of the Fund on December 7, 1990. Amendments to the Plan were
approved in respect of the Class D shares on November 18, 1993 by the Trustees,
including a majority of the Qualified Trustees and became effective with respect
to the Class D shares on February 1, 1994. The Plan will continue in effect
until December 31 of each year so long as such continuance is approved annually
by a majority vote of both the Trustees of the Fund and the Qualified Trustees,
cast in person at a meeting called for the purpose of voting on such approval.
The Plan may not be amended to increase materially the amounts payable to
Service Organizations without the approval of a majority of the outstanding
voting securities of the Fund and no material amendment to the Plan may be made
except by a majority of both the Trustees and the Qualified Trustees.

The Plan requires that the Treasurer of the Fund shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Plan. Rule 12b-1 also
requires that the selection and nomination of Trustees who are not "interested
persons" of the Trust be made by such disinterested Trustees.

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<PAGE>

PORTFOLIO TRANSACTIONS

No brokerage commissions were paid by the Fund during the fiscal years ended
September 30, 1992, 1993 or 1994. When the Fund or two or more of the investment
companies in the Seligman Group or other investment advisory clients of the
Manager desire to buy or sell the same security at the same time, the securities
purchased or sold are allocated by the Manager in a manner believed to be
equitable to each. There may be possible advantages or disadvantages of such
transactions with respect to price or the size of positions already obtainable
or saleable.

PURCHASE AND REDEMPTION OF FUND SHARES

The Fund issues two classes of shares: Class A shares may be purchased at a
price equal to the next determined net asset value per share, plus a sales load.
Class D shares may be purchased at a price equal to the next determined net
asset value without an initial sales load, but a CDSL may be charged on certain
redemptions within one year of purchase. See "Alternative Distribution System,"
"Purchase Of Shares," and "Redemption Of Shares" in the Fund's Prospectus.

Specimen Price Make-Up

Under the current distribution arrangements between the Trust and the
Distributor, Class A shares are sold at a maximum sales load of 4.75% and Class
D shares are sold at net asset value.* Using the Fund's net asset value at
September 30, 1994, the maximum offering price of the Fund's shares is as
follows:

Class A

Net asset value per share .............................. $ 7.34

Maximum sales load (4.75% of offering price) ........... .37
-----

Maximum offering price per share ....................... $ 7.71
=====

Class D

Net asset value and maximum offering price per share* .. $ 7.34
=====

- --------------
* Class D shares are subject to a CDSL of 1% on certain redemptions within
one year of purchase. See "Redemption Of Shares" in the Prospectus.

Class A Shares - Reduced Sales Loads

Reduction Available. Shares of any Seligman mutual fund sold with a sales load
in a continuous offering will be eligible for the following reductions:

Volume Discounts are provided if the total amount being invested in Class A
shares of the Fund alone, the other series of the Trust or in any combination of
shares of the other mutual funds in the Seligman Group which are sold with a
sales load, reaches levels indicated in the sales load schedule set forth in the
Prospectuses.

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<PAGE>

of shares of Seligman Cash Management Fund acquired in an exchange of shares of
another mutual fund in the Seligman Group on which there is a sales load at the
time of purchase will be taken into account in orders placed through a dealer,
however, only if Seligman Financial Services, Inc. ("SFSI") is notified by an
investor or dealer of the amount owned at the time of purchase is made and is
furnished sufficient information to permit confirmation.

A Letter of Intent allows an investor to purchase Class A shares of the
Fund over a 13-month period at reduced sales loads in accordance with the
schedule in the Prospectuses, based on the total amount of Class A shares that
the letter states the investor intends to purchase plus the total net asset
value of shares that were sold with a sales load of the other series of the
Trust, Seligman Capital Fund, Seligman Common Stock Fund, Seligman
Communications and Information Fund, Seligman Frontier Fund, Seligman Growth
Fund, Seligman Henderson Global Fund Series, Seligman High Income Fund Series,
Seligman Income Fund, Seligman New Jersey Tax-Exempt Fund, Seligman Pennsylvania
Tax-Exempt Fund Series and Seligman Tax-Exempt Fund Series already owned and the
total net asset value of shares of Seligman Cash Management Fund which were
acquired through an exchange of shares of another mutual fund in the Seligman
Group on which there was a sales load at the time of purchase. Reduced sales
loads also may apply to purchases made within a 13-month period starting up to
90 days before the date of execution of a letter of intent. For more information
concerning the terms of the letter of intent, see "Terms and Conditions - Letter
of Intent" accompanying the Account Application in the Fund's Prospectus.

Persons Entitled to Reductions. Reductions in sales loads apply to purchases of
Class A shares of the Fund by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code,
tax-exempt organizations under Section 501 (c)(3) or (13), and non-qualified
employee benefit plans that satisfy uniform criteria are considered "single
persons" for this purpose. The uniform criteria are as follows:

1. Employees must authorize the employer, if requested by the Fund, to receive
in bulk and to distribute to each participant on a timely basis the Fund
prospectuses, reports and other shareholder communications.

2. Employees participating in a plan will be expected to make regular periodic
investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12
months and 30 days after the last regular investment in his account. In such
event, the dropped participant would lose the discount on share purchases to
which the plan might then be entitled.

3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.

Eligible Employee Benefit Plans. The table of sales loads in the Prospectuses
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans," of
employers who have at least 2,000 U.S. employees to whom such plan is made
available or, regardless of the number of employees, if such plan is established
or maintained by any dealer which has a sales agreement with Seligman Financial
Services, Inc. Such sales must be made in connection with a payroll deduction
system of plan funding or other systems acceptable to Seligman Data Corp., the
Trust's shareholder service agent. Such sales are believed to require limited
sales effort and sales related expenses and therefore are made at net asset
value. Contributions or account information for plan participation also should
be transmitted to Union Data by methods which it accepts. Additional information
about "eligible employee benefit plans" is available from investment dealers or
SFSI. The term "eligible employee benefit plan" means any plan or arrangement,
whether or not tax qualified, which provides for the purchase of Fund shares.

Further Types of Reductions. Class A shares may be issued without a sales load
in connection with the acquisition of cash and securities owned by other
investment companies and personal holding companies to financial institution
trust departments, to registered investment advisers exercising investment
discretionary authority with respect to the purchase of Fund shares, or pursuant
to sponsored arrangements with organizations which make recommendations to, or
permit group solicitation of, its employees, members or participants in
connection with the purchase of shares of the Fund, to separate accounts
established and maintained by an insurance company which are exempt from
registration under Section 3(c)(11) of the 1940 Act, to registered
representatives and employees (and their spouses and minor children) of any
dealer that has a sales agreement with SFSI, to shareholders of mutual funds
with investment objectives similar to the Fund's who purchase shares with
redemption proceeds of such funds and to certain unit investment trusts as
described in the Fund's Prospectus.

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<PAGE>

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.

Payment in Securities. In addition to cash, the Fund may accept securities in
payment for Fund shares sold at the applicable public offering price. Generally,
the Fund will only consider accepting securities (1) to increase its holdings in
a portfolio security of the Fund, or (2) if the Manager determines that the
offered securities are a suitable investment in a sufficient amount for
efficient management. Although no minimum has been established, it is expected
that the Fund would not accept securities with a value of less than $100,000 per
issue in payment for shares. The Fund may reject in whole or in part offers to
pay for shares with securities, may require partial payment in cash for
applicable sales loads, and may discontinue accepting securities as payment for
shares at any time without notice. The Fund has no present intention of
accepting securities in payment for shares.

More About Redemptions. The procedures for redemption of Fund shares under
ordinary circumstances are set forth in the Prospectus. Payment may be made in
securities, subject to the review of some state securities commissions, or
postponed, if the orderly liquidation of portfolio securities is prevented by
the closing of, or restricted trading on, the New York Stock Exchange during
periods of emergency, or during such other periods as ordered by the Securities
and Exchange Commission. If payment were to be made in securities could incur
certain transaction costs. The Fund will not accept orders from securities
dealers for the repurchase of shares.

DISTRIBUTION SERVICES

Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager,
acts as general distributor of the shares of the Trust and of the other mutual
funds in the Seligman Group. As general distributor of the Trust's shares of
beneficial interest, SFSI allows concessions to all dealers up to 4.25% on
purchases of Class A shares to which the 4.75% sales load applies. SFSI receives
the balance of sales loads of any CDSL paid on Class D shares. The Trust and
SFSI are parties to a Distributing Agreement dated January 1, 1993.

Total sales loads paid by shareholders of the Fund for fiscal years ended
September 30, 1994, 1993 and 1992, respectively, amounted to $225,122, $496,885
and $387,655, respectively, of which $198,371, $438,708 and $358,438,
respectively, were paid as concessions to dealers. SFSI receives the balance of
sales loads and any CDSL, if applicable, paid by investors. For the period ended
February 1, 1994 through September 30, 1994 no CDSL charges were retained by
SFSI.

Class A shares may be sold at net asset value to present and retired
Trustees, directors, officers, employees (and family members) of the Fund, the
other investment companies in the Seligman Group, the Manager and other
companies affiliated with the Manager. Such sales also may be made to employee
benefit plans for such persons and to any investment advisory, custodial, trust
or other fiduciary account managed or advised by the Manager or any affiliate.
These sales may be made for investment purposes only, and shares may be resold
only to the Fund.

MORE ABOUT TAXES

Under the Tax Reform Act of 1986, each Series of the Trust will be treated
as a separate corporation for federal income tax purposes. As a result,
determinations of net investment income, exempt interest dividends and net
long-term and short-term capital gain and loss will be made separately for each
Series.

As indicated in the Prospectus, the Fund intends to qualify and elect to be
treated as a regulated investment company under the Internal Revenue Code and
thus to be relieved of federal income tax on amounts distributed to
shareholders; provided that it distributes at least 90% of its net investment
income and net short-term capital gains, if any.

Qualification as a regulated investment company under the Internal Revenue
Code requires among other things, that (a) at least 90% of the annual gross
income of the 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, and forward contracts) derived with respect to its
business of investing in such stocks, securities or currencies; (b) the Fund

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<PAGE>

derive less than 30% of its gross annual income from gains from the sale or
other disposition of stock, securities and certain other assets held for less
than three months; and (c) the Fund diversifies 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, United States 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 U.S. Government securities).

VALUATION

The net asset value per share of the Fund is determined as of the close of
the New York Stock Exchange ("NYSE") (currently, 4:00 p.m., New York City time)
on each day that the NYSE is open. The Fund and the NYSE are currently closed on
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day. The Fund will also determine net
asset value on each day in which there is a sufficient degree of trading in the
Fund's portfolio securities that the net asset value of the Fund might be
materially affected. It is computed by dividing 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 the Fund. All expenses of the Fund, including the
Manager's fee, are accrued daily and taken into account for the purpose of
determining its net asset value.

Florida tax-exempt securities will be valued on the basis of quotations
provided by an independent pricing service, approved by the Trustees, which uses
information with respect to transactions in bonds, quotations from bond dealers,
market transactions in comparable securities and various relationships between
securities in determining value. In the absence of such quotations, in
accordance with fair value as determined in accordance with procedures approved
by the Trustees. Short-term notes having remaining maturities of 60 days or less
are generally valued at amortized cost.

Generally, trading in certain securities such as tax-exempt securities,
corporate bonds, U.S. Government securities, and money market instruments is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in determining the net asset value of
the Fund shares are computed as of such times. Occasionally, events affecting
the value of such securities may occur between such times and the close of the
NYSE which will not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur during
such period, then these securities and other assets will be valued at their fair
market value as determined in good faith by the Trustees.

PERFORMANCE INFORMATION

The Fund's Class A shares annualized yield for the 30-day period ended
September 30, 1994 was 4.85%. The annualized yield was computed by dividing the
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, 1994 which was
the last day of the period. The average number of Class A shares of the Fund was
6,850,527 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 (which includes fees charged pursuant to the Fund's 12b-1
plan). The 30-day yield was then annualized on a bond-equivalent basis assuming
semi-annual reinvestment and compounding of net investment income, as described
in the Prospectus.

The Fund's Class A shares tax equivalent annualized yield for the 30-day
period ended September 30, 1994 was 8.03%. 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 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).

The average annual total return for the Fund's Class A shares for the
one-year period ended September 30, 1994 was (8.56)%; for the five-year period
ended September 30, 1994 was 6.55%; and since inception through the period ended
September 30, 1994 was 6.43%. The amount was computed by assuming a hypothetical
initial payment of $1,000. 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 paid by the Fund over the relevant time period
were reinvested. It was then assumed that at the end of each of the above
periods, the entire amount was redeemed. The average annual total return was

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<PAGE>

then calculated by calculating the annual rate required for the initial payment
to grow to the amount which would have been received upon redemption (i.e., the
average annual compound rate of return).

The annualized yield for the 30-day period ended September 30, 1994 for the
Fund's Class D shares was 4.24%. The annualized yield was computed as for Class
A shares by dividing a Series' net investment income per share earned during
this 30-day period by the maximum offering price per share (i.e., the net asset
value) on September 30, 1994, which was the last day of this period. The average
number of Class D shares was 31,794 which was the average daily number of shares
outstanding during the 30-day period that were eligible to receive dividends.

The tax equivalent annualized yield for the 30-day period ended September
30, 1994 for each the Fund's Class D shares was 7.02%. The tax equivalent
annualized yield was computed as discussed above for Class A shares.

The total return for the period from February 1, 1994 through September 30,
1994 for the Fund's Class D shares was (7.54)%. This amount was computed by
assuming a hypothetical initial payment of $1,000 in Class D shares and that all
of the dividends and distributions by the Fund's Class D shares over the
relevant time period were reinvested. It was then assumed that at the end of the
period, the entire amount was redeemed, subtracting the applicable 1% CDSL.

The following tables are illustrate the total return on a $1,000 investment
in Class A and Class D shares of the Fund from the commencement of their
operations through September 30, 1994, assuming investment of all dividends and
capital gain distributions.

<TABLE>
<CAPTION>
CLASS A SHARES

9/30/87 $ 803 $ - $ 47 $ 850
9/30/88 895 - 123 1,018
9/30/89 932 - 201 1,133
9/30/90 920 - 272 1,192
9/30/91 983 - 369 1,352
9/30/92 1,008 - 469 1,477
9/30/93 1,093 3 606 1,702
9/30/94 979 26 629 1,634 63.37%

CLASS D SHARES

9/30/94 $ 897 $ - $ 28 $ 925 (7.54)%

</TABLE>

- -----------------
1 From commencement of operations of Class A shares on November 17, 1986;
Class D shares on February 1, 1994.

2 The "Value of Initial Investment" as of the dates indicated reflects the
effect of the maximum sales load, assumes that all dividends and capital
gain distributions were taken in cash and reflects changes in the net asset
value of the shares purchased with the hypothetical initial investment.
"Total Value of Investment" assumes investment of all dividends and capital
gain distributions.

-16-
<PAGE>

investment at the end of the period; and finally, by dividing the difference
between the amount of the hypothetical initial investment at the beginning
of the period and its value at the end of the period by the amount of the
hypothetical initial investment.

The waiver by the Manager of all or a portion of its fee and the
reimbursement of certain Fund expenses during the periods (as set forth under
"Management and Expenses" herein and "Financial Highlights" in the Prospectus)
positively affected the performance results provided in this section.

The Fund's total return and average annual total return quoted from time to
time through December 27, 1990 does not reflect the deduction of the
administration, shareholder services and distribution fee, which fee if
reflected would reduce the performance quoted.

GENERAL INFORMATION

As a general matter, the Trust will not hold annual or other meetings of the
shareholders. This is because the Declaration of Trust provides for shareholder
voting only (a) for the election or removal of one or more Trustees if a meeting
is called for that purpose, (b) with respect to any contract as to which
shareholder approval is required by the Act, (c) with respect to any termination
or reorganization of the Trust or any series, including the Fund, to the extent
and as provided in the Declaration of Trust, (d) with respect to any amendment
of the Declaration of Trust (other than amendments establishing and designating
new series, abolishing series when there are no units thereof outstanding,
changing the name of the Trust or the name of any series, supplying any
omission, curing any ambiguity or curing, correcting or supplementing any
provision thereof which is internally inconsistent with any other provision
thereof or which is defective or inconsistent with the Act or with the
requirements of the Internal Revenue Code of 1986, as amended, or applicable
regulations for the Fund's obtaining the most favorable treatment thereunder
available to regulated investment companies), which amendments require approval
by a majority of the Shares entitled to vote, (e) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding, or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the shareholders,
and (f) with respect to such additional matters relating to the Trust as may be
required by the Act, the Declaration of Trust, the By-laws of the Trust, any
registration of the Trust with the Securities and Exchange Commission or any
state, or as the Trustees may consider necessary or desirable. Each Trustee
serves until the next meeting of shareholders, if any, called for the purpose of
considering the election or reelection of such Trustee or of a successor to such
Trustee, and until the election and qualification of his successor, if any,
elected at such meeting, or until such Trustee sooner dies, resigns, retires or
is removed by the shareholders or two-thirds of the Trustees.

-17-
<PAGE>

objections specified in the written statement so filed, the Commission may, and
if demanded by the Trustees or by such applicants shall, enter an order either
sustaining one or more of such objections or refusing to sustain any of them. If
the Commission shall enter an order refusing to sustain any of such objections,
or if, after the entry of an order sustaining one or more of such objections,
the Commission shall find, after notice and opportunity for hearing, that all
objections so sustained have been met, and shall enter an order so declaring,
the Trustees shall mail copies of such material to all shareholders with
reasonable promptness after the entry of such order and the renewal of such
tender.

Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, NY
10281.

RISK FACTORS REGARDING INVESTMENTS IN FLORIDA TAX-EXEMPT SECURITIES

The following information as to certain Florida considerations is given to
investors in view of the Fund's policy of concentrating its investments in
Florida issues. This information is derived from sources that are generally
available to investors and is believed to be accurate. This information
constitutes only a brief summary, does not purport to be a complete description
and has not been independently verified.

Florida's financial operations are considerably different than most other
states because, under the State's constitution, there is no state income tax on
individuals. A constitutional amendment would be necessary to impose an income
tax on individuals. The lack of an income tax exposes total State tax
collections to more volatility than would otherwise be the case and, in the
event of an economic downswing, could affect the State's ability to pay
principal and interest in a timely manner.

Florida imposes an income tax on corporate income allocable to the State, as
well as an ad valorem tax on intangible personal property, sales and use taxes
and other miscellaneous taxes. These taxes are a major source of funds to meet
state expenses, including repayment of, and interest on, obligations of the
State. In April 1994, a $38.6 billion budget was passed for fiscal 1995. The
State's general fund budget for 1994-1995 includes revenues of $14.6 billion (a
7.3% increase over 1993-1994) and expenditures of $14.3 billion ( a 7.6%
increase over 1993-1994). Through November 1994, actual revenues were 1.6% ahead
of projections. Unencumbered reserves are projected to be $281 million (1.9% of
expenditures). Non-recurring revenue from rebuilding efforts following Hurricane
Andrew was $200 million in 1993-1994 and is estimated to be $159 million in
1994-1995. In 1993-1994, $190 million was transferred to a hurricane relief
trust fund and $159 million is budgeted to be transferred in 1994-1995.

In 1993, Florida's constitution was amended to limit the annual growth in
the assessed valuation of residential property, and which, over time, could
constrain growth in property taxes, a major source of revenue for local
governments.

Florida has historically experienced substantial population increases as a
result of migration to Florida from other areas of the United States and from
foreign countries, although recently population growth has been meager by
historical standards, rising only 1.4% in 1993 and 1.8% in 1994. The State's
population growth is expected to continue at about a rate of 1.9%. As a result
of population growth, the State may experience a need for additional revenues to
meet increased burdens on the various public and social services provided by the

-18-
<PAGE>

State. Florida's ability to obtain increased revenues to meet these burdens will
be dependent in part upon the State's ability to foster business and economic
growth. The State's business and economic growth could be restricted by the
natural limitations of environmental resources and the State's ability to
finance adequate public facilities such as roads and schools.

Florida's economy has continued its modest recovery from the 1990-1991
recession. Low interest rates and weak investment in recent years have created a
favorable environment for investment spending in the State, although increased
investment has not translated into strength in employment and income growth,
which have been moderate. This lack of growth has been attributed to businesses
exercising caution in expanding their payrolls. The modest employment and income
growth relegated consumption spending to a supporting role, rather than a
leading one, in the State's economic recovery. As of the second quarter of 1994,
Florida taxable sales had grown moderately in comparison to sales in the first
trimester. Florida taxable sales frequently move in a volatile manner and it is
not uncommon for high-growth quarters to be followed by declines unless the
State economy is expanding in a fairly robust manner. Unemployment in Florida
for November 1994 was 6.8% compared to the national unemployment rate of 5.6%.

Despite increases in other sectors of its economy, Florida remains heavily
dependent on tourism. Second quarter 1994 tourist arrivals rose 7.3 percent
relative to the previous period, but with less than 40 million visitors on an
annualized basis, the Florida vacation industry remained in the doldrums.
Negative information regarding crime against tourists in Florida may be
partially responsible.

Housing starts in Florida vacillated in the second quarter of 1994.
Double-digit rates of change, positive or negative, occurred throughout the
State. Single-unit starts fell by 13.7 thousand, while multifamily activity
climbed by 12.2 thousand. Estimated July 1994 housing starts were the lowest
since November 1991. Increases in mortgage loan rates are believed to have led
to the slowdown in single-unit starts.

The majority of Florida's general obligation bonds are rated Aa by Moody's,
AA by S&P and AA by Fitch.

FINANCIAL STATEMENTS

The Annual Report to Shareholders for the fiscal year ended September 30,
1994 is incorporated by reference into this Statement of Additional Information.
The Annual Report contains a schedule of the investments of the Florida Series
as of September 30, 1994, as well as certain other financial information as of
that date. The Annual Report will be furnished, without charge, to investors who
request copies of the Fund's Statement of Additional Information.

-19-
<PAGE>

APPENDIX A

Moody's Investors Service
Tax-Exempt Bonds

Caa: Tax-exempt bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.

Ca: Tax-exempt bonds which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or have other
marked shortcomings.

C: Tax-exempt bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Tax-Exempt Notes

-20-
<PAGE>

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

Issues rated "Not Prime" do not fall within any of the Prime rating
categories.

Standard & Poor's Corporation ("S&P")
Tax-Exempt Bonds

AAA: Tax-exempt bonds rated AAA are highest grade obligations. Capacity to
pay interest and repay principal is extremely strong.

AA: Tax-exempt bonds rated AA have a very strong degree of safety and very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree.

BBB: Tax-exempt bonds rated BBB are regarded as having a satisfactory degree
of safety and capacity to pay interest and re-pay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and re-pay principal for bonds in this category than for bonds in
higher rated categories.

C: The rating C is reserved for income bonds on which no interest is being
paid.

D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.

-21-
<PAGE>

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".

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.

APPENDIX B

HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED

Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing business in the South and
East.

Seligman:

... Prior to 1900

o Helps finance America's fledgling railroads.
o Is admitted to the New York Stock Exchange in 1869
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistant to Mary Todd Lincoln and urges the Senate to
award her a pension.

-22-
<PAGE>

o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and Urban
development.

... 1900-1910

o Helps Congress finance the building of the Panama Canal.

... 1910s

o Participates in raising billions for Great Britain, France and Italy,
helping finance World War I.

... 1920s

... 1930s

o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund.
o Establishes Investment Advisory Service.

... 1940s

... 1950-1989

... 1990s

o Introduces Seligman Select Municipal Fund and Seligman Quality Municipal
Fund, two high quality, closed-end municipal bond funds.
o In 1991 establishes a joint venture with Henderson Administration Group plc,
of London, known as Seligman Henderson Co., to offer global investment
products.
o Introduces two small-cap mutual funds: Seligman Frontier Fund and Seligman
Henderson Global Smaller Companies Fund.

-23-

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
February 1, 1995

SELIGMAN NORTH CAROLINA TAX-EXEMPT SERIES
100 Park Avenue
New York, N.Y. 10017

New York City Telephone (212) 850-1864
Toll-Free Telephone:
(800) 221-2450 - all continental states

This Statement of Additional Information expands upon and supplements the
information contained in the current Prospectus of Seligman North Carolina
Tax-Exempt Series (the "Fund"), dated February 1, 1995. It should be read in
conjunction with the Prospectus, which may be obtained by writing or calling the
Fund at the above address or telephone numbers. This Statement of Additional
Information, although not in itself a Prospectus, is incorporated by reference
into the Prospectus in its entirety.

The Fund offers two classes of shares. Class A shares may be purchased at
net asset value plus a sales load of up to 4.75%. Class D shares may be
purchased at net asset value and are subject to a contingent deferred sales load
("CDSL") of 1% if redeemed within one year.

Each share of Class A and Class D represents an identical legal interest in
the investment portfolio of the Fund and has the same rights except for certain
class expenses and except that Class D shares bear a higher distribution fee
that generally will cause the Class D shares to have a higher expense ratio and
pay lower dividends than Class A shares. Each Class has exclusive voting rights
with respect to its distribution plan. Although holders of Class A and Class D
shares have identical legal rights, the different expenses borne by each Class
will result in different dividends. The two classes also have different exchange
privileges.

TABLE OF CONTENTS

Page
Seligman North Carolina
Tax-Exempt Series ............................................. 2
Investment Objectives, Policies And Risks ....................... 2
Investment Limitations .......................................... 6
Trustees And Officers ........................................... 7
Management And Expenses ......................................... 11
Administration, Shareholder Services
And Distribution Plan ......................................... 12
Portfolio Transactions .......................................... 12
Purchase And Redemption Of Fund Shares .......................... 12
Distribution Services ........................................... 15
More About Taxes ................................................ 15
Valuation ....................................................... 15
Performance Information ......................................... 16
General Information ............................................. 18
Risk Factors Regarding Investments In
North Carolina Tax-Exempt Securities ........................... 19
Financial Statements ............................................ 20
Appendix A ...................................................... 20
Appendix B ...................................................... 23

TEBNC1A

-1-
<PAGE>

SELIGMAN NORTH CAROLINA TAX-EXEMPT SERIES

INVESTMENT OBJECTIVES, POLICIES AND RISKS

As stated in the Prospectus, the Fund seeks to provide high income exempt
from federal income taxes and the personal income taxes of North Carolina
consistent with preservation of capital. The Fund also invests with
consideration given to capital gain.

Although securities rated in the fourth rating category are commonly
referred to as investment grade, investment in such securities could involve
risks not usually associated with bonds rated in the first three categories.
Bonds rated BBB by S&P are more likely as a result of adverse economic
conditions or changing circumstance to exhibit a weakened capacity to pay
interest and re-pay principal than bonds in higher rating categories and bonds
rated Baa by Moody's lack outstanding investment characteristics and in fact
have speculative characteristics according to Moody's. Tax-exempt securities in
the fourth rating category of S&P or Moody's will generally provide a higher
yield than do higher rated tax-exempt securities of similar maturities; however,
they are subject to a greater degree of fluctuation in value as a result of
changing interest rates and economic conditions. The market value of the
tax-exempt securities will also be affected by the degree of interest of dealers
to bid, for them, and in certain markets dealers may be more unwilling to trade
tax-exempt securities rated in the fourth rating categories than in the higher
rating categories.

A description of the credit ratings in which the Fund may invest is
contained in the Appendix to this Statement.

North Carolina Tax-Exempt Securities

North Carolina Tax-Exempt Securities include notes, bonds and commercial
paper issued by or on behalf of the State of North Carolina, its political
subdivisions, agencies, and instrumentalities, the interest on which is exempt
from federal income taxes and North Carolina state personal income taxes. Such
securities are traded primarily in an over-the-counter market. The Fund may
invest no more than 20% of its net assets in certain private activity bonds, the
interest on which is treated as a preference item for purposes of the
alternative minimum tax. See "North Carolina Tax-Exempt Securities" in the
Prospectus.

-2-
<PAGE>

authority, instrumentality or other political subdivision are separate from
those of the government creating the subdivision and the obligation is backed
only by the assets and revenues of the subdivision, such subdivision is regarded
as the sole issuer. Similarly, in the case of an industrial development revenue
bond or pollution control revenue bond, if the bond is backed only by the assets
and revenues of the nongovernmental user, the nongovernmental user is regarded
as the sole issuer. If in either case the creating government or another entity
guarantees an obligation, the security is treated as an issue of such guarantor
to the extent of the value of the guarantee.

Tax-Exempt Notes generally are used to provide for short-term capital needs
and generally have maturities of one year or less. Tax-Exempt Notes include:

1. Tax Anticipation Notes. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they are issued in anticipation
of various tax revenues, such as income, sales, use and business taxes, and
are payable from these specific future taxes.

3. 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.

4. Construction Loan Notes. Construction Loan Notes are sold to provide
construction financing. Permanent financing, the proceeds of which are
applied to the payment of Construction Loan Notes, is sometimes provided by
a commitment by the Government National Mortgage Association ("GNMA") to
purchase the loan notes, accompanied by a commitment by the Federal Housing
Administration to insure mortgage advances thereunder. In other instances,
permanent financing is provided by commitments of banks to purchase the loan
notes.

-3-
<PAGE>

When-Issued Securities

The Fund may purchase tax-exempt securities on a when-issued basis, in which
case delivery and payment normally take place 15 to 45 days after the date of
the commitment to purchase. The payment obligation and the interest rate that
will be received on the tax-exempt securities are each fixed at the time the
buyer enters into the commitment. Although the Fund will only purchase a
tax-exempt security on a when-issued basis with the intention of actually
acquiring the securities, the Fund may sell these securities before the
settlement date if it is deemed advisable.

Floating Rate and Variable Rate Securities

Stand-By Commitments

-4-
<PAGE>

Portfolio Turnover

The Fund's investment policies may lead to frequent changes in investments,
particularly in periods of rapidly fluctuating interest rates. A change in
securities held by the Fund is known as "portfolio turnover" and may involve the
payment by the Fund of dealer spreads or underwriting commissions, and other
transaction costs, on the sale of securities, as well as on the reinvestment of
the proceeds in other securities. Portfolio turnover rate for a fiscal year is
the ratio of the lesser of purchases or sales of portfolio securities to the
monthly average of the value of portfolio securities. Securities whose maturity
or expiration date at the time of acquisition were one year or less are excluded
from the calculation. The portfolio turnover rate for the fiscal years ended
September 30, 1994 and 1993 were 15.61% and 3.13%, respectively. It is estimated
that the portfolio turnover rate of the Fund will not exceed 100%. The
fluctuation of portfolio turnover ratios of certain series during 1994 and 1993
result from conditions in the state and the market in general. The Fund's
portfolio turnover rate will not be a limiting factor when the Fund deems it
desirable to sell or purchase securities.

Taxable Investments

Under normal market conditions, the Fund will attempt to invest 100% and as
a matter of fundamental policy will invest at least 80% of the value of its net
assets in securities the interest on which is exempt from federal and North
Carolina personal income tax. However in abnormal market conditions, if, in the
judgment of the Manager, the tax-exempt securities satisfying the Fund's
investment objectives may not be purchased, the Fund may, for defensive purposes
temporarily invest in instruments the interest on which is exempt from federal
income taxes, but not North Carolina personal income taxes. Such securities
would include those described under "North Carolina Tax-Exempt Securities" above
that would otherwise meet the Fund's objectives.

-5-
<PAGE>

INVESTMENT LIMITATIONS

Under the Fund's fundamental policies, which cannot be changed except by
vote of a majority of the outstanding voting securities of the Fund, the Fund
may not:

- - Borrow money, except from banks for temporary purposes (such as meeting
redemption requests or for extraordinary or emergency purposes but not for
the purchase of portfolio securities) in an amount not to exceed 10% of the
value of its total assets at the time the borrowing is made (not including
the amount borrowed). 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;

- - 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 tax-exempt securities and securities of the U.S. Government, its
agencies and instrumentalities are not considered an industry for purposes of
this limitation.

- - As to 50% of the value of its total assets, purchase securities of any issuer
if immediately thereafter more than 5% of total assets at market value would
be invested in the securities of any issuer (except that this limitation does
not apply to obligations issued or guaranteed as to principal and interest by
the U.S. Government or its agencies or instrumentalities);

- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;

- - Write or purchase put, call, straddle or spread options; purchase securities
on margin or sell "short"; or underwrite the securities of other issuers,
except that the Fund may be deemed an underwriter in connection with the
purchase and sale of portfolio securities;

- - Purchase or sell commodities or commodity contracts including futures
contracts; or

- - Make loans, except to the extent that the purchase of notes, bonds or other
evidences of indebtedness or deposits with banks may be considered loans.

-6-
<PAGE>

TRUSTEES AND OFFICERS

WILLIAM C. MORRIS* Trustee, Chairman of the Board, Chief (56)
(56) Executive Officer and Chairman of the Executive
Committee

RONALD T. SCHROEDER* Trustee, President and Member of the Executive
(47) Committee

-7-
<PAGE>

-8-
<PAGE>

JAMES N. WHITSON Trustee
(60)

-9-
<PAGE>

Treasurer, Seligman Holdings, Inc., holding
company; and Seligman Henderson Co., advisors;
formerly, Senior Vice President, Seligman
Securities, Inc., broker/dealer; Vice President,
Finance, J. & W. Seligman Trust Company; and
Senior Audit Manager, Price Waterhouse,
independent accountants.

<TABLE>
<CAPTION>
Compensation Table

Pension or Total Compensation
Aggregate Retirement Benefits from Registrant and
Compensation Accrued as part of Fund Complex Paid
Position with Registrant from Registrant (1) Fund Expenses to Directors (2)
------------------------ ------------------- ------------- ----------------
<S> <C> <C> <C>
William C. Morris, Trustee N/A N/A N/A
Ronald T. Schroeder, Trustee N/A N/A N/A
Fred E. Brown, Trustee N/A N/A N/A
Alice S. Ilchman, Trustee $3,002.16 N/A $67,000.00
John E. Merow, Trustee $2,966.44(d) N/A $66,000.00(d)
Betsy S. Michel, Trustee $2,966.44 N/A $66,000.00
Douglas R. Nichols, Jr, Trustee $2,966.44 N/A $66,000.00
James C. Pitney, Trustee $3,002.16 N/A $67,000.00
James Q. Riordan, Trustee $2,966.44 N/A $66,000.00
Herman J. Schmidt, Trustee $2,966.44 N/A $66,000.00
Robert L. Shafer, Trustee $2,966.44 N/A $66,000.00
James N. Whitson, Trustee $2,966.44(d) N/A $66,000.00(d)
Brian T. Zino, Trustee N/A N/A N/A
</TABLE>

(1) Based on remuneration received by Trustees for the Trusts four series for
the year ended December 31, 1994.

(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.

(d) Deferred.

-10-
<PAGE>

Trustees and officers of the Trust are also trustees, directors and officers
of some or all of the other investment companies in the Seligman Group. No
trustees or officers of the Fund owned shares of the Fund at December 31, 1994.

MANAGEMENT AND EXPENSES

As indicated in the Prospectus, under the Management Agreement, dated June
21, 1990, subject to the control of the Trustees, the Manager manages the
investment of the assets of the Fund, including making purchases and sales of
portfolio securities consistent with the Fund's investment objectives and
policies, and administers its business and other affairs. The Manager provides
the Fund with such office space, administrative and other services and executive
and other personnel as are necessary for Fund operations. The Manager pays all
of the compensation of Trustees of the Trust who are employees or consultants of
the Manager and the officers and employees of the Fund. The Manager also
provides senior management for Seligman Data Corp., the Fund's shareholder
service agent. The Manager is entitled to receive a management fee from the Fund
calculated daily and payable monthly equal to .50% of the Fund's average daily
net assets on an annual basis. During the fiscal years ended September 30, 1992,
1993 and 1994 the Manager, at its discretion, waived all of its fees for the
Fund and also elected to reimburse the Fund for certain expenses incurred during
the period.

The Fund pays all its expenses other than those assumed by the Manager
including brokerage commissions, if any, fees and expenses of independent
attorneys and auditors, taxes and governmental fees including fees and expenses
of qualifying the Fund and its shares under federal and state securities laws,
cost of stock certificates and expenses of repurchase or redemption of shares,
expenses of printing and distributing reports, notices and proxy materials to
existing shareholders, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of shareholders' meetings,
expenses of corporate data processing and related services, shareholder
recordkeeping and shareholder account services fees and disbursements of
transfer agents and custodians, expenses of disbursing dividends and
distributions, fees and expenses of Trustees of the Fund not employed by or
serving as a Trustee of the Manager or its affiliates, insurance premiums and
extraordinary expenses such as litigation expenses. The Trust's expenses are
allocated between each series of the Trust in a manner determined by the
Trustees to be fair and equitable.

On December 29, 1988, a majority of the outstanding voting securities of the
Manager was purchased by Mr. William C. Morris and a simultaneous
recapitalization of the Manager occurred.

The Fund's Management Agreement was approved by the Trustees at a meeting
held on June 12, 1990, and was unanimously approved by the shareholders at a
meeting held on April 11, 1991. The Agreement will continue in effect from year
to year thereafter if such continuance is approved in the manner required by the
Act (i.e. (1) by a vote of a majority of the Trustees or of the outstanding
voting securities of the Fund and (2) by a vote of a majority of the Trustees
who are not parties to the Management Agreement or interested persons of any
such party) and if the Manager shall not have notified the Fund at least 60 days
prior to the anniversary date of the previous continuance that it does not
desire such continuance. The Agreement may be terminated by the Fund, without
penalty, on 60 days' written notice to the Manager and will terminate
automatically in the event of its assignment. The Fund has agreed to change its
name upon termination of its Management Agreement if continued use of the name
would cause confusion in the context of the Manager's business.

-11-
<PAGE>

The Manager is a successor firm to an investment banking business founded in
1864 which has thereafter provided investment services to individuals, families,
institutions and corporations. See Appendix B.

ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN

The Plan was approved on June 21, 1990 by the Trustees, including a majority
of the Trustees who are not "interested persons" (as defined in the Act) of the
Fund and who have no direct or indirect financial interest in the operation of
the Plan or in any agreement related to the Plan (the "Qualified Trustees") and
on April 11, 1991 by the shareholders of the Fund. Amendments to the Plan were
approved in respect of the Class D shares on November 18, 1993 by the Trustees,
including a majority of the Qualified Trustees, and became effective with
respect to the Class D shares on February 1, 1994. The Plan will continue in
effect until December 31 of each year so long as such continuance is approved
annually by a majority vote of both the Trustees and the Qualified Trustees of
the Fund, cast in person at a meeting called for the purpose of voting on such
approval. The Plan may not be amended to increase materially the amounts payable
to Service Organizations with respect to a class of shares without the approval
of a majority of the outstanding voting securities of the Class and no material
amendment to the Plan may be made except by a majority of both the Trustees and
the Qualified Trustees.

PORTFOLIO TRANSACTIONS

No brokerage commissions were paid by the Fund during the fiscal years ended
September 30, 1994, 1993 or 1992. When the Fund or two or more of the investment
companies in the Seligman Group or other investment advisory clients of the
Manager desire to buy or sell the same security at the same time, the securities
purchased or sold are allocated by the Manager in a manner believed to be
equitable to each. There may be possible advantages or disadvantages of such
transactions with respect to price or the size of positions already obtainable
or saleable.

PURCHASE AND REDEMPTION OF FUND SHARES

Specimen Price Make-Up

Under the current distribution arrangements between the Trust and the
Distributor, Class A shares are sold at a maximum sales load of 4.75% and Class
D shares are sold at net asset value.* Using the Fund's net asset value at
September 30, 1994, the maximum offering price of the Fund's shares is as
follows:

Class A

Net asset value per share ................................. $ 7.30

Maximum sales load (4.75% of offering price) .............. .36
-----

Maximum offering price per share .......................... $ 7.66
=====

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<PAGE>

Class D

Net asset value and maximum offering price per share* ..... $ 7.29
=====

- ---------
* Class D shares are subject to a CDSL of 1% on certain redemptions within
one year of purchase. See "Redemption Of Shares" in the Prospectus.

Class A Shares - Reduced Sales Loads

Reductions Available. Shares of any Seligman mutual fund sold with a sales load
in a continuous offering will be eligible for the following reductions:

The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the Fund, the other series of the Trust, Seligman
Capital Fund, Seligman Common Stock Fund, Seligman Communications and
Information Fund, Seligman Frontier Fund, Seligman Growth Fund, Seligman
Henderson Global Fund Series, Seligman High Income Fund Series, Seligman Income
Fund, Seligman New Jersey Tax-Exempt Fund, Seligman Pennsylvania Tax-Exempt Fund
Series, or Seligman Tax-Exempt Fund Series that were sold with a sales load with
the total net asset value of shares of those Seligman mutual funds already owned
that were sold with a sales load and the total net asset value of shares of
Seligman Cash Management Fund which were acquired through an exchange of shares
of another mutual fund in the Seligman Group on which there was a sales load at
the time of purchase to determine reduced sales loads in accordance with the
schedule in the Prospectuses. The value of the shares owned, including the value
of shares of Seligman Cash Management Fund acquired in an exchange of shares of
another mutual fund in the Seligman Group on which there is a sales load at the
time of purchase will be taken into account in orders placed through a dealer,
however, only if Seligman Financial Services, Inc. ("SFSI") is notified by the
investor or a dealer of the amount owned at the time the purchase is made and is
furnished sufficient information to permit confirmation.

-13-
<PAGE>

2. Employees participating in a plan will be expected to make regular periodic
investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12
months and 30 days after the last regular investment in his account. In such
event, the dropped participant would lose the discount on share purchases to
which the plan might then be entitled.

3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.

Eligible Employee Benefit Plans. The table of sales loads in the Prospectuses
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans," of
employers who have at least 2,000 U.S. employees to whom such plan is made
available or, regardless of the number of employees, if such plan is established
or maintained by any dealer which has a sales agreement with Seligman Financial
Services, Inc. Such sales must be made in connection with a payroll deduction
system of plan funding or other systems acceptable to Seligman Data Corp., the
Trust's shareholder service agent. Such sales are believed to require limited
sales effort and sales related expenses and therefore are made at net asset
value. Contributions or account information for plan participation also should
be transmitted to Seligman Data Corp. by methods which it accepts. Additional
information about "eligible employee benefit plans" is available from investment
dealers or SFSI. The term "eligible employee benefit plan" means any plan or
arrangement, whether or not tax qualified, which provides for the purchase of
Fund shares.

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.

More About Redemptions. The procedures for redemption of Fund shares under
ordinary circumstances are set forth in the Prospectus. Payment may be made in
securities, subject to the review of some state securities commissions, or
postponed, if the orderly liquidation of portfolio securities is prevented by
the closing of, or restricted trading on, the New York Stock Exchange during
periods of emergency, or during such other periods as ordered by the Securities
and Exchange Commission. If payment were to be made in securities, shareholders
receiving securities could incur certain transaction costs. The Fund will not
accept orders from securities dealers for the repurchase of shares.

-14-
<PAGE>

DISTRIBUTION SERVICES

Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager,
acts as general distributor of the shares of the Trust and of the other mutual
funds in the Seligman Group. As general distributor of the Trust's shares of
beneficial interest, SFSI allows concessions to all dealers up to 4.25% on
purchases of Class A shares to which the 4.75% sales load applies. SFSI receives
the balance of sales loads and any CDSL, if applicable, paid by investors. The
Trust and SFSI are parties to a Distributing Agreement dated January 1, 1993.

The total sales load paid by shareholders of the Fund for the fiscal year
ended September 30, 1994 amounted to $261,717, with allowance of $232,335 as
concessions to dealers; for the fiscal year ended September 30, 1993 amounted to
$650,587, with allowance of $574,851, as concessions to dealers; and for the
fiscal year ended September 30, 1992 amounted to $542,444, with allowance of
$480,412 as concessions to dealers. For the period February 1, 1994 through
September 30, 1994, SFSI retained CDSL charges amounting to $19.

MORE ABOUT TAXES

Qualification as a regulated investment company under the Internal Revenue
Code requires among other things, that (a) at least 90% of the annual gross
income of the Trust, 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, and forward contracts) derived with respect to its
business of investing in such stocks, securities or currencies; (b) the Fund
derives less than 30% of its gross annual income from gains from the sale or
other disposition of stock, securities and certain other assets held for less
than three months; and (c) the Fund diversifies 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, United States 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 U.S. Government securities).

VALUATION

The net asset value per share of the Fund is determined as of the close of
the New York Stock Exchange ("NYSE") (currently, 4:00 p.m. New York City time)
on each day that the NYSE is open. The Fund and the NYSE are currently closed on
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day. The Fund will also determine net
asset value on each day in which there is a sufficient degree of trading in the
Fund's portfolio securities that the net asset value of the Fund might be
materially affected. It is computed by dividing 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 the Fund. All expenses of the Fund, including the
Manager's fee, are accrued daily and taken into account for the purpose of
determining its net asset value.

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<PAGE>

North Carolina tax-exempt securities will be valued on the basis of
quotations provided by an independent pricing service, approved by the Trustees,
which uses information with respect to transactions in bonds, quotations from
bond dealers, market transactions in comparable securities and various
relationships between securities in determining value. In the absence of such
quotations, in accordance with fair value as determined in accordance with
procedures approved by the Trustees. Short-term notes having remaining
maturities of 60 days or less are generally valued at amortized cost.

Generally, trading in certain securities such as tax-exempt securities,
corporate bonds, U.S. Government securities, and money market instruments is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in determining the net asset value of
the Fund's shares are computed as of such times. Occasionally, events affecting
the value of such securities may occur between such times and the close of the
NYSE which will not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur during
such period, then these securities and other assets will be valued at their fair
market value as determined in good faith by the Trustees.

PERFORMANCE INFORMATION

The Fund's Class A shares annualized yield for the 30-day period ended
September 30, 1994 was 5.46%. The annualized yield was computed by dividing the
Fund's net investment income per share earned during a 30-day period by the
maximum offering price per share (i.e., the net asset value plus the maximum
sales load of 4.75% of the net amount invested) on September 30, 1994, the last
day of the period. The average number of Class A shares of the Fund used was
5,345,694 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 (which includes fees charged pursuant to the Fund's 12b-1
plan). The 30-day yield was then annualized on a bond-equivalent basis assuming
semi-annual reinvestment and compounding of net investment income, as described
in the Prospectus.

The Fund's Class A shares tax equivalent annualized yield for the 30-day
period ended September 30, 1994 was 9.79%. 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 44.28% (44.28% being the assumed maximum
combined federal and state income tax rate for individual taxpayers subject to
North Carolina personal income taxes). Then the small portion of the yield
attributable to securities, the income of which was exempt only for federal
income tax purposes was determined. This portion of the yield was then divided
by one minus 39.6% (39.6% being the maximum federal income tax rate). These two
calculations were then added to the portion of the yield, if any, that was not
attributable to securities, the income of which was not tax exempt.

The average annual total return for the Fund's Class A shares for the
one-year period ended September 30, 1994 was 10.28% and since inception through
the period ended September 30, 1994 was (5.34)%. These amounts were computed by
assuming a hypothetical initial payment of $1,000. 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 paid by the Class A shares
over the relevant time period were reinvested. It was then assumed that at the
end of each of the above periods, the entire amount was redeemed. The average
annual total return was then calculated by calculating the annual rate required
for the initial payment to grow to the amount which would have been received
upon redemption (i.e., the average annual compound rate of return).

The annualized yield for the 30-day period ended September 30, 1994 for the
Fund's Class D shares was 4.91%. The annualized yield was computed by dividing
the net investment income per share earned during this 30-day period by the
maximum offering price per share (i.e., the net asset value) on September 30,
1994, which was the last day of this period. The average number of Class D
shares was 163,962 which was the average daily number of shares outstanding
during the 30-day period that were eligible to receive dividends.

-16-
<PAGE>

The tax equivalent annualized yield for the 30-day period ended September
30, 1994 for the Fund's Class D shares was 8.81%. 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 44.28%, which percentages assume the
maximum combined federal and state income tax rate for individual taxpayers that
are subject to such personal income taxes.

The total return for the period from February 1, 1994 through September 30,
1994 for the Fund's Class D shares was (9.04)%. This amount was computed by
assuming a hypothetical initial payment of $1,000 in Class D shares and that all
of the dividends and distributions by the Fund's Class D shares over the
relevant time period were reinvested. It was then assumed that at the end of the
period, the entire amount was redeemed, subtracting the applicable 1% CDSL.

The tables below illustrate the total return on a $1,000 investment in Class
A and Class D shares of the Fund from the commencement of their operations
through September 30, 1994, assuming investment of all dividends and capital
gain distributions.
<TABLE>
<CAPTION>

CLASS A SHARES

CLASS D SHARES

9/30/94 $ 883 $ - $ 27 $ 910 (9.04)%
</TABLE>

1 From commencement of operations of Class A shares on August 27, 1990; 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 load, assumes that all dividends and capital
gain distributions were taken in cash and reflects changes in the net asset
value of the shares purchased with the hypothetical initial investment.
"Total Value of Investment" assumes investment of all dividends and capital
gain distributions.

3 Total return for the 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 CDSL, if applicable; determining total value of
all dividends and distributions that would have been paid during the period
on such shares assuming that each dividend or distribution was invested in
additional shares at net asset value; calculating the total value of the
investment at the end of the period; and finally, by dividing the difference
between the amount of the hypothetical initial investment at the beginning
of the period and its value at the end of period by the amount of the
hypothetical initial investment.

The waiver by the Manager of all of its fees and the reimbursement of
certain Fund expenses during the periods (as set forth under "Management and
Expenses " herein and "Financial Highlights" in the Prospectus) positively
affected the performance results provided in this section.

-17-
<PAGE>

GENERAL INFORMATION

As a general matter, the Trust will not hold annual or other meetings of the
shareholders. This is because the Declaration of Trust provides for shareholder
voting only (a) for the election or removal of one or more Trustees if a meeting
is called for that purpose, (b) with respect to any contract as to which
shareholder approval is required by the Act, (c) with respect to any termination
or reorganization of the Trust or any series, including the Fund, to the extent
and as provided in the Declaration of Trust, (d) with respect to any amendment
of the Declaration of Trust (other than amendments establishing and designating
new series, abolishing series when there are no units thereof outstanding,
changing the name of the Trust or the name of any series, supplying any
omission, curing any ambiguity or curing, correcting or supplementing any
provision thereof which is internally inconsistent with any other provision
thereof or which is defective or inconsistent with the Act or with the
requirements of the Internal Revenue Code of 1986, as amended, or applicable
regulations for the Fund's obtaining the most favorable treatment thereunder
available to regulated investment companies), which amendments require approval
by a majority of the Shares entitled to vote, (e) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding, or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the shareholders,
and (f) with respect to such additional matters relating to the Trust as may be
required by the Act, the Declaration of Trust, the By-laws of the Trust, any
registration of the Trust with the Securities and Exchange Commission or any
state, or as the Trustees may consider necessary or desirable. Each Trustee
serves until the next meeting of shareholders, if any, called for the purpose of
considering the election or reelection of such Trustee or of a successor to such
Trustee, and until the election and qualification of his successor, if any,
elected at such meeting, or until such Trustee sooner dies, resigns, retires or
is removed by the shareholders or two-thirds of the Trustees.

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<PAGE>

Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, NY
10281.

RISK FACTORS REGARDING INVESTMENTS IN NORTH CAROLINA TAX-EXEMPT SECURITIES

The economy of North Carolina is dependent primarily on manufacturing,
agriculture, tourism and mining. While North Carolina has been moving from an
agriculture to a service and goods producing economy in recent years,
agriculture remains a basic element in the economy of North Carolina, with
tobacco production being the leading single source of agricultural income.
Although there is diversity in the agricultural business in North Carolina,
major legislative or regulatory measures affecting the production and marketing
of tobacco or other negative factors affecting tobacco could adversely impact
the agricultural sector of the North Carolina economy. A strong agribusiness
sector also supports farmers with farm inputs (fertilizer, insecticide,
pesticide and farm machinery) and processing of commodities produced by farmers
(vegetable canning and cigarette manufacturing). North Carolina's manufacturing
employment is among the largest in the Southeast. However, certain portions of
the North Carolina manufacturing sector, particularly the textile industry, have
been hurt by foreign competition. Tourist spending has increased in North
Carolina in recent years.

The North Carolina State Constitution requires that the total expenditures
of the State for each fiscal period covered by the budget must not exceed the
total receipts during the fiscal period and the surplus in the State Treasury at
the beginning of the period. Although certain revenue sources such as income and
sales taxes have increased in recent years, the demand on tax revenues for
services also has increased and during the State's 1990-1991 fiscal year North
Carolina began facing a substantial budget shortfall resulting from the failure
of revenues received by the State to meet projected levels. Based upon this
projected shortfall, the State's operating budget for the 1990-1991 fiscal year
included spending reductions and the State implemented measures such as hiring
freezes on State employees, reductions in authorized legislative appropriations
and delayed capital expenditures to deal with the problem. While the State was
successful in dealing with the problem in the short term and in fact in 1992
established a reserve fund to help guard against future budget shortfalls,
pressure on State revenues will be an ongoing problem.

-19-
<PAGE>

The Governor of the state as recently proposed a reduction in certain income
tax rates and a possible repeal of the Ste's intangibles tax. It is not clear
whether any such proposals will be enacted, and if they are, what impact they
may have on the State's operating revenues and budget.

General obligations of the State are currently rated "AAA" and "Aaa" by
Standard & Poor's Corporation and Moody's Investors Service, Inc., respectively.
There can be no assurance that the economic conditions on which these ratings
are based will continue or that particular bond issues may not be adversely
affected by changes in economic, political or other conditions, including the
State's response to any future budget problems. When the budget shortfall
problem first developed, the State was cautioned by Standard & Poor's
Corporation and Moody's Investors Service that a failure to respond adequately
to the budget shortfall could result in a reevaluation of the ratings given to
the State's general obligations and the State's response to any future budget
problems will be important to the maintenance of its current ratings. Moreover,
such ratings apply only to obligations of the State and not to those of its
political subdivisions, and the economic information provided above may not be
relevant to obligations issued by such political subdivisions.

FINANCIAL STATEMENTS

The Annual Report to Shareholders for the fiscal year ended September 30, 1994
is incorporated by reference into this Statement of Additional Information. The
Annual Report contains a schedule of the investments of the Fund as well as each
of the Trust's other series as of September 30, 1994, and certain other
financial information as of that date. The Annual Report will be furnished,
without charge, to investors who request copies of the Fund's Statement of
Additional Information.

APPENDIX A

Moody's Investors Service
Tax-Exempt Bonds

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<PAGE>

Caa: Tax-exempt bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.

Ca: Tax-exempt bonds which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or have other
marked shortcomings.

C: Tax-exempt bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Tax-Exempt Notes

Moody's ratings for tax-exempt notes and other short-term loans are designated
Moody's Investment Grade (MIG). This distinction is in recognition of the
differences between short-term and long-term credit risk. Loans bearing the
designation MIG 1 are of the best quality, enjoying strong protection by
established cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing. Loans bearing the designation
MIG 2 are of high quality, with margins of protection ample although not so
large as in the preceding group. Loans bearing the designation MIG 3 are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Market access for refinancing in
particular, is likely to be less well established. Notes bearing the designation
MIG 4 are judged to be of adequate quality, carrying specific risk but having
protection commonly regarded as required of an investment security and not
distinctly or predominantly speculative.

Commercial Paper

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.

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<PAGE>

Standard & Poor's Corporation ("S&P")
Tax-Exempt Bonds

AAA: Tax-exempt bonds rated AAA are highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.

AA: Tax-exempt bonds rated AA have a very high degree of safety and very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree.

BBB: Tax-exempt bonds rated BBB are regarded as having a satisfactory degree
of safety and capacity to pay interest and re-pay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and re-pay principal for bonds in this category than for bonds in
higher rated categories.

C: The rating C is reserved for income bonds on which no interest is being
paid.

D: Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.

Municipal Notes

SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.

SP-2: Satisfactory capacity to pay principal and interest.

Commercial Paper

S&P Commercial Paper ratings are current assessments of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.

A-1: The A-1 designation indicates that the degree of safety regarding timely
payment is very strong.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.

-22-
<PAGE>

C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.

D: Debt rated "D" is in payment default.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.

The ratings assigned by S&P may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within its major rating categories.

APPENDIX B

HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED

Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing business in the South and
East.

Backed by nearly thirty years of business success - culminating in the sale of
government securities to help finance the Civil War - Joseph Seligman, with his
brothers, established the international banking and investment firm of J. & W.
Seligman & Co. In the years that followed, Seligman played a major role in the
geographical expansion and industrial development of the United States.

Seligman:

... Prior to 1900

... 1900-1910

o Helps Congress finance the building of the Panama Canal.

... 1910s

o Participates in raising billions for Great Britain, France and Italy, helping
finance World War I.

... 1920s

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<PAGE>

... 1930s

o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund.
o Establishes Investment Advisory Service.

... 1940s

... 1950-1989

... 1990s

o Introduces Seligman Select Municipal Fund and Seligman Quality Municipal
Fund, two high quality, closed-end municipal bond funds.
o In 1991 establishes a joint venture with Henderson Administration Group plc,
of London, known as Seligman Henderson Co., to offer global investment
products.
o Introduces two small-cap mutual funds: Seligman Frontier Fund and Seligman
Henderson Global Smaller Companies Fund.

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<PAGE>

========================================
Seligman
Tax-Exempt
Series Trust

----------------------------------------
10th Annual Report

September 30, 1994

========================================
[JWS Logo]

<PAGE>

================================================================================
To the Shareholders
- --------------------------------------------------------------------------------

We are pleased to report the long-term investment results, portfolio holdings,
and audited financial statements for each Series of Seligman Tax-Exempt Series
Trust--the California High-Yield and Quality Series, the Florida Series, and the
North Carolina Series--for the fiscal year ended September 30, 1994.

The economic recovery which has been unfolding over the past several years
was characterized by low inflation, declining interest rates, and steady, albeit
modest, growth. During the second half of 1993, however, the economy began to
show signs of increased strength. In February of 1994, the Federal Reserve Board
(FRB) moved to raise the federal funds rate for the first time in five years in
an effort to slow the economy's rate of growth and keep inflation under control.
Since then, the FRB has raised the federal funds rate an additional four times
as economic reports continued to suggest that the economy was gaining momentum.
Further tightening remains a possibility until such time as the FRB achieves its
goal of moderate growth and stable inflation.

1994 has been a difficult year for the bond markets. The increase in
interest rates has led to a decline in the value of fixed-income securities,
including those held in your Trust. The municipal bond market, however, has
experienced less volatility and, in general, has outperformed the taxable bond
markets. Additionally, intermediate-term and long-term municipal bonds still
provide a substantial yield advantage when compared with after-tax returns of
taxable bonds of comparable quality. While the possibility exists that interest
rates will increase further, we believe there is value in the current municipal
market environment.

Early this year, the use of derivatives in the management of mutual fund
portfolios gained substantial media attention, and many of you have inquired
about the use of these securities in your Series. Your Manager does not invest
in derivative securities because, in our opinion, they may increase the
potential of investment risk to your portfolio.

For additional information about your Series, or your investment in its
shares, please write, or call the toll-free telephone numbers listed on page 27.

We thank you for your continued trust and support of Seligman Tax-Exempt
Series Trust.

By order of the Trustees,

/s/ WILLIAM C. MORRIS
William C. Morris
Chairman

/s/ RONALD T. SCHROEDER
Ronald T. Schroeder
President

October 28, 1994
1
<PAGE>

================================================================================
Seligman Tax-Exempt Series Trust
- --------------------------------------------------------------------------------

--------------------------------------------------
California California North
Highlights September 30, 1994 High-Yield Quality Florida Carolina
Series Series Series Series
- --------------------------------------------------------------------------------
Net Assets:
Class A (in millions) $ 48.0 $ 99.0 $ 49.9 $ 38.9
Class D (in millions) 0.7 0.8 0.2 1.3
- --------------------------------------------------------------------------------
Yield:*
Class A 4.95% 5.19% 4.85% 5.46%
Class D 4.23 4.45 4.24 4.91
- --------------------------------------------------------------------------------
Dividends:**
Class A $ 0.374 $ 0.353 $ 0.424 $ 0.411
Class D 0.206 0.191 0.237 0.230
- --------------------------------------------------------------------------------
Capital Gain
Distributions--Class A** $ 0.086 $ 0.159 $ 0.124 $ 0.050
- --------------------------------------------------------------------------------
Net asset value per share:
Class A $ 6.30 $ 6.39 $ 7.34 $ 7.30
Class D 6.31 6.38 7.34 7.29
- --------------------------------------------------------------------------------
Maximum offering price per share:
Class A $ 6.61 $ 6.71 $ 7.71 $ 7.66
Class D 6.31 6.38 7.34 7.29
- --------------------------------------------------------------------------------
Moody's/S&P Ratings+
Aaa/AAA 10% 56% 72% 46%
Aa/AA 7 26 17 27
A/A 31 18 11 26
Baa/BBB 11 -- -- 1
Non-rated 41 -- -- --
------------------------------------------------------------------------------
Holdings by Market Sector+
Revenue Bonds 67% 83% 61% 78%
General Obligation Bonds 33 17 39 22
- --------------------------------------------------------------------------------
Weighted Average Maturity
(years) 16.3 21.8 17.5 22.3
- --------------------------------------------------------------------------------

* Current yield representing the annualized yield based upon maximum offering
price for the 30-day period ended September 30, 1994.

** Represents per share amount paid or declared in respect of Class A shares
during the year ended September 30, 1994, and in the case of Class D
shares, for the period February 1, 1994, to September 30, 1994.

+ Percentages based on current market value of long-term holdings.

Note: Results reflect past performance, which is not indicative of future
results. The yield has been computed in accordance with SEC regulations and
will vary, and the principal value of an investment will fluctuate. Shares,
if redeemed, may be worth more or less than their original cost. A small
portion of each Series' income may be subject to applicable state and local
taxes. A portion of each Series' income dividends may be subject to the
federal alternative minimum tax.

<PAGE>

================================================================================
Annual Performance Overview September 30, 1994
- --------------------------------------------------------------------------------

The following is a biography of your Portfolio Manager, a discussion with him
regarding Seligman Tax-Exempt Series Trust, and a comparison chart and table of
each Series' performance against the Lehman Brothers Municipal Bond Index.

Your Portfolio Manager

[Photo of Thomas G. Moles]

Thomas G. Moles is a Managing Director of J. & W. Seligman & Co. Incorporated,
as well as President and Senior Portfolio Manager of Seligman Select Municipal
Fund and Seligman Quality Municipal Fund, and Vice President and Senior
Portfolio Manager of the Seligman tax-exempt mutual funds which include 19
separate portfolios. He is responsible for more than $2 billion in tax-exempt
securities. Mr. Moles, with more than 24 years of experience, has spearheaded
Seligman's tax-exempt efforts since joining the firm in 1983.

Investment Policy:

"To manage Seligman Tax-Exempt Series Trust's portfolios for total return and to
provide competitive tax-exempt yields while striving to minimize risk to
principal."

Economic Factors Affecting Seligman Tax-Exempt Series Trust:

"Interest rates have been moving higher since the fourth quarter of 1993 as
steadily improving economic conditions focused attention on the risk of an
acceleration in the rate of inflation. In February of 1994, the Federal Reserve
Board voted to begin raising the federal funds rate in an attempt to slow the
economy's rate of growth and keep inflation under control. Since the increases
began, yields on municipal securities for all maturities have increased and
market values have declined across the yield curve."

Your Manager's Investment Strategy:

"New purchases for the portfolios have been concentrated in higher-quality
municipal bonds, while holdings of lower-rated bonds have been reduced, where
appropriate, in order to enhance the overall quality of the portfolios. We
continue to purchase long-term bonds, despite rising interest rates, because of
the significantly higher yields available compared to those offered by
short-term bonds. By remaining in the long-end of the market, however, the
portfolios have declined more in value than they would have had a greater
percentage of assets been invested in cash or other high-quality, short-term
securities."

Looking Ahead:

"We believe that the Federal Reserve Board ultimately will be successful in
accomplishing its objective and, therefore, do not expect inflation to become a
serious threat. In the interim, however, the bond markets may experience further
volatility. While 1994 has been a difficult year for all fixed-income markets,
municipal securities have generally outperformed other fixed-income securities,
such as U.S. Treasuries. We anticipate that this outperformance will continue,
due mainly to the imbalance in supply and demand which has characterized the
municipal market for most of the year. New issue volume, which has declined
significantly in 1994, is expected to remain subdued, while demand for municipal
securities should continue to increase because of the relative attractiveness of
their yields."

<PAGE>

================================================================================
Performance Comparison Charts and Tables
- --------------------------------------------------------------------------------

The following charts compare $10,000 hypothetical investments made in each
Series of Seligman Tax-Exempt Series Trust Class A shares, with and without the
maximum initial sales charge of 4.75%, since inception through September 30,
1994, 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 Tax-Exempt Series Trust Class D shares is not shown in the charts but
is included in the table below each chart. It is important to keep in mind that
the Lehman Index excludes the effects of any fees or sales charges, and does not
reflect state-specific bond market performance.

Seligman California Tax-Exempt High-Yield Series

[The table below was represented as a line graph in the printed material]

with without
sales charge sales charge Lehman Index
------------ ------------ ------------
11/20/84 9,518 10,000 10,000
12/31/84 9,745 10,238 10,187
3/31/85 9,914 10,416 10,598
6/30/85 10,615 11,152 11,486
9/30/85 10,681 11,222 11,313
12/31/85 11,582 12,168 12,227
3/31/86 12,716 13,360 13,465
6/30/86 12,674 13,315 13,383
9/30/86 13,329 14,003 14,102
12/31/86 13,772 14,469 14,589
3/31/87 14,161 14,877 14,943
6/30/87 13,662 14,354 14,537
9/30/87 13,135 13,799 14,175
12/31/87 13,764 14,461 14,809
3/31/88 14,328 15,053 15,318
6/30/88 14,590 15,329 15,615
9/30/88 15,069 15,831 16,015
12/31/88 15,569 16,357 16,314
3/31/89 15,735 16,532 16,422
6/30/89 16,466 17,300 17,394
9/30/89 16,517 17,352 17,406
12/31/89 17,015 17,876 18,074
3/31/90 17,166 18,035 18,155
6/30/90 17,535 18,423 18,579
9/30/90 17,437 18,319 18,590
12/31/90 18,036 18,949 19,391
3/31/91 18,450 19,384 19,830
6/30/91 18,879 19,834 20,253
9/30/91 19,621 20,613 21,040
12/31/91 19,926 20,935 21,746
3/31/92 20,212 21,235 21,810
6/30/92 20,936 21,996 22,637
9/30/92 21,386 22,468 23,240
12/31/92 21,826 22,930 23,662
3/31/93 22,460 23,597 24,541
6/30/93 23,108 24,278 25,345
9/30/93 23,666 24,863 26,201
12/31/93 23,988 25,202 26,569
3/31/94 23,436 24,622 25,111
6/30/94 23,568 24,760 25,394
9/30/94 23,764 24,966 25,562

The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
California Tax-Exempt High-Yield Series Class A shares, with and without the
maximum initial sales charge of 4.75%, and the Lehman Index. Also included in
the table is the total return for the period since inception on February 1,
1994, to September 30, 1994, for Seligman California Tax-Exempt High-Yield
Series Class D shares, with and without the effect of the 1% contingent deferred
sales load ("CDSL") imposed on shares redeemed within one year of purchase, and
the Lehman Index.

Average Annual Total Returns

Since Since
One Five Inception Inception
Year Years 11/20/84 2/1/94
------ ----- ---------- --------------
Seligman California Seligman California
Tax-Exempt Tax-Exempt
High-Yield Series High-Yield Series
Class A with Class D with
Sales Charge (1) -4.42% 6.50% 9.17% CDSL (1) -3.42%
Class A without Class D without
Sales Charge (2) 0.41 7.55 9.72 CDSL (2) -2.47
Lehman Index -2.44 7.99 9.98 Lehman Index -4.88

See page 7 for footnotes.

<PAGE>

================================================================================
September 30, 1994
- --------------------------------------------------------------------------------

Seligman California Tax-Exempt Quality Series

[The table below was represented as a line graph in the printed material]

with without
sales charge sales charge Lehman Index
11/20/84 9,518 10,000 10,000
12/31/84 9,675 10,164 10,187
3/31/85 10,109 10,620 10,598
6/30/85 10,939 11,493 11,486
9/30/85 10,656 11,195 11,313
12/31/85 11,563 12,148 12,227
3/31/86 12,651 13,291 13,465
6/30/86 12,521 13,155 13,383
9/30/86 13,113 13,777 14,102
12/31/86 13,688 14,381 14,589
3/31/87 13,992 14,700 14,943
6/30/87 13,342 14,017 14,537
9/30/87 12,773 13,420 14,175
12/31/87 13,524 14,208 14,809
3/31/88 13,991 14,699 15,318
6/30/88 14,277 14,999 15,615
9/30/88 14,608 15,348 16,015
12/31/88 15,144 15,910 16,314
3/31/89 15,248 16,020 16,422
6/30/89 16,182 17,001 17,394
9/30/89 16,048 16,860 17,406
12/31/89 16,623 17,464 18,074
3/31/90 16,603 17,444 18,155
6/30/90 17,023 17,884 18,579
9/30/90 16,726 17,572 18,590
12/31/90 17,714 18,611 19,391
3/31/91 18,013 18,924 19,830
6/30/91 18,354 19,283 20,253
9/30/91 19,126 20,094 21,040
12/31/91 19,702 20,699 21,746
3/31/92 19,671 20,666 21,810
6/30/92 20,537 21,576 22,637
9/30/92 20,954 22,015 23,240
12/31/92 21,374 22,456 23,662
3/31/93 22,392 23,525 24,541
6/30/93 23,076 24,244 25,345
9/30/93 23,871 25,079 26,201
12/31/93 24,069 25,287 26,569
3/31/94 22,474 23,611 25,111
6/30/94 22,509 23,648 25,394
9/30/94 22,568 23,710 25,562

The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
California Tax-Exempt Quality Series Class A shares, with and without the
maximum initial sales charge of 4.75%, and the Lehman Index. Also included in
the table is the total return for the period since inception on February 1,
1994, to September 30, 1994, for Seligman California Tax-Exempt Quality Series
Class D shares, with and without the effect of the 1% contingent deferred sales
load ("CDSL") imposed on shares redeemed within one year of purchase, and the
Lehman Index.

Average Annual Total Returns

Since Since
One Five Inception Inception
Year Years 11/20/84 2/1/94
------ ----- ---------- --------------

Seligman California Seligman California
Tax-Exempt Quality Series Tax-Exempt Quality Series
Class A with Class D with
Sales Charge (1) -9.91% 6.03% 8.60% CDSL (1) -8.91%
Class A without Class D without
Sales Charge (2) -5.46 7.06 9.14 CDSL (2) -8.01
Lehman Index -2.44 7.99 9.98 Lehman Index -4.88

See page 7 for footnotes.

<PAGE>

================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------

Seligman Florida Tax-Exempt Series

[The table below was represented as a line graph in the printed material]

with without
sales charge sales charge Lehman Index
11/17/86 9,520 10,000 10,000
12/31/86 9,440 9,916 9,972
3/31/87 9,746 10,238 10,214
6/30/87 9,038 9,494 9,937
9/30/87 8,497 8,926 9,690
12/31/87 9,211 9,676 10,123
3/31/88 9,528 10,009 10,471
6/30/88 9,821 10,316 10,674
9/30/88 10,181 10,695 10,947
12/31/88 10,603 11,137 11,151
3/31/89 10,668 11,205 11,225
6/30/89 11,467 12,045 11,890
9/30/89 11,330 11,901 11,898
12/31/89 11,807 12,402 12,354
3/31/90 11,781 12,375 12,410
6/30/90 12,089 12,698 12,699
9/30/90 11,922 12,523 12,707
12/31/90 12,569 13,202 13,255
3/31/91 12,807 13,453 13,555
6/30/91 13,070 13,729 13,844
9/30/91 13,520 14,202 14,382
12/31/91 13,903 14,604 14,864
3/31/92 13,937 14,639 14,908
6/30/92 14,487 15,218 15,473
9/30/92 14,770 15,515 15,885
12/31/92 15,164 15,929 16,174
3/31/93 15,729 16,522 16,775
6/30/93 16,410 17,237 17,324
9/30/93 17,016 17,874 17,910
12/31/93 17,214 18,082 18,161
3/31/94 16,184 17,000 17,164
6/30/94 16,310 17,133 17,358
9/30/94 16,337 17,161 17,472

The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
Florida Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman Florida Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.

Average Annual Total Returns+

Since Since
One Five Inception Inception
Year Years 11/17/86 2/1/94
----- ------- --------- --------------
Seligman Florida Seligman Florida
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -8.56% 6.55% 6.43% CDSL (1) -7.54%
Class A without Class D without
Sales Charge (2) -3.99 7.60 7.10 CDSL (2) -6.64
Lehman Index -2.44 7.99 7.35 Lehman Index -4.88

See page 7 for footnotes.

<PAGE>

================================================================================
September 30, 1994
- --------------------------------------------------------------------------------

Seligman North Carolina Tax-Exempt Series

[The table below was represented as a line graph in the printed material]

with without
sales charge sales charge Lehman Index
8/27/90 9,520 10,000 10,000
9/30/90 9,387 9,860 10,006
12/31/90 9,784 10,277 10,437
3/31/91 9,982 10,485 10,673
6/30/91 10,083 10,591 10,901
9/30/91 10,510 11,040 11,325
12/31/91 10,824 11,370 11,704
3/31/92 10,779 11,323 11,739
6/30/92 11,212 11,777 12,184
9/30/92 11,479 12,058 12,509
12/31/92 11,706 12,297 12,736
3/31/93 12,197 12,812 13,209
6/30/93 12,631 13,268 13,642
9/30/93 13,139 13,801 14,103
12/31/93 13,226 13,893 14,301
3/31/94 12,335 12,957 13,516
6/30/94 12,372 12,996 13,668
9/30/94 12,377 13,000 13,758

The table below shows the average annual total returns for the one-year and
since-inception periods through September 30, 1994, for Seligman North Carolina
Tax-Exempt Series Class A shares, with and without the maximum initial sales
charge of 4.75%, and the Lehman Index. Also included in the table is the total
return for the period since inception on February 1, 1994, to September 30,
1994, for Seligman North Carolina Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.

Average Annual Total Returns+

Since Since
One Inception Inception
Year 8/27/90 2/1/94
----- ---------- --------------
Seligman North Carolina Seligman North Carolina
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -10.28% 5.34% CDSL (1) -9.04%
Class A without Class D without
Sales Charge (2) -5.80 6.62 CDSL (2) -8.15
Lehman Index -2.44 8.10 Lehman Index -4.88

+ At its discretion, the Manager waived all or portions of its fees and
reimbursed certain expenses for the Florida and North Carolina Series. This has
the effect of increasing the Series' average annual total returns for all
periods presented.

(1) Represents the average compound rate of return per year over the specified
period for Class A shares and total returns for Class D shares, and reflects
change in price and assumes all distributions within the period are reinvested
in additional shares; also reflects the effect of the 4.75% maximum initial
sales charge or CDSL of 1%, if applicable. No adjustment was made to Class A
shares' performance for periods prior to commencement dates, December 27, 1990,
in the case of the Florida Series and January 1, 1993, in the case of the
California High-Yield and California Quality Series for the annual
Administration, Shareholder Services and Distribution Plan fee of up to 0.25% of
average daily net assets of each Series.

(2) Represents the rate of return as above, but does not reflect the effect of
the 4.75% maximum initial sales charge or 1% CDSL.

The investment return and principal value of an investment will fluctuate so
that shares, if redeemed, may be worth more or less than their original cost.
Past performance is not indicative of future investment results.

<PAGE>

================================================================================
Portfolios of Investments
- --------------------------------------------------------------------------------

CALIFORNIA HIGH-YIELD SERIES

Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- ------ --------------- ------------ -------
$ 715,000 Alameda, CA Community Improvement
Commission Tax Allocation Bonds
(West End Community Improvement
Project), 9.20% due 1/1/2016 ............ NR/NR $726,054
1,000,000 Bakersfield, CA Hospital Rev.
(Bakersfield Memorial Hospital),
6 1/2% due 1/1/2022 ..................... A/A 941,690
825,000 Barstow, CA Redevelopment Agency Tax
Allocation Bonds (Central Redevelopment
Project), 7 5/8% due 8/1/2011 ........... NR/NR 891,965
3,000,000 California Department of Water Resources
Water System Rev. (Central Valley
Project), 6% due 12/1/2020 .............. Aa/AA 2,812,140
1,000,000 California Health Facilities Financing
Authority Rev. Catholic Health
Corporation (St. Elizabeth Community
Hospital Project),
6.30% due 11/15/2015 .................... A1/A+ 927,400
1,500,000 California Pollution Control Financing
Authority Pollution Control Rev.
(Pacific Gas & Electric Co.),
7 1/2% due 5/1/2016 ..................... A1/A 1,571,070
2,500,000 California Public Works Board Lease Rev.
(Department of Corrections--Del Norte),
5 1/8% due 12/1/2008 .................... A1/A- 2,201,425
430,000 Chula Vista, CA Improvement Bonds
(Assessment District No. 85-2),
7.60% due 9/2/2005 ...................... NR/NR 441,180
435,000 Chula Vista, CA Improvement Bonds
(Assessment District No. 85-2),
7.60% due 9/2/2006 ...................... NR/NR 445,931
245,000 Corona, CA Redevelopment Agency
(Residential Mortgage Rev.),
9% due 11/15/2012 ....................... NR/AA 247,038
1,000,000 Cupertino, CA Certificates of
Participation (Cupertino Public
Facilities Corporation),
7 3/4% due 7/1/2016 ..................... NR/NR 1,072,400
180,000 Fairfield, CA Improvement Bonds (Smith
Ranch Assessment District), 7.35%
due 9/2/2003 ............................ NR/NR 184,952
160,000 Fairfield, CA Improvement Bonds
(Smith Ranch Assessment District),
7.40% due 9/2/2007 ...................... NR/NR 164,800
1,000,000 Folsom, CA Special Tax Bonds (Willow Creek
Community Facilities District No. 1),
8 1/4% due 12/1/2006 .................... NR/NR 1,089,160
1,000,000 Fontana, CA Certificates of Participation
(Police Facility Project),
7 3/4% due 4/1/2016 ..................... Baa/NR 1,064,060
500,000 Los Angeles, CA Certificates of
Participation (Convention & Exhibition
Center Authority),
7 3/8% due 8/15/2018 .................... Aaa/AAA 555,055
500,000 Los Angeles, CA Community Redevelopment
Agency Multi-Family Housing Rev.
(Grand Central Square), 5.85%
due 12/1/2026* .......................... A/A 435,885
1,000,000 Los Angeles County, CA Certificates
of Participation (Sheriff's Training
Academy and San Fernando Courthouse),
7 3/4% due 7/1/2016 ..................... NR/NR 1,073,370
1,000,000 Los Angeles County Transportation
Commission, CA Sales Tax Rev.,
7.40% due 7/1/2015 ...................... A1/A- 1,085,110
600,000 M-S-R Public Power Agency, CA (San Juan
Project Rev.), 6 7/8% due 7/1/2019 ...... A/A 606,162
400,000 Milpitas, CA Local Improvement District
No. 9 (Milpitas Business Park),
7 1/4% due 9/2/2007 ..................... NR/NR 408,380
400,000 Milpitas, CA Local Improvement District
No. 9 (Milpitas Business Park),
7.30% due 9/2/2008 ...................... NR/NR 405,200
250,000 Milpitas, CA Local Improvement District
No. 9 (Milpitas Business Park),
7.30% due 9/2/2011 ...................... NR/NR 248,540

- -------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.

<PAGE>

================================================================================
September 30, 1994
- --------------------------------------------------------------------------------

CALIFORNIA HIGH-YIELD SERIES (continued)

Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- ------ --------------- ------------ -------
$1,200,000 Mojave, CA Water Agency Improvement
District M G.O.'s (Morongo Basin
Pipeline Project),
6.60% due 9/1/2022 ...................... Baa/BBB+ $1,149,864
100,000 Oxnard, CA Certificates of Participation
(River Ridge Public Parking Project),
9.10% due 12/1/2003 .....................Baa1/BBB+ 107,380
1,000,000 Oxnard Union High School District,
CA Certificates of Participation
(Union High School),
7.70% due 11/1/2019 ..................... NR/NR 1,130,590
750,000 Petaluma, CA Community Development
Commission Tax Allocation Bonds
(Central Business District),
9.30% due 5/15/2010 ..................... Baa1/NR 760,950
1,020,000 Rancho Mirage, CA Improvement Bonds
Assessment District No. 22-85
(Frank Sinatra Drive Extension),
8.30% due 9/2/2008 ...................... NR/NR 1,029,109
1,200,000 Rancho Mirage, CA Improvement Bonds
Assessment District No. 22-85
(Frank Sinatra Drive Extension),
8.30% due 9/2/2011 ...................... NR/NR 1,209,648
5,000 Riverside County, CA (Single Family
Mortgage Rev.), 10 1/2% due 9/1/2014 .... NR/BBB+ 5,024
1,270,000 San Diego, CA Redevelopment Agency Rev.
(Great American First Savings Bank),
10% due 6/16/2011 ....................... NR/NR 1,301,344
2,000,000 San Francisco, CA State Building
Authority Lease Rev. (State of
California Dept. of
General Services Lease),
5% due 10/1/2013 ........................ A1/A- 1,633,840
3,000,000 San Joaquin Hills, CA Transportation
Corridor Agency (Orange County
Senior Lien Toll Road),
6 3/4% due 1/1/2032 ..................... NR/NR 2,803,590
1,500,000 Santa Barbara, CA Certificates
of Participation (Harbor Improvement
Project), 7.70% due 10/1/2016 ........... A1/NR 1,581,435
1,000,000 Santa Clara, CA Improvement Bonds Project
No. 186 (Santa Clara Convention Center
Complex), 7.10% due 9/2/2011 ............ NR/NR 1,030,000
1,500,000 Santa Cruz, CA Hospital Rev.
(Dominican Santa Cruz Hospital),
7% due 12/1/2013 ........................ A1/A+ 1,527,030
2,000,000 Santa Margarita, CA Water District G.O.'s,
7 1/2% due 11/1/2005 .................... NR/NR 2,143,500
2,000,000 Southern California Public Power
Authority Power Project Rev.
(Multiple Projects),
6% due 7/1/2018 ......................... A/A 1,856,780
3,000,000 Southern California Public Power
Authority Power Project Rev.
(Multiple Projects),
6% due 7/1/2018 ......................... Aaa/AAA 3,131,400
1,000,000 Stanislaus, CA Waste-to-Energy
Financing Agency Solid Waste Facility
Rev. (Ogden Martin System of Stanislaus,
Inc. Project), 7 1/2% due 1/1/2005 ...... NR/BBB+ 1,031,410
800,000 Stanislaus, CA Waste-to-Energy Financing
Agency Solid Waste Facility Rev.
(Ogden Martin System of Stanislaus,
Inc. Project), 7 5/8% due 1/1/2010 ...... NR/BBB+ 836,280
250,000 Tustin, CA Improvement Bonds
(Assessment District No. 85-1),
8.15% due 9/2/2011 ...................... NR/NR 257,415
615,000 Tustin, CA Improvement Bonds
(Assessment District No. 85-1),
8.15% due 9/2/2011 ...................... NR/NR 633,653
1,000,000 Ukiah, CA Electric Rev.,
8% due 6/1/2018 ......................... NR/AAA 1,073,300
-----------
Total Municipal Bonds--94.2% (Cost $45,079,894) ................. 45,832,509

Variable Rate Demand Notes--3.9% (Cost $1,900,000) .............. 1,900,000

Other Assets Less Liabilities--1.9% ............................. 924,295
-----------
NET ASSETS--100.0% .............................................. $48,656,804
===========

- -------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.

<PAGE>

================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------

CALIFORNIA QUALITY SERIES

Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- ------ --------------- ------------ -------
$2,000,000 California Department of Water
Resources Water System Rev.
(Central Valley Project),
6 1/8% due 12/1/2013 .................... Aa/AA $1,944,880
1,000,000 California Department of Water
Resources Water System Rev.
(Central Valley Project),
6% due 12/1/2020 ........................ Aa/AA 937,380
2,000,000 California Educational Facilities
Authority Rev. (Stanford University),
6 3/4% due 1/1/2013 ..................... Aaa/AAA 2,055,020
3,200,000 California Educational Facilities
Authority Rev. (University of
Southern California Project),
5.80% due 10/1/2015 ..................... Aa/AA 2,941,824
3,440,000 California Educational Facilities
Authority Rev. (Pomona College),
6% due 2/15/2017 ........................ Aa/AA 3,242,131
4,500,000 California Educational Facilities
Authority Rev. (California Institute
of Technology),
6% due 1/1/2021 ......................... Aaa/AAA 4,266,495
1,500,000 California Health Facilities Financing
Authority Health Facility Rev.
(Mercy Health System),
9 1/8% due 7/1/2013 ..................... A1/A+ 1,584,585
3,000,000 California Health Facilities Financing
Authority Health Facility Rev.
(Kaiser Permanente),
6 1/2% due 12/1/2020 .................... Aa2/AA 2,925,990
2,000,000 California Health Facilities Financing
Authority Insured Hospital Rev.
(Scripps Memorial Hospital),
6 3/8% due 10/1/2022 .................... Aaa/AAA 1,983,200
265,000 California Housing Finance Agency
(Housing Revenue Insured Bonds),
8 3/4% due 8/1/2005 ..................... Aaa/AAA 271,850
530,000 California Housing Finance Agency
(Housing Revenue Insured Bonds),
8 3/4% due 8/1/2010 ..................... Aaa/AAA 544,443
505,000 California Housing Finance Agency
(Housing Revenue Insured Bonds),
8 5/8% due 8/1/2015 ..................... Aaa/AAA 508,909
2,000,000 California Housing Finance Agency
Housing Rev., 5.60% due 8/1/2024 ........ Aaa/AAA 1,738,080
2,850,000 California Housing Finance Agency
Home Mortgage Rev.,
6 3/4% due 2/1/2025* .................... Aa/AA- 2,813,406
3,000,000 California Pollution Control Financing
Authority Pollution Control Rev.
(Southern California Edison Company),
6.85% due 12/1/2008 ..................... Aa3/A+ 3,110,520
975,000 California Public Capital Improvements
Financing Authority (Pooled Projects),
8.10% due 3/1/2018 ...................... Aaa/AAA 1,053,000
3,000,000 California Public Works Board Lease Rev.
(Correctional Facilities Improvements),
5 3/4% due 9/1/2021 ..................... A/A- 2,629,740
2,000,000 California State G.O.'s,
7% due 8/1/2009 ......................... A1/A 2,159,580
7,000,000 California State G.O.'s,
4 3/4% due 9/1/2010 ..................... A1/A 5,783,470
3,000,000 California Statewide Communities
Development Authority Certificates
of Participation (The Trustees of
the J. Paul Getty Trust),
5% due 10/1/2023 ........................ Aaa/AAA 2,399,490
5,000,000 Contra Costa Water District, CA,
5 1/2% due 10/1/2019 .................... Aaa/AAA 4,352,850
2,500,000 Eastern Municipal Water District
Riverside County, CA Water and Sewer Rev.,
6 3/4% due 7/1/2012 ..................... Aaa/AAA 2,627,075
3,000,000 Fresno, CA Sewer System Rev.,
5 1/4% due 9/1/2019 ..................... Aaa/AAA 2,514,210
2,000,000 Industry, CA G.O.'s, 7 3/8% due
7/1/2015 ................................ Aaa/AAA 2,223,840
1,000,000 Los Angeles, CA Convention and
Exhibition Center Authority Lease Rev.,
5 3/8% due 8/15/2018 .................... Aaa/AAA 853,670
3,460,000 Los Angeles, CA Wastewater System Rev.,
5.80% due 6/1/2021 ...................... Aaa/AAA 3,150,572

- -------
*Interest income earned from this security is subject to the federal alternative
minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.

<PAGE>

================================================================================
September 30, 1994
- --------------------------------------------------------------------------------

CALIFORNIA QUALITY SERIES (continued)

Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- ------ --------------- ------------ -------
$2,000,000 Los Angeles County Transportation
Commission, CA (Sales Tax Rev.),
6 3/4% due 7/1/2018 ..................... Aaa/AAA $2,201,560
4,000,000 Los Angeles Department of Water & Power,
CA Electric Plant Rev.,
6 3/8% due 2/1/2020 ..................... Aa/AA 3,947,600
2,000,000 M-S-R Public Power Agency, CA
(San Juan Project),
6 7/8% due 7/1/2019 ..................... Aaa/AAA 2,040,580
2,000,000 Marin, CA Municipal Water District Water
Rev., 5.65% due 7/1/2023 ................ A1/AA 1,742,560
3,000,000 Metropolitan Water District of Southern
California Waterworks G.O.'s,
5 3/4% due 3/1/2014 ..................... Aaa/AAA 2,791,050
4,500,000 Northern California Power Agency Public
Power Rev. (Combustion Turbine
Project A-1),
6% due 8/15/2010 ........................ Aaa/AAA 4,409,460
4,500,000 Orange County, CA Local Transportation
Authority (Measure M Sales Tax Rev.),
6% due 2/15/2009 ........................ Aa/AA 4,482,450
3,250,000 San Francisco Bay Area Rapid Transit
District, CA (Sales Tax Rev.),
6.60% due 7/1/2012 ...................... Aaa/AAA 3,318,802
3,000,000 San Francisco, CA (City & County) Public
Utilities Commission Water Rev.,
6% due 11/1/2015 ........................ Aa/AA 2,848,650
2,000,000 Santa Rosa, CA (Sonoma County)
Wastewater Rev. (Subregional Wastewater
Project), 6 1/2% due 9/1/2022 ........... Aaa/AAA 2,017,300
4,500,000 Southern California Public Power
Authority Transmission Project Rev.,
5% due 7/1/2022 ......................... Aaa/AAA 3,569,400
5,000,000 University of California Regents
(Multiple Purpose Projects),
6 3/8% due 9/1/2024 ..................... Aaa/AAA 4,950,150
-----------
Total Municipal Bonds--99.1% (Cost $101,782,075) ................ 98,935,772
Other Assets Less Liabilities--0.9% ............................. 895,958
-----------
NET ASSETS--100.0% .............................................. $99,831,730
===========

FLORIDA SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- ------ --------------- ------------ -------
$ 500,000 Broward County, FL G.O.'s
(Environmentally Sensitive
Lands Project),
6.90% due 7/1/2009 ...................... Aaa/AAA $ 536,190
2,000,000 Broward County, FL Water & Sewer
Utility Rev., 6 1/2% due 10/1/2017 ...... Aaa/AAA 2,156,380
2,500,000 Broward County, FL Water & Sewer
Utility Rev., 5% due 10/1/2018 .......... Aaa/AAA 2,029,100
1,500,000 Broward County School District,
FL G.O.'s, 7 1/8% due 2/15/2008 ......... Aaa/AAA 1,644,810
1,500,000 Citrus County, FL Pollution Control Rev.
(Florida Power Corporation Crystal River
Power Plant Project),
6 5/8% due 1/1/2027 ..................... A1/A+ 1,510,605
2,000,000 Collier County, FL Water & Sewer Rev.,
5 1/4% due 7/1/2021 ..................... Aaa/AAA 1,671,400
1,000,000 Dade County, FL Public Facilities Rev.
(Jackson Memorial Hospital),
5 1/4% due 6/1/2023 ..................... Aaa/AAA 824,380
1,000,000 Dade County, FL Seaport G.O.'s,
6 1/4% due 10/1/2021 .................... Aaa/AAA 985,870
1,000,000 Dade County, FL Solid Waste System
Special Obligation Rev.,
7 1/8% due 10/1/2006 .................... A/A 1,035,440
2,000,000 Dade County Health Facilities Authority,
FL Hospital Rev. (Baptist Hospital
of Miami Project),
5 1/4% due 5/15/2021 .................... Aaa/AAA 1,650,360
1,000,000 Dunes Community Development District,
FL Rev. (Intracoastal Waterway Bridge
Project), 7% due 2/1/2007 ............... NR/A 1,067,940

- -------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.

<PAGE>

FLORIDA SERIES (continued)

Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- ------ --------------- ------------ -------
$1,000,000 Florida Housing Finance Agency
(General Mortgage Rev.),
6.35% due 6/1/2014 ...................... NR/AAA $ 969,340
1,000,000 Florida State Board of Education
Public Education Capital Outlay,
6 3/4% due 6/1/2021 ..................... Aa/AA 1,033,040
2,000,000 Florida State Board of Education
Public Education Capital Outlay,
6% due 6/1/2022 ......................... Aa/AA 1,894,160
1,000,000 Florida State Department of Natural
Resources Rev. (Save Our Coast),
7.35% due 7/1/2008 ...................... Aaa/AAA 1,063,990
1,000,000 Florida State Municipal Power Agency Rev.
(St. Lucie Project),
5 1/2% due 10/1/2012 .................... Aaa/AAA 910,550
1,250,000 Florida State Municipal Power Agency Rev.
(St. Lucie Project),
5.70% due 10/1/2016 ..................... Aaa/AAA 1,146,075
1,500,000 Florida State Turnpike
Authority Turnpike
Rev., 6.35% due 7/1/2022 ................ Aaa/AAA 1,563,098
1,500,000 Gainesville, FL Utilities System Rev.,
5 1/2% due 10/1/2013 .................... Aa/AA 1,355,820
2,500,000 Hillsborough County,
FL Aviation Authority
Rev. (Tampa International Airport),
5 3/8% due 10/1/2023* ................... Aaa/AAA 2,092,525
700,000 Hillsborough County,
FL Capital Improvement
Program Rev., 6 7/8% due 8/1/2016 ....... Aaa/AAA 722,092
1,000,000 Hillsborough County,
FL Capital Improvement
Program Rev. (Water & Wastewater
Facilities), 6.90% due 8/1/2016 ......... Aaa/AAA 1,031,620
1,000,000 Hollywood, FL Water & Sewer Rev.,
6 7/8% due 10/1/2021 .................... Aaa/AAA 1,107,510
1,050,000 Jacksonville Beach, FL Utilities
Rev., 7 1/2% due 10/1/2014 .............. Aaa/AAA 1,126,787
1,500,000 Jacksonville Electric Authority,
FL Rev. (St. Johns River Power
Park System),
5 1/2% due 10/1/2013 .................... Aa1/AA 1,352,760
750,000 Jacksonville Electric Authority,
FL Bulk Power Supply System Rev.
(Scherer 4 Project),
6 3/4% due 10/1/2021 .................... Aaa/AA 819,975
2,000,000 Kissimmee Utility Authority,
FL Electric System Improvement Rev.,
5 1/4% due 10/1/2018 .................... Aaa/AAA 1,685,400
1,000,000 Naples, FL Hospital Rev. (Naples
Community Hospital, Inc. Project),
7% due 10/1/2013 ........................ Aaa/AAA 1,064,060
1,000,000 Orange County Health Facilities
Authority, FL Rev. (Orlando Regional
Medical Center),
6.80% due 10/1/2015 ..................... Aaa/AAA 1,073,820
2,000,000 Orlando, FL Utilities Commission
Water & Electric Rev.,
5 1/2% due 10/1/2026 .................... Aa/AA- 1,720,140
1,000,000 Orlando-Orange County Expressway
Authority, FL Expressway Rev.,
7 1/2% due 7/1/2016 ..................... Aaa/AAA 1,067,350
1,000,000 Osceola County, FL Transportation Rev.
(Osceola Parkway Project),
6.10% due 4/1/2017 ...................... Aaa/AAA 978,450
1,200,000 Palm Beach County, FL Criminal Justice
Facilities Rev., 7 1/4% due 6/1/2011 .... Aaa/AAA 1,339,140
1,500,000 Palm Beach County, FL Water & Sewer Rev.,
7 1/8% due 10/1/2009 .................... A1/A+ 1,582,770
1,625,000 Palm Beach County, FL Water & Sewer Rev.,
5 1/4% due 10/1/2013 .................... Aaa/AAA 1,405,137
1,000,000 Pensacola Health Facilities Authority,
FL Health Facilities Rev. (Daughters
of Charity National Health System--
Sacred Heart Hospital of Pensacola),
5 1/4% due 1/1/2011 ..................... Aa/NR 875,570
1,000,000 St. Lucie County, FL Utility System Rev.,
7 1/8% due 10/1/2017 .................... Aaa/AAA 1,115,610
1,250,000 Volusia County, FL Educational Facilities
Authority Rev. (Embry-Riddle
Aeronautical University Project),
6 5/8% due 10/15/2022 ................... NR/AAA 1,262,237
-----------
Total Municipal Bonds--96.7% (Cost $49,242,897) ................. 48,471,501
Variable Rate Demand Notes--1.4% (Cost $700,000) ................ 700,000
Other Assets Less Liabilities--1.9% ............................. 969,610
-----------
NET ASSETS--100.0% .............................................. $50,141,111
===========

- -------
*Interest income earned from this security is subject to the federal alternative
minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.

<PAGE>

================================================================================
September 30, 1994
- --------------------------------------------------------------------------------

NORTH CAROLINA SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- ------ --------------- ------------ -------
$1,250,000 Appalachian State University, NC Housing
& Student Center System Rev.,
5 5/8% due 7/15/2015 .................... Aaa/AAA $1,142,000
1,000,000 Buncombe County, NC Metropolitan Sewerage
District (Sewerage System Rev.),
6 3/4% due 7/1/2015 ..................... Aaa/NR 1,087,010
600,000 Buncombe County, NC Metropolitan Sewerage
District (Sewerage System Rev.),
5 1/2% due 7/1/2022 ..................... Aaa/AAA 530,238
1,500,000 Charlotte-Mecklenburg Hospital Authority,
NC Health Care System Rev.,
6 1/4% due 1/1/2020 ..................... Aa/AA 1,444,575
1,000,000 Charlotte, NC Certificates of
Participation (Charlotte-Mecklenburg
Law Enforcement Center Project),
5 3/8% due 6/1/2013 ..................... Aa1/AA 883,170
2,000,000 Charlotte, NC Water & Sewer G.O.'s,
5.90% due 2/1/2017 ...................... Aaa/AAA 1,945,400
365,000 Cleveland County, NC Sanitary District
Water G.O.'s, 6.80% due 3/1/2019 ........ Aaa/AAA 379,783
500,000 Coastal Regional Solid Waste Management
Authority Rev., 6 1/2% due 6/1/2008 ..... A/BBB 498,150
1,150,000 Concord, NC Utilities System Rev.,
5 3/4% due 12/1/2017 .................... Aaa/AAA 1,066,729
500,000 Cumberland County, NC Hospital Facility
Rev. (Cumberland County Hospital
System, Inc.), 5 1/2% due 10/1/2014 ..... Aaa/AAA 444,465
500,000 Cumberland County, NC Hospital Facility
Rev. (Cumberland County Hospital
System, Inc.), 6% due 10/1/2021 ......... Aaa/AAA 477,525
250,000 Durham County, NC Certificates
of Participation (Jail Facilities and
Computer Equipment Financing Project),
6 5/8% due 5/1/2014 ..................... Aa1/AA 247,947
2,000,000 Fayetteville, NC Public Works
Commission Rev., 4 3/4% due 3/1/2014 .... Aaa/AAA 1,598,120
2,500,000 Martin County Industrial Facilities and
Pollution Control Financing Authority,
NC (Weyerhaeuser Company Project),
5.65% due 12/1/2023* .................... A2/A 2,134,225
1,000,000 North Carolina Eastern Municipal
Power Agency Power System Rev.,
5% due 1/1/2021 ......................... Aaa/A- 829,580
500,000 North Carolina Educational Facilities
Financing Authority Rev.
(Duke University Project),
6 3/4% due 10/1/2021 .................... Aa1/AA 508,415
500,000 North Carolina Educational Facilities
Financing Authority Rev.
(Elon College Project),
6 3/8% due 1/1/2014 ..................... NR/AAA 494,745
600,000 North Carolina Housing Finance Agency
Rev. (Multi-Family),
5.80% due 7/1/2014 ...................... Aa/AA 542,460
1,500,000 North Carolina Housing Finance Agency
Rev. (Single Family),
6 1/2% due 9/1/2018 ..................... Aa/A+ 1,498,095
250,000 North Carolina Housing Finance Agency
Rev. (Multi-Family),
5.90% due 7/1/2026 ...................... Aa/AA 223,497
750,000 North Carolina Medical Care Commission
Hospital Rev. (North Carolina Baptist
Hospital Project), 6 3/8% due 6/1/2014 .. Aa/AA- 741,225
500,000 North Carolina Medical Care Commission
Hospital Rev.
(Carolina Medicorp Project),
5 1/2% due 5/1/2015 ..................... Aa/AA 444,690
1,000,000 North Carolina Medical Care Commission
Hospital Rev. (Mercy Hospital Project),
6 1/2% due 8/1/2015 ..................... NR/A- 973,220
1,250,000 North Carolina Medical Care Commission
Hospital Rev. (Rex Hospital Project),
6 1/4% due 6/1/2017 ..................... A1/A+ 1,201,600
750,000 North Carolina Medical Care Commission
Hospital Rev.
(Carolina Medicorp Project),
6% due 5/1/2021 ......................... Aa/AA 699,203
1,000,000 North Carolina Medical Care Commission
Hospital Rev.
(Memorial Mission Hospital Project),
6% due 10/1/2022 ........................ Aaa/AAA 956,950

- -------
*Interest income earned from this security is subject to the federal alternative
minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.

<PAGE>

================================================================================
Portfolios of Investments (continued) September 30, 1994
- --------------------------------------------------------------------------------

NORTH CAROLINA SERIES (continued)

Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- ------ --------------- ------------ -------
$2,250,000 North Carolina Medical Care Commission
Hospital Rev. (Presbyterian Health
Services Corp. Project),
6% due 10/1/2024 ........................ Aa/AA $2,063,655
2,000,000 North Carolina Municipal Power Agency
No. 1 Catawba Electric Rev.,
5% due 1/1/2018 ......................... Aaa/AAA 1,613,960
245,000 North Carolina Municipal Power Agency
No. 1 Catawba Electric Rev.,
9 1/2% due 1/1/2019 ..................... Aaa/AAA 255,910
3,000,000 North Carolina Municipal Power Agency
No. 1 Catawba Electric Rev.,
5% due 1/1/2020 ......................... Aaa/AAA 2,496,690
1,100,000 Orange County, NC School District G.O.'s,
4 3/4% due 3/1/2011 ..................... Aa1/AA 917,147
1,000,000 Orange, NC Water & Sewer Authority Rev.,
5.20% due 7/1/2016 ...................... Aa/AA 841,450
250,000 Piedmont Triad Airport Authority,
NC Airport Rev. Series "A",
6 3/4% due 7/1/2016 ..................... Aaa/AAA 256,940
250,000 Pitt County, NC Hospital Rev.
(Pitt County Memorial Hospital),
6 5/8% due 12/1/2019 .................... Aaa/AAA 255,900
300,000 Pitt County, NC Hospital Rev.
(Pitt County Memorial Hospital),
6.90% due 12/1/2021 ..................... Aa/AA- 309,195
200,000 Polk County, NC School G.O.'s,
6.70% due 5/1/2011 ...................... Aaa/AAA 208,996
775,000 Raleigh, NC G.O.'s,
6 1/2% due 3/1/2008 ..................... Aaa/AAA 814,424
200,000 Transylvania County, NC G.O.'s,
6.80% due 4/1/2007 ...................... A/A 213,790
500,000 University of North Carolina Chapel
Hill Housing System Rev.,
6.40% due 11/1/2010 ..................... NR/AA- 511,710
250,000 University of North Carolina Greensboro
Housing & Dining System Rev.,
6 3/8% due 4/1/2016 ..................... A/A- 251,872
500,000 University of North Carolina Hospitals
at Chapel Hill Rev.,
6 3/8% due 2/15/2017 .................... A1/AA- 496,125
1,550,000 Wake County Industrial Facilities &
Pollution Control Financing Authority,
NC (Carolina Power & Light),
6.90% due 4/1/2009 ...................... A2/A1 1,604,529
1,500,000 Wake County, NC Hospital System Rev.
(Wake Medical Center),
5 1/8% due 10/1/2026 .................... Aaa/AAA 1,202,535
500,000 Wayne County, NC G.O.'s,
5.90% due 2/1/2009 ...................... A/A+ 490,475
1,440,000 Wilkes County, NC G.O.'s,
5.30% due 6/1/2007 ...................... A/A 1,347,653
-----------
Total Municipal Bonds--97.4% (Cost $41,070,844) ................. 39,145,973
Other Assets Less Liabilities--2.6% ............................. 1,056,481
-----------
NET ASSETS--100.0% .............................................. $40,202,454
===========

- -------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.

<PAGE>

================================================================================
Statements of Assets and Liabilities September 30, 1994
- --------------------------------------------------------------------------------

California California North
High-Yield Quality Florida Carolina
Series Series Series Series
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets:
Investments, at value
(see portfolios of investments):
Long-term holdings ................. $ 45,832,509 $ 98,935,772 $ 48,471,501 $39,145,973
Short-term holdings ................ 1,900,000 -- 700,000 --
------------ ------------ ------------ ------------
47,732,509 98,935,772 49,171,501 39,145,973
Cash ................................ 119,746 188,497 86,658 363,291
Interest receivable ................. 904,738 1,421,300 1,233,344 770,530
Receivable for Shares of Beneficial
Interest sold ..................... 101,254 128,113 25,987 52,004
Expenses prepaid to shareholder
service agent ..................... 6,021 14,254 6,881
Other ............................... 2,636 9,120 4,160 15,410
------------ ------------ ------------ ------------
Total Assets ........................ 48,866,904 100,697,056 50,528,531 40,354,089
------------ ------------ ------------ ------------
Liabilities:
Dividends payable ................... 92,838 173,433 91,770 73,027
Payable for Shares of Beneficial
Interest repurchased ................ 52,470 579,488 240,879 27,786
Deferred trustees' fees payable ..... 20,878 20,878 8,665 5,416
Accrued expenses, taxes, and other .. 43,914 91,527 46,106 45,406
------------ ------------ ------------ ------------
Total Liabilities ................... 210,100 865,326 387,420 151,635
------------ ------------ ------------ ------------
Net Assets .......................... $48,656,804 $ 99,831,730 $50,141,111 $40,202,454
============ ============ ============ ============
Composition of Net Assets:
Shares of Beneficial Interest, at par:
Class A ............................ $ 7,617 $ 15,484 $ 6,802 $ 5,333
Class D ............................ 103 127 33 176
Additional paid-in capital .......... 47,904,845 101,773,830 50,893,523 42,052,435
Undistributed net realized gain
(distribution in excess of net
realized gain) ..................... (8,376) 888,592 12,149 69,381
Net unrealized appreciation
(depreciation) of investments ...... 752,615 (2,846,303) (771,396) (1,924,871)
------------ ------------ ------------ ------------
Net Assets .......................... $48,656,804 $ 99,831,730 $50,141,111 $40,202,454
============ ============ ============ ============
Net Assets:
Class A ............................ $ 48,006,512 $ 99,019,401 $ 49,897,142 $ 38,920,462
Class D ............................ $ 650,292 $ 812,329 $ 243,969 $ 1,281,992

Shares of Beneficial Interest
outstanding (Unlimited shares
authorized, except Florida Series
20,000,000 shares authorized;
$.001 par value):
Class A ........................... 7,617,429 15,483,908 6,801,785 5,333,675
Class D ........................... 103,086 127,267 33,242 175,761
Net Asset Value per share:
Class A ........................... $6.30 $6.39 $7.34 $7.30
Class D ........................... $6.31 $6.38 $7.34 $7.29

</TABLE>

- -----------
See notes to financial statements.

<PAGE>

================================================================================
Statements of Operations For the year ended September 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
California California North
High-Yield Quality Florida Carolina
Series Series Series Series
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment income:
Interest ............................ $ 3,280,441 $ 6,406,291 $ 3,101,033 $ 2,345,324
------------ ------------ ------------ ------------
Expenses:
Management fees ..................... 248,761 532,542 2,630 --
Shareholder account services ........ 62,614 124,650 67,181 69,399
Distribution and service fees ....... 48,932 102,671 120,448 102,221
Custody and related services ........ 20,329 49,016 22,013 33,625
Auditing and legal fees ............. 18,853 18,853 19,534 21,988
Registration ........................ 8,203 12,877 15,921 16,611
Trustees' fees and expenses ......... 7,877 8,924 7,444 7,368
Shareholder reports
and communications ................ 4,701 9,166 8,213 6,002
Miscellaneous ....................... 5,118 9,602 4,753 3,711
------------ ------------ ------------ ------------
Total expenses
before reimbursement .............. 425,388 868,301 268,137 260,925
Reimbursement of expenses ........... -- -- (45,105) (75,043)
------------ ------------ ------------ ------------
Total expenses
after reimbursement ............... 425,388 868,301 223,032 185,882
------------ ------------ ------------ ------------
Net investment income ............... 2,855,053 5,537,990 2,878,001 2,159,442
------------ ------------ ------------ ------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain on investments .... 296,724 1,699,245 200,813 270,319
Net change in unrealized
appreciation of investments ....... (2,966,240) (13,151,970) (5,275,433) (4,951,199)
------------ ------------ ------------ ------------
Net loss on investments ........... (2,669,516) (11,452,725) (5,074,620) (4,680,880)
------------ ------------ ------------ ------------
Increase (decrease) in net
assets from operations ............ $ 185,537 $(5,914,735) $(2,196,619) $(2,521,438)
============ ============ ============ ============
</TABLE>

- -----------
See notes to financial statements.

<PAGE>

================================================================================
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
California High-Yield California Quality
Series Series
---------------------------- ---------------------------
Year Ended September 30 Year Ended September 30
------------ ------------ ------------ ------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ............... $ 2,855,053 $ 2,933,234 $ 5,537,990 $ 5,422,429
Net realized gain on investments .... 296,724 349,096 1,699,245 1,665,453
Net change in unrealized appreciation
of investments .................... (2,966,240) 1,722,472 (13,151,970) 6,238,172
------------ ------------ ------------ ------------
Increase (decrease) in net assets
from operations ................... 185,537 5,004,802 (5,914,735) 13,326,054
------------ ------------ ------------ ------------
Distributions to shareholders:
Net investment income:
Class A ........................... (2,841,218) (2,933,234) (5,523,434) (5,422,429)
Class D ........................... (13,835) -- (14,556) --
Net realized gain on investments--
Class A ........................... (651,601) (1,451,790) (2,473,637) (1,498,525)
------------ ------------ ------------ ------------
Decrease in net assets
from distributions ................ (3,506,654) (4,385,024) (8,011,627) (6,920,954)
------------ ------------ ------------ ------------
Transactions in Shares of
Beneficial Interest:*
Net proceeds from sale of shares:
Class A ........................... 3,186,756 3,831,887 8,288,928 16,601,210
Class D ........................... 702,222 -- 742,183 --
Shares issued in payment of dividends:
Class A ........................... 1,419,731 1,485,515 2,772,508 2,728,850
Class D ........................... 9,395 -- 5,784 --
Exchanged from associated Funds:
Class A ........................... 459,044 347,239 2,025,609 1,912,057
Class D ........................... 2,892 -- 110,731 --
Shares issued in payment
of gain distributions--Class A .... 441,866 996,403 1,645,620 990,382
------------ ------------ ------------ ------------
Total ........................... 6,221,906 6,661,044 15,591,363 22,232,499
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A ........................... (5,032,468) (4,505,214) (10,846,020) (9,118,005)
Class D ........................... (46,242) -- (16,784) --
Exchanged into associated Funds:
Class A ........................... (380,165) (1,005,653) (2,700,925) (1,343,962)
Class D ........................... (2,902) -- (2,000) --
------------ ------------ ------------ ------------
Total ........................... (5,461,777) (5,510,867) (13,565,729) (10,461,967)
------------ ------------ ------------ ------------
Increase in net assets from
transactions in Shares of
Beneficial Interest ............... 760,129 1,150,177 2,025,634 11,770,532
------------ ------------ ------------ ------------
Increase (decrease) in net assets ... (2,560,988) 1,769,955 (11,900,728) 18,175,632
Net Assets:
Beginning of year ................... 51,217,792 49,447,837 111,732,458 93,556,826
------------ ------------ ------------ ------------
End of year ......................... $48,656,804 $51,217,792 $ 99,831,730 $111,732,458
============ ============ ============ ============
</TABLE>

- -------------
*The Trust began offering Class D shares on February 1, 1994.
See notes to financial statements.

<PAGE>

================================================================================
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
North Carolina
Florida Series Series
---------------------------- ----------------------------
Year Ended September 30 Year Ended September 30
------------ ------------ ------------ ------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ............... $ 2,878,001 $ 2,615,036 $ 2,159,442 $ 1,597,474
Net realized gain on investments .... 200,813 629,550 270,319 40,113
Net change in unrealized appreciation
of investments .................... (5,275,433) 3,221,465 (4,951,199) 2,440,051
------------ ------------ ------------ ------------
Increase (decrease) in net assets
from operations ................... (2,196,619) 6,466,05 (2,521,438) 4,077,638
------------ ------------ ------------ ------------
Distributions to shareholders:
Net investment income:
Class A ........................... (2,874,294) (2,615,036) (2,133,632) (1,597,474)
Class D ........................... (3,707) -- (25,810) --
Net realized gain on investments--
Class A ........................... (813,447) (61,263) (239,782) (59,523)
------------ ------------ ------------ ------------
Decrease in net assets
from distributions ................ (3,691,448) (2,676,299) (2,399,224) (1,656,997)
------------ ------------ ------------ ------------
Transactions in Shares of
Beneficial Interest:*
Net proceeds from sale of shares:
Class A ........................... 5,761,739 11,506,310 7,080,082 15,488,283
Class D ........................... 252,386 -- 1,346,158 --
Shares issued in payment of dividends:
Class A ........................... 1,194,799 991,353 1,263,936 928,363
Class D ........................... 2,701 -- 8,781 --
Exchanged from associated Funds:
Class A ........................... 1,958,021 2,663,183 748,851 653,809
Class D ........................... -- -- -- --
Shares issued in payment
of gain distributions--Class A .... 425,883 32,786 179,478 42,524
------------ ------------ ------------ ------------
Total ........................... 9,595,529 15,193,632 10,627,286 17,112,979
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A ........................... (5,704,776) (3,824,028) (3,909,952) (2,243,063)
Class D ........................... (5,020) -- (1,959) --
Exchanged into associated Funds
Class A ........................... (711,426) (260,987) (419,075) (298,460)
Class D ........................... -- -- (1,267) --
------------ ------------ ------------ ------------
Total ........................... (6,421,222) (4,085,015) (4,332,253) (2,541,523)
------------ ------------ ------------ ------------
Increase in net assets from
transactions in Shares of
Beneficial Interest ............... 3,174,307 11,108,617 6,295,033 14,571,456
------------ ------------ ------------ ------------
Increase (decrease) in net assets ... (2,713,760) 14,898,369 1,374,371 16,992,097
Net Assets:
Beginning of year ................... 52,854,871 37,956,502 38,828,083 21,835,986
------------ ------------ ------------ ------------
End of year ......................... $50,141,111 $52,854,871 $40,202,454 $ 38,828,083
============ ============ ============ ============
</TABLE>
- -----------
*The Trust began offering Class D shares on February 1, 1994.
See notes to financial statements.

<PAGE>

================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------

1. Seligman Tax-Exempt Series Trust (the "Trust") consists of four separate
series: the "California High-Yield Series," the "California Quality Series," the
"Florida Series" and the "North Carolina Series." Effective February 1, 1994,
the Trust began offering two classes of shares of each Series. All shares
existing prior to February 1, 1994, of each Series have been classified as Class
A shares. Class A shares are sold with an initial sales charge of up to 4.75%
and a continuing service fee of up to 0.25% on an annual basis. Class D shares
are sold without an initial sales charge but are subject to a higher
distribution fee and a contingent deferred sales load ("CDSL") of 1% imposed on
certain redemptions made within one year of purchase. The two classes of shares
of a Series represent interests in the same portfolio of investments, have the
same rights and are generally identical in all respects except that each class
bears its separate distribution and certain class expenses and has exclusive
voting rights with respect to any matter to which a separate vote of any class
is required.

2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:

a. All tax-exempt securities and other short-term holdings maturing in more than
60 days are valued based upon quotations provided by an independent pricing
service or, in their absence, at fair value determined in accordance with
procedures approved by the Trustees. Short-term holdings maturing in 60 days
or less are generally valued at amortized cost.

b. There is no provision for federal income or excise tax. Each Series has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
Dividends are declared daily and paid monthly.

c. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income tax
purposes. Interest income is recorded on the accrual basis. The Trust
amortizes original issue discounts and premiums paid on purchases of
portfolio securities. Discounts other than original issue discounts are not
amortized.

d. All income, expenses (other than class-specific expenses), and realized and
unrealized gains or losses are allocated daily to each class of shares based
upon the relative proportion of the value of settled shares outstanding of
each class. Class-specific expenses, which include distribution and service
fees and any other items that can be specifically attributed to a particular
class, are charged directly to such class.

e. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gains may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense, and capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations, or net asset value
per share of any Series of the Trust.

3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended September 30, 1994, were as follows:

Series Purchases Sales
------ ------------ -----------
California High-Yield $ 3,955,510 $ 4,938,080
California Quality 23,873,650 23,278,005
Florida 4,414,755 3,131,360
North Carolina 13,267,200 6,059,050

At September 30, 1994, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
portfolio securities were as follows:

Total Total
Unrealized Unrealized
Series Appreciation Depreciation
---- ------------ ------------
California High-Yield $1,743,781 $ 991,166
California Quality 1,769,265 4,615,568
Florida 1,584,596 2,355,992
North Carolina 303,772 2,228,643

4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Trust and provides the necessary personnel and facilities.
Compensation of all officers of the Trust, all trustees of the Trust who are
employees or consultants of the Manager, and all personnel of the Trust and the

<PAGE>

================================================================================
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

Manager is paid by the Manager. The Manager's fee is calculated daily and
payable monthly, equal to 0.50% per annum of each Series' average daily net
assets. For the year ended September 30, 1994, the Manager, at its discretion,
waived a portion of its fees for the Florida Series equal to $259,683. The
management fee reflected in the statements of operations represent 0.01% per
annum of average net assets of the Florida Series. The Manager also waived all
of its fees for the North Carolina Series equal to $204,428, and voluntarily
reimbursed the Florida and North Carolina Series $45,105 and $75,043,
respectively, for certain expenses.

Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of each Series' shares and an affiliate of the Manager, received
the following commissions after concessions were paid to dealers for sale of
Class A shares:

Seligman
Financial Services' Dealer
Series Commissions Concessions
--------------------- ------------------ -----------
California High-Yield $12,861 $ 95,408
California Quality 35,278 251,128
Florida 26,751 198,371
North Carolina 29,382 232,335

The Trust has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to Class A shares under which service organizations
can enter into agreements with the Distributor and receive continuing fees of up
to 0.25% on an annual basis, payable quarterly, of the average daily net assets
of the Class A shares attributable to the particular service organizations for
providing personal services and/or the maintenance of shareholder accounts. The
Distributor charges such fees to the Trust pursuant to the Plan. For the year
ended September 30, 1994, for the California High-Yield, California Quality,
Florida, and North Carolina Series, fees paid aggregated $46,090, $99,390,
$119,671, and $96,673, respectively, or 0.09%, 0.09%, 0.23%, and 0.24%,
respectively, per annum of average daily net assets.

Effective February 1, 1994, the Trust adopted a Plan with respect to Class D
shares under which service organizations can enter into agreements with the
Distributor and receive continuing fees for providing personal services and/or
the maintenance of shareholder accounts of up to 0.25% on 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 Trust to the Distributor pursuant to the Plan. For the period February 1,
1994 to September 30, 1994, fees paid amounted to $2,842, $3,281, $777, and
$5,548, or 1% per annum of the average daily net assets of Class D shares of the
California High-Yield, California Quality, Florida, and North Carolina Series,
respectively.

The Distributor is entitled to retain any CDSL imposed on certain redemptions
of Class D shares occurring within one year of purchase. For the period February
1, 1994 to September 30, 1994, such charges amounted to $491 for the California
High-Yield Series, $152 for the California Quality Series, and $19 for the North
Carolina Series.

Seligman Data Corp., formerly Union Data Service Center, Inc., which is owned
by certain associated investment companies, charged at cost for shareholder
account services the following amounts:

Series
- ---------------------
California High-Yield $ 62,614
California Quality 124,650
Florida 67,181
North Carolina 69,399

Certain officers and trustees of the Trust are officers or directors of the
Manager, the Distributor, and/or Seligman Data Corp.

Fees of $23,500 were incurred by the Trust for the legal services of Sullivan
& Cromwell, a member of which firm is a trustee of the Trust.

The Trust has a compensation agreement under which trustees who receive fees
may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The annual cost of such fees and interest is included in trustees'
fees and expenses, and the accumulated balance thereof at September 30, 1994, is
shown as deferred trustees' fees payable.

<PAGE>

================================================================================

- --------------------------------------------------------------------------------

5. Class-specific expenses charged to Class A and Class D during the year ended
September 30, 1994, which are included in the corresponding captions of the
Statements of Operations, were as follows:

<TABLE>
<CAPTION>
Distribution Shareholder
and reports and
Series service fees Registration communications
- ---------------------- ------------ ----------- --------------
<S> <C> <C> <C>
California High-Yield:
Class A ....................... $ 46,090 $2,252 $1,581
Class D ....................... 2,842 137 5
California Quality:
Class A ....................... 99,390 6,169 2,624
Class D ....................... 3,281 159 18
Florida:
Class A ....................... 119,671 3,122 1,090
Class D ....................... 777 24 6
North Carolina:
Class A ....................... 96,673 3,786 1,267
Class D ....................... 5,548 583 23

</TABLE>

6. Transactions in Shares of Beneficial Interest were as follows:*

<TABLE>
California High-Yield Series California Quality Series
---------------------------- ----------------------------
Year Ended September 30 Year Ended September 30
------------ ------------ ------------ ------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sale of shares:
Class A ...................... 487,989 579,944 1,210,817 2,381,361
Class D ...................... 108,907 -- 112,971 --
Shares issued in payment of dividends:
Class A ...................... 218,487 225,140 409,496 390,669
Class D ...................... 1,471 -- 887 --
Exchanged from associated Funds:
Class A ...................... 70,262 53,190 294,395 273,223
Class D ...................... 452 -- 16,307 --
Shares issued in payment
of gain distributions--Class A 66,949 154,962 234,753 147,818
------------ ------------ ------------ ------------
Total .......................... 954,517 1,013,236 2,279,626 3,193,071
------------ ------------ ------------ ------------
Shares repurchased:
Class A ...................... (772,412) (687,327) (1,614,125) (1,302,518)
Class D ...................... (7,290) -- (2,585) --
Exchanged into associated Funds:
Class A ...................... (58,674) (152,412) (400,621) (194,282)
Class D ...................... (454) -- (313) --
------------ ------------ ------------ ------------
Total .......................... (838,830) (839,739) (2,017,644) (1,496,800)
------------ ------------ ------------ ------------
Increase in shares ............. 115,687 173,497 261,982 1,696,271
============ ============ ============ ============

</TABLE>

<PAGE>

Note 6. (continued)
<TABLE>
<CAPTION>

North Carolina
Florida Series Series
--------------------------- ---------------------------
Year Ended September 30 Year Ended September 30
--------------------------- ---------------------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sale of shares:
Class A ...................... 734,617 1,470,217 892,418 1,969,502
Class D ...................... 33,552 -- 175,027 --
Shares issued in payment of dividends:
Class A ...................... 154,793 126,344 163,227 117,970
Class D ...................... 362 -- 1,170 --
Exchanged from associated Funds:
Class A ...................... 252,598 340,189 95,126 81,997
Class D ...................... -- -- -- --
Shares issued in payment
of gain distributions--Class A 53,369 4,337 22,323 5,647
------------ ------------ ------------ ------------
Total .......................... 1,229,291 1,941,087 1,349,291 2,175,116
------------ ------------ ------------ ------------
Shares repurchased:
Class A ...................... (744,532) (487,799) (508,245) (282,998)
Class D ...................... (672) -- (262) --
Exchanged into associated Funds:
Class A ...................... (92,862) (33,144) (54,138) (37,904)
Class D ...................... -- -- (174) --
------------ ------------ ------------ ------------
Total .......................... (838,066) (520,943) (562,819) (320,902)
------------ ------------ ------------ ------------
Increase in shares ............. 391,225 1,420,144 786,472 1,854,214
============ ============ ============ ============
</TABLE>

- -----------
*The Trust began offering Class D shares on February 1, 1994.

<PAGE>

(This page intentionally left blank.)

<PAGE>

================================================================================
Financial Highlights
- --------------------------------------------------------------------------------

The Trust's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Trust's beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investment assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item as disclosed in the financial statements
to their equivalent per share amounts using average shares outstanding.

The total return based on net asset value measures the Trust's performance
assuming investors purchased Trust shares at net asset value as of the beginning
of the period, reinvested dividends and capital gains paid at net asset value,
and then sold their shares at the net asset value per share on the last day of
the period. The total return computations do not reflect any sales charges
investors may incur in purchasing or selling shares of the Trust. The total
returns for periods of less than one year are not annualized.

Per Share Operating Performance:
<TABLE>
<CAPTION>

Net Increase
Net Asset Realized & (Decrease) Distributions Net Increase
Value at Net Unrealized from Dividends from (Decrease) in
Fiscal Year Beginning Investment Investment Investment Paid or Net Gain Net Asset
or Period of Period Income* Gain (Loss) Operations Declared Realized Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A:
California High-Yield Series
Year ended 9/30/94 $6.73 $0.37 $(0.34) $0.03 $(0.37) $(0.09) $(0.43)
Year ended 9/30/93 6.65 0.39 0.28 0.67 (0.39) (0.20) 0.08
Year ended 9/30/92 6.50 0.41 0.16 0.57 (0.41) (0.01) 0.15
Year ended 9/30/91 6.18 0.42 0.33 0.75 (0.42) (0.01) 0.32
Year ended 9/30/90 6.36 0.42 (0.07) 0.35 (0.42) (0.11) (0.18)
California Quality Series
Year ended 9/30/94 7.28 0.35 (0.73) (0.38) (0.35) (0.16) (0.89)
Year ended 9/30/93 6.85 0.37 0.54 0.91 (0.37) (0.11) 0.43
Year ended 9/30/92 6.65 0.40 0.22 0.62 (0.40) (0.02) 0.20
Year ended 9/30/91 6.22 0.40 0.46 0.86 (0.40) (0.03) 0.43
Year ended 9/30/90 6.47 0.40 (0.13) 0.27 (0.40) (0.12) (0.25)
Florida Series
Year ended 9/30/94 8.20 0.42 (0.74) (0.32) (0.42) (0.12) (0.86)
Year ended 9/30/93 7.56 0.46 0.65 1.11 (0.46) (0.01) 0.64
Year ended 9/30/92 7.37 0.47 0.19 0.66 (0.47) -- 0.19
Year ended 9/30/91 6.90 0.43 0.47 0.90 (0.43) -- 0.47
Year ended 9/30/90 6.99 0.45 (0.09) 0.36 (0.45) -- (0.09)
North Carolina Series
Year ended 9/30/94 8.22 0.41 (0.87) (0.46) (0.41) (0.05) (0.92)
Year ended 9/30/93 7.61 0.43 0.63 1.06 (0.43) (0.02) 0.61
Year ended 9/30/92 7.39 0.44 0.22 0.66 (0.44) -- 0.22
Year ended 9/30/91 7.04 0.45 0.35 0.80 (0.45) -- 0.35
8/27/90**--9/30/90 7.14 0.03 (0.10) (0.07) (0.03) -- (0.10)
Class D:
2/1/94**--9/30/94
California High-Yield
Series 6.67 0.21 (0.36) (0.15) (0.21) -- (0.36)
California Quality Series 7.13 0.19 (0.75) (0.56) (0.19) -- (0.75)
Florida Series 8.10 0.24 (0.76) (0.52) (0.24) -- (0.76)
North Carolina Series 8.17 0.23 (0.88) (0.65) (0.23) -- (0.88)
</TABLE>

Ratio of Net
Net Asset Total Return Ratio of Investment
Value at Based on Expenses to Income
End Net Asset Average to Average Portfolio
of Period Value Net Assets* Net Assets* Turnover
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A:
California High-Yield Series
Year ended 9/30/94 $6.30 0.41% 0.85% 5.74% 8.36%
Year ended 9/30/93 6.73 10.66 0.88 5.94 7.70
Year ended 9/30/92 6.65 9.00 0.82 6.20 45.50
Year ended 9/30/91 6.50 12.53 0.83 6.67 5.13
Year ended 9/30/90 6.18 5.57 0.89 6.68 17.66
California Quality Series
Year ended 9/30/94 6.39 (5.46) 0.81 5.20 22.16
Year ended 9/30/93 7.28 13.92 0.82 5.30 15.67
Year ended 9/30/92 6.85 9.56 0.78 5.86 34.25
Year ended 9/30/91 6.65 14.35 0.78 6.19 20.11
Year ended 9/30/90 6.22 4.22 0.83 6.31 28.61
Florida Series
Year ended 9/30/94 7.34 (3.99) 0.42 5.49 6.17
Year ended 9/30/93 8.20 15.21 0.23 5.82 16.42
Year ended 9/30/92 7.56 9.24 0.17 6.32 12.62
Year ended 9/30/91 7.37 13.41 0.90 6.00 --
Year ended 9/30/90 6.90 5.23 0.65 6.44 13.08
North Carolina Series
Year ended 9/30/94 7.30 (5.80) 0.44 5.29 15.61
Year ended 9/30/93 8.22 14.46 0.23 5.44 3.13
Year ended 9/30/92 7.61 9.23 0.14 5.83 12.51
Year ended 9/30/91 7.39 11.97 0.07 6.10 --
8/27/90**--9/30/90 7.04 (1.40) 0.94+ 4.48+ --

Class D:
2/1/94**--9/30/94
California High-Yield 6.31 (2.47) 1.74+ 4.73+ 8.36++
Series 6.38 (8.01) 1.77+ 4.39+ 22.16++
California Quality Series 7.34 (6.64) 1.29+ 4.61+ 6.17++
Florida Series 7.29 (8.15) 1.27+ 4.49+ 15.61++
North Carolina Series

</TABLE>

<TABLE>
<CAPTION>
Adjusted
Adjusted Ratio of
Net Assets Adjusted Net Ratio of Net Investment
at End of Investment Expenses to Income
Period Income Average Net to Average
(000's omitted) per Share* Assets* Net Assets*
---------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Class A:
California High-Yield Series
Year ended 9/30/94 $ 48,007
Year ended 9/30/93 51,218
Year ended 9/30/92 49,448
Year ended 9/30/91 49,172
Year ended 9/30/90 49,312
California Quality Series
Year ended 9/30/94 99,020
Year ended 9/30/93 111,732
Year ended 9/30/92 93,557
Year ended 9/30/91 77,884
Year ended 9/30/90 61,854
Florida Series
Year ended 9/30/94 49,897 $0.38 1.00% 4.91%
Year ended 9/30/93 52,855 0.40 1.03 5.01
Year ended 9/30/92 37,957 0.41 1.02 5.47
Year ended 9/30/91 28,173 0.42 1.15 5.75
Year ended 9/30/90 24,025 0.44 0.90 6.20
North Carolina Series
Year ended 9/30/94 38,920 0.35 1.13 4.60
Year ended 9/30/93 38,828 0.35 1.22 4.45
Year ended 9/30/92 21,836 0.34 1.40 4.57
Year ended 9/30/91 9,255 0.22 3.22 2.96
8/27/90**--9/30/90 1,377 0.01 4.48+ 1.04+
Class D:
2/1/94**--9/30/94
California High-Yield 650
Series 812
California Quality Series 244 0.21 1.84+ 4.06+
Florida Series 1,282 0.20 1.95+ 3.82+
North Carolina Series

</TABLE>

- ----------------
* During the periods stated, the Manager, at its discretion, waived all or a
portion of its fees and, in some cases, reimbursed certain expenses for the
Florida and North Carolina Series. The adjusted net investment income per
share and adjusted ratios reflect what the results would have been had the
Manager not waived fees and reimbursed expenses.
** Commencement of operations.
+ Annualized.
++ For the year ended September 30, 1994.
See notes to financial statements.

24 & 25

<PAGE>

================================================================================
Report of Independent Auditors
- --------------------------------------------------------------------------------

The Trustees and Shareholders,
Seligman Tax-Exempt Series Trust:

We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the California High-Yield, California Quality,
Florida and North Carolina Series of Seligman Tax- Exempt Series Trust as of
September 30, 1994, 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
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1994 by correspondence with the Trust's custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the California
High-Yield, California Quality, Florida and North Carolina Series of Seligman
Tax-Exempt Series Trust as of September 30, 1994, the results of their
operations, the changes in their net assets, and the financial highlights for
the respective stated periods, in conformity with generally accepted accounting
principles.

DELOITTE & TOUCHE LLP
New York, New York
October 28, 1994

<PAGE>

================================================================================
Trustees
- --------------------------------------------------------------------------------

Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated

Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation

John E. Merow
Chairman and Senior Partner,
Sullivan & Cromwell, Attorneys

Betsy S. Michel 2
Director or Trustee,
Various Organizations

William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation

Douglas R. Nichols, Jr. 2
Management Consultant

James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
Director, Public Service Enterprise Group

James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service

Herman J. Schmidt 2
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.

Ronald T. Schroeder 1
President
Managing Director, J. & W. Seligman & Co. Incorporated

Robert L. Shafer 3
Vice President, Pfizer Inc.
Director, USLIFE Corporation

James N. Whitson 2
Executive Vice President and Director, Sammons Enterprises, Inc.
Director, C-SPAN

Brian T. Zino 1
Managing Director, J. & W. Seligman & Co. Incorporated

- --------------
Member: 1 Executive Committee; 2 Audit Committee; 3 Trustee Nominating Committee

- --------------------------------------------------------------------------------
Executive Officers

William C. Morris
Chairman

Ronald T. Schroeder
President

Thomas G. Moles
Vice President

Lawrence P. Vogel
Vice President

Thomas G. Rose
Treasurer

Frank J. Nasta
Secretary

- --------------------------------------------------------------------------------

Manager
J. & W. Seligman & Co.
Incorporated
100 Park Avenue
New York, NY 10017

General Counsel
Sullivan & Cromwell

Independent Auditors
Deloitte & Touche LLP

General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017

Shareholder Service Agent
Seligman Data Corp. (formerly
Union Data Service Center, Inc.)
100 Park Avenue
New York, NY 10017

Important Telephone Numbers
(800) 221-2450 Shareholder Services

(800) 622-4597 24-Hour Automated
Telephone
Access Service

<PAGE>

Seligman Financial Services, Inc.
an affiliate of

[JWS Logo]

J. & W. Seligman & Co.
incorporated
established 1864
100 Park Avenue, New York, NY 10017

This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Beneficial Interest of
Seligman Tax-Exempt Series Trust, which contains information about the sales
charges, management fee, and other costs. Please read the prospectus carefully
before investing or sending money.
TEB2 9/94

<PAGE>

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements and Schedules:

Part A - Financial Highlights for Class A shares for each Series for the
period from commencement of operations to September 30, 1994.
Financial Highlights for Class D shares for each Series for the
period 2/1/94 (commencement of offering) to September 30, 1994.

Part B - Required Financial Statements are included in the Fund's Annual
Report to shareholders, dated September 30, 1994, which are
incorporated by reference in the Statement of Additional Information.
These Financial Statements are: Portfolios of Investments as of
September 30, 1994; Statements of Assets and Liabilities as of
September 30, 1994; Statements of Operations for year ended September
30, 1994; Statements of Changes in Net Assets for the years ended
September 30, 1994 and September 30, 1993; Notes to Financial
Statements; Financial Highlights for the five years ended September
30, 1994, or since commencement of operations through September 30,
1994, for the Fund's Class A shares and for the period 2/1/94
(commencement of offering) through September 30, 1993 and for the
year ended September 30, 1994 for the Fund's Class D shares; Report
of Independent Auditors.

(b) Exhibits: Exhibits listed below are incorporated by reference from
the Registrant's initial Registration Statement and amendments filed
thereto (File No. 2-92569). All Exhibits have been previously filed
except Exhibits marked with an asterisk (*) which are incorporated
herein.

(1) Instrument of Establishment and Designation of the Declaration of
Trust of Registrant.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 21 filed on November 30, 1993.)

(2) Bylaws of Registrant.
(Incorporated by Reference to Registrant's Initial Registration
Statement filed on August 3, 1984.)

(4) Specimen of Stock Certificates for Class D Shares of each Series.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 22 filed on January 29, 1994.)

(5) Copy of New Management Agreement between the Florida Series of the
Registrant and J. & W. Seligman & Co. Incorporated.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 13 filed on August 24, 1990.)

(6a) Copy of the New Distributing Agreement between Registrant and
Seligman Financial Services, Inc.
Incorporated by Reference to Registrant's Post-Effective Amendment
No. 20 filed on January 29, 1993.)

(6b) Copy of Sales Agreement between Dealers and Seligman Financial
Services, Inc.*

(7) Copy of Amended Retirement Income Plan of J. & W. Seligman & Co.
Incorporated and Trust.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 19 filed on November 30, 1992.)

(7a) Copy of Amended Employees' Thrift Plan of Union Data Service Center,
Inc. and Trust.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 19 filed on November 30, 1992.)

(8) Copy of Custodian Agreement between Registrant and Investors
Fiduciary Trust Company.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 12 filed on August 6, 1990.)

(10) Opinion and Consent of Counsel.*

(11) Consent of Independent Auditors.*

(13) Purchase Agreement for Initial Capital for Class D Shares.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No.22 filed on January 31, 1994.)

<PAGE>

PART C. OTHER INFORMATION (continued)

(14) Copy of Amended Individual Retirement Account Trust and Related
Documents.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 19 filed on November 30, 1992.)

(14a) Copy of Amended Comprehensive Retirement Plans for Money Purchase
and/or Prototype Profit Sharing Plan.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 19 filed on November 30, 1992.)

(14b) Copy of Amended Basic Business Retirement Plans for Money Purchase
and/or Profit Sharing Plans.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 19 filed on November 30, 1992.)

(14c) Copy of Amended 403(b)(7) Custodial Account Plan.
(Incorporated by Reference to Seligman New Jersey Tax-Exempt Fund,
Inc. Pre-Effective Amendment No. 1 filed on January 11, 1988.)

(14d) Copy of Amended Simplified Employee Pension Plan (SEP).
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 19 filed on November 30, 1992.)

(14e) Copy of the amended J. & W. Seligman & Co. Incorporated (SARSEP)
Salary Reduction and Other Elective Simplified Employee
Pension-Individual Retirement Accounts Contribution Agreement (Under
Section 408(k) of the Internal Revenue Code).
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 19 filed on November 30, 1992.)

(15) Copy of amended Administration, Shareholder Services and Distribution
Plans of each Series and form of Agreement of Registrant.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 24 filed on January 31, 1994.)

(16) Schedule for Computation of Tax Equivalent Yield and Schedule for
Computation of Each Performance Quotation Provided in Registration
Statement to Item 22.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 15 filed on November 30, 1990.)

Item 25. Persons Controlled by or Under Common Control with Registrant - None.

Item 26. Number of Holders of Securities - As of December 31, 1994, the number
of record holders of each Series' Class A and Class D shares of the
Registrant was as follows:

Class A Class D

California High-Yield ........ 1,135 8
California Quality ........... 1,907 21
Florida ...................... 976 12
North Carolina ............... 1,136 37

Item 27. Indemnification - Incorporated by Reference from the Registrant's
Registration Statement on Form N-1A and Pre-Effective Amendment Nos.
1 and 2 thereto; File No. 2-92569

Item 28. Business and Other Connections of Investment Adviser - J. & W.
Seligman & Co. Incorporated, a Delaware corporation ("Manager"), is
the Registrant's investment manager. The Manager also serves as
investment manager to sixteen associated investment companies. They
are Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and
Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth
Fund, Inc., Seligman Henderson Global Fund Series, Inc., Seligman
High Income Fund Series, Seligman Income Fund, Inc., Seligman
Portfolios, Inc., Seligman New Jersey Tax-Exempt Fund, Inc., Seligman
Pennsylvania Tax-Exempt Fund Series, Seligman Quality Municipal Fund,
Inc., Seligman Select Municipal Fund, Inc., Seligman Tax-Exempt 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.
801-5798) was filed on March 30, 1994.

<PAGE>

PART C. OTHER INFORMATION

Item 29. Principal Underwriters

(a) The names of each investment company (other than the Registrant)
for which each principal underwriter currently distributing
securities of the Registrant also acts as a principal
underwriter, depositor or investment adviser follow:

Seligman Capital Fund, Inc., Seligman Cash Management Fund,
Inc., Seligman Common Stock Fund, Inc., Seligman Communications
and Information Fund, Inc., Seligman Frontier Fund, Inc.,
Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income
Fund, Inc., Seligman Portfolios, Inc., Seligman New Jersey
Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund
Series, Seligman Tax-Exempt Fund Series, Inc.

(b) Name of each director, officer or partner of each principal
underwriter named in the answer to Item 21 of Part II:
<TABLE>
<CAPTION>

Seligman Financial Services, Inc.
As of January 3, 1995

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ --------------------- ---------------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board and
Chief Executive Officer
Ronald T. Schroeder* Director President and Director
Fred E. Brown* Director Director
Michael J. Del Priore* Director None
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
David Watts* Director None
Brian T. Zino* Director Director
Stephen J. Hodgdon* President None
Lynda M. Soleim* Regional Vice President None
14074 Rue St. Raphael Street
Del Mar, CA 92014
Gerald I. Cetrulo, III Vice President and Regional None
140 West Parkway Sales Manager
Pompton Plains, NJ 07444
D. Ian Valentine Vice President and None
307 Braehead Drive Regional Sales Manager
Fredericksburg, VA 22401
Andrew Veasey Regional Vice President None
40 Goshawk Court
Voorhees, NJ 08043
Kelli A. Wirth Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
Judith L. Lyon Regional Vice President None
8384-H Roswell Road NE
Atlanta, GA 30350
David Meyncke Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
Bradley F. Hanson Vice President and None
9707 Xylon Court Regional Sales Manager
Bloomington, MN 55438
</TABLE>

<PAGE>

PART C. OTHER INFORMATION
<TABLE>
<CAPTION>

Seligman Financial Services, Inc.
As of January 3, 1995

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ ---------------------- ----------------------
<S> <C> <C>
Melinda Nawn Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
Randy D. Lierman Regional Vice President None
2627 R.D. Mize Road
Independence, MO 64057
Bradley W. Larson Vice President and None
367 Bryan Drive Regional Sales Manager
Danville, CA 94526
Herb W. Morgan Regional Vice President None
11308 Monticook Court
San Diego, CA 92127
Robert H. Ruhm Regional Vice President None
167 Derby Street
Melrose, MA 02176
Todd Volkman Regional Vice President None
4650 Cole Avenue, #216
Dallas, TX 75205
Brad Davis Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
Bruce Tuckey Regional Vice President None
316 Woodedge Drive
Bloomfield, MI 48304
Susan Gutterud Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
Lawrence P. Vogel* Senior Vice President - Finance Vice President
Helen Simon* Vice President None
Marsha E. Jacoby* Vice President, National Accounts None
Manager
Vito Graziano* Assistant Secretary Assistant Secretary
William W. Johnson* Vice President, Order Desk None
Frank P. Marino* Assistant Vice President, Mutual
Fund Product Manager None
Aurelia Lacsamana* Treasurer None

</TABLE>

*The principal business address of each of these directors and/or officers is
100 Park Avenue, New York, New York 10017.

Item 30. Location of Accounts and Records

Custodian: Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
and Seligman Tax-Exempt Series Trust
100 Park Avenue
New York, New York 10017

<PAGE>

PART C. OTHER INFORMATION

Item 31. Management Services - Seligman Data Corp. ("SDC") the Registrant's
shareholder service agent, has an agreement with The Shareholder
Services Group ("TSSG") pursuant to which TSSG provides a data
processing system for certain shareholder accounting and
recordkeeping functions performed by SDC, which commenced in July
1990. For the fiscal year ended September 30, 1994 and 1993, the
approximate cost of these services for each Series was:

1994 1993
---- ----
California Tax-Exempt High-Yield Series ..... $ 6,029 $ 7,300
California Tax-Exempt Quality Series ........ 9,875 11,223
Florida Tax-Exempt Series ................... 5,075 4,783
North Carolina Tax-Exempt Series ............ 5,767 4,715

Item 32. Undertakings -The Registrant undertakes: (1) if requested to do so by
the holders of at least ten percent of its outstanding shares, to
call a meeting of shareholders for the purpose of voting upon the
removal of a director or directors and to assist in communications
with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940; and (2) to furnish to each person to
whom a prospectus is delivered, a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 23 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 1st day of February, 1995.

SELIGMAN TAX-EXEMPT SERIES TRUST

By: /s/ William C. Morris
--------------------------------
William C. Morris, Chairman*

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 23 has been signed below by the following persons
in the capacities indicated on February 1, 1995.

Signature Title
---------- -----

<S> <C>
/s/ William C. Morris Chairman of the Trustees (Principal
- ------------------------ executive officer) and Trustee
William C. Morris*

/s/ Ronald T. Schroeder President and Trustee
- ------------------------
Ronald T. Schroeder*

/s/ Thomas G. Rose Treasurer (Principal financial
- ------------------------ and accounting officer)
Thomas G. Rose

Fred E. Brown, Trustee )
Alice S. Ilchman, Trustee ) /s/ Brian T. Zino
John E. Merow, Trustee ) -----------------------------------
Betsy S. Michel, Trustee ) *By: Brian T. Zino, Attorney-in-fact
Douglas R. Nichols, Jr., Trustee )
James C. Pitney, Trustee )
James Q. Riordan, Trustee )
Herman J. Schmidt, Trustee )
Robert L. Shafer, Trustee )
James N. Whitson, Trustee )
Brian T. Zino, Trustee )
</TABLE>

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> CALIFORNIA HIGH-YIELD A
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 46980
<INVESTMENTS-AT-VALUE> 47733
<RECEIVABLES> 1012
<ASSETS-OTHER> 122
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 48867
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 210
<TOTAL-LIABILITIES> 210
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47913
<SHARES-COMMON-STOCK> 7617<F1>
<SHARES-COMMON-PRIOR> 7605<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 753
<NET-ASSETS> 48657
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3261<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 420<F1>
<NET-INVESTMENT-INCOME> 2841<F1>
<REALIZED-GAINS-CURRENT> 297
<APPREC-INCREASE-CURRENT> (2960)
<NET-CHANGE-FROM-OPS> 186
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2841<F1>
<DISTRIBUTIONS-OF-GAINS> 652<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 558<F1>
<NUMBER-OF-SHARES-REDEEMED> 831<F1>
<SHARES-REINVESTED> 285<F1>
<NET-CHANGE-IN-ASSETS> (2561)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 346<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 248<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 420<F1>
<AVERAGE-NET-ASSETS> 49458<F1>
<PER-SHARE-NAV-BEGIN> 6.73<F1>
<PER-SHARE-NII> .37<F1>
<PER-SHARE-GAIN-APPREC> .34<F1>
<PER-SHARE-DIVIDEND> .37<F1>
<PER-SHARE-DISTRIBUTIONS> .09<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.30<F1>
<EXPENSE-RATIO> .85<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are at Fund level.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> CALIFORNIA HIGH-YIELD D
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 46980
<INVESTMENTS-AT-VALUE> 47733
<RECEIVABLES> 1012
<ASSETS-OTHER> 122
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 48867
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 210
<TOTAL-LIABILITIES> 210
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47913
<SHARES-COMMON-STOCK> 103<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 753
<NET-ASSETS> 48657
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 5<F1>
<NET-INVESTMENT-INCOME> 14<F1>
<REALIZED-GAINS-CURRENT> 297
<APPREC-INCREASE-CURRENT> (2960)
<NET-CHANGE-FROM-OPS> 186
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 109<F1>
<NUMBER-OF-SHARES-REDEEMED> 8<F1>
<SHARES-REINVESTED> 2<F1>
<NET-CHANGE-IN-ASSETS> (2561)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5<F1>
<AVERAGE-NET-ASSETS> 441<F1>
<PER-SHARE-NAV-BEGIN> 6.67<F1>
<PER-SHARE-NII> .21<F1>
<PER-SHARE-GAIN-APPREC> .36<F1>
<PER-SHARE-DIVIDEND> .21<F1>
<PER-SHARE-DISTRIBUTIONS> .00<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.31<F1>
<EXPENSE-RATIO> 1.74<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are at Fund level.
</FN>

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CALIFORNIA QUALITY CLASS A
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 101782
<INVESTMENTS-AT-VALUE> 98936
<RECEIVABLES> 1564
<ASSETS-OTHER> 197
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100697
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 865
<TOTAL-LIABILITIES> 865
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 101789
<SHARES-COMMON-STOCK> 15484
<SHARES-COMMON-PRIOR> 15349
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 889
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2846)
<NET-ASSETS> 998831
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6386<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 862<F1>
<NET-INVESTMENT-INCOME> 5524<F1>
<REALIZED-GAINS-CURRENT> 1699
<APPREC-INCREASE-CURRENT> (13152)
<NET-CHANGE-FROM-OPS> (5915)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5524<F1>
<DISTRIBUTIONS-OF-GAINS> 2474<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1505<F1>
<NUMBER-OF-SHARES-REDEEMED> 2015<F1>
<SHARES-REINVESTED> 644<F1>
<NET-CHANGE-IN-ASSETS> (11901)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1663<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 531<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 862<F1>
<AVERAGE-NET-ASSETS> 106173<F1>
<PER-SHARE-NAV-BEGIN> 7.28<F1>
<PER-SHARE-NII> .35<F1>
<PER-SHARE-GAIN-APPREC> (.73)<F1>
<PER-SHARE-DIVIDEND> .35<F1>
<PER-SHARE-DISTRIBUTIONS> .16<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.39<F1>
<EXPENSE-RATIO> .81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other figures are Fund level.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CALIFORNIA QUALITY CLASS D
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 101782
<INVESTMENTS-AT-VALUE> 98936
<RECEIVABLES> 1564
<ASSETS-OTHER> 197
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100697
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 865
<TOTAL-LIABILITIES> 865
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 101789
<SHARES-COMMON-STOCK> 127
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 889
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2846)
<NET-ASSETS> 998831
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 20<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 6<F1>
<NET-INVESTMENT-INCOME> 14<F1>
<REALIZED-GAINS-CURRENT> 1699
<APPREC-INCREASE-CURRENT> (13152)
<NET-CHANGE-FROM-OPS> (5915)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 129<F1>
<NUMBER-OF-SHARES-REDEEMED> 3<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (11901)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6<F1>
<AVERAGE-NET-ASSETS> 500<F1>
<PER-SHARE-NAV-BEGIN> 7.13<F1>
<PER-SHARE-NII> .19<F1>
<PER-SHARE-GAIN-APPREC> (.75)<F1>
<PER-SHARE-DIVIDEND> .19<F1>
<PER-SHARE-DISTRIBUTIONS> .19<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.38<F1>
<EXPENSE-RATIO> 1.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other figures are Fund level.
</FN>

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> FLORIDA SERIES CLASS A
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 49943
<INVESTMENTS-AT-VALUE> 49172
<RECEIVABLES> 1266
<ASSETS-OTHER> 91
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50529
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 387
<TOTAL-LIABILITIES> 387
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50900
<SHARES-COMMON-STOCK> 6802
<SHARES-COMMON-PRIOR> 6444
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (771)
<NET-ASSETS> 49897<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3096<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 222<F1>
<NET-INVESTMENT-INCOME> 2874<F1>
<REALIZED-GAINS-CURRENT> 201
<APPREC-INCREASE-CURRENT> (5275)
<NET-CHANGE-FROM-OPS> (2197)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2874<F1>
<DISTRIBUTIONS-OF-GAINS> 813<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 987<F1>
<NUMBER-OF-SHARES-REDEEMED> 837<F1>
<SHARES-REINVESTED> 208<F1>
<NET-CHANGE-IN-ASSETS> (2714)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 625
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 262<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 526<F1>
<AVERAGE-NET-ASSETS> 52382<F1>
<PER-SHARE-NAV-BEGIN> 8.20<F1>
<PER-SHARE-NII> .42<F1>
<PER-SHARE-GAIN-APPREC> (.74)<F1>
<PER-SHARE-DIVIDEND> .42<F1>
<PER-SHARE-DISTRIBUTIONS> .12<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.34
<EXPENSE-RATIO> .42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are Fund level.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> FLORIDA SERIES CLASS D
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 49943
<INVESTMENTS-AT-VALUE> 49172
<RECEIVABLES> 1266
<ASSETS-OTHER> 91
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50529
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 387
<TOTAL-LIABILITIES> 387
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50900
<SHARES-COMMON-STOCK> 6802
<SHARES-COMMON-PRIOR> 6444
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (771)
<NET-ASSETS> 244<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 1<F1>
<NET-INVESTMENT-INCOME> 4<F1>
<REALIZED-GAINS-CURRENT> 201
<APPREC-INCREASE-CURRENT> (5275)
<NET-CHANGE-FROM-OPS> (2197)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34<F1>
<NUMBER-OF-SHARES-REDEEMED> 1<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> (2714)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 625
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2<F1>
<AVERAGE-NET-ASSETS> 121<F1>
<PER-SHARE-NAV-BEGIN> 8.10<F1>
<PER-SHARE-NII> .24<F1>
<PER-SHARE-GAIN-APPREC> (.76)<F1>
<PER-SHARE-DIVIDEND> .24<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.34<F1>
<EXPENSE-RATIO> 1.29<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.

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> NORTH CAROLINA SERIES A
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 41071
<INVESTMENTS-AT-VALUE> 39146
<RECEIVABLES> 829
<ASSETS-OTHER> 379
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40354
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 152
<TOTAL-LIABILITIES> 152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42058
<SHARES-COMMON-STOCK> 5334<F1>
<SHARES-COMMON-PRIOR> 4723<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 69
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1925
<NET-ASSETS> 38920<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2312<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 179<F1>
<NET-INVESTMENT-INCOME> 2133<F1>
<REALIZED-GAINS-CURRENT> 270
<APPREC-INCREASE-CURRENT> (4951)
<NET-CHANGE-FROM-OPS> (2521)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2133<F1>
<DISTRIBUTIONS-OF-GAINS> 240
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 988<F1>
<NUMBER-OF-SHARES-REDEEMED> 563<F1>
<SHARES-REINVESTED> 186<F1>
<NET-CHANGE-IN-ASSETS> 1374
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 201<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 454<F1>
<AVERAGE-NET-ASSETS> 40311<F1>
<PER-SHARE-NAV-BEGIN> 8.22<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> (.87)<F1>
<PER-SHARE-DIVIDEND> (.41)<F1>
<PER-SHARE-DISTRIBUTIONS> (.05)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.30<F1>
<EXPENSE-RATIO> .44<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are at Fund level.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> NORTH CAROLINA SERIES D
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 41071
<INVESTMENTS-AT-VALUE> 39146
<RECEIVABLES> 829
<ASSETS-OTHER> 379
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40354
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 152
<TOTAL-LIABILITIES> 152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42058
<SHARES-COMMON-STOCK> 176<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 69
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1925
<NET-ASSETS> 1282<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 33<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 7<F1>
<NET-INVESTMENT-INCOME> 26<F1>
<REALIZED-GAINS-CURRENT> 270
<APPREC-INCREASE-CURRENT> (4951)
<NET-CHANGE-FROM-OPS> (2521)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 26<F1>
<DISTRIBUTIONS-OF-GAINS> 240
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 175<F1>
<NUMBER-OF-SHARES-REDEEMED> 0<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> 1374
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11<F1>
<AVERAGE-NET-ASSETS> 866<F1>
<PER-SHARE-NAV-BEGIN> 8.17<F1>
<PER-SHARE-NII> .23<F1>
<PER-SHARE-GAIN-APPREC> (.88)<F1>
<PER-SHARE-DIVIDEND> (.23)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.29<F1>
<EXPENSE-RATIO> 1.27<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are at Fund level.
</FN>

</TABLE>

Exhibit 6

SALES AGREEMENT

covering shares of capital stock
and/or shares of beneficial interest of

THE SELIGMAN MUTUAL FUNDS

Seligman Capital Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman New Jersey Tax-Exempt Fund, Inc.
Seligman Pennsylvania Tax-Exempt Fund Series
Seligman Tax-Exempt Fund Series, Inc.
Seligman Tax-Exempt Series Trust

between

SELIGMAN FINANCIAL SERVICES, INC.

and

----------------------------------------------------------------------------
Dealer

The Dealer named above and Seligman Financial Services, Inc., exclusive agent
for distribution of shares of capital stock of Seligman Capital Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman
Henderson Global Fund Series, Inc., Seligman Income Fund, Inc., Seligman New
Jersey Tax-Exempt Fund, Inc., and Seligman Tax-Exempt Fund Series, Inc., and
shares of beneficial interest of Seligman High Income Fund Series, Seligman
Pennsylvania Tax-Exempt Fund, and Seligman Tax-Exempt Series Trust, agree to the
terms and conditions set forth in this agreement.

Dealer Signature Seligman Financial Services, Inc. Acceptance

- ---------------------------- -------------------------------------------
Principal Officer Stephen J. Hodgdon, President

SELIGMAN FINANCIAL SERVICES, INC.
- ---------------------------- 100 Park Avenue
Address New York, New York 10017

- ---------------------------- -------------------------------------------
Employer Identification No. Date

REV 1/95

<PAGE>

The Dealer and Seligman Financial Services, Inc. ("Seligman Financial
Services"), as exclusive agent for distribution of Class A and Class D Shares
(as described in the "Policies and Procedures," as set forth below) of the
Capital Stock and/or Class A and Class D Shares of beneficial interest
(collectively, the "Shares") of Seligman Capital Fund, Inc., Seligman Common
Stock Fund, Inc., Seligman Communications and Information Fund, Inc., Seligman
Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund, Inc.,
Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt
Fund, Seligman Tax-Exempt Fund Series, Inc. and Seligman Tax-Exempt Series Trust
and or any other mutual fund for which Seligman Financial Services is exclusive
agent for distribution (herein called the Funds), agree as follows:

1. The Dealer agrees to comply with the attached "Policies and Procedures"
with respect to sales of Seligman Mutual Funds offering two classes of
shares, as set forth below.

2. An order for Shares of one or more of the Funds, placed by the Dealer
with Seligman Financial Services, will be confirmed at the public
offering price as described in each Fund's current prospectus. Unless
otherwise agreed when an order is placed, the Dealer shall remit the
purchase price to the Fund, or Funds, with issuing instruction, within
the period of time prescribed by existing regulations. No wire orders
under $1,000 may be placed for initial purchases.

3. Shares of the Funds shall be offered for sale and sold by the Dealer
only at the applicable public offering price currently in effect,
determined in the manner prescribed in each Fund's prospectus. Seligman
Financial Services will make a reasonable effort to notify the Dealer
of any redetermination or suspension of the current public offering
price, but Seligman Financial Services shall be under no liability for
failure to do so.

4. On each purchase of Shares by the Dealer, the Dealer shall be entitled,
based on the Class of Shares purchased and except as provided in each
Fund's current prospectus, to a concession determined as a percentage
of the price to the investor as set forth in each Fund's current
prospectus. On each purchase of Class A Shares, Seligman Financial
Services reserves the right to receive a minimum concession of $.75 per
transaction. No concessions will be paid to the Dealer for the
investment of dividends in additional shares.

5. Except for sales to and purchases from the Dealer's retail customers,
all of which shall be made at the applicable current public offering
price or the current price bid by Seligman Financial Services on behalf
of the Fund, the Dealer agrees to buy Shares only through Seligman
Financial Services and not from any other sources and to sell shares
only to Seligman Financial Services, the Fund or its redemption agent
and not to any other purchasers.

6. By signing this Agreement, both Seligman Financial Services and the
Dealer warrant that they are members of the National Association of
Securities Dealers, Inc., and agree that termination of such membership
at any time shall terminate this Agreement forthwith regardless of the
provisions of paragraph 10 hereof. Each party further agrees to comply
with all rules and regulations of such Association and specifically to
observe the following provisions:

(a) Neither Seligman Financial Services nor the Dealer shall
withhold placing customers' orders for Shares so as to profit
itself as a result of such withholding.

(b) Seligman Financial Services shall not purchase Shares from any
of the Funds except for the purpose of covering purchase
orders already received, and the Dealer shall not purchase
Shares of any of the Funds through Seligman Financial Services
other than for investment, except for the purpose of covering
purchase orders already received.

<PAGE>

(c) Seligman Financial Services shall not accept a conditional
order for Shares on any basis other than at a specified
definite price. The Dealer shall not, as principal, purchase
Shares of any of the Funds from a recordholder at a price
lower than the bid price, if any, then quoted by or for the
Fund, but the Dealer shall not be prevented from selling
Shares for the account of a record owner to Seligman Financial
Services, the Fund or its redemption agent at the bid price
currently quoted by or for such Fund, and charging the
investor a fair commission for handling the transaction.

(d) If Class A Shares are repurchased by a Fund or by Seligman
Financial Services as its agent, or are tendered for
redemption within seven business days after confirmation by
Seligman Financial Services of the original purchase order of
the Dealer for such Shares, (i) the Dealer shall forthwith
refund to Seligman Financial Services the full concession
allowed to the Dealer on the original sales and (ii) Seligman
Financial Services shall forthwith pay to the Fund Seligman
Financial Services' share of the "sales load" on the original
sale by Seligman Financial Services, and shall also pay to the
Fund the refund which Seligman Financial Services received
under (i) above. The Dealer shall be notified by Seligman
Financial Services of such repurchase or redemption within ten
days of the date that such redemption or repurchase is placed
with Seligman Financial Services, the Fund or its authorized
agent. Termination or cancellation of this Agreement shall not
relieve the Dealer or Seligman Financial Services from the
requirements of this clause (d).

7. (a) Seligman Financial Services shall be entitled to a contingent
deferred sales load ("CDSL") on redemptions within one year of
purchase on any Class D Shares sold. With respect to omnibus
accounts in which Class D Shares are held at Seligman Data
Corp. ("SDC") in the Dealer's name, the Dealer agrees that by
the tenth day of each month it will furnish to SDC a report of
each redemption in the preceding month to which a CDSL was
applicable, accompanied by a check payable to Seligman
Financial Services in payment of the CDSL due.

(b) If, with respect to a redemption of any Class D Shares sold by
the Dealer, the CDSL is waived because the redemption
qualifies for a waiver set forth in the Fund's prospectus, the
Dealer shall promptly remit to Seligman Financial Services an
amount equal to the payment made by Seligman Financial
Services to the Dealer at the time of sale with respect to
such Class D Shares.

8. In all transactions between Seligman Financial Services and the Dealer
under this Agreement, the Dealer will act as principal in purchasing
from or selling to Seligman Financial Services. The dealer is not for
any purposes employed or retained as or authorized to act as broker,
agent or employee of any Fund or of Seligman Financial Services and the
Dealer is not authorized in any manner to act for any Fund or Seligman
Financial Services or to make any representations on behalf of Seligman
Financial Services. In purchasing and selling Shares of any Fund under
this Agreement, the Dealer shall be entitled to rely only upon matters
stated in the current offering prospectus of the applicable Fund and
upon such written representations, if any, as may be made by Seligman
Financial Services to the Dealer over the signature of Seligman
Financial Services.

9. Seligman Financial Services will furnish to the Dealer, without charge,
reasonable quantities of the current offering prospectus of each Fund
and sales material issued from time to time by Seligman Financial
Services.
<PAGE>

10. Either Party to this Agreement may cancel this Agreement by written
notice to the other party. Such cancellation shall be effective at the
close of business on the 5th day following the date on which such
notice was given. Seligman Financial Services may modify this Agreement
at any time by written notice to the Dealer. Such notice shall be
deemed to have been given on the date upon which it was either
delivered personally to the other party or any officer or member
thereof, or was mailed postage-paid, or delivered to a telegraph office
for transmission to the other party at his or its address as shown
herein.

11. This Agreement shall be construed in accordance with the laws of the
State of New York and shall be binding upon both parties hereto when
signed by Seligman Financial Services and by the Dealer in the spaces
provided on the cover of this Agreement. This Agreement shall not be
applicable to Shares of a Fund in a state in which such Fund Shares are
not qualified for sale.

POLICIES AND PROCEDURES

In connection with the offering by the Funds of two classes of shares,
one subject to a front-end sales load and a service fee ("Class A Shares"), and
one subject to a service fee, a distribution fee, no front-end sales load and a
contingent deferred sales load on redemptions within one year of purchase
("Class D Shares"), it is important for an investor to choose the method of
purchasing shares which best suits his or her particular circumstances. To
assist investors in these decisions, Seligman Financial Services has instituted
the following policies with respect to orders for Shares:

1. No purchase order may be placed for Class D Shares for amounts of
$4,000,000 or more.

2. Any purchase order for less than $4,000,000 may be for either
Class A or Class D Shares in light of the relevant facts and
circumstances, including:

a. the specific purchase order dollar amount;

b. the length of time the investor expects to hold his Shares;
and

c. any other relevant circumstances such as the availability of
purchases under a Letter of Intent, Volume Discount, or Right
of Accumulation.

There are instances when one method of purchasing Shares may be more
appropriate than the other. For example, investors who would qualify for a
significant discount from the maximum sales load on Class A Shares may determine
that payment of such a reduced front-end sales load and service fee is
preferable to payment of a higher ongoing distribution fee. On the other hand,
an investor whose order would not qualify for such a discount may wish to have
all of his or her funds invested in Class D Shares, initially. However, if such
an investor anticipates that he or she will redeem his or her Class D Shares
within one year, the investor may, depending on the amount of the purchase, pay
an amount greater than the sales load and service fee attributable to Class A
Shares.

Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of Shares of
a Fund advise the investor of then available pricing structures offered by the
Fund, and the impact of choosing one method over another. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.

Questions relating to this policy should be directed to Stephen J.
Hodgdon, President, Seligman Financial Services at (212) 850-1217.

Exhibit 10.1

[LETTERHEAD OF SULLIVAN & CROMWELL]

January 26, 1995

Seligman Tax-Exempt Series Trust,
100 Park Avenue, 8th Floor,
New York, New York 10017.

Ladies and Gentlemen:

We have acted as counsel to Seligman Tax-Exempt Series Trust (the
"Trust"), and you have requested our opinion regarding the California personal
income tax consequences to holders of certain of the series of shares of
beneficial interest in the Trust.

The Trust, an unincorporated business trust organized under the laws of
Massachusetts pursuant to a Declaration of Trust (the "Declaration"), is an
open-end, non-diversified management investment company. Article VI of the
Declaration authorizes the issuance of shares or units of beneficial interest in
the Trust. The shares may be divided into series of shares, the proceeds of
which may be invested in separate investment portfolios. Each share in a series
represents a beneficial interest in the net assets of the series, and each
shareholder in a series is entitled to receive such shareholder's pro rata share
of distributions of income and capital gains with respect to such series. Upon
redemption of a shareholder's shares in a series, the shareholder is paid solely
out of the funds and property of such series, and, upon liquidation or
termination of a series, a shareholder is entitled only to such shareholder's
pro rata share of the net assets of such series.

All consideration received by the Trust for the issue or sale of shares
in a series, all assets in which such consideration is invested, and all income
from such assets, including any proceeds derived from the sale, exchange, or
liquidation of such assets, belong to that series, subject only to the rights of
creditors of the series. The assets belonging to each series are charged with
the liabilities attributable to that series only and with all expenses, costs,
charges, and reserves attributable to that series.

<PAGE>

At present, the Trust offers separate investment series, each with
different investment objectives and policies and each composed of different
types of assets and having different shareholders. The Quality Series seeks high
tax-exempt income consistent with preservation of capital and with consideration
given to capital gain by investing in obligations of the state of California and
its political subdivisions the interest on which is exempt from Federal and
California personal income tax ("California tax-exempt securities") rated within
or of quality comparable to the three highest rating categories of Moody's
Investor Services ("Moody's") or Standard & Poor's Corporation ("S&P"). The
High-Yield Series seeks the maximum amount of tax-exempt income consistent with
preservation of capital and with consideration given to capital gain by
investing primarily in California tax-exempt securities which are rated in the
medium and lower rating categories of Moody's or S&P or which are unrated (the
Quality Series and the High-Yield Series are collectively referred to herein as
"Series").

It is expected that any further series to be established under the
Declaration and offered by the Trust will have investment objectives and
policies, types of assets, and shareholders that are different from those of the
Series and any other series currently established under the Declaration. Section
6.9 of the Declaration provides that if the Trustees divide shares of the Trust
into two or more series of classes, then all provisions of the Declaration shall
apply equally to each series.

The income of each Series will consist primarily of interest on
California tax-exempt securities, and the balance will consist in part of
interest on certain other securities which is excluded from gross income for
Federal and California personal income tax purposes ("Non-California tax-exempt
securities").

In connection with this opinion we have assumed, with your consent,
that each series of the Trust is a separate regulated investment company taxable
under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code")
and that dividends paid by each Series will constitute in whole or in part
"exempt-interest dividends" within the meaning of Section 852(b)(5) of the Code.

<PAGE>

On the basis of the foregoing, and our consideration of such matters as
we have considered necessary, we advise you that, in our opinion, for California
personal income tax purposes:

(1) Dividends received by a shareholder who is subject to California
personal income tax are generally includible in California gross income.
However, dividends received from each Series attributable to interest
received by the Series during its taxable year on California tax-exempt
securities and on Non-California tax-exempt securities are excludible from
California gross income provided that at the end of each quarter of its
taxable year, at least 50 percent of the value of the total assets of the
Series consists of such securities. Section 17145 of the California Revenue
and Taxation Code. Because each Series will be treated as a separate
regulated investment company, the determination under Section 17145 with
respect to a Series will be made solely on the basis of the proportion of
the value of the total assets of that Series constituting California
tax-exempt securities and Non-California tax-exempt securities.

(2) Capital gain dividends of each Series, as defined in Section
852(b)(3) of the Code, will be taxed as long-term capital gain to a
shareholder. Section 17088(a) of the California Revenue and Taxation Code.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement for the Trust. In giving such consent we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended.

Very truly yours,

/s/ Sullivan & Cromwell

Exhibit 10.2

[LETTERHEAD OF HORACK, TALLEY, PHARR & LOWNDES]

January 13, 1995

Seligman Tax-Exempt Series Trust
100 Park Avenue
New York, NY 10017

Ladies and Gentlemen:

With respect to Post-Effective Amendment No. 23 to the Registration
Statement on Form N-lA under the Securities Act of 1933, as amended, of Seligman
Tax-Exempt Series Trust, of which Seligman North Carolina Tax-Exempt Series is a
series, we have reviewed the material relative to North Carolina Taxes in the
Registration Statement. Subject to such review, our opinion as delivered to you
and as filed with the Securities and Exchange Commission remains unchanged.

We consent to the filing of this consent as an exhibit to the
Registration Statement and to the reference to us under the heading "North
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,

Horack, Talley, Pharr & Lowndes

/s/ Stephen L. Smith

Exhibit 11

Consent of Independent Auditors

Seligman Tax-Exempt Series Trust:

We consent to the incorporation by reference in the Statement of Additional
Information in this Post-Effective Amendment No. 23 to Registration Statement
No. 2-92569 of our report dated October 28, 1994, appearing in the annual report
to shareholders for the year ended September 30, 1994, and to the reference to
us under the caption "Financial Highlights" in the Prospectus, which is a part
of such Registration Statement.

DELOITTE & TOUCHE LLP

/s/ Deloitte & Touche LLP
- -------------------------

New York, New York
January 27, 1995