----------------------------------------
12TH ANNUAL REPORT
SELIGMAN
MUNICIPAL
SERIES
TRUST
----------------------------------------
September 30, 1996
Providing Income
Free From Regular Income Tax
Since 1984
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TO THE SHAREHOLDERS
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We are pleased to update you on Seligman Municipal Series Trust -- the
California High-Yield and Quality Series, the Florida Series, and the North
Carolina Series -- at its fiscal year-end, September 30, 1996.
After reducing interest rates twice in 1995, and again in January
1996, the Federal Reserve Board left rates unchanged for the next eight
months. The economy's rate of growth, which slowed in the fourth quarter of
1995, bounced back in the second quarter of 1996. It continued to grow at a
healthy pace all year with virtually no inflationary repercussions. Reports
issued in September supported this view, showing continued increases in
production, new home sales, wages, and spending.
With the lowest unemployment rate since June 1990, strong personal
incomes, interest rates far below their 1980s levels, and few signs of
inflationary pressure, consumer confidence as measured by The Conference
Board rose 25% above its January 1996 level.
In the municipal bond market, interest rates began to decline in the
third quarter of 1995 and continued to do so until February 1996. However, as
the economy picked up steam late in the first quarter of this year, and
continued to grow in the second quarter, municipal market sentiment turned
from enthusiasm to concern regarding inflation. For the last six months,
every Fed meeting was under intense scrutiny by market participants. The
inability of municipal bond investors to gauge the future direction of rates
exaggerated their response to each economic report, with municipal bond
yields drifting up or down in response to the latest data.
On September 24, the Fed decided to maintain the current fed funds
rate. Once the decision was announced, long-term municipal bond yields, as
measured by the Bond Buyer 20-Bond General Obligation Index, declined
slightly and ended the quarter at 5.76%. The unchanged monetary policy
somewhat stabilized the municipal bond market by the end of the Trust's
fourth quarter.
Going forward, we foresee continued, albeit moderate, economic growth
and a benign level of inflation. This environment of modest growth, combined
with relatively stable interest rates, should be beneficial for financial
markets in the months ahead. As always, there could be short-term volatility,
but we remain confident in the long-term outlook.
As we near the end of the year, we encourage you to review your
overall investment portfolio. When doing so, you may wish to consult your
financial advisor to discuss financial issues such as tax planning, and to
ensure that you are following the best investment strategy to help you seek
your financial goals.
At the Special Meeting of Shareholders, held on September 30, 1996, a
proposal was passed permitting the Trust to invest any portion of its net
assets in securities subject to the federal alternative minimum tax.
Consequently, your Trust's name was changed to Seligman Municipal Series
Trust and the word "Municipal" will replace the words "Tax-Exempt" for each
Series within the Trust. For specific results of the Special Meeting of
Shareholders, please refer to page 27.
A discussion with your Portfolio Manager about your Trust, along
with highlights of performance, long-term investment results, portfolio
holdings, and financial statements, follows this letter.
We thank you for your continued interest in Seligman Municipal Series
Trust, and look forward to serving your investment needs in the many
years to come.
By order of the Trustees,
/s/ William Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
October 30, 1996
1
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SELIGMAN MUNICIPAL SERIES TRUST
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<TABLE>
<CAPTION>
CALIFORNIA CALIFORNIA NORTH
HIGHLIGHTS September 30, 1996 HIGH-YIELD QUALITY FLORIDA CAROLINA
SERIES SERIES SERIES SERIES
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<S> <C> <C> <C> <C>
NET ASSETS (in millions)
Class A $50.3 $95.6 $45.2 $36.0
Class D 1.9 1.6 1.3 1.2
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YIELD*
Class A 4.95% 4.64% 4.45% 4.55%
Class D 4.29 3.97 3.95 4.01
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DIVIDENDS**
Class A $0.355 $0.345 $0.377 $0.372
Class D 0.296 0.283 0.318 0.312
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CAPITAL GAIN DISTRIBUTIONS** $0.023 $0.012 $0.080 $0.014
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NET ASSET VALUE PER SHARE
September 30, 1996
Class A $6.50 $6.75 $7.67 $7.84
Class D 6.51 6.74 7.68 7.83
September 30, 1995
Class A 6.47 6.65 7.71 7.74
Class D 6.48 6.63 7.72 7.74
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MAXIMUM OFFERING PRICE PER SHARE
September 30, 1996
Class A $6.82 $7.09 $8.05 $8.23
Class D 6.51 6.74 7.68 7.83
September 30, 1995
Class A 6.79 6.98 8.09 8.13
Class D 6.48 6.63 7.72 7.74
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MOODY'S/S&P RATINGS+
Aaa/AAA 6% 64% 69% 46%
Aa/AA 9 25 22 35
A/A 37 11 9 16
Baa/BBB 24 -- -- --
Non-rated 24 -- -- 3
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HOLDINGS BY MARKET SECTOR+
Revenue Bonds 93% 88% 76% 80%
General Obligation Bonds 7 12 24 20
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WEIGHTED AVERAGE MATURITY (Years) 22.2 21.4 20.8 21.6
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<FN>
* Current yield representing the annualized yield for the 30-day period ended September 30, 1996.
** Represents per share amount paid or declared in respect of Class A
and Class D shares during the year ended September 30, 1996.
+ Percentages based on current market values of long-term holdings.
Note: The yields have been computed in accordance with current SEC
regulations and will vary, and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their original
cost. A small portion of each State Series' income may be subject to
applicable state and local taxes and any amount may be subject to the federal
alternative minimum tax. Past performance is not indicative of future
investment results
</FN>
</TABLE>
2
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ANNUAL PERFORMANCE OVERVIEW
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The following is a discussion with your Portfolio Manager regarding Seligman
Municipal Series Trust, and a chart and table comparing your Trust's
performance to the performance of the Lehman Brothers Municipal Bond Index.
YOUR PORTFOLIO MANAGER
[picture of Thomas G. Moles]
Thomas G. Moles is a Managing Director of J. & W. Seligman & Co.
Incorporated, Vice President and Portfolio Manager of Seligman Municipal
Series Trust and the other Seligman municipal mutual funds which include 19
separate portfolios, and President and Portfolio Manager of Seligman Select
Municipal Fund and Seligman Quality Municipal Fund. He is responsible for
more than $2 billion in municipal securities. Mr. Moles, with more than 25
years of experience, has spearheaded Seligman's municipal investment efforts
since joining the firm in 1983.
What economic factors affected Seligman Municipal Series Trust over the past
12 months?
Throughout the fourth quarter of 1995, the majority of market participants
believed that the economy was growing at a moderate pace and that inflation
remained under control. This bullish outlook caused long-term interest rates
to decline steadily during the fourth quarter of 1995 and into the new year.
By February 1996, however, the economy began to exhibit signs of unexpected
strength and interest rates rose sharply on renewed inflation concerns. Since
then, economic data has been mixed, suggesting weakness in some areas and
vigor in others. Given these conflicting economic reports, market
participants have been unable to form a consensus with respect to the
economy. As a result, each new economic release has led to an amplified shift
in interest rates.
On September 24, the Federal Reserve Board stated that it had not
seen sufficient evidence of an acceleration in inflation to warrant an
increase in the fed funds rate. The Fed's decision to hold monetary policy
steady helped stabilize the bond market and prompted a modest decline in
long-term yields. Further, by September 30, 1996, long-term municipal yields,
as measured by the Bond Buyer 20-Bond General Obligation Index, stood at
5.76%, down from 6.00% a year ago.
What market factors influenced the Trust over the past 12 months?
In the municipal bond market, year-to-date new issue supply has increased
only marginally over 1995 levels. However, demand, in particular retail
demand, has been strong, resulting in shortages of certain types of municipal
bonds. The supply imbalance pushed buyers to bid up prices to obtain the
specific bonds they required, which caused a compression of yield spreads, or
a narrowing of yield differentials, within the various sectors of the
municipal market. For example, hospital bonds typically trade at higher
yields than similarly rated general obligation bonds, due to their
complexity. This year, many typically higher-yielding issues such as hospital
bonds have been trading at or near general obligation levels. This market
aberration provided us an opportunity to improve the relative value of the
portfolios.
What was your investment strategy in the past 12 months?
We believe that the economy is expanding at an acceptable rate of growth and
that inflation remains in check. Therefore, we have been comfortable
purchasing long-term municipal bonds in spite of the market's frequent ups
and downs. Yields on long-term municipal bonds are significantly higher than
yields on short-term municipal securities. For that reason, short-term
positions were kept to a minimum.
3
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ANNUAL PERFORMANCE OVERVIEW (continued)
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Further, to better protect the net asset value of the Series of the
Trust during periods of rising interest rates, we concentrated new
acquisitions in current coupon bonds rather than in discount or zero coupon
bonds, as the prices of discount and zero coupon bonds are more vulnerable to
rising interest rates. Though we primarily focus on our long-term goals
rather than short-term gains, we continuously search for ways to improve the
relative value of the Trust by taking advantage of aberrations and
inefficiencies within the municipal marketplace.
What is your outlook for the Trust?
Thus far, 1996 has been a challenging year for fixed-income investors. The
debate within the municipal markets over the strength of the economy most
likely will continue to influence the direction of interest rates in the
short term. Our team, however, takes a long-term, conservative approach to
managing your Trust. We believe municipal bond funds will continue to play an
important role in helping investors meet their long-term financial goals, and
we remain committed to maintaining diversified portfolios of quality
municipal bonds while providing our Shareholders with competitive yields.
4
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PERFORMANCE COMPARISON CHARTS AND TABLES September 30, 1996
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The following charts compare a $10,000 hypothetical investment made
in each Series of Seligman Municipal Series Trust Class A
shares with and without the maximum initial sales charge of 4.75%, for the
10-year or since-inception (where applicable) periods ended September 30,
1996, to a $10,000 hypothetical investment made in the Lehman Brothers
Municipal Bond Index (Lehman Index) for the same periods. The performance of
each Series of Seligman Municipal 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 does not include any fees or sales
charges, and does not reflect state-specific bond market performance.
SELIGMAN CALIFORNIA MUNICIPAL HIGH-YIELD SERIES
With Without
sales charge sales charge Lehman Index
9/30/86 $9,519.09 $10,000.00 $10,000
12/31/86 $9,835.54 $10,332.43 $10,346
3/31/87 $10,113.16 $10,624.08 $10,596
6/30/87 $9,757.21 $10,250.15 $10,309
9/30/87 $9,380.23 $9,854.12 $10,052
12/31/87 $9,829.93 $10,326.55 $10,501
3/31/88 $10,232.86 $10,749.84 $10,863
6/30/88 $10,419.84 $10,946.26 $11,072
9/30/88 $10,761.28 $11,304.95 $11,356
12/31/88 $11,120.37 $11,682.18 $11,566
3/31/89 $11,238.91 $11,806.72 $11,642
6/30/89 $11,761.06 $12,355.24 $12,331
9/30/89 $11,795.26 $12,391.17 $12,340
12/31/89 $12,152.12 $12,766.06 $12,814
3/31/90 $12,260.00 $12,879.39 $12,872
6/30/90 $12,523.84 $13,156.57 $13,173
9/30/90 $12,452.40 $13,081.51 $13,181
12/31/90 $12,881.58 $13,532.37 $13,749
3/31/91 $13,177.23 $13,842.97 $14,060
6/30/91 $13,462.20 $14,142.33 $14,359
9/30/91 $14,012.13 $14,720.05 $14,918
12/31/91 $14,231.60 $14,950.61 $15,419
3/31/92 $14,435.55 $15,164.86 $15,465
6/30/92 $14,953.12 $15,708.59 $16,053
9/30/92 $15,272.81 $16,044.43 $16,478
12/31/92 $15,588.36 $16,375.93 $16,778
3/31/93 $16,041.20 $16,851.66 $17,401
6/30/93 $16,504.43 $17,338.29 $17,970
9/30/93 $16,901.26 $17,755.16 $18,577
12/31/93 $17,132.77 $17,998.37 $18,837
3/31/94 $16,738.21 $17,583.89 $17,803
6/30/94 $16,832.36 $17,682.81 $18,001
9/30/94 $16,970.74 $17,828.17 $18,123
12/31/94 $16,654.65 $17,496.11 $17,862
3/31/95 $17,733.70 $18,629.69 $19,125
6/30/95 $18,073.39 $18,986.55 $19,586
9/30/95 $18,472.33 $19,405.64 $20,150
12/31/95 $19,078.72 $20,042.67 $20,980
3/31/96 $18,903.38 $19,858.47 $20,726
6/30/96 $19,166.38 $20,134.76 $20,886
9/30/96 $19,670.98 $20,664.86 $21,367
The table below shows the average annual total returns for the one-, five-,
and 10-year periods through September 30, 1996, for Seligman California
Municipal 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 are the average annual total returns for the one-year and
since-inception periods through September 30, 1996, for Seligman California
Municipal 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
<TABLE>
<CAPTION>
SINCE
ONE FIVE 10 ONE INCEPTION
YEAR YEARS YEARS YEAR 2/1/94
-------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Seligman California Municipal Seligman California Municipal
High-Yield Series High-Yield Series
Class A with Sales Charge 1.47% 6.00% 7.00% Class D with CDSL 4.53% n/a
Class A without Sales Charge 6.49 7.02 7.53 Class D without CDSL 5.53 3.97%
Lehman Index 6.04 7.45 7.89 Lehman Index 6.04 4.40
<FN>
- ------------------------
See page 8 for footnotes.
</FN>
</TABLE>
5
<PAGE>
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PERFORMANCE COMPARISON CHARTS AND TABLES (continued)
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SELIGMAN CALIFORNIA MUNICIPAL QUALITY SERIES
With Without
sales charge sales charge Lehman Index
9/30/86 $9,519.09 $10,000.00 $10,000
12/31/86 $9,936.42 $10,438.40 $10,346
3/31/87 $10,156.87 $10,670.00 $10,596
6/30/87 $9,685.30 $10,174.62 $10,309
9/30/87 $9,272.66 $9,741.13 $10,052
12/31/87 $9,817.16 $10,313.14 $10,501
3/31/88 $10,156.53 $10,669.64 $10,863
6/30/88 $10,364.01 $10,887.61 $11,072
9/30/88 $10,604.63 $11,140.38 $11,356
12/31/88 $10,993.50 $11,548.90 $11,566
3/31/89 $11,069.30 $11,628.53 $11,642
6/30/89 $11,746.97 $12,340.43 $12,331
9/30/89 $11,649.75 $12,238.30 $12,340
12/31/89 $12,067.25 $12,676.90 $12,814
3/31/90 $12,052.85 $12,661.77 $12,872
6/30/90 $12,357.43 $12,981.75 $13,173
9/30/90 $12,141.84 $12,755.25 $13,181
12/31/90 $12,859.49 $13,509.17 $13,749
3/31/91 $13,075.87 $13,736.49 $14,060
6/30/91 $13,323.82 $13,996.96 $14,359
9/30/91 $13,884.14 $14,585.58 $14,918
12/31/91 $14,302.39 $15,024.96 $15,419
3/31/92 $14,279.42 $15,000.84 $15,465
6/30/92 $14,908.15 $15,661.34 $16,053
9/30/92 $15,211.32 $15,979.83 $16,478
12/31/92 $15,516.28 $16,300.19 $16,778
3/31/93 $16,255.01 $17,076.24 $17,401
6/30/93 $16,751.89 $17,598.23 $17,970
9/30/93 $17,328.72 $18,204.20 $18,577
12/31/93 $17,472.29 $18,355.02 $18,837
3/31/94 $16,314.47 $17,138.71 $17,803
6/30/94 $16,340.15 $17,165.68 $18,001
9/30/94 $16,382.78 $17,210.46 $18,123
12/31/94 $16,022.25 $16,831.71 $17,862
3/31/95 $17,459.70 $18,341.79 $19,125
6/30/95 $17,687.66 $18,581.27 $19,586
9/30/95 $18,159.55 $19,077.01 $20,150
12/31/95 $19,193.43 $20,163.12 $20,980
3/31/96 $18,789.33 $19,738.60 $20,726
6/30/96 $18,980.81 $19,939.77 $20,886
9/30/96 $19,431.33 $20,413.04 $21,366
The table below shows the average annual total returns for the one-, five-,
and 10-year periods through September 30, 1996, for
Seligman California Municipal 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 are the average annual total returns for the one-year
and since-inception periods through September 30, 1996, for Seligman
California Municipal 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
<TABLE>
<CAPTION>
SINCE
ONE FIVE 10 ONE INCEPTION
YEAR YEARS YEARS YEAR 2/1/94
-------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Seligman California Municipal Seligman California Municipal
Quality Series Quality Series
Class A with Sales Charge 1.95% 5.92% 6.87% Class D with CDSL 5.20% n/a
Class A without Sales Charge 7.00 6.95 7.40 Class D without CDSL 6.20 2.60%
Lehman Index 6.04 7.45 7.89 Lehman Index 6.04 4.40
<FN>
- -------------------------
See page 8 for footnotes
</FN>
</TABLE>
6
<PAGE>
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September 30, 1996
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SELIGMAN FLORIDA MUNICIPAL SERIES
With Without
sales charge sales charge Lehman Index
11/17/86 $9,520 $10,000 $10,000
21/31/86 $9,440 $9,915 $9,972
3/31/87 $9,746 $10,237 $10,213
6/30/87 $9,038 $9,493 $9,936
9/30/87 $8,497 $8,925 $9,689
12/31/87 $9,211 $9,675 $10,122
3/31/88 $9,528 $10,008 $10,470
6/30/88 $9,821 $10,316 $10,672
9/30/88 $10,181 $10,694 $10,945
12/31/88 $10,602 $11,137 $11,148
3/31/89 $10,667 $11,205 $11,221
6/30/89 $11,466 $12,045 $11,886
9/30/89 $11,329 $11,900 $11,894
12/31/89 $11,806 $12,401 $12,351
3/31/90 $11,780 $12,374 $12,406
6/30/90 $12,088 $12,698 $12,697
9/30/90 $11,921 $12,522 $12,704
12/31/90 $12,568 $13,202 $13,252
3/31/91 $12,807 $13,452 $13,551
6/30/91 $13,070 $13,729 $13,840
9/30/91 $13,519 $14,201 $14,378
12/31/91 $13,902 $14,603 $14,861
3/31/92 $13,936 $14,639 $14,906
6/30/92 $14,487 $15,217 $15,473
9/30/92 $14,769 $15,514 $15,883
12/31/92 $15,164 $15,928 $16,172
3/31/93 $15,728 $16,521 $16,772
6/30/93 $16,410 $17,237 $17,320
9/30/93 $17,015 $17,873 $17,905
12/31/93 $17,214 $18,082 $18,156
3/31/94 $16,183 $16,999 $17,159
6/30/94 $16,310 $17,132 $17,350
9/30/94 $16,337 $17,161 $17,468
12/31/94 $16,264 $17,084 $17,216
3/31/95 $17,402 $18,280 $18,433
6/30/95 $17,677 $18,569 $18,878
9/30/95 $18,113 $19,026 $19,421
12/31/95 $18,976 $19,933 $20,222
3/31/96 $18,548 $19,483 $19,977
6/30/96 $18,686 $19,628 $20,131
9/30/96 $19,118 $20,082 $20,594
The table below shows the average annual total returns for
the one-year, five-year, and since-inception
periods through September 30, 1996, for Seligman Florida Municipal Series
Class A shares, with and without the maximum initial sales charge of 4.75%, an
d the Lehman Index. Also included in the table are the average annual total
returns for the one-year and since-inception periods through September 30,
1996, for Seligman Florida Municipal Series Class D shares, with and without
the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
SINCE SINCE
ONE FIVE INCEPTION ONE INCEPTION
YEAR YEARS 11/17/86 YEAR 2/1/94
-------- -------- ---------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Seligman Florida Seligman Florida
Municipal Series Municipal Series
Class A with Sales Charge 0.59% 6.13% 6.78% Class D with CDSL 3.74% n/a
Class A without Sales Charge 5.54 7.17 7.31 Class D without CDSL 4.74 2.80%
Lehman Index 6.04 7.45 7.63* Lehman Index 6.04 4.40
* From 11/30/86.
<FN>
- ------------------------
See page 8 for footnotes
</FN>
</TABLE>
7
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PERFORMANCE COMPARISON CHARTS AND TABLES (continued) September 30, 1996
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SELIGMAN NORTH CAROLINA MUNICIPAL SERIES
With Without
sales charge sales charge Lehman Index
8/27/90 9520 10000 10000
9/30/90 9386 9859 10006
12/31/90 9783 10277 10437
3/31/91 9982 10485 10673
6/30/91 10082 10591 10900
9/30/91 10509 11039 11324
12/31/91 10823 11369 11705
3/31/92 10779 11322 11740
6/30/92 11211 11777 12186
9/30/92 11479 12058 12509
12/31/92 11706 12296 12736
3/31/93 12197 12812 13209
6/30/93 12631 13268 13641
9/30/93 13138 13801 14102
12/31/93 13225 13892 14299
3/31/94 12335 12957 13514
6/30/94 12372 12996 13664
9/30/94 12376 13000 13757
12/31/94 12254 12872 13559
3/31/95 13322 13994 14518
6/30/95 13563 14246 14868
9/30/95 13852 14550 15296
12/31/95 14651 15389 15926
3/31/96 14254 14973 15733
6/30/96 14393 15119 15855
9/30/96 14737 15480 16219
The table below shows the average annual total returns for the
one-year, five-year, and since-inception
periods through September 30, 1996, for Seligman North Carolina Municipal
Series Class A shares, with and without the maximum initial sales charge of
4.75%, and the Lehman Index. Also included in the table are the average
annual total returns for the one-year and since-inception periods through
September 30, 1996, for Seligman North Carolina Municipal Series Class D
shares, with and without the effect of the 1% contingent deferred sales load
("CDSL") imposed on shares redeemed within one year of purchase, and the
Lehman Index.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
SINCE SINCE
ONE FIVE INCEPTION ONE INCEPTION
YEAR YEARS 8/27/90 YEAR 2/1/94
-------- -------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Seligman North Carolina Seligman North Carolina
Municipal Series Municipal Series
Class A with Sales Charge 1.29% 5.96% 6.57% Class D with CDSL 4.45% n/a
Class A without Sales Charge 6.39 7.00 7.43 Class D without CDSL 5.45 2.82%
Lehman Index 6.04 7.45 8.28* Lehman Index 6.04 4.40
* From 8/31/90.
<FN>
- ------------------
+At its discretion, the Manager waived all or a portion of its
fees and, in some cases, reimbursed certain expenses for the
North Carolina Series. This has the effect of increasing the Series' average
annual total returns for the five-year and since-inception periods.
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. THE PERFORMANCE OF CLASS D SHARES WILL BE GREATER THAN OR LESS THAN
THE PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON DIFFERENCES IN SALES
CHARGES AND FEES PAID BY SHAREHOLDERS. Performance data quoted represent
changes in prices and assume that all distributions within the periods are
invested in additional shares. The investment return and principal value of
an investment will fluctuate. Shares, if redeemed, may be worth more or less
than their original cost. Past performance is not indicative of future
investment results.
</FN>
</TABLE>
8
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS September 30, 1996
- ------------------------------------------------------------------------------
CALIFORNIA HIGH-YIELD SERIES
<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
----------- -------------------- ------------- --------------
<S> <C> <C> <C>
$2,500,000 Alameda, CA Certificates of Participation (City Hall Seismic Upgrade Project),
6.20% due 5/1/2025............................................................ NR/A $ 2,531,825
1,000,000 Bakersfield, CA Hospital Rev. (Bakersfield Memorial Hospital),
6 1/2% due 1/1/2022........................................................... A/A- . 1,033,680
3,000,000 California Department of Water Resources Water System Rev. (Central Valley Project),
6% due 12/1/2020............................................................... Aa/AA 3,007,350
2,500,000 California Educational Facilities Authority Rev. (Loyola Marymount University),
5% due 10/1/2024............................................................... A1/NR 2,428,925
1,500,000 California Housing Finance Agency Home Mortgage Rev., 6% due 8/1/2027*........... Aa/AA- 1,511,610
2,500,000 Cupertino, CA Certificates of Participation (Capital Improvement Projects),
5% due 1/1/2016................................................................. A1/A+ 2,437,300
175,000 Fairfield, CA Improvement Bonds (Smith Ranch Assessment District),
7.35% due 9/2/2003.............................................................. NR/NR 179,543
155,000 Fairfield, CA Improvement Bonds (Smith Ranch Assessment District),
7.40% due 9/2/2007.............................................................. NR/NR 159,937
1,000,000 Folsom, CA Special Tax Bonds (Willow Creek Community Facilities District No. 1),
8 1/4% due 12/1/2006............................................................ NR/NR 1,058,770
3,000,000 Foothill/Eastern Transportation Corridor Agency, CA Toll Road Rev.,
6% due 1/1/2034................................................................. Baa/BBB- 2,904,390
2,000,000 Garden Grove, CA Agency for Community Development Rev. (Garden Grove Community
Project), 5 7/8% due 10/1/2023 ................................................. NR/BBB+ 1,905,260
500,000 Los Angeles, CA Certificates of Participation (Convention & Exhibition Center
Authority), 7% due 8/15/2018.................................................... Aaa/AAA 548,905
500,000 Los Angeles, CA Community Redevelopment Agency Multi-Family Housing Rev.
(Grand Central Square), 5.85% due 12/1/2026*.................................... Baa1/BBB+ 452,345
1,300,000 Los Angeles, CA Wastewater System Rev., 7.10% due 6/1/2018........................ A1/A 1,395,849
2,385,000 Los Angeles County, CA Transportation Commission Sales Tax Rev.,
5% due 7/1/2018................................................................. Aaa/AAA 2,381,828
400,000 Milpitas, CA Local Improvement District No. 9 (Milpitas Business Park),
7 1/4% due 9/2/2007............................................................. NR/NR 412,836
400,000 Milpitas, CA Local Improvement District No. 9 (Milpitas Business Park),
7.30% due 9/2/2008.............................................................. NR/NR 412,884
250,000 Milpitas, CA Local Improvement District No. 9 (Milpitas Business Park),
7.30% due 9/2/2011.............................................................. NR/NR 257,955
1,000,000 Oxnard Union High School District, CA Certificates of Participation
(Union High School), 7.70% due 11/1/2019........................................ NR/NR 1,112,920
730,000 Petaluma, CA Community Development Commission Tax Allocation Bonds
(Central Business District), 9.30% due 5/15/2010................................ Baa1/NR 732,672
2,180,000 Pleasanton, CA Joint Powers Financing Authority Reassessment Rev.,
6.15% due 9/2/2012.............................................................. Baa/NR 2,208,209
2,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2036.............................................................. Baa1/A 1,892,240
<FN>
- ----------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
</FN>
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD SERIES (continued)
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
---------- -------------------- ------------ --------------
<S> <C> <C> <C>
$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 $ 1,056,057
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 1,242,984
5,000 Riverside County, CA (Single Family Mortgage Rev.), 10 1/2% due 9/1/2014.......... NR/BBB+ 5,252
2,000,000 San Francisco, CA State Building Authority Lease Rev. (State of California Dept. of
General Services Lease), 5% due 10/1/2013....................................... A/A 1,850,900
3,000,000 San Joaquin Hills, CA Transportation Corridor Agency (Orange County
Senior Lien Toll Road), 6% due 1/1/2032......................................... NR/NR 3,116,730
2,500,000 Santa Barbara, CA Certificates of Participation, 5.70% due 3/1/2011............... A1/A+ 2,468,450
1,000,000 Santa Clara, CA Improvement Bonds Project No. 186 (Santa Clara Convention Center
Complex), 7.10% due 9/2/2011.................................................... NR/NR 1,031,580
1,500,000 Santa Cruz, CA Hospital Rev. (Dominican Santa Cruz Hospital), 7% due 12/1/2013.... A1/A+ 1,568,490
2,000,000 Santa Margarita, CA Water District GOs, 7 1/2% due 11/1/2005...................... NR/NR 2,073,380
1,000,000 Southern California Public Power Authority Power Project Rev. (Multiple Projects),
6% due 7/1/2018................................................................. A/A 996,280
875,000 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+ 927,448
1,270,000 Stanislaus, CA Waste-to-Energy Financing Agency Solid Waste Facility Rev.
(Ogden Martin System of Stanislaus, Inc. Project), 7% due 1/1/2010.............. NR/BBB+ 1,369,136
2,230,000 West Covina, CA Certificates of Participation (Queen of the Valley Hospital),
6 1/2% due 8/15/2024............................................................ A/A 2,322,099
------------
Total Municipal Bonds (Cost $49,424,946) -- 97.7%....................................... 50,996,019
Variable Rate Demand Notes (Cost $1,900,000) -- 3.7% ................................... 1,900,000
Other Assets Less Liabilities -- (1.4)%................................................. (712,744)
------------
NET ASSETS -- 100.0%.................................................................... $52,183,275
------------
------------
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA QUALITY SERIES
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
---------- -------------------- --------- --------------
<S> <C> <C> <C>
$2,000,000 California Department of Water Resources Water System Rev. (Central Valley Project),
6 1/8% due 12/1/2013............................................................ Aa/AA $2,070,800
2,500,000 California Department of Water Resources Water System Rev. (Central Valley Project),
5 1/2% due 12/1/2023........................................................... Aa/AA 2,378,175
2,000,000 California Educational Facilities Authority Rev. (Stanford University),
6% due 1/1/2013................................................................ Aaa/AAA 2,130,060
3,200,000 California Educational Facilities Authority Rev.
(University of Southern California Project),
5.80% due 10/1/2015............................................................ Aa/AA 3,152,960
3,440,000 California Educational Facilities Authority Rev. (Pomona College),
6% due 2/15/2017............................................................... Aa1/AA 3,427,685
4,500,000 California Educational Facilities Authority Rev.
(California Institute of Technology),
6% due 1/1/2021................................................................ Aaa/AAA 4,476,735
3,000,000 California Health Facilities Financing Authority Health Facility Rev.
(Kaiser Permanente),
6 1/2% due 12/1/2020........................................................... Aa3/AA 3,135,750
<FN>
- ---------------
+ Ratings have not been audited by Deloitte & Touche LLP.
</FN>
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
September 30, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA QUALITY SERIES (continued)
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
---------- -------------------- -------------- --------------
<S> <C> <C> <C>
$2,000,000 California Health Facilities Financing Authority Insured Hospital Rev.
(Scripps Memorial Hospital), 6% due 10/1/2022................................... Aaa/AAA $ 2,104,140
5,000 California Housing Finance Agency (Housing Revenue Insured Bonds),
8% due 8/1/2010................................................................. Aaa/AAA 5,289
425,000 California Housing Finance Agency (Housing Revenue Insured Bonds),
8% due 8/1/2015................................................................. Aaa/AAA 446,365
2,000,000 California Housing Finance Agency Housing Rev., 5.60% due 8/1/2024................ Aaa/AAA 1,910,400
2,835,000 California Housing Finance Agency Home Mortgage Rev., 6% due 2/1/2025*............ Aa/AA- 2,927,166
940,000 California Public Capital Improvements Financing Authority (Pooled Projects),
8.10% due 3/1/2018.............................................................. Aaa/AAA 991,559
3,000,000 California Public Works Board Lease Rev. (Correctional Facilities Improvements),
5% due 9/1/2021................................................................. A/A 2,899,710
6,000,000 California State GOs, 5.90% due 4/1/2023.......................................... A1/A+ 5,968,140
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 2,670,840
5,000,000 Contra Costa Water District, CA, 5 1/2% due 10/1/2019............................. Aaa/AAA 4,854,000
3,500,000 East Bay, CA Municipal Utility District Water System Rev., 6% due 6/1/2012........ Aaa/AAA 3,594,780
2,500,000 Eastern Municipal Water District Riverside County, CA Water and Sewer Rev.,
6% due 7/1/2012................................................................. Aaa/AAA 2,840,400
3,000,000 Fresno, CA Sewer System Rev., 5 1/4% due 9/1/2019................................. Aaa/AAA 2,854,080
2,000,000 Industry, CA GOs, 7% due 7/1/2015................................................. Aaa/AAA 2,197,840
3,000,000 Los Angeles Department of Water & Power, CA Electric Plant Rev., 6% due 2/1/2020.. Aa/AA- 3,144,690
2,000,000 M-S-R Public Power Agency, CA (San Juan Project), 6% due 7/1/2019................. Aaa/AAA 2,053,180
2,000,000 Marin, CA Municipal Water District Water Rev., 5.65% due 7/1/2023................. A1/AA 1,925,140
3,000,000 Metropolitan Water District of Southern California Waterworks GOs,
5% due 3/1/2014................................................................. Aaa/AAA 2,970,570
4,500,000 Northern California Power Agency Public Power Rev. (Combustion Turbine Project A-1),
6% due 8/15/2010................................................................ Aaa/AAA 4,563,495
4,500,000 Orange County, CA Local Transportation Authority (Measure M Sales Tax Rev.),
6% due 2/15/2009................................................................ Aaa/AAA 4,741,065
2,500,000 Rancho, CA Water District Financing Authority Rev., 5.90% due 11/1/2015........... Aaa/AAA 2,524,150
3,250,000 San Francisco Bay Area Rapid Transit District, CA
(Sales Tax Rev.), 6.60% due 7/1/2012............................................ Aaa/AAA 3,533,075
3,000,000 San Francisco, CA (City & County) Airport Commission Rev.
(International Airport), 6.60% due 5/1/2024*.................................... Aaa/AAA 3,217,710
3,000,000 San Francisco, CA (City & County) Public Utilities Commission Water Rev.,
6% due 11/1/2015................................................................ Aa/AA 3,005,850
5,000,000 University of California Regents (Multiple Purpose Projects), 6% due 9/1/2024..... Aaa/AAA 5,264,450
-----------
Total Municipal Bonds (Cost $90,662,846) -- 96.7% ............................................ 93,980,249
Variable Rate Demand Notes (Cost $1,700,000) -- 1.7%.......................................... 1,700,000
Other Assets Less Liabilities -- 1.6%......................................................... 1,525,316
-----------
NET ASSETS -- 100.0%.......................................................................... $97,205,565
-----------
-----------
<FN>
- ----------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
</FN>
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA SERIES
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
---------- -------------------- ------------ --------------
<S> <C> <C> <C>
$ 500,000 Broward County, FL GOs (Environmentally Sensitive Lands Project),
6.90% due 7/1/2009............................................................. Aaa/AAA $ 521,070
2,500,000 Broward County, FL Water & Sewer Utility Rev., 5% due 10/1/2018.................. Aaa/AAA 2,279,200
1,500,000 Broward County School District, FL GOs, 7 1/8% due 2/15/2008..................... Aaa/AAA 1,623,360
1,500,000 Citrus County, FL Pollution Control Rev. (Florida Power Corporation Crystal River
Power Plant Project), 6% due 1/1/2027.......................................... A1/A+ 1,598,130
2,000,000 Collier County, FL Water & Sewer Rev., 5 1/4% due 7/1/2021....................... Aaa/AAA 1,871,160
1,250,000 Dade County, FL Aviation Rev., 6 1/8% due 10/1/2020*............................. Aaa/AAA 1,277,650
1,000,000 Dade County, FL Public Facilities Rev. (Jackson Memorial Hospital),
5 1/4% due 6/1/2023............................................................ Aaa/AAA 920,650
2,870,000 Dade County, FL Public Improvement GOs, 5 3\4% due 10/1/2016..................... Aaa/AAA 2,870,000
2,000,000 Dade County, FL Water & Sewer System Rev., 5% due 10/1/2022...................... Aaa/AAA 1,994,640
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 1,851,680
1,000,000 Dunes Community Development District, FL Rev. (Intracoastal Waterway Bridge Project),
7% due 2/1/2007................................................................ NR/A 1,030,430
1,000,000 Florida Housing Finance Agency (General Mortgage Rev.), 6.35% due 6/1/2014........ NR/AAA 1,028,730
715,000 Florida Housing Finance Agency Rev. (Single Family Mortgage), 6.55% due 7/1/2014* Aaa/AAA 735,878
2,000,000 Florida Housing Finance Agency Rev. (Homeowner Mortgage), 6.20% due 7/1/2027*..... Aa/AA 2,014,260
2,000,000 Florida State Department of Transportation GOs (Right of Way),
5.80% due 7/1/2021.............................................................. Aa/AA 2,008,660
1,000,000 Florida State Municipal Power Agency Rev. (St. Lucie Project), 5 1/2% due 10/1/2012 Aaa/AAA 991,600
2,500,000 Florida State Turnpike Authority Turnpike Rev., 5% due 7/1/2025................... Aaa/AAA 2,469,900
1,500,000 Gainesville, FL Utilities System Rev., 5 1/2% due 10/1/2013....................... Aa/AA 1,470,810
2,500,000 Hillsborough County, FL Aviation Authority Rev. (Tampa International Airport),
5% due 10/1/2023*............................................................... Aaa/AAA 2,343,000
1,500,000 Jacksonville Electric Authority, FL Rev. (St. Johns River Power Park System),
5 1/2% due 10/1/2013............................................................ Aa1/AA 1,470,810
2,000,000 Kissimmee Utility Authority, FL Electric System Improvement Rev.,
5 1/4% due 10/1/2018............................................................ Aaa/AAA 1,885,560
1,000,000 Lee County, FL Transportation Facilities Rev., 6% due 10/1/2015 Aaa/AAA 1,025,920
2,000,000 Orlando, FL Utilities Commission Water & Electric Rev., 5 1/2% due 10/1/2026...... Aa/AA- 1,912,420
1,000,000 Osceola County, FL Transportation Rev. (Osceola Parkway Project),
6.10% due 4/1/2017.............................................................. Aaa/AAA 1,026,590
1,200,000 Palm Beach County, FL Criminal Justice Facilities Rev., 7 1/4% due 6/1/2011....... Aaa/AAA 1,330,764
1,500,000 Palm Beach County, FL Water & Sewer Rev., 7 1/8% due 10/1/2009.................... Aa/A+ 1,584,885
1,625,000 Palm Beach County, FL Water & Sewer Rev., 5 1/4% due 10/1/2013.................... Aaa/AAA 1,557,985
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/AA 933,270
1,250,000 Volusia County, FL Educational Facilities Authority Rev. (Embry-Riddle Aeronautical
University Project), 6% due 10/15/2022............................................ NR/AAA 1,337,425
-----------
Total Municipal Bonds (Cost $44,280,089) -- 96.8% ............................................ 44,966,437
Variable Rate Demand Notes (Cost $800,000) -- 1.7%............................................ 800,000
Other Assets Less Liabilities -- 1.5%......................................................... 710,782
-----------
NET ASSETS -- 100.0%.......................................................................... $46,477,219
-----------
-----------
<FN>
- -----------------
* Interest income earned from this security is subject to the federal alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
</FN>
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
September 30, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
---------- -------------------- ------------ --------------
<S> <C> <C> <C>
$1,250,000 Appalachian State University, NC Housing & Student Center System Rev.,
5% due 7/15/2015............................................................... Aaa/AAA $ 1,234,900
1,250,000 Asheville, NC Water System Rev., 5.70% due 8/1/2025.............................. Aaa/AAA 1,242,888
600,000 Buncombe County, NC Metropolitan Sewerage District (Sewerage System Rev.),
5 1/2% due 7/1/2022............................................................ Aaa/AAA 582,264
2,000,000 Charlotte-Mecklenburg Hospital Authority, NC Health Care System Rev.,
6 1/4% due 1/1/2020............................................................ Aa/AA 2,037,060
1,000,000 Charlotte, NC Certificates of Participation (Charlotte-Mecklenburg Law Enforcement
Center Project), 5% due 6/1/2013............................................... Aa1/AA 995,020
2,000,000 Charlotte, NC Water & Sewer GOs, 5.90% due 2/1/2017.............................. Aaa/AAA 2,076,920
1,590,000 Concord, NC Utilities System Rev., 5% due 12/1/2017.............................. Aaa/AAA 1,578,313
2,000,000 Fayetteville, NC Public Works Commission Rev., 4% due 3/1/2014................... Aaa/AAA 1,795,880
2,500,000 Martin County Industrial Facilities and Pollution Control Financing Authority, NC
(Weyerhaeuser Company Project), 5.65% due 12/1/2023*........................... A2/A 2,405,850
500,000 North Carolina Educational Facilities Financing Authority Rev.
(Duke University Project),
6% due 10/1/2021................................................................ Aa1/AA+ 545,190
500,000 North Carolina Educational Facilities Financing Authority Rev.
(Elon College Project),
6% due 1/1/2014................................................................. NR/AAA 524,300
600,000 North Carolina Housing Finance Agency Rev. (Multi-Family), 5.80% due 7/1/2014..... Aa/AA 594,690
1,455,000 North Carolina Housing Finance Agency Rev. (Single Family), 6 1/2% due 3/1/2018... Aa/AA 1,501,400
250,000 North Carolina Housing Finance Agency Rev. (Multi-Family), 5.90% due 7/1/2026..... Aa/AA 244,490
750,000 North Carolina Medical Care Commission Hospital Rev. (North Carolina Baptist
Hospital Project), 6% due 6/1/2014.............................................. Aa/AA 773,513
1,000,000 North Carolina Medical Care Commission Hospital Rev. (Mercy Hospital Project),
6 1/2% due 8/1/2015............................................................. NR/NR 1,050,880
1,250,000 North Carolina Medical Care Commission Hospital Rev. (Rex Hospital Project),
6 1/4% due 6/1/2017............................................................. A1/A+ 1,276,687
1,500,000 North Carolina Medical Care Commission Hospital Rev. (Carolina Medicorp Project),
6% due 5/1/2021................................................................. Aa/AA 1,499,910
1,000,000 North Carolina Medical Care Commission Hospital Rev. (Memorial Mission Hospital
Project), 6% due 10/1/2022...................................................... Aaa/AAA 1,009,480
2,250,000 North Carolina Medical Care Commission Hospital Rev. (Presbyterian Health Services
Corp. Project), 6% due 10/1/2024................................................ Aa/AA 2,250,000
2,000,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev., 5% due 1/1/2015 Aaa/AAA 1,986,400
3,000,000 North Carolina Municipal Power Agency
No. 1 Catawba Electric Rev., 5% due 1/1/2020 ................................... Aaa/AAA 2,750,160
1,000,000 Orange, NC Water & Sewer Authority Rev., 5.20% due 7/1/2016....................... Aa/AA 943,350
250,000 Piedmont Triad Airport Authority, NC Airport Rev. Series "A," 6% due 7/1/2016..... Aaa/AAA 270,452
775,000 Raleigh, NC GOs, 6 1/2% due 3/1/2008.............................................. Aaa/AAA 832,366
200,000 Transylvania County, NC GOs, 6.80% due 4/1/2007................................... A/A 216,010
500,000 University of North Carolina Chapel Hill Housing System Rev., 6.40% due 11/1/2010 NR/AA- 529,390
1,500,000 University of North Carolina Charlotte Rev. (Student Activity Center),
5 1/2% due 6/1/2021............................................................. Aaa/AAA 1,458,465
500,000 University of North Carolina Hospitals at Chapel Hill Rev., 6% due 2/15/2017...... Aa/AA 515,500
1,000,000 University of North Carolina Hospitals at Chapel Hill Rev., 5 1/4% due 2/15/2026.. Aa/AA 932,100
<FN>
- -------------------
* Interest income earned from this security is subject to the federal alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
</FN>
</TABLE>
13
See Notes to Financial Statements.
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued) September 30, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES (continued)
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
---------- -------------------- ------------ --------------
<S> <C> <C> <C>
$1,550,000 Wake County Industrial Facilities & Pollution Control Financing Authority, NC
(Carolina Power & Light), 6.90% due 4/1/2009.................................... A2/A1 $ 1,665,227
500,000 Wayne County, NC GOs, 5.90% due 2/1/2009.......................................... A/A+ 520,170
-----------
Total Municipal Bonds (Cost $37,015,217) -- 101.8% ............................................ 37,839,225
Other Assets Less Liabilities -- (1.8)%........................................................ (673,054)
-----------
NET ASSETS -- 100.0%........................................................................... $37,166,171
-----------
-----------
+ Ratings have not been audited by Deloitte & Touche LLP.
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES September 30, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 . . . . . . . . . . . . . . . . . . . $ 50,996,019 $ 93,980,249 $ 44,966,437 $ 37,839,225
Short-term holdings . . . . . . . . . . . . . . . . . . . 1,900,000 1,700,000 800,000 --
-------------- ------------- ------------ -------------
52,896,019 95,680,249 45,766,437 37,839,225
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,497 332,113 53,902 69,360
Interest receivable . . . . . . . . . . . . . . . . . . . 872,642 1,544,901 1,007,268 619,014
Receivable for Shares of Beneficial Interest sold . . . . . 50,034 381 200 2,168
Expenses prepaid to shareholder service agent . . . . . . 5,961 10,862 7,133 7,554
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 2,025 3,591 1,856 1,626
-------------- ------------- ------------ -------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . 53,865,178 97,572,097 46,836,796 38,538,947
-------------- ------------- ------------ -------------
LIABILITIES:
Payable for securities purchased . . . . . . . . . . . . 1,500,000 -- -- 1,237,027
Dividend payable . . . . . . . . . . . . . . . . . . . . 98,503 170,583 77,545 62,198
Payable for Shares of Beneficial Interest repurchased . . -- 88,011 201,849 5,000
Accrued expenses, taxes, and other . . . . . . . . . . . 83,400 107,938 80,183 68,551
-------------- ------------- ------------ -------------
Total Liabilities . . . . . . . . . . . . . . . . . . . 1,681,903 366,532 359,577 1,372,776
-------------- ------------- ------------ -------------
Net Assets . . . . . . . . . . . . . . . . . . . . . . . $52,183,275 $97,205,565 $46,477,219 $37,166,171
-------------- ------------- ------------ -------------
-------------- ------------- ------------ -------------
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par:
Class A . . . . . . . . . . . . . . . . . . . . . $ 7,735 $ 14,159 $ 5,894 $ 4,584
Class D . . . . . . . . . . . . . . . . . . . . . 295 244 166 157
Additional paid-in capital . . . . . . . . . . . . . . . 49,948,015 94,075,578 45,154,873 36,189,507
Undistributed net realized gain/ (distribution in excess
of net realized gain) . . . . . . . . . . . . . . 656,157 (201,819) 629,938 147,915
Net unrealized appreciation of investments . . . . . . . 1,571,073 3,317,403 686,348 824,008
-------------- ------------- ------------ -------------
Net Assets . . . . . . . . . . . . . . . . . . . . . . $52,183,275 $97,205,565 $46,477,219 $37,166,171
-------------- ------------- ------------ -------------
-------------- ------------- ------------ -------------
NET ASSETS:
Class A . . . . . . . . . . . . . . . . . . . . . $50,264,190 $95,560,369 $45,200,550 $35,933,912
Class D . . . . . . . . . . . . . . . . . . . . . $ 1,919,085 $ 1,645,196 $ 1,276,669 $ 1,232,259
SHARES OF BENEFICIAL INTEREST
OUTSTANDING:
(Unlimited shares authorized; $.001 par value)
Class A . . . . . . . . . . . . . . . . . . . . . 7,735,149 14,158,491 5,893,544 4,583,980
Class D . . . . . . . . . . . . . . . . . . . . . 294,980 244,236 166,165 157,281
NET ASSET VALUE PER SHARE:
Class A . . . . . . . . . . . . . . . . . . . . . $6.50 $6.75 $7.67 $7.84
Class D . . . . . . . . . . . . . . . . . . . . . $6.51 $6.74 $7.68 $7.83
- -------------------
</TABLE>
See Notes to Financial Statements.
15
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS For the Year Ended September 30, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA CALIFORNIA NORTH
HIGH-YIELD QUALITY FLORIDA CAROLINA
SERIES SERIES SERIES SERIES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 3,199,448 $ 5,707,092 $ 2,875,437 $ 2,206,026
------------ ------------ ------------ ------------
EXPENSES:
Management fees . . . . . . . . . . . . . . . . . . . . 252,643 483,123 243,865 187,874
Distribution and service fees . . . . . . . . . . . . . 61,490 102,682 124,366 100,286
Shareholder account services . . . . . . . . . . . . . . 60,179 105,465 60,189 56,752
Auditing and legal fees . . . . . . . . . . . . . . . . 20,752 20,752 22,733 23,130
Custody and related services . . . . . . . . . . . . . . 11,825 25,166 11,268 10,988
Registration . . . . . . . . . . . . . . . . . . . . . . 9,076 10,720 7,744 6,524
Shareholder reports and communications . . . . . . . . . 9,074 9,497 5,527 10,137
Trustees' fees and expenses . . . . . . . . . . . . . . 7,981 7,990 7,316 7,142
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 5,012 8,635 2,984 4,409
------------ ------------ ------------ ------------
Total expenses . . . . . . . . . . . . . . . . . . . . . 438,032 774,030 485,992 407,242
------------ ------------ ------------ ------------
Net investment income . . . . . . . . . . . . . . . . . 2,761,416 4,933,062 2,389,445 1,798,784
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments . . . . . . . . . . . 761,672 10,779 848,068 150,901
Net change in unrealized appreciation
of investments . . . . . . . . . . . . . . . . . . . (302,934) 1,634,127 (599,721) 428,165
------------ ------------ ------------ ------------
Net gain on investments . . . . . . . . . . . . . . . . 458,738 1,644,906 248,347 579,066
------------ ------------ ------------ ------------
Increase in Net Assets from Operations . . . . . . . . . $3,220,154 $6,577,968 $2,637,792 $2,377,850
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
- ----------------
See notes to financial statements.
</TABLE>
16
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD CALIFORNIA QUALITY
SERIES SERIES
--------------------------------- ------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
--------------------------------- ------------------------------
1996 1995 1996 1995
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................. $ 2,761,416 $ 2,807,220 $ 4,933,062 $ 5,160,992
Net realized gain (loss) on investments............... 761,672 88,139 10,779 (40,110)
Net change in unrealized appreciation/depreciation
of investments.................................... (302,934) 1,121,392 1,634,127 4,529,579
------------ ------------- ------------- ------------
Increase in net assets from operations.............. 3,220,154 4,016,751 6,577,968 9,650,461
------------ ------------- ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A............................................. (2,694,728) (2,768,632) (4,886,875) (5,122,722)
Class D............................................. (66,688) (38,588) (46,187) (38,270)
Net realized gain on investments:
Class A............................................. (181,195) -- (170,861) (893,986)
Class D............................................. (4,083) -- (1,627) (7,846)
------------ ------------- ------------- ------------
Decrease in net assets from distributions............. (2,946,694) (2,807,220) (5,105,550) (6,062,824)
------------ ------------- ------------- ------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sale of shares:
Class A............................................. 7,028,522 6,943,019 4,563,152 3,791,860
Class D............................................. 971,455 707,886 938,009 336,722
Shares issued in payment of dividends:
Class A............................................. 1,381,074 1,388,517 2,408,049 2,556,436
Class D............................................. 51,365 29,049 28,597 16,286
Exchanged from associated Funds:
Class A............................................. 2,237,849 2,554,338 6,680,456 1,674,871
Class D............................................. 197,372 9,444 601,980 36,700
Shares issued in payment of gain distributions:
Class A ............................................ 123,013 -- 108,888 588,709
Class D ............................................ 3,665 -- 857 3,308
------------ ------------- ------------- ------------
Total .............................................. 11,994,315 11,632,253 15,329,988 9,004,892
------------ ------------- ------------- ------------
Cost of shares repurchased:
Class A............................................. (10,210,483) (6,675,164) (8,519,741) (12,989,249)
Class D............................................. (128,873) (12,518) (208,709) (274,505)
Exchanged into associated Funds:
Class A............................................. (2,054,893) (1,900,990) (6,087,884) (3,245,114)
Class D............................................. (471,562) (128,605) (590,062) (105,836)
------------ ------------- ------------- ------------
Total .............................................. (12,865,811) (8,717,277) (15,406,396) (16,614,704)
------------ ------------- ------------- ------------
Increase (decrease) in net assets from transactions
in Shares of Beneficial Interest.................... (871,496) 2,914,976 (76,408) (7,609,812)
------------ ------------- ------------- ------------
Increase (decrease) in net assets................... (598,036) 4,124,507 1,396,010 (4,022,175)
NET ASSETS:
Beginning of year................................... 52,781,311 48,656,804 95,809,555 99,831,730
------------ ------------- ------------- ------------
End of year......................................... $52,183,275 $52,781,311 $97,205,565 $95,809,555
------------ ------------- ------------- ------------
------------ ------------- ------------- ------------
- ---------------
See notes to financial statements.
</TABLE>
17
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH CAROLINA
FLORIDA SERIES SERIES
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
--------------------------------- ------------------------------
1996 1995 1996 1995
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................. $ 2,389,445 $ 2,643,663 $ 1,798,784 $ 2,049,418
Net realized gain on investments...................... 848,068 295,392 150,901 67,083
Net change in unrealized appreciation/depreciation
of investments...................................... (599,721) 2,057,465 428,165 2,320,714
------------ ------------- ------------- ------------
Increase in net assets from operations................ 2,637,792 4,996,520 2,377,850 4,437,215
------------ ------------- ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A............................................. (2,340,450) (2,625,734) (1,748,201) (1,991,128)
Class D............................................. (48,995) (17,929) (50,583) (58,290)
Net realized gain on investments:
Class A............................................. (503,822) (13,355) (67,229) (67,575)
Class D............................................. (8,426) (68) (2,262) (2,384)
------------ ------------- ------------- ------------
Decrease in net assets from distributions............. (2,901,693) (2,657,086) (1,868,275) (2,119,377)
------------ ------------- ------------- ------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sale of shares:
Class A............................................. 2,194,401 2,612,961 2,675,748 3,259,927
Class D............................................. 844,824 463,188 263,673 514,321
Shares issued in payment of dividends:
Class A............................................. 944,497 1,095,007 915,705 1,126,718
Class D............................................. 27,492 10,660 37,861 34,388
Exchanged from associated Funds:
Class A............................................. 1,720,648 1,500,260 558,685 1,065,941
Class D............................................. 132,950 334,150 3,221 583,255
Shares issued in payment of gain distributions:
Class A ............................................ 274,175 7,441 49,273 51,235
Class D ............................................ 3,798 60 2,102 2,322
------------ ------------- ------------- ------------
Total ................................................ 6,142,785 6,023,727 4,506,268 6,638,107
------------ ------------- ------------- ------------
Cost of shares repurchased:
Class A............................................. (7,546,385) (7,404,963) (5,507,260) (7,888,154)
Class D............................................. (254,841) (147,983) (151,705) (171,491)
Exchanged into associated Funds:
Class A............................................. (1,167,372) (998,971) (695,424) (1,326,399)
Class D............................................. (65,958) (319,464) (198,185) (1,069,453)
------------ ------------- ------------- ------------
Total ................................................ (9,034,556) (8,871,381) (6,552,574) (10,455,497)
------------ ------------- ------------- ------------
Decrease in net assets from transactions
in Shares of Beneficial Interest.................... (2,891,771) (2,847,654) (2,046,306) (3,817,390)
------------ ------------- ------------- ------------
Decrease in net assets................................ (3,155,672) (508,220) (1,536,731) (1,499,552)
NET ASSETS:
Beginning of year..................................... 49,632,891 50,141,111 38,702,902 40,202,454
------------ ------------- ------------- ------------
End of year........................................... $46,477,219 $49,632,891 $37,166,171 $38,702,902
------------ ------------- ------------- ------------
------------ ------------- ------------- ------------
- ----------------
See notes to financial statements.
</TABLE>
18
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
1. Seligman Municipal Series Trust, formerly 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." Each Series of the Trust offers two
classes of shares. All shares existing prior to February 1, 1994, were
classified as Class A shares. Class A shares are sold with an initial sales
charge of up to 4.75% and a continuing service fee of up to 0.25% on an
annual basis. Class A shares purchased in an amount of $1,000,000 or more are
sold without an initial sales charge but are subject to a contingent deferred
sales load ("CDSL") of 1% on redemptions within 18 months of purchase. Class
D shares are sold without an initial sales charge but are subject to a higher
distribution fee and a CDSL of 1% imposed on certain redemptions made within
one year of purchase. The two classes of shares for each Series represent
interests in the same portfolio of investments, have the same rights and are
generally identical in all respects except that each class bears its separate
distribution and certain other 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 value of the shares of each class.
Class-specific expenses, which include distribution and service fees and
any other items that are specifically attributed to a particular class,
are charged directly to such class. For the year ended September 30,
1996, distribution and service fees were the only class-specific
expenses.
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. At September 30, 1996, realized capital gains for federal tax
purposes exceeded realized capital gains for financial statement purposes
for the California High-Yield and California Quality Series by $59,886
and $223,740, respectively.
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended September 30, 1996, were as follows:
SERIES PURCHASES SALES
------- ------------ -----------
California High-Yield $20,801,177 $16,698,461
California Quality 12,188,715 14,094,245
Florida 8,842,547 12,180,335
North Carolina 5,690,675 6,204,311
At September 30, 1996, 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 $1,812,028 $ 240,955
California Quality 4,240,018 922,615
Florida 1,158,394 472,046
North Carolina 1,142,804 318,796
19
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ------------------------------------------------------------------------------
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 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, 1996, the
Manager, at its discretion, waived a portion of its fees for the Florida and
North Carolina Series equal to $953 and $2,623, respectively. The management
fees reflected in the Statements of Operations represent 0.50% and 0.49%,
respectively, per annum of their average net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of each Series' shares and an affiliate of the Manager, received
the following concessions after commissions were paid to dealers for sale of
Class A shares:
DISTRIBUTOR DEALER
SERIES CONCESSIONS COMMISSIONS
------ ------------ ----------
California High-Yield $14,028 $100,612
California Quality 14,194 104,653
Florida 9,355 72,852
North Carolina 12,563 91,647
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,
1996, for the California High-Yield, California Quality, Florida, and North
Carolina Series, fees paid aggregated $46,930, $91,746, $112,531, and
$87,589, respectively, or 0.10%, 0.10%, 0.24%, and 0.24%, respectively, per
annum of average daily net assets.
The Trust has a Plan with respect to Class D shares under which service
organizations can enter into agreements with the Distributor and receive
continuing fees for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on 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 year ended
September 30, 1996, fees paid amounted to $14,560, $10,936, $11,835, and
$12,697, 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
year ended September 30, 1996, such charges amounted to $443 for the
California High-Yield Series, $526 for the California Quality Series, $138
for the Florida Series, and $5 for the North Carolina Series.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of Fund shares, as well as
distribution and service fees pursuant to the Plan. For the year ended
September 30, 1996, Seligman Services, Inc. received commissions from sales
of shares of each Series, and distribution and service fees, pursuant to the
Plan, as follows:
DISTRIBUTION AND
SERIES COMMISSIONS SERVICE FEES
------ ------------ ------------
California High-Yield $ 28 $1,592
California Quality 2,241 2,753
Florida 1,101 5,070
North Carolina 171 1,638
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost for shareholder account services the following
amounts:
SERIES
------
California High-Yield $ 60,179
California Quality 105,465
Florida 60,189
North Carolina 56,752
Certain officers and trustees of the Trust are officers or directors of
the Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data
Corp.
20
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Fees of $19,000 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. Deferred fees and
the related accrued interest are not
deductible for federal income tax purposes until such amounts are paid. The
annual cost of such fees and interest
is included in trustees' fees and expenses, and the accumulated balances
thereof at September 30, 1996, were
as follows:
SERIES
------
California High-Yield $26,074
California Quality 26,074
Florida 12,540
North Carolina 8,941
5. Transactions in Shares of Beneficial Interest were as follows:
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD CALIFORNIA QUALITY
SERIES SERIES
---------------------------- ----------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
----------------------------- ----------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sale of shares:
Class A............................................. 1,087,963 1,079,685 673,408 590,593
Class D............................................. 152,012 110,995 139,499 53,458
Shares issued in payment of dividends:
Class A............................................. 213,528 219,618 356,784 397,979
Class D............................................. 7,942 4,570 4,255 2,531
Exchanged from associated Funds:
Class A............................................. 343,880 404,353 996,761 265,696
Class D............................................. 30,371 1,488 89,271 5,830
Shares issued in payment of gain distributions:
Class A............................................. 18,896 -- 16,012 100,634
Class D............................................. 562 -- 126 566
--------- --------- --------- ---------
Total................................................. 1,855,154 1,820,709 2,276,116 1,417,287
--------- --------- --------- ---------
Shares repurchased:
Class A....................................... (1,573,674) (1,056,589) (1,264,284) (2,039,599)
Class D....................................... (19,819) (1,935) (31,274) (42,182)
Exchanged into associated Funds:
Class A....................................... (317,574) (302,366) (905,529) (513,872)
Class D....................................... (73,253) (21,039) (87,668) (17,443)
--------- --------- --------- ---------
Total................................................. (1,984,320) (1,381,929) (2,288,755) (2,613,096)
--------- --------- --------- ---------
Increase (decrease) in shares......................... (129,166) 438,780 (12,639) (1,195,809)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
21
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH CAROLINA
FLORIDA SERIES SERIES
---------------------------- ----------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
----------------------------- ----------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sale of shares:
Class A............................................. 284,373 347,578 342,388 438,845
Class D............................................. 109,057 60,844 34,006 72,260
Shares issued in payment of dividends:
Class A............................................. 122,783 146,628 116,783 151,286
Class D............................................. 3,582 1,419 4,830 4,585
Exchanged from associated Funds:
Class A............................................. 222,479 199,964 72,372 147,787
Class D............................................. 17,046 43,212 425 82,219
Shares issued in payment of gain distributions:
Class A............................................. 35,286 1,075 6,221 7,647
Class D............................................. 488 9 265 347
--------- --------- --------- ---------
Total................................................. 795,094 800,729 577,290 904,976
--------- --------- --------- ---------
Shares repurchased:
Class A....................................... (981,300) (999,949) (704,359) (1,057,443)
Class D....................................... (33,593) (19,405) (19,457) (22,493)
Exchanged into associated Funds:
Class A....................................... (151,754) (135,404) (88,114) (183,108)
Class D....................................... (8,586) (41,150) (25,245) (150,222)
--------- --------- --------- ---------
Total................................................. (1,175,233) (1,195,908) (837,175) (1,413,266)
--------- --------- --------- ---------
Decrease in shares.................................... (380,139) (395,179) (259,885) (508,290)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
22
<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 each
Class' 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,
based on average shares outstanding.
The total return based on net asset value measures each Class'
performance assuming investors purchased shares at net asset value as of the
beginning of the period, reinvested dividends and capital gains paid at net
asset value, and then sold their shares at the net asset value per share on
the last day of the period. The total return computations do not reflect any
sales charges investors may incur in purchasing or selling shares of each
Series. The total returns for periods of less than one year are not
annualized.
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD SERIES CLASS A CLASS D
--------------------------------------------- ---------------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, 2/1/94**
PER SHARE OPERATING --------------------------------------------- --------------- TO
PERFORMANCE: 1996 1995 1994 1993 1992 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $6.47 $6.30 $6.73 $6.65 $6.50 $6.48 $6.31 $6.67
----- ----- ----- ----- ----- ----- ----- -----
Net investment income......................... 0.36 0.37 0.37 0.39 0.41 0.30 0.31 0.21
Net realized and unrealized gain (loss)....... 0.05 0.17 (0.34) 0.28 0.16 0.05 0.17 (0.36)
----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease) from investment operations 0.41 0.54 0.03 0.67 0.57 0.35 0.48 (0.15)
Dividends paid or declared.................... (0.36) (0.37) (0.37) (0.39) (0.41) (0.30) (0.31) (0.21)
Distributions from net gain realized.......... (0.02) -- (0.09) (0.20) (0.01) (0.02) -- --
----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in net asset value.... 0.03 0.17 (0.43) 0.08 0.15 0.03 0.17 (0.36)
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period................ $6.50 $6.47 $6.30 $6.73 $6.65 $6.51 $6.48 $6.31
----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN BASED
ON NET ASSET VALUE: 6.49% 8.85% 0.41% 10.66% 9.00% 5.53% 7.78% (2.47)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets................ 0.84% 0.90% 0.85% 0.88% 0.82% 1.74% 1.91% 1.74%+
Net investment income to average net assets 5.49% 5.84% 5.74% 5.94% 6.20% 4.59% 4.84% 4.73%+
Portfolio turnover............................ 34.75% 17.64% 8.36% 7.70% 45.50% 34.75% 17.64% 8.36%++
Net assets, end of period (000s omitted)...... $50,264 $51,504 $48,007 $51,218 $49,448 $1,919 $1,277 $650
- ------------------
See page 25 for footnotes.
</TABLE>
23
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA QUALITY SERIES CLASS A CLASS D
--------------------------------------------- ---------------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, 2/1/94**
PER SHARE OPERATING --------------------------------------------- --------------- TO
PERFORMANCE: 1996 1995 1994 1993 1992 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $6.65 $6.39 $7.28 $6.85 $6.65 $6.63 $6.38 $7.13
----- ----- ----- ----- ----- ----- ----- -----
Net investment income......................... 0.35 0.34 0.35 0.37 0.40 0.28 0.28 0.19
Net realized and unrealized gain (loss)....... 0.11 0.32 (0.73) 0.54 0.22 0.12 0.31 (0.75)
----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease) from investment operations 0.46 0.66 (0.38) 0.91 0.62 0.40 0.59 (0.56)
Dividends paid or declared.................... (0.35) (0.34) (0.35) (0.37) (0.40) (0.28) (0.28) (0.19)
Distributions from net gain realized.......... (0.01) (0.06) (0.16) (0.11) (0.02) (0.01) (0.06) --
----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in net asset value.... 0.10 0.26 (0.89) 0.43 0.20 0.11 0.25 (0.75)
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period................ $6.75 $6.65 $6.39 $7.28 $6.85 $6.74 $6.63 $6.38
----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN BASED
ON NET ASSET VALUE: 7.00% 10.85% (5.46)% 13.92% 9.56% 6.20% 9.61% (8.01)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets................ 0.79% 0.89% 0.81% 0.82% 0.78% 1.69% 1.88% 1.77%+
Net investment income to average net assets... 5.11% 5.34% 5.20% 5.30% 5.86% 4.21% 4.36% 4.39%+
Portfolio turnover............................ 12.84% 11.24% 22.16% 15.67% 34.25% 12.84% 11.24% 22.16%++
Net assets, end of period (000s omitted)...... $95,560 $94,947 $99,020 $111,732 $93,557 $1,645 $863 $812
</TABLE>
<TABLE>
<CAPTION>
FLORIDA SERIES CLASS A CLASS D
--------------------------------------------- ---------------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, 2/1/94**
PER SHARE OPERATING --------------------------------------------- --------------- TO
PERFORMANCE: 1996 1995 1994 1993 1992 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $7.71 $7.34 $8.20 $7.56 $7.37 $7.72 $7.34 $8.10
----- ----- ----- ----- ----- ----- ----- -----
Net investment income*........................ 0.38 0.40 0.42 0.46 0.47 0.32 0.34 0.24
Net realized and unrealized gain (loss)....... 0.04 0.37 (0.74) 0.65 0.19 0.04 0.38 (0.76)
----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease) from investment operations 0.42 0.77 (0.32) 1.11 0.66 0.36 0.72 (0.52)
Dividends paid or declared.................... (0.38) (0.40) (0.42) (0.46) (0.47) (0.32) (0.34) (0.24)
Distributions from net gain realized.......... (0.08) -- (0.12) (0.01) -- (0.08) -- --
----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in net asset value.... (0.04) 0.37 (0.86) 0.64 0.19 (0.04) 0.38 (0.76)
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period................ $7.67 $7.71 $7.34 $8.20 $7.56 $7.68 $7.72 $7.34
----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN BASED
ON NET ASSET VALUE: 5.54% 10.87% (3.99)% 15.21% 9.24% 4.74% 10.07% (6.64)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets*............... 0.97% 0.72% 0.42% 0.23% 0.17% 1.73% 1.66% 1.29%+
Net investment income to average net assets* 4.90% 5.38% 5.49% 5.82% 6.32% 4.14% 4.53% 4.61%+
Portfolio turnover............................ 18.53% 11.82% 6.17% 16.42% 12.62% 18.53% 11.82% 6.17%++
Net assets, end of period (000s omitted)...... $45,200 $49,030 $49,897 $52,855 $37,957 $1,277 $603 $244
Without expense reimbursement and/or
management waiver:*
Net investment income per share............... $0.38 $0.37 $0.38 $0.40 $0.41 $0.32 $0.31 $0.21
Ratios:
Expenses to average net assets............. 0.97% 1.03% 1.00% 1.03% 1.02% 1.73% 1.97% 1.84%+
Net investment income to average net assets 4.90% 5.07% 4.91% 5.01% 5.47% 4.14% 4.22% 4.06%+
See page 25 for footnotes.
</TABLE>
24
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES CLASS A CLASS D
--------------------------------------------- ---------------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, 2/1/94**
PER SHARE OPERATING --------------------------------------------- --------------- TO
PERFORMANCE: 1996 1995 1994 1993 1992 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $7.74 $7.30 $8.22 $7.61 $7.39 $7.74 $7.29 $8.17
----- ----- ----- ----- ----- ----- ----- -----
Net investment income*........................ 0.37 0.39 0.41 0.43 0.44 0.31 0.33 0.23
Net realized and unrealized gain (loss)....... 0.11 0.45 (0.87) 0.63 0.22 0.10 0.46 (0.88)
----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease) from investment operations 0.48 0.84 (0.46) 1.06 0.66 0.41 0.79 (0.65)
Dividends paid or declared.................... (0.37) (0.39) (0.41) (0.43) (0.44) (0.31) (0.33) (0.23)
Distributions from net gain realized.......... (0.01) (0.01) (0.05) (0.02) -- (0.01) (0.01) --
----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in net asset value.... 0.10 0.44 (0.92) 0.61 0.22 0.09 0.45 (0.88)
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period................ $7.84 $7.74 $7.30 $8.22 $7.61 $7.83 $7.74 $7.29
----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN BASED
ON NET ASSET VALUE: 6.39% 11.92% (5.80)% 14.46% 9.23% 5.45% 11.19% (8.15)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets*............... 1.05% 0.82% 0.44% 0.23% 0.14% 1.81% 1.64% 1.27%+
Net investment income to average net assets*.. 4.75% 5.21% 5.29% 5.44% 5.83% 3.99% 4.42% 4.49%+
Portfolio turnover............................ 15.12% 4.38% 15.61% 3.13% 12.51% 15.12% 4.38% 15.61%++
Net assets, end of period (000s omitted)...... $35,934 $37,446 $38,920 $38,828 $21,836 $1,232 $1,257 $1,282
Without expense reimbursement and/or
management waiver:*
Net investment income per share............... $0.37 $0.36 $0.35 $0.35 $0.34 $0.31 $0.31 $0.20
Ratios:
Expenses to average net assets............. 1.06% 1.18% 1.13% 1.22% 1.40% 1.82% 2.00% 1.95%+
Net investment income to average net assets 4.74% 4.85% 4.60% 4.45% 4.57% 3.98% 4.06% 3.82%+
<FN>
- ---------------------------
* 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.
** Commencement of operations.
+ Annualized.
++ For the year ended September 30, 1994.
See Notes to Financial Statements.
</FN>
</TABLE>
25
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------
The Trustees and Shareholders,
Seligman Municipal 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 Municipal
Series Trust (formerly Seligman Tax-Exempt Series Trust), as of September 30,
1996, 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, 1996 by correspondence with the Trust's
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the California
High-Yield, California Quality, Florida and North Carolina Series of Seligman
Municipal Series Trust as of September 30, 1996, 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 30, 1996
26
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PROXY RESULTS
- ------------------------------------------------------------------------------
Seligman Municipal Series Trust Shareholders voted on the following proposals
at the SPECIAL MEETING OF SHAREHOLDERS held on September 30, 1996, in New
York, NY. Each Trustee was elected, and all other proposals were approved.
The description of each proposal and number of shares voted are as follows:
ELECTION OF TRUSTEES:
FOR WITHHELD
--------------- ----------
Fred E. Brown 20,813,235 424,145
John R. Galvin 20,805,682 431,698
Alice S. Ilchman 20,816,771 420,609
Frank A. McPherson 20,800,549 436,831
John E. Merow 20,810,270 427,110
Betsy S. Michel 20,826,177 411,203
William C. Morris 20,817,181 420,199
James C. Pitney 20,814,181 423,199
James Q. Riordan 20,757,589 479,791
Ronald T. Schroeder 20,817,181 420,199
Robert L. Shafer 20,743,529 493,851
James N. Whitson 20,817,181 420,199
Brian T. Zino 20,816,870 420,510
RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTE
---------- -------- --------- --------
<S> <C> <C> <C> <C>
20,056,295 160,586 1,020,499 n/a
</TABLE>
APPROVAL TO PERMIT ANY PORTION OF INVESTMENTS IN SECURITIES SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX:
<TABLE>
<CAPTION>
SERIES FOR AGAINST ABSTAIN NON-VOTE
--------------------- --------- --------- ------- --------
<S> <C> <C> <C> <C>
California High-Yield 3,940,941 498,191 573,003 230,564
California Quality 6,371,052 1,483,792 834,770 265,842
Florida 3,237,321 347,902 139,049 155,345
North Carolina 2,679,692 239,984 164,507 75,425
</TABLE>
25
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TRUSTEES
- ------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
John R. Galvin 2
Dean, Fletcher School of Law and Diplomacy at
Tufts University
Director, USLIFE Corporation
Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Chairman, The Rockefeller Foundation
Frank A. McPherson 2
Chairman and CEO, Kerr-McGee Corporation
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
John E. Merow
Partner, Sullivan & Cromwell, Law Firm
Director, Commonwealth Aluminum Corporation
Betsy S. Michel 2
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
Director, Public Service Enterprise Group
James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Ronald T. Schroeder 1
Managing Director,
J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3
Director or Trustee,
Various Organizations
James N. Whitson 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, Red Man Pipe and Supply Company
Brian T. Zino 1
President
Managing Director,
J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
- -------------------
Member:
1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
28
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
EXECUTIVE OFFICERS
- ------------------------------------------------------------------------------
William C. Morris
Chairman
Brian T. Zino
President
Thomas G. Moles
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- ------------------------------------------------------------------------------
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.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder
Services
(800) 622-4597 24-Hour Automated
Telephone
Access Service
29
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30
<PAGE>
Seligman Financial Services, Inc.
an affiliate of
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 Municipal 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 9/96
