================================================================================
TO THE SHAREHOLDERS
--------------------------------------------------------------------------------
We are pleased to update you on Seligman Tax-Exempt Series Trust -- the
California High-Yield and Quality Series, the Florida Series, and the North
Carolina Series -- at its mid-year, March 31, 1996. Specific portfolio
information for each Series begins on page 4.
The Federal Reserve Board began lowering the federal funds rate -- the
interest rate charged for interbank loans -- in July 1995, in response to a
slowdown in the rate of economic growth and a stable rate of inflation. This
less restrictive monetary policy encouraged the continuation of the decline in
long-term interest rates through 1995 and into 1996. During the middle of the
first quarter of 1996, however, the economy began to exhibit signs of strength.
Up to this point, the municipal bond market was rallying in anticipation of an
additional Fed easing of short-term interest rates. The realization that a
continued lowering of the federal funds rate was no longer imminent caused
long-term interest rates to spike sharply.
Overall, municipal market psychology has been improving since the end of
1995. Tax reform legislation appears to have faded as an issue in the
presidential race, thereby easing the concerns that overshadowed the municipal
market in 1995. This, together with the higher yields available, has stimulated
demand. While new issue supply has slowed recently due to market conditions,
total first-quarter volume was 35% higher compared to last year's first quarter.
In your Trust, your Manager views the current interest rate environment as an
opportunity to purchase long-term municipal bonds at levels not seen since
September 1995. While we believe that the increase in municipal yields is
temporary, the market may remain unsettled until participants are convinced that
the economy is not re-accelerating. Therefore, new purchases have been
concentrated in current coupon bonds, which are generally less volatile than
discount or zero coupon bonds during periods of uncertainty.
Going forward, we believe the most likely outcome for 1996 is continued
moderate economic growth. However, in the event that the economy exceeds its
non-inflationary potential, we are confident that the Fed will act swiftly to
prevent the economy from growing at an unsustainable rate.
For any additional information about Seligman Tax-Exempt Series Trust, or
your investment in its shares, please write or call using the toll-free
telephone numbers listed on page 22 of this report.
By order of the Trustees,
/S/ William C. Morris
William C. Morris
Chairman
/S/ Brian T. Zino
Brian T. Zino
President
May 3, 1996
1
<PAGE>
================================================================================
SELIGMAN TAX-EXEMPT SERIES TRUST
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------------------------------
CALIFORNIA CALIFORNIA NORTH
HIGHLIGHTS March 31, 1996 HIGH-YIELD QUALITY FLORIDA CAROLINA
SERIES SERIES SERIES SERIES
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS (in millions)
Class A $47.6 $95.2 $48.2 $36.6
Class D 1.2 1.0 1.2 1.3
-----------------------------------------------------------------------------------------------------------------
YIELD*
Class A 4.73% 4.71% 4.15% 4.61%
Class D 4.06 4.02 3.59 4.06
-----------------------------------------------------------------------------------------------------------------
DIVIDENDS**
Class A $0.179 $0.171 $0.188 $0.184
Class D 0.150 0.140 0.158 0.154
-----------------------------------------------------------------------------------------------------------------
CAPITAL GAIN DISTRIBUTIONS** $0.023 $0.012 $0.080 $0.014
-----------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN+
Class A
One Year
With sales charge(1) 1.51% 2.46% 1.51% 1.92%
Without sales charge(2) 6.60 7.62 6.58 7.00
Five Years
With sales charge(1) 6.43 6.49 6.64 6.35
Without sales charge(2) 7.48 7.52 7.69 7.39
Ten Years or since inception: 11/17/86 8/27/90
With sales charge(1) 7.09 6.89 6.81% 6.54%
Without sales charge(2) 7.61 7.42 7.37 7.48
Class D
One Year
With CDSL(1) 4.43 5.61 4.87 5.32
Without CDSL(2) 5.43 6.61 5.87 6.32
Since inception February 1, 1994(2) 3.14 1.84 2.21 2.15
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A $6.42 $6.70 $7.63 $7.77
Class D 6.42 6.69 7.64 7.77
-----------------------------------------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
Class A $6.74 $7.03 $8.01 $8.16
Class D 6.42 6.69 7.64 7.77
-----------------------------------------------------------------------------------------------------------------
MOODY'S/S&P RATINGS++
Aaa/AAA 8% 63% 75% 46%
Aa/AA 6 25 16 31
A/A 37 12 9 23
Baa/BBB 22 -- -- --
Non-rated 27 -- -- --
-----------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
================================================================================
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------
CALIFORNIA CALIFORNIA NORTH
HIGH-YIELD QUALITY FLORIDA CAROLINA
SERIES SERIES SERIES SERIES
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOLDINGS BY MARKET SECTOR++
Revenue Bonds 86% 85% 71% 80%
General Obligation Bonds 14 15 29 20
------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE MATURITY (years) 19.3 21.7 18.0 21.9
------------------------------------------------------------------------------------------------------------------
</TABLE>
* Current yield representing the annualized yield for the 30-day period ended
March 31, 1996.
** Represents per share amount paid or declared in respect of Class A and
Class D shares during the six months ended March 31, 1996.
(1) Represents the average compound rate of return per year over the specified
period, and reflects change in price and assumes all distributions within
the period are reinvested in additional shares; also reflects the effect of
the 4.75% maximum initial sales charge or contingent deferred sales load
("CDSL") of 1%, if applicable. No adjustment was made to Class A shares'
performance for periods prior to 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, which are the commencement dates
for the Administration, Shareholder Services and Distribution Plan fee of
up to 0.25% of average daily net assets of each series.
(2) Represents the rate of return as above, but does not reflect the effect of
the 4.75% maximum initial sales charge or 1% CDSL.
+ At its discretion, the Manager reimbursed certain expenses and/or waived a
portion of its fees for the Florida and North Carolina Series. This has the
effect of increasing each Series' total returns for all periods presented.
++ 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 to the federal alternative minimum
tax. Past performance is not indicative of future investment results.
3
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
--------------------------------------------------------------------------------
CALIFORNIA HIGH-YIELD SERIES
<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
------ --------------- ------------ -----
<C> <S> <C> <C>
$2,500,000 Alameda, CA Certificates of Participation (City Hall Seismic Upgrade Project),
6.20% due 5/1/2025................................................................ NR/A $2,494,150
1,000,000 Bakersfield, CA Hospital Rev. (Bakersfield Memorial Hospital), 6 1/2% due 1/1/2022.. A/A 1,031,780
3,000,000 California Department of Water Resources Water System Rev. (Central Valley Project),
6% due 12/1/2020.................................................................. Aa/AA 2,984,400
1,500,000 California Pollution Control Financing Authority Pollution Control Rev.
(Pacific Gas & Electric Co.), 7 1/2% due 5/1/2016................................. A2/A 1,537,380
2,500,000 California Public Works Board Lease Rev. (Department of Corrections--Del Norte),
5 1/8% due 12/1/2008.............................................................. A/A- 2,390,875
2,500,000 Cupertino, CA Certificates of Participation (Capital Improvement Projects),
5 3/4% due 1/1/2016............................................................... A1/A+ 2,408,375
175,000 Fairfield, CA Improvement Bonds (Smith Ranch Assessment District),
7.35% due 9/2/2003................................................................ NR/NR 177,175
155,000 Fairfield, CA Improvement Bonds (Smith Ranch Assessment District),
7.40% due 9/2/2007................................................................ NR/NR 159,196
1,000,000 Folsom, CA Special Tax Bonds (Willow Creek Community Facilities District No. 1),
8 1/4% due 12/1/2006.............................................................. NR/NR 1,064,980
1,000,000 Fontana, CA Certificates of Participation (Police Facility Project),
7 3/4% due 4/1/2016 .............................................................. Baa/NR 1,020,220
2,000,000 Garden Grove, CA Agency for Community Development Rev. (Garden Grove Community
Project), 5 7/8% due 10/1/2023.................................................... NR/BBB+ 1,850,380
500,000 Los Angeles, CA Certificates of Participation (Convention & Exhibition Center
Authority), 7 3/8% due 8/15/2018.................................................. Aaa/AAA 555,490
500,000 Los Angeles, CA Community Redevelopment Agency Multi-Family Housing Rev.
(Grand Central Square), 5.85% due 12/1/2026*...................................... Baa1/BBB+ 443,740
1,300,000 Los Angeles, CA Wastewater System Rev., 7.10% due 6/1/2018.......................... A1/A 1,397,695
1,000,000 Los Angeles County, CA Certificates of Participation (Sheriff's Training Academy
and San Fernando Courthouse), 7 3/4% due 7/1/2016................................. NR/NR 1,030,260
2,385,000 Los Angeles County, CA Transportation Commission Sales Tax Rev.,
5 3/4% due 7/1/2018............................................................... Aaa/AAA 2,317,743
400,000 Milpitas, CA Local Improvement District No. 9 (Milpitas Business Park),
7 1/4% due 9/2/2007............................................................... NR/NR 412,260
400,000 Milpitas, CA Local Improvement District No. 9 (Milpitas Business Park),
7.30% due 9/2/2008................................................................ NR/NR 412,308
250,000 Milpitas, CA Local Improvement District No. 9 (Milpitas Business Park),
7.30% due 9/2/2011................................................................ NR/NR 257,595
1,000,000 Oxnard Union High School District, CA Certificates of Participation
(Union High School), 7.70% due 11/1/2019.......................................... NR/NR 1,128,360
750,000 Petaluma, CA Community Development Commission Tax Allocation Bonds
(Central Business District), 9.30% due 5/15/2010.................................. Baa1/NR 752,610
2,230,000 Pleasanton, CA Joint Powers Financing Authority Reassessment Rev.,
6.15% due 9/2/2012................................................................ Baa/NR 2,231,450
2,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2036............................................................... Baa1/A 1,840,100
</TABLE>
----------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
4
<PAGE>
================================================================================
March 31, 1996
--------------------------------------------------------------------------------
CALIFORNIA HIGH-YIELD SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
------ --------------- ------------ -----
<C> <S> <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 $ 1,054,608
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 1,241,280
5,000 Riverside County, CA (Single Family Mortgage Rev.), 10 1/2% due 9/1/2014............ NR/BBB+ 5,233
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- 1,809,200
3,000,000 San Joaquin Hills, CA Transportation Corridor Agency (Orange County
Senior Lien Toll Road), 6 3/4% due 1/1/2032....................................... NR/NR 3,077,250
2,500,000 Santa Barbara, CA Certificates of Participation, 5.70% due 3/1/2011................. A1/A+ 2,410,150
1,000,000 Santa Clara, CA Improvement Bonds Project No. 186 (Santa Clara Convention Center
Complex), 7.10% due 9/2/2011...................................................... NR/NR 1,025,810
1,500,000 Santa Cruz, CA Hospital Rev. (Dominican Santa Cruz Hospital), 7% due 12/1/2013 A1/A+ 1,578,015
2,000,000 Santa Margarita, CA Water District G.O.'s, 7 1/2% due 11/1/2005..................... NR/NR 2,077,680
1,000,000 Southern California Public Power Authority Power Project Rev. (Multiple Projects),
6% due 7/1/2018................................................................... A/A 978,280
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+ 927,745
1,270,000 Stanislaus, CA Waste-to-Energy Financing Agency Solid Waste Facility Rev.
(Ogden Martin System of Stanislaus, Inc. Project), 7 5/8% due 1/1/2010 ........... NR/BBB+ 1,372,680
1,000,000 Ukiah, CA Electric Rev., 8% due 6/1/2018............................................ NR/AAA 1,027,660
-----------
Total Municipal Bonds (Cost $47,413,464)--99.3%............................................................... 48,484,113
Variable Rate Demand Notes (Cost $1,400,000)--2.9% ........................................................... 1,400,000
Other Assets Less Liabilities--(2.2)%......................................................................... (1,042,290)
-----------
NET ASSETS--100.0%............................................................................................ $48,841,823
===========
</TABLE>
----------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
5
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS (continued)
--------------------------------------------------------------------------------
CALIFORNIA QUALITY SERIES
<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
------ --------------- ------------ -----
<C> <S> <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 $2,037,560
2,500,000 California Department of Water Resources Water System Rev. (Central Valley Project),
5 1/2% due 12/1/2023.............................................................. Aa/AA 2,344,800
2,000,000 California Educational Facilities Authority Rev. (Stanford University),
6 3/4% due 1/1/2013 .............................................................. Aaa/AAA 2,140,360
3,200,000 California Educational Facilities Authority Rev. (University of Southern California
Project), 5.80% due 10/1/2015..................................................... Aa/AA 3,137,792
3,440,000 California Educational Facilities Authority Rev. (Pomona College), 6% due 2/15/2017 Aa1/AA 3,415,438
4,500,000 California Educational Facilities Authority Rev. (California Institute of Technology),
6% due 1/1/2021................................................................... Aaa/AAA 4,527,720
3,000,000 California Health Facilities Financing Authority Health Facility Rev. (Kaiser Permanente),
6 1/2% due 12/1/2020.............................................................. Aa3/AA 3,079,500
2,000,000 California Health Facilities Financing Authority Insured Hospital Rev.
(Scripps Memorial Hospital), 6 3/8% due 10/1/2022................................. Aaa/AAA 2,073,640
5,000 California Housing Finance Agency (Housing Revenue Insured Bonds),
8 3/4% due 8/1/2010............................................................... Aaa/AAA 5,286
425,000 California Housing Finance Agency (Housing Revenue Insured Bonds),
8 5/8% due 8/1/2015............................................................... Aaa/AAA 447,240
2,000,000 California Housing Finance Agency Housing Rev., 5.60% due 8/1/2024.................. Aaa/AAA 1,907,140
2,840,000 California Housing Finance Agency Home Mortgage Rev., 6 3/4% due 2/1/2025*.......... Aa/AA- 2,896,800
940,000 California Public Capital Improvements Financing Authority (Pooled Projects),
8.10% due 3/1/2018................................................................ Aaa/AAA 992,170
3,000,000 California Public Works Board Lease Rev. (Correctional Facilities Improvements),
5 3/4% due 9/1/2021............................................................... A/A- 2,835,510
7,000,000 California State G.O.'s, 5.90% due 4/1/2023......................................... A1/A 6,953,240
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 2,645,910
5,000,000 Contra Costa Water District, CA, 5 1/2% due 10/1/2019............................... Aaa/AAA 4,796,450
3,500,000 East Bay, CA Municipal Utility District Water System Rev., 6% due 6/1/2012 ......... Aaa/AAA 3,549,245
2,500,000 Eastern Municipal Water District Riverside County, CA Water and Sewer Rev.,
6 3/4% due 7/1/2012............................................................... Aaa/AAA 2,832,700
3,000,000 Fresno, CA Sewer System Rev., 5 1/4% due 9/1/2019................................... Aaa/AAA 2,808,120
2,000,000 Industry, CA G.O.'s, 7 3/8% due 7/1/2015............................................ Aaa/AAA 2,224,140
3,000,000 Los Angeles Department of Water & Power, CA Electric Plant Rev., 6 3/8% due 2/1/2020 Aa/AA- 3,117,990
2,000,000 M-S-R Public Power Agency, CA (San Juan Project), 6 3/8% due 7/1/2019............... Aaa/AAA 2,074,000
2,000,000 Marin, CA Municipal Water District Water Rev., 5.65% due 7/1/2023................... A1/AA 1,911,580
3,000,000 Metropolitan Water District of Southern California Waterworks G.O.'s,
5 3/4% due 3/1/2014............................................................... Aaa/AAA 2,976,660
4,500,000 Northern California Power Agency Public Power Rev. (Combustion Turbine Project A-1),
6% due 8/15/2010.................................................................. Aaa/AAA 4,550,220
</TABLE>
----------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
6
<PAGE>
================================================================================
March 31, 1996
--------------------------------------------------------------------------------
CALIFORNIA QUALITY SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
------ --------------- ------------ -----
<C> <S> <C> <C>
$4,500,000 Orange County, CA Local Transportation Authority (Measure M Sales Tax Rev.),
6% due 2/15/2009.................................................................. Aaa/AAA $4,722,300
3,250,000 San Francisco Bay Area Rapid Transit District, CA (Sales Tax Rev.),
6.60% due 7/1/2012 ............................................................... Aaa/AAA 3,479,808
3,000,000 San Francisco, CA (City & County) Airport Commission Rev.
(International Airport), 6.60% due 5/1/2024*...................................... Aaa/AAA 3,129,930
3,000,000 San Francisco, CA (City & County) Public Utilities Commission Water Rev.,
6% due 11/1/2015.................................................................. Aa/AA 3,001,410
2,000,000 Santa Rosa, CA Sonoma County Wastewater Rev. (Subregional Wastewater Project),
6 1/2% due 9/1/2022............................................................... Aaa/AAA 2,232,720
5,000,000 University of California Regents (Multiple Purpose Projects), 6 3/8%
due 9/1/2024 ..................................................................... Aaa/AAA 5,185,750
-----------
Total Municipal Bonds (Cost $91,185,243)--97.8% ............................................................. 94,033,129
Variable Rate Demand Notes (Cost $900,000)--0.9%............................................................. 900,000
Other Assets Less Liabilities--1.3%.......................................................................... 1,271,722
-----------
NET ASSETS--100.0%........................................................................................... $96,204,851
===========
FLORIDA SERIES
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 500,000 Broward County, FL G.O.'s (Environmentally Sensitive Lands Project),
6.90% due 7/1/2009................................................................ Aaa/AAA $ 529,345
2,500,000 Broward County, FL Water & Sewer Utility Rev., 5% due 10/1/2018..................... Aaa/AAA 2,238,850
1,500,000 Broward County School District, FL G.O.'s, 7 1/8% due 2/15/2008..................... Aaa/AAA 1,643,850
1,500,000 Citrus County, FL Pollution Control Rev. (Florida Power Corporation Crystal River
Power Plant Project), 6 5/8% due 1/1/2027......................................... A1/A+ 1,577,670
2,000,000 Collier County, FL Water & Sewer Rev., 5 1/4% due 7/1/2021.......................... Aaa/AAA 1,842,500
1,250,000 Dade County, FL Aviation Rev., 6 1/8% due 10/1/2020*................................ Aaa/AAA 1,264,950
1,000,000 Dade County, FL Public Facilities Rev. (Jackson Memorial Hospital),
5 1/4% due 6/1/2023............................................................... Aaa/AAA 920,030
1,000,000 Dade County, FL Seaport G.O.'s, 6 1/4% due 10/1/2021................................ Aaa/AAA 1,089,270
2,000,000 Dade County, FL Water & Sewer System Rev., 5 3/4% due 10/1/2022..................... Aaa/AAA 1,989,220
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 1,845,360
1,000,000 Dunes Community Development District, FL Rev. (Intracoastal Waterway Bridge Project),
7% due 2/1/2007................................................................... NR/A 1,047,870
1,000,000 Florida Housing Finance Agency (General Mortgage Rev.), 6.35% due 6/1/2014 ......... NR/AAA 1,020,780
715,000 Florida Housing Finance Agency Rev. (Single Family Mortgage), 6.55% due 7/1/2014* .. Aaa/AAA 724,989
1,000,000 Florida State Department of Natural Resources Rev. (Save Our Coast),
7.35% due 7/1/2008................................................................ Aaa/AAA 1,029,710
2,000,000 Florida State Department of Transportation G.O.'s (Right of Way),
5.80% due 7/1/2021................................................................ Aa/AAA 1,984,080
1,000,000 Florida State Municipal Power Agency Rev. (St. Lucie Project), 5 1/2% due 10/1/2012. Aaa/AAA 979,830
</TABLE>
----------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
7
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS (continued)
--------------------------------------------------------------------------------
FLORIDA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
------ --------------- ------------ -----
<C> <S> <C> <C>
$2,500,000 Florida State Turnpike Authority Turnpike Rev., 5 5/8% due 7/1/2025. ............... Aaa/AAA $ 2,445,375
1,500,000 Gainesville, FL Utilities System Rev., 5 1/2% due 10/1/2013......................... Aa/AA 1,460,565
2,500,000 Hillsborough County, FL Aviation Authority Rev. (Tampa International Airport),
5 3/8% due 10/1/2023*............................................................. Aaa/AAA 2,309,725
1,050,000 Jacksonville Beach, FL Utilities Rev., 7 1/2% due 10/1/2014......................... Aaa/AAA 1,092,073
1,500,000 Jacksonville Electric Authority, FL Rev. (St. Johns River Power Park System),
5 1/2% due 10/1/2013.............................................................. Aa1/AA 1,460,565
2,000,000 Kissimmee Utility Authority, FL Electric System Improvement Rev.,
5 1/4% due 10/1/2018.............................................................. Aaa/AAA 1,857,980
1,000,000 Lee County, FL Transportation Facilities Rev., 6% due 10/1/2015.................... Aaa/AAA 1,016,620
1,000,000 Naples, FL Hospital Rev. (Naples Community Hospital, Inc. Project), 7% due 10/1/2013 Aaa/AAA 1,037,590
1,000,000 Orange County Health Facilities Authority, FL Rev. (Orlando Regional Medical Center),
6.80% due 10/1/2015............................................................... Aaa/AAA 1,063,000
2,000,000 Orlando, FL Utilities Commission Water & Electric Rev., 5 1/2% due 10/1/2026........ Aa/AA- 1,874,020
1,000,000 Orlando-Orange County Expressway Authority, FL Expressway Rev., 7 1/2% due 7/1/2016. Aaa/AAA 1,030,080
1,000,000 Osceola County, FL Transportation Rev. (Osceola Parkway Project),
6.10% due 4/1/2017................................................................ Aaa/AAA 1,017,710
1,200,000 Palm Beach County, FL Criminal Justice Facilities Rev., 7 1/4% due 6/1/2011......... Aaa/AAA 1,348,980
1,500,000 Palm Beach County, FL Water & Sewer Rev., 7 1/8% due 10/1/2009...................... Aa/A+ 1,606,260
1,625,000 Palm Beach County, FL Water & Sewer Rev., 5 1/4% due 10/1/2013...................... Aaa/AAA 1,544,660
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 949,670
1,000,000 St. Lucie County, FL Utility System Rev., 7 1/8% due 10/1/2017...................... Aa/AA 1,126,710
1,250,000 Volusia County, FL Educational Facilities Authority Rev. (Embry-Riddle Aeronautical
University Project), 6 5/8% due 10/15/2022........................................ NR/AAA 1,310,950
-----------
Total Municipal Bonds (Cost $46,483,398)--95.7% ..................................................... 47,280,837
Variable Rate Demand Notes (Cost $900,000)--1.8%..................................................... 900,000
Other Assets Less Liabilities--2.5%.................................................................. 1,206,528
-----------
NET ASSETS--100.0%................................................................................... $49,387,365
===========
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
------ --------------- ------------ -----
<C> <S> <C> <C>
$1,250,000 Appalachian State University, NC Housing & Student Center System Rev.,
5 5/8% due 7/15/2015.............................................................. Aaa/AAA $ 1,227,525
600,000 Buncombe County, NC Metropolitan Sewerage District (Sewerage System Rev.),
5 1/2% due 7/1/2022............................................................... Aaa/AAA 570,402
2,000,000 Charlotte-Mecklenburg Hospital Authority, NC Health Care System Rev.,
6 1/4% due 1/1/2020............................................................... Aa/AA 2,017,480
1,000,000 Charlotte, NC Certificates of Participation (Charlotte-Mecklenburg Law Enforcement
Center Project), 5 3/8% due 6/1/2013.............................................. Aa1/AA 968,870
2,000,000 Charlotte, NC Water & Sewer G.O.'s, 5.90% due 2/1/2017.............................. Aaa/AAA 2,075,580
</TABLE>
----------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
8
<PAGE>
================================================================================
March 31, 1996
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P+ VALUE
------ --------------- ------------ -----
<C> <S> <C> <C>
$1,590,000 Concord, NC Utilities System Rev., 5 3/4% due 12/1/2017............................. Aaa/AAA $ 1,572,383
500,000 Cumberland County, NC Hospital Facility Rev. (Cumberland County Hospital
System, Inc.), 6% due 10/1/2021 .................................................. Aaa/AAA 501,155
2,000,000 Fayetteville, NC Public Works Commission Rev., 4 3/4% due 3/1/2014.................. Aaa/AAA 1,775,960
2,500,000 Martin County Industrial Facilities and Pollution Control Financing Authority, NC
(Weyerhaeuser Company Project), 5.65% due 12/1/2023*.............................. A2/A 2,317,375
1,000,000 North Carolina Eastern Municipal Power Agency Power System Rev., 5% due 1/1/2021 ... Aaa/BBB+ 921,330
500,000 North Carolina Educational Facilities Financing Authority Rev. (Duke University
Project), 6 3/4% due 10/1/2021.................................................... Aa1/AA+ 545,485
500,000 North Carolina Educational Facilities Financing Authority Rev. (Elon College Project),
6 3/8% due 1/1/2014............................................................... NR/AAA 513,930
600,000 North Carolina Housing Finance Agency Rev. (Multi-Family), 5.80% due 7/1/2014 ...... Aa/AA 589,344
1,455,000 North Carolina Housing Finance Agency Rev. (Single Family), 6 1/2% due 3/1/2018 .... Aa/A+ 1,493,397
250,000 North Carolina Housing Finance Agency Rev. (Multi-Family), 5.90% due 7/1/2026 ...... Aa/AA 241,103
750,000 North Carolina Medical Care Commission Hospital Rev. (North Carolina Baptist
Hospital Project), 6 3/8% due 6/1/2014............................................ Aa/AA- 772,267
1,000,000 North Carolina Medical Care Commission Hospital Rev. (Mercy Hospital Project),
6 1/2% due 8/1/2015............................................................... NR/A 1,017,900
1,250,000 North Carolina Medical Care Commission Hospital Rev. (Rex Hospital Project),
6 1/4% due 6/1/2017............................................................... A1/A+ 1,296,650
1,500,000 North Carolina Medical Care Commission Hospital Rev. (Carolina Medicorp Project),
6% due 5/1/2021................................................................... Aa/AA 1,475,085
1,000,000 North Carolina Medical Care Commission Hospital Rev. (Memorial Mission Hospital
Project), 6% due 10/1/2022........................................................ Aaa/AAA 1,003,290
2,250,000 North Carolina Medical Care Commission Hospital Rev. (Presbyterian Health Services
Corp. Project), 6% due 10/1/2024.................................................. Aa/AA 2,210,805
2,000,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev., 5 3/4% due 1/1/2015 Aaa/AAA 1,963,800
3,000,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev., 5% due 1/1/2020 . Aaa/AAA 2,768,550
1,000,000 Orange, NC Water & Sewer Authority Rev., 5.20% due 7/1/2016......................... Aa/AA 942,580
250,000 Piedmont Triad Airport Authority, NC Airport Rev. Series "A," 6 3/4% due 7/1/2016 .. Aaa/AAA 267,230
775,000 Raleigh, NC G.O.'s, 6 1/2% due 3/1/2008............................................. Aaa/AAA 834,892
200,000 Transylvania County, NC G.O.'s, 6.80% due 4/1/2007.................................. A/A 216,508
500,000 University of North Carolina Chapel Hill Housing System Rev., 6.40% due 11/1/2010 .. NR/AA- 532,365
1,000,000 University of North Carolina Charlotte Rev. (Student Activity Center),
5 1/2% due 6/1/2021 .............................................................. Aaa/AAA 961,730
500,000 University of North Carolina Hospitals at Chapel Hill Rev., 6 3/8% due 2/15/2017.... Aa/AA 519,855
1,000,000 University of North Carolina Hospitals at Chapel Hill Rev., 5 1/4% due 2/15/2026 ... Aa/AA 914,370
1,550,000 Wake County Industrial Facilities & Pollution Control Financing Authority, NC
(Carolina Power & Light), 6.90% due 4/1/2009...................................... A2/A1 1,663,879
500,000 Wayne County, NC G.O.'s, 5.90% due 2/1/2009......................................... A/A+ 521,915
-----------
Total Municipal Bonds (Cost $36,541,383)--98.2% ............................................................. 37,214,990
Variable Rate Demand Notes (Cost $100,000)--0.2%............................................................. 100,000
Other Assets Less Liabilities--1.6%.......................................................................... 591,927
-----------
NET ASSETS--100.0%........................................................................................... $37,906,917
===========
</TABLE>
----------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
9
<PAGE>
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES March 31, 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 ......................................... $ 48,484,113 $ 94,033,129 $ 47,280,837 $ 37,214,990
Short-term holdings ........................................ 1,400,000 900,000 900,000 100,000
------------ ------------ ------------ ------------
49,884,113 94,933,129 48,180,837 37,314,990
Cash ......................................................... 327,809 82,382 261,743 33,438
Interest receivable .......................................... 875,221 1,522,388 1,133,821 632,849
Receivable for Shares of Beneficial Interest sold ............ 36,998 27,062 -- 165,184
Expenses prepaid to shareholder service agent ................ 3,578 5,904 3,757 3,579
Other ........................................................ 381 2,837 122 730
------------ ------------ ------------ ------------
Total Assets ................................................. 51,128,100 96,573,702 49,580,280 38,150,770
------------ ------------ ------------ ------------
LIABILITIES:
Payable for securities purchased ............................. 1,820,600 -- -- --
Payable for Shares of Beneficial Interest repurchased ........ 280,061 56,937 9,013 101,837
Dividends payable ............................................ 102,673 189,569 92,210 69,341
Accrued expenses, taxes, and other ........................... 82,943 122,345 91,692 72,675
------------ ------------ ------------ ------------
Total Liabilities ............................................ 2,286,277 368,851 192,915 243,853
------------ ------------ ------------ ------------
Net Assets ................................................... $ 48,841,823 $ 96,204,851 $ 49,387,365 $ 37,906,917
============ ============ ============ ============
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par:
Class A ................................................... $ 7,428 $ 14,200 $ 6,316 $ 4,715
Class D ................................................... 185 155 160 161
Additional paid-in capital ................................... 47,250,896 93,743,207 48,317,433 37,233,307
Undistributed/accumulated net realized gain (loss) ........... 512,665 (400,597) 266,017 (4,873)
Net unrealized appreciation of investments ................... 1,070,649 2,847,886 797,439 673,607
------------ ------------ ------------ ------------
Net Assets ................................................... $ 48,841,823 $ 96,204,851 $ 49,387,365 $ 37,906,917
============ ============ ============ ============
NET ASSETS:
Class A ................................................... $ 47,653,579 $ 95,165,047 $ 48,163,418 $ 36,652,241
Class D ................................................... $ 1,188,244 $ 1,039,804 $ 1,223,947 $ 1,254,676
SHARES OF BENEFICIAL INTEREST OUTSTANDING
(Unlimited shares authorized, except Florida Series
20,000,000 shares authorized; $.001 par value):
Class A ................................................... 7,427,764 14,200,126 6,316,181 4,714,927
Class D ................................................... 184,996 155,442 160,237 161,476
NET ASSET VALUE PER SHARE:
Class A ................................................... $ 6.42 $ 6.70 $ 7.63 $ 7.77
Class D ................................................... $ 6.42 $ 6.69 $ 7.64 $ 7.77
</TABLE>
10
<PAGE>
================================================================================
STATEMENTS OF OPERATIONS For the six months ended March 31, 1996
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA CALIFORNIA NORTH
HIGH-YIELD QUALITY FLORIDA CAROLINA
SERIES SERIES SERIES SERIES
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................................... $ 1,623,771 $ 2,859,308 $ 1,462,251 $ 1,121,303
----------- ----------- ----------- -----------
EXPENSES:
Management fees ........................................ 127,497 245,512 124,880 95,608
Shareholder account services ........................... 31,365 52,567 32,452 31,244
Distribution and service fees .......................... 30,911 53,701 64,001 51,968
Custody and related services ........................... 12,242 18,389 11,462 14,881
Auditing and legal fees ................................ 10,436 15,574 10,377 10,090
Trustees' fees and expenses ............................ 3,970 3,975 3,664 3,598
Registration ........................................... 2,942 3,191 2,015 2,163
Shareholder reports and communications ................. 2,749 3,160 2,669 2,704
Miscellaneous .......................................... 2,311 4,468 2,367 2,718
----------- ----------- ----------- -----------
Total expenses ......................................... 224,423 400,537 253,887 214,974
----------- ----------- ----------- -----------
Net investment income .................................. 1,399,348 2,458,771 1,208,364 906,329
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments ................ 618,180 (187,999) 484,147 (1,887)
Net change in unrealized appreciation
of investments ...................................... (803,358) 1,164,610 (488,630) 277,764
----------- ----------- ----------- -----------
Net gain (loss) on investments ......................... (185,178) 976,611 (4,483) 275,877
----------- ----------- ----------- -----------
Increase in net assets from operations ................. $ 1,214,170 $ 3,435,382 $ 1,203,881 $ 1,182,206
=========== =========== =========== ===========
</TABLE>
----------
See notes to financial statements.
11
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD CALIFORNIA QUALITY
SERIES SERIES
------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/96 9/30/95 3/31/96 9/30/95
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 1,399,348 $ 2,807,220 $ 2,458,771 $ 5,160,992
Net realized gain (loss) on investments .................... 618,180 88,139 (187,999) (40,110)
Net change in unrealized appreciation/depreciation
of investments .......................................... (803,358) 1,121,392 1,164,610 4,529,579
------------ ------------ ------------ ------------
Increase in net assets from operations ..................... 1,214,170 4,016,751 3,435,382 9,650,461
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ................................................. (1,371,191) (2,768,632) (2,438,193) (5,122,722)
Class D ................................................. (28,157) (38,588) (20,578) (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 .................. (1,584,626) (2,807,220) (2,631,259) (6,062,824)
------------ ------------ ------------ ------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Net proceeds from sale of shares:
Class A ................................................. 2,581,295 6,943,019 2,413,577 3,791,860
Class D ................................................. 137,806 707,886 391,009 336,722
Shares issued in payment of dividends:
Class A ................................................. 700,265 1,388,517 1,206,864 2,556,436
Class D ................................................. 21,766 29,049 10,715 16,286
Exchanged from associated Funds:
Class A ................................................. 1,677,561 2,554,338 1,806,938 1,674,871
Class D ................................................. 142,332 9,444 119,070 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 ...................................................... 5,387,703 11,632,253 6,057,918 9,004,892
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A ................................................. (7,089,363) (6,675,164) (3,540,810) (12,989,249)
Class D ................................................. (97,417) (12,518) (161,954) (274,505)
Exchanged into associated Funds:
Class A ................................................. (1,483,966) (1,900,990) (2,584,433) (3,245,114)
Class D ................................................. (285,989) (128,605) (179,548) (105,836)
------------ ------------ ------------ ------------
Total ...................................................... (8,956,735) (8,717,277) (6,466,745) (16,614,704)
------------ ------------ ------------ ------------
Increase (decrease) in net assets from transactions
in Shares of Beneficial Interest ........................ (3,569,032) 2,914,976 (408,827) (7,609,812)
------------ ------------ ------------ ------------
Increase (decrease) in net assets .......................... (3,939,488) 4,124,507 395,296 (4,022,175)
NET ASSETS:
Beginning of period ........................................ 52,781,311 48,656,804 95,809,555 99,831,730
------------ ------------ ------------ ------------
End of period .............................................. $ 48,841,823 $ 52,781,311 $ 96,204,851 $ 95,809,555
============ ============ ============ ============
</TABLE>
----------
See notes to financial statements.
12
<PAGE>
================================================================================
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH CAROLINA
FLORIDA SERIES SERIES
------------------------------ -------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/96 9/30/95 3/31/96 9/30/95
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 1,208,364 $ 2,643,663 $ 906,329 $ 2,049,418
Net realized gain (loss) on investments .................... 484,147 295,392 (1,887) 67,083
Net change in unrealized appreciation/depreciation
of investments .......................................... (488,630) 2,057,465 277,764 2,320,714
------------ ------------ ------------ ------------
Increase in net assets from operations ..................... 1,203,881 4,996,520 1,182,206 4,437,215
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ................................................. (1,187,584) (2,625,734) (881,214) (1,991,128)
Class D ................................................. (20,780) (17,929) (25,115) (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 .................. (1,720,612) (2,657,086) (975,820) (2,119,377)
------------ ------------ ------------ ------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Net proceeds from sale of shares:
Class A ................................................. 1,347,298 2,612,961 1,149,967 3,259,927
Class D ................................................. 570,103 463,188 101,368 514,321
Shares issued in payment of dividends:
Class A ................................................. 482,424 1,095,007 457,651 1,126,718
Class D ................................................. 9,955 10,660 18,781 34,388
Exchanged from associated Funds:
Class A ................................................. 1,439,060 1,500,260 224,607 1,065,941
Class D ................................................. 103,131 334,150 -- 583,255
Shares issued in payment of gain distributions:
Class A ................................................. 274,174 7,441 49,273 51,235
Class D ................................................. 3,798 60 2,102 2,322
------------ ------------ ------------ ------------
Total ...................................................... 4,229,943 6,023,727 2,003,749 6,638,107
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A ................................................. (3,315,970) (7,404,963) (2,363,660) (7,888,154)
Class D ................................................. (24,134) (147,983) (76,439) (171,491)
Exchanged into associated Funds:
Class A ................................................. (597,601) (998,971) (510,730) (1,326,399)
Class D ................................................. (21,033) (319,464) (55,291) (1,069,453)
------------ ------------ ------------ ------------
Total ...................................................... (3,958,738) (8,871,381) (3,006,120) (10,455,497)
------------ ------------ ------------ ------------
Increase (decrease) in net assets from transactions
in Shares of Beneficial Interest ........................ 271,205 (2,847,654) (1,002,371) (3,817,390)
------------ ------------ ------------ ------------
Increase (decrease) in net assets .......................... (245,526) (508,220) (795,985) (1,499,552)
NET ASSETS:
Beginning of period ........................................ 49,632,891 50,141,111 38,702,902 40,202,454
------------ ------------ ------------ ------------
End of period .............................................. $ 49,387,365 $ 49,632,891 $ 37,906,917 $ 38,702,902
============ ============ ============ ============
</TABLE>
13
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. Seligman Tax-Exempt Series Trust (the "Trust") consists of four separate
series: the "California High-Yield Series," the "California Quality Series," the
"Florida Series," and the "North Carolina Series." 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 D shares are sold without an initial sales charge but are subject
to a higher distribution fee and a contingent deferred sales load ("CDSL") of 1%
imposed on certain redemptions made within one year of purchase. The two classes
of shares for each Series represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. All tax-exempt securities and other short-term holdings maturing in more
than 60 days are valued based upon quotations provided by an independent
pricing service or, in their absence, at fair value determined in
accordance with procedures approved by the 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 six months ended March 31, 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.
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the six months ended March 31, 1996, were as follows:
SERIES PURCHASES SALES
------ ------------ ------
California High-Yield $11,816,650 $ 9,585,049
California Quality 9,686,715 10,873,195
Florida 4,018,000 4,789,400
North Carolina 3,981,030 4,813,076
At March 31, 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 $1,578,814 $ 508,165
California Quality 4,035,707 1,187,821
Florida 1,451,159 653,720
North Carolina 1,211,792 538,185
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
14
<PAGE>
================================================================================
--------------------------------------------------------------------------------
calculated daily and payable monthly, equal to 0.50% per annum of each Series'
average daily net assets. For the six months ended March 31, 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 $ 6,389 $45,934
California Quality 8,409 60,264
Florida 6,246 47,820
North Carolina 5,534 42,933
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 six
months ended March 31, 1996, for the California High-Yield, California Quality,
Florida, and North Carolina Series, fees paid aggregated $24,793, $48,705,
$58,869, and $45,487, 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 six months ended March 31,
1996, fees paid amounted to $6,118, $4,996, $5,132, and $6,481, 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 six months
ended March 31, 1996, such charges amounted to $299 for the California
High-Yield Series, $429 for the California Quality Series, $54 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 six months ended March 31, 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 $ -- $1,806
California Quality 1,637 1,254
Florida 199 2,607
North Carolina 171 767
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 $31,365
California Quality 52,567
Florida 32,452
North Carolina 31,244
Certain officers and trustees of the Trust are officers or directors of the
Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
Fees of $10,000 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 cost of such fees
and
15
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
interest is included in trustees' fees and expenses, and the accumulated
balances thereof at March 31, 1996, were as follows:
SERIES
------
California High-Yield $24,795
California Quality 24,795
Florida 11,595
North Carolina 8,084
5.Transactions in Shares of Beneficial Interest were as follows:
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD CALIFORNIA QUALITY
SERIES SERIES
---------------------------- -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/96 9/30/95 3/31/96 9/30/95
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sale of shares:
Class A ................................................. 397,834 1,079,685 353,740 590,593
Class D ................................................. 21,118 110,995 56,873 53,458
Shares issued in payment of dividends:
Class A ................................................. 107,560 219,618 176,997 397,979
Class D ................................................. 3,340 4,570 1,576 2,531
Exchanged from associated Funds:
Class A ................................................. 256,067 404,353 266,287 265,696
Class D ................................................. 21,826 1,488 17,434 5,830
Shares issued in payment of gain distributions:
Class A ................................................. 18,896 -- 16,013 100,634
Class D ................................................. 562 -- 126 566
---------- ---------- ---------- ----------
Total ...................................................... 827,203 1,820,709 889,046 1,417,287
---------- ---------- ---------- ----------
Shares repurchased:
Class A ................................................. (1,086,260) (1,056,589) (518,986) (2,039,599)
Class D ................................................. (14,899) (1,935) (24,197) (42,182)
Exchanged into associated Funds:
Class A ................................................. (228,463) (302,366) (379,264) (513,872)
Class D ................................................. (44,116) (21,039) (26,397) (17,443)
---------- ---------- ---------- ----------
Total ...................................................... (1,373,738) (1,381,929) (948,844) (2,613,096)
---------- ---------- ---------- ----------
Increase (decrease) in shares: ............................. (546,535) 438,780 (59,798) (1,195,809)
========== ========== ========== ==========
</TABLE>
16
<PAGE>
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--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH CAROLINA
FLORIDA SERIES SERIES
---------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/96 9/30/95 3/31/96 9/30/95
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sale of shares:
Class A ................................................. 172,315 347,578 145,142 438,845
Class D ................................................. 72,901 60,844 12,841 72,260
Shares issued in payment of dividends:
Class A ................................................. 61,946 146,628 57,662 151,286
Class D ................................................. 1,278 1,419 2,367 4,585
Exchanged from associated Funds:
Class A ................................................. 185,465 199,964 28,848 147,787
Class D ................................................. 13,133 43,212 -- 82,219
Shares issued in payment of gain distributions:
Class A
Class D ................................................. 35,286 1,075 6,221 7,647
488 9 265 347
---------- ---------- ---------- ----------
Total ...................................................... 542,812 800,729 253,346 904,976
---------- ---------- ---------- ----------
Shares repurchased:
Class A
Class D ................................................. (424,162) (999,949) (297,388) (1,057,443)
Exchanged into associated Funds: ........................... (3,064) (19,405) (9,594) (22,493)
Class A
Class D ................................................. (76,346) (135,404) (64,247) (183,108)
(2,670) (41,150) (6,860) (150,222)
---------- ---------- ---------- ----------
Total ...................................................... (506,242) (1,195,908) (378,089) (1,413,266)
---------- ---------- ---------- ----------
Increase (decrease) in shares: ............................. 36,570 (395,179) (124,743) (508,290)
========== ========== ========== ==========
</TABLE>
17
<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 a Series' beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investment assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item as disclosed in the financial statements
to
<TABLE>
<CAPTION>
NET INCREASE
NET ASSET REALIZED & (DECREASE) DISTRIBUTIONS NET INCREASE NET ASSET
VALUE AT NET UNREALIZED FROM DIVIDENDS FROM (DECREASE) IN VALUE AT
PER SHARE OPERATING BEGINNING INVESTMENT INVESTMENT INVESTMENT PAID OR NET GAIN NET ASSET END
PERFORMANCE: OF PERIOD INCOME* GAIN (LOSS) OPERATIONS DECLARED REALIZED VALUE OF PERIOD
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
CALIFORNIA HIGH-YIELD SERIES
Six months ended 3/31/96 $6.47 $0.18 $(0.03) $0.15 $(0.18) $(0.02) $(0.05) $6.42
Year ended 9/30/95 6.30 0.37 0.17 0.54 (0.37) -- 0.17 6.47
Year ended 9/30/94 6.73 0.37 (0.34) 0.03 (0.37) (0.09) (0.43) 6.30
Year ended 9/30/93 6.65 0.39 0.28 0.67 (0.39) (0.20) 0.08 6.73
Year ended 9/30/92 6.50 0.41 0.16 0.57 (0.41) (0.01) 0.15 6.65
Year ended 9/30/91 6.18 0.42 0.33 0.75 (0.42) (0.01) 0.32 6.50
CALIFORNIA QUALITY SERIES
Six months ended 3/31/96 6.65 0.17 0.06 0.23 (0.17) (0.01) 0.05 6.70
Year ended 9/30/95 6.39 0.34 0.32 0.66 (0.34) (0.06) 0.26 6.65
Year ended 9/30/94 7.28 0.35 (0.73) (0.38) (0.35) (0.16) (0.89) 6.39
Year ended 9/30/93 6.85 0.37 0.54 0.91 (0.37) (0.11) 0.43 7.28
Year ended 9/30/92 6.65 0.40 0.22 0.62 (0.40) (0.02) 0.20 6.85
Year ended 9/30/91 6.22 0.40 0.46 0.86 (0.40) (0.03) 0.43 6.65
FLORIDA SERIES
Six months ended 3/31/96 7.71 0.19 -- 0.19 (0.19) (0.08) (0.08) 7.63
Year ended 9/30/95 7.34 0.40 0.37 0.77 (0.40) -- 0.37 7.71
Year ended 9/30/94 8.20 0.42 (0.74) (0.32) (0.42) (0.12) (0.86) 7.34
Year ended 9/30/93 7.56 0.46 0.65 1.11 (0.46) (0.01) 0.64 8.20
Year ended 9/30/92 7.37 0.47 0.19 0.66 (0.47) -- 0.19 7.56
Year ended 9/30/91 6.90 0.43 0.47 0.90 (0.43) -- 0.47 7.37
NORTH CAROLINA SERIES
Six months ended 3/31/96 7.74 0.18 0.04 0.22 (0.18) (0.01) 0.03 7.77
Year ended 9/30/95 7.30 0.39 0.45 0.84 (0.39) (0.01) 0.44 7.74
Year ended 9/30/94 8.22 0.41 (0.87) (0.46) (0.41) (0.05) (0.92) 7.30
Year ended 9/30/93 7.61 0.43 0.63 1.06 (0.43) (0.02) 0.61 8.22
Year ended 9/30/92 7.39 0.44 0.22 0.66 (0.44) -- 0.22 7.61
Year ended 9/30/91 7.04 0.45 0.35 0.80 (0.45) -- 0.35 7.39
CLASS D:
CALIFORNIA HIGH-YIELD SERIES
Six months ended 3/31/96 6.48 0.15 (0.04) 0.11 (0.15) (0.02) (0.06) 6.42
Year ended 9/30/95 6.31 0.31 0.17 0.48 (0.31) -- 0.17 6.48
2/1/94**--9/30/94 6.67 0.21 (0.36) (0.15) (0.21) -- (0.36) 6.31
CALIFORNIA QUALITY SERIES
Six months ended 3/31/96 6.63 0.14 0.07 0.21 (0.14) (0.01) 0.06 6.69
Year ended 9/30/95 6.38 0.28 0.31 0.59 (0.28) (0.06) 0.25 6.63
2/1/94**--9/30/94 7.13 0.19 (0.75) (0.56) (0.19) -- (0.75) 6.38
FLORIDA SERIES
Six months ended 3/31/96 7.72 0.16 -- 0.16 (0.16) (0.08) (0.08) 7.64
Year ended 9/30/95 7.34 0.34 0.38 0.72 (0.34) -- 0.38 7.72
2/1/94**--9/30/94 8.10 0.24 (0.76) (0.52) (0.24) -- (0.76) 7.34
NORTH CAROLINA SERIES
Six months ended 3/31/96 7.74 0.15 0.04 0.19 (0.15) (0.01) 0.03 7.77
Year ended 9/30/95 7.29 0.33 0.46 0.79 (0.33) (0.01) 0.45 7.74
2/1/94**--9/30/94 8.17 0.23 (0.88) (0.65) (0.23) -- (0.88) 7.29
</TABLE>
----------
* During the periods stated, the Manager, at its discretion, waived all or a
portion of its fees and, in some cases, reimbursed certain expenses for the
Florida and North Carolina Series. The adjusted net investment income per
share and adjusted ratios reflect what the results would have been had the
Manager not waived fees and reimbursed expenses.
** Commencement of operations.
18
<PAGE>
================================================================================
--------------------------------------------------------------------------------
their equivalent per share amounts using average shares outstanding.
The total return based on net asset value measures a Series' performance
assuming investors purchased shares at net asset value as of the beginning of
the period, reinvested dividends and capital gains paid at net asset value, and
then sold their shares at the net asset value per share on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Trust. The total returns for
periods of less than one year are not annualized.
<TABLE>
<CAPTION>
ADJUSTED
RATIO OF NET ADJUSTED RATIO OF
TOTAL RETURN RATIO OF INVESTMENT NET ASSETS ADJUSTED NET RATIO OF NET INVESTMEN
BASED ON EXPENSES TO INCOME AT END OF INVESTMENT EXPENSES TO INCOME
NET ASSET AVERAGE TO AVERAGE PORTFOLIO PERIOD INCOME AVERAGE NET TO AVERAGE
VALUE NET ASSETS* NET ASSETS* TURNOVER (000'S OMITTED) PER SHARE* ASSETS* NET ASSETS*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
CALIFORNIA HIGH-YIELD SERIES
Six months ended 3/31/96 2.33% 0.86%+ 5.50%+ 19.81% $ 47,654
Year ended 9/30/95 8.85 0.90 5.84 17.64 51,504
Year ended 9/30/94 0.41 0.85 5.74 8.36 48,007
Year ended 9/30/93 10.66 0.88 5.94 7.70 51,218
Year ended 9/30/92 9.00 0.82 6.20 45.50 49,448
Year ended 9/30/91 12.53 0.83 6.67 5.13 49,172
CALIFORNIA QUALITY SERIES
Six months ended 3/31/96 3.47 0.81+ 5.02+ 10.07 95,165
Year ended 9/30/95 10.85 0.89 5.34 11.24 94,947
Year ended 9/30/94 (5.46) 0.81 5.20 22.16 99,020
Year ended 9/30/93 13.92 0.82 5.30 15.67 111,732
Year ended 9/30/92 9.56 0.78 5.86 34.25 93,557
Year ended 9/30/91 14.35 0.78 6.19 20.11 77,884
FLORIDA SERIES
Six months ended 3/31/96 2.40 0.99+ 4.81+ 8.28 48,163 $0.19 0.99%+ 4.81%+
Year ended 9/30/95 10.87 0.72 5.38 11.82 49,030 0.37 1.03 5.07
Year ended 9/30/94 (3.99) 0.42 5.49 6.17 49,897 0.38 1.00 4.91
Year ended 9/30/93 15.21 0.23 5.82 16.42 52,855 0.40 1.03 5.01
Year ended 9/30/92 9.24 0.17 6.32 12.62 37,957 0.41 1.02 5.47
Year ended 9/30/91 13.41 0.90 6.00 -- 28,173 0.42 1.15 5.75
NORTH CAROLINA SERIES
Six months ended 3/31/96 2.90 1.07+ 4.64+ 10.34 36,652 0.18 1.08+ 4.63+
Year ended 9/30/95 11.92 0.82 5.21 4.38 37,446 0.36 1.18 4.85
Year ended 9/30/94 (5.80) 0.44 5.29 15.61 38,920 0.35 1.13 4.60
Year ended 9/30/93 14.46 0.23 5.44 3.13 38,828 0.35 1.22 4.45
Year ended 9/30/92 9.23 0.14 5.83 12.51 21,836 0.34 1.40 4.57
Year ended 9/30/91 11.97 0.07 6.10 -- 9,255 0.22 3.22 2.96
CLASS D:
CALIFORNIA HIGH-YIELD SERIES
Six months ended 3/31/96 1.72 1.76+ 4.60+ 19.81 1,188
Year ended 9/30/95 7.78 1.91 4.84 17.64 1,277
2/1/94**--9/30/94 (2.47) 1.74+ 4.73+ 8.36++ 650
CALIFORNIA QUALITY SERIES
Six months ended 3/31/96 3.16 1.71+ 4.12+ 10.07 1,040
Year ended 9/30/95 9.61 1.88 4.36 11.24 863
2/1/94**--9/30/94 (8.01) 1.77+ 4.39+ 22.16++ 812
FLORIDA SERIES
Six months ended 3/31/96 2.02 1.75+ 4.05+ 8.28 1,224 0.16 1.75+ 4.05+
Year ended 9/30/95 10.07 1.66 4.53 11.82 603 0.31 1.97 4.22
2/1/94**--9/30/94 (6.64) 1.29+ 4.61+ 6.17++ 244 0.21 1.84+ 4.06+
NORTH CAROLINA SERIES
Six months ended 3/31/96 2.52 1.83+ 3.88+ 10.34 1,255 0.15 1.84+ 3.87+
Year ended 9/30/95 11.19 1.64 4.42 4.38 1,257 0.31 2.00 4.06
2/1/94**--9/30/94 (8.15) 1.27+ 4.49+ 15.61++ 1,282 0.20 1.95+ 3.82+
</TABLE>
----------
+ Annualized.
++ For the year ended September 30, 1994.
See notes to financial statements.
19
<PAGE>
================================================================================
REPORT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
The Trustees and Shareholders,
Seligman Tax-Exempt Series Trust:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the California High-Yield, California Quality,
Florida and North Carolina Series of Seligman Tax-Exempt Series Trust as of
March 31, 1996, the related statements of operations for the six months then
ended and of changes in net assets for the six months then ended and for the
year ended September 30, 1995, 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 March
31, 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
Tax-Exempt Series Trust as of March 31, 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
May 3, 1996
20
<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
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, Red Man Pipe and Supply Company
Brian T. Zino 1
President
Managing Director, J. & W. Seligman & Co. Incorporated
----------
Member:
1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
21
<PAGE>
================================================================================
EXECUTIVE OFFICERS
--------------------------------------------------------------------------------
William C. Morris Lawrence P. Vogel
Chairman Vice President
Brian T. Zino Thomas G. Rose
President Treasurer
Thomas G. Moles Frank J. Nasta
Vice President Secretary
--------------------------------------------------------------------------------
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
22
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Beneficial Interest of
Seligman Tax-Exempt Series Trust, which contains information about the sales
charges, management fee, and other costs. Please read the prospectus carefully
before investing or sending money.
TEB3 3/96
================================================================================
MID-YEAR REPORT
-------------------------
SELIGMAN
TAX-EXEMPT
SERIES
TRUST
-------------------------
March 31, 1996
[LOGO]
--------------------------------------------------------------------------------
Providing Tax-Free Income
Since 1984
