<PAGE>
SELIGMAN
MUNICIPAL
SERIES TRUST
Mid-Year Report
March 31, 1999
Providing Income
Exempt From Regular
Income Tax
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Seligman -- Times Change...Values Endure
J. & W. Seligman & Co. Incorporated is a firm with a long tradition of
investment expertise, offering a broad array of investment choices to help
today's investors seek their long-term financial goals.
Times Change...
Established in 1864, Seligman has a history of providing financial services
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 135 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and launched its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including equity funds that specialize in small companies,
technology, or international securities, and bond funds that focus on high-yield
issuers, US government bonds, or municipal securities.
...Values Endure
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
Table of Contents
To the Shareholders................................. 1
Interview With Your Portfolio Manager............... 2
Performance Overview and
Portfolio Summary................................ 4
Portfolios of Investments........................... 8
Statements of Assets and Liabilities................ 14
Statements of Operations............................ 15
Statements of Changes in Net Assets................. 16
Notes to Financial Statements....................... 18
Financial Highlights................................. 21
Report of Independent Auditors...................... 26
Trustees............................................. 27
Executive Officers and For More Information.......... 28
Glossary of Financial Terms......................... 29
[PHOTO}
James, Jesse, and Joseph Seligman, 1870
<PAGE>
To the Shareholders
During Seligman Municipal Series Trust's six-month reporting period ended March
31, 1999, the US economy remained strong. In fact, the economy grew faster than
almost anyone had predicted.
At the Trust's fiscal year-end in September 1998, the consensus was that the US
economy would slow, possibly to recessionary levels, in the face of worldwide
financial disorder brought on by the Asian economic crisis. However, US consumer
strength was widely underestimated, and consumer confidence and the strong
consumer demand that accompanied it remained a powerful economic force. Not only
did the economy continue to surprise on the upside, it did so without signs of
rising inflation, a common side effect of prolonged and robust growth.
Despite evidence that inflation remained under control, the unexpected
acceleration in economic activity earlier this year caused bond-market
participants to worry that inflation posed a possible threat. This concern
pushed Treasury yields significantly higher. During these six months, Treasury
bond yields fluctuated within a wide range of 98 basis points. In contrast, the
municipal market remained relatively stable, with yields fluctuating within a
much narrower range of 32 basis points.
At the Trust's fiscal year-end in September 1998, the yield spread between
municipal bonds and Treasuries was unprecedentedly narrow. Recently, however, a
slowdown in the supply of new municipal bond issues and rising Treasury yields
caused the yield spread between municipal bonds and Treasury bonds to widen to a
more historically normal range. We believe that this trend will continue and, as
it does, the performance of the municipal market should improve relative to the
Treasury market.
The ongoing economic expansion in the US continued to benefit the municipal bond
market. Municipal bond issuers have been able to improve their financial
situations and, for the fourth year in a row, there were more credit-rating
upgrades than downgrades. We expect that this positive trend will continue.
The Trust's manager, J. & W. Seligman & Co. Incorporated, continues to work to
ensure that all of its operations are prepared for the challenges posed by the
Year 2000 (Y2K) computer issue. We are confident that there will be no
disruption in the investment and shareholder services provided by the Trust as a
result of Y2K. In addition, your portfolio management team considers the
potential ramifications of Y2K when making decisions on which securities should
be held by the Trust.
We appreciate your confidence in Seligman Municipal Series Trust and look
forward to serving your investment needs for many years to come. A discussion
with your Portfolio Manager and the Trust's portfolios of investments follow
this letter.
By order of the Trustees,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
April 30, 1999
1
<PAGE>
Interview With Your Portfolio Manager,
Thomas G. Moles
Q: What economic and market factors influenced Seligman Municipal Series
Trust in the last six months?
A: During the past six months, the outlook for the US and global economies
has improved dramatically. At fiscal year-end in September 1998,
economies around the world were struggling with financial crises that
threatened to drag the US into recession. In response, the Federal
Reserve Board took immediate defensive action by lowering the
federal-funds rate three times last fall.
However, the outlook for the US economy brightened as economies around the
world began to show signs of recovery and as strong US consumer demand
continued to drive economic growth.
While ending on a positive note, the last six months were nonetheless
volatile for equity markets, and thus for the US Treasury market as
investors rushed to buy Treasury bonds during periods of market
uncertainty. This "flight to quality" was the primary cause of the sharp
swings in Treasury yields that were experienced during the period. The
yield on the 30-year US Treasury bond fluctuated by more than 98 basis
points during this time. In contrast to the volatility of the Treasury
market, the municipal market remained relatively stable throughout the
period. Long-term municipal interest rates fluctuated within a much
narrower trading range of approximately 32 basis points.
The historically low interest-rate environment led to a surge in municipal
new issue volume during 1998. The increase in municipal supply caused the
yield spread between municipal bonds and Treasury bonds to narrow, making
municipals particularly attractive. For a brief period in October,
long-term municipal yields actually exceeded long-term Treasury yields, an
unusual occurrence given the tax advantages of municipal ownership.
This situation has now begun to reverse itself. Year-to-date, new issue
volume has slowed from its robust pace, causing the yield spread between
municipal bonds and Treasury bonds to widen to a historically normal range.
The continued strength of the US economy, which is now in its ninth year of
economic expansion, has allowed the financial condition of the nation's
states, cities, and municipalities to steadily improve. For the fourth year
in a row, credit-rating upgrades exceeded downgrades. We expect that this
positive trend will continue with the possible exception of healthcare
bonds, whose issuers have been experiencing increased financial and
operating pressures.
Q: What was your investment strategy?
A: The relative lack of volatility in the municipal market limited our
opportunities to enhance total
A TEAM APPROACH
Seligman Municipal Series Trust is managed by the Seligman Municipals Team,
headed by Thomas G. Moles. Mr. Moles is assisted in the management of the Trust
by a group of seasoned professionals who are responsible for research and
trading consistent with the Trust's investment objective.
Seligman Municipals Team: (standing from left) Audrey Kuchtyak,
Theresa Barion, Debra McGuinness, (seated) Eileen Comerford,
Thomas G. Moles (Portfolio Manager)
2
<PAGE>
Interview With Your Portfolio Manager,
Thomas G. Moles
return through trading activity. Therefore, we focused on improving the
relative value of Seligman Municipal Series Trust's portfolios. Through
in-depth credit analysis and market research, we have been able to
identify municipal credits that we believe have been undervalued by the
market, and we have used this information in our security selection
process.
During the period, our investment strategy was consistent with
our positive outlook for the economy and long-term interest rates. We
reduced portfolio holdings with short durations, replacing them with
longer-term bonds because they offer the greatest opportunity for price
appreciation during periods of declining interest rates. (Conversely,
during periods of rising interest rates, long-term bonds will depreciate
more than shorter-term bonds.) Long-term bonds have also provided the
highest yields historically. During the past six months, long-term
municipal yields rose slightly, resulting in declines in Seligman Municipal
Series Trust's net asset values.
We have concentrated new purchases in triple "A" rated insured bonds
because of the prevailing narrow yield spread between high-quality
and lower-quality bonds. At this time, lower-quality bonds do not offer
enough additional yield to compensate for the increased credit risk.
For the six-month period, high-quality insured bonds outperformed
lower-quality bonds.
Q: What is your outlook?
A: Recent economic reports have suggested that the economy may be
strengthening further, raising concerns about an acceleration in the rate
of inflation. In response, long-term municipal yields have increased
modestly. However, we believe that any increase in long-term yields will
be temporary and our outlook for interest rates remains positive. We will
continually monitor market conditions and will adjust our investment
strategy accordingly.
There are currently a number of factors that bode well for the municipal
market going forward. First, new issue supply has slowed, widening the
yield spread between municipals and Treasuries to a historically normal
range. If this trend continues, and we believe that it will, the
performance of the municipal market should improve relative to the
Treasury market. In addition, the municipal bond market has been the
beneficiary of a healthy economy and a stable rate of inflation, and we
anticipate that these favorable market conditions will continue for the
balance of the year.
3
<PAGE>
Performance Overview and Portfolio Summary
California High-Yield Series
Investment Results per Share
TOTAL RETURNS
For Periods Ended March 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------------------------------------
CLASS D
SINCE
SIX* ONE FIVE 10 INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C>
Class A**
With Sales Charge (3.92)% 0.54% 5.90% 7.09% n/a
Without Sales Charge 0.89 5.52 6.93 7.61 n/a
Class D**
With 1% CDSC (0.40) 3.57 n/a n/a n/a
Without CDSC 0.59 4.57 5.98 n/a 5.06%
Lehman Brothers Municipal Bond Index*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
NET ASSET VALUE
<TABLE>
<CAPTION>
3/31/99 9/30/98 3/31/98
-------- -------- --------
<S> <C> <C> <C>
Class A $6.68 $6.80 $6.66
Class D 6.69 6.80 6.67
</TABLE>
DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended March 31, 1999
<TABLE>
<CAPTION>
CAPITAL SEC
DIVIDENDS++ GAIN++ YIELD+++
------------- --------- ----------
<S> <C> <C> <C>
Class A $0.156 $0.024 3.76%
Class D 0.125 0.024 3.05
</TABLE>
<TABLE>
<S> <C> <C>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 85% Aaa/AAA 13%
General Obligation Bonds 15 Aa/AA 10
A/A 53
Baa/BBB 23
Non-Rated 1
WEIGHTED AVERAGE MATURITY 21.7 years
</TABLE>
- ---------------------------
See footnotes on page 7.
4
<PAGE>
Performance Overview and Portfolio Summary
California Quality Series
Investment Results per Share
TOTAL RETURNS
For Periods Ended March 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------------------------------------
CLASS D
SINCE
SIX* ONE FIVE 10 INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C>
Class A**
With Sales Charge (3.98)% 0.85% 6.22% 7.14% n/a
Without Sales Charge 0.81 5.87 7.28 7.67 n/a
Class D**
With 1% CDSC (0.60) 3.94 n/a n/a n/a
Without CDSC 0.36 4.92 6.23% n/a 4.37%
Lehman Brothers Municipal Bond Index*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
NET ASSET VALUE
<TABLE>
<CAPTION>
3/31/99 9/30/98 3/31/98
-------- -------- --------
<S> <C> <C> <C>
Class A $6.88 $7.21 $7.03
Class D 6.86 7.19 7.01
</TABLE>
DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended March 31, 1999
<TABLE>
<CAPTION>
CAPITAL SEC
DIVIDENDS++ GAIN++ YIELD+++
------------- --------- ----------
<S> <C> <C> <C>
Class A $0.156 $0.230 3.68%
Class D 0.124 0.230 2.97
</TABLE>
<TABLE>
<S> <C> <C>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 79% Aaa/AAA 75%
General Obligation Bonds 21 Aa/AA 12
A/A 13
WEIGHTED AVERAGE MATURITY 21.7 years
</TABLE>
- -------------------------------
See footnotes on page 7.
5
<PAGE>
Performance Overview and Portfolio Summary
Florida Series
Investment Results per Share
TOTAL RETURNS
For Periods Ended March 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------------------------------------
CLASS D
SINCE
SIX* ONE FIVE 10 INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
--------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C>
Class A**
With Sales Charge (4.00)% 0.53% 5.98% 7.32% n/a
Without Sales Charge 0.75 5.50 7.01 7.85 n/a
Class D**
With 1% CDSC (0.48) 3.82 n/a n/a n/a
Without CDSC 0.50 4.82 6.22 n/a 4.51%
Lehman Brothers Municipal Bond Index*** 1.49 6.20 7.62 8.24 5.97++
</TABLE>
NET ASSET VALUE
<TABLE>
<CAPTION>
3/31/99 9/30/98 3/31/98
-------- -------- --------
<S> <C> <C> <C>
Class A $7.91 $8.07 $7.88
Class D 7.93 8.08 7.89
</TABLE>
DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended March 31, 1999
<TABLE>
<CAPTION>
CAPITAL SEC
DIVIDENDS++ GAIN++ YIELD+++
------------- --------- ----------
<S> <C> <C> <C>
Class A $0.169 $0.051 3.78%
Class D 0.140 0.051 3.21
</TABLE>
<TABLE>
<S> <C> <C>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 87% Aaa/AAA 66%
General Obligation Bonds 13 Aa/AA 29
A/A 5
WEIGHTED AVERAGE MATURITY 23.5 years
</TABLE>
- --------------------------
See footnotes on page 7.
6
<PAGE>
Performance Overview and Portfolio Summary
North Carolina Series
Investment Results per Share
TOTAL RETURNS
For Periods Ended March 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------------------------------------
CLASS A CLASS D
SINCE SINCE
SIX* ONE FIVE INCEPTION INCEPTION
MONTHS* YEAR YEARS 8/27/9000 2/1/94
--------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C>
Class A**
With Sales Charge (4.00)% 0.55% 6.11% 6.67% n/a
Without Sales Charge 0.74 5.52 7.14 7.28 n/a
Class D**
With 1% CDSC (0.73) 3.60 n/a n/a n/a
Without CDSC 0.24 4.60 6.29% n/a 4.40%
Lehman Brothers Municipal Bond Index*** 1.49 6.20 7.62 8.10+ 5.97++
</TABLE>
NET ASSET VALUE
<TABLE>
<CAPTION>
3/31/99 9/30/98 3/31/98
-------- -------- --------
<S> <C> <C> <C>
Class A $8.07 $8.30 $8.10
Class D 8.06 8.30 8.10
</TABLE>
DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended March 31, 1999
<TABLE>
<CAPTION>
CAPITAL SEC
DIVIDENDS++ GAIN++ YIELD+++
------------- --------- ----------
<S> <C> <C> <C>
Class A $0.174 $0.117 3.57%
Class D 0.143 0.117 3.01
</TABLE>
<TABLE>
<S> <C> <C>
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 73% Aaa/AAA 46%
General Obligation Bonds 27 Aa/AA 36
A/A 18
WEIGHTED AVERAGE MATURITY 18.7 years
<FN>
- --------------------------------------------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price and assume all distributions
within the period are invested in additional shares. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class D shares are calculated with and
without the effect of the 1% contingent deferred sales charge ("CDSC"),
charged on redemptions made within one year of the date of purchase. No
adjustment was made to the performance of Class A shares 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 for each Series. The rates of return will vary and the principal
value of an investment will fluctuate. Shares, if redeemed, may be worth
more or less than their original cost. A portion of each Series' income may
be subject to applicable state and local taxes, and any amount may be
subject to the federal alternative minimum tax. Past performance is not
indicative of future investment results.
*** The Lehman Brothers Municipal Bond Index is an unmanaged index that does
not include any fees or sales charges. It is composed of approximately 60%
revenue bonds and 40% state government obligations. Investors cannot invest
directly in an index.
0 Percentages based on market values of long-term holdings at March 31, 1999.
00 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 since-inception period.
++ From 1/31/94.
+ From 8/31/90.
++ Represents per share amount paid or declared for the six months ended March
31, 1999.
+++ Current yield, representing the annualized yield for the 30-day period
ended March 31, 1999, has been computed in accordance with SEC
regulations and will vary.
</FN>
</TABLE>
7
<PAGE>
Portfolios of Investments
March 31, 1999
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 $ 2,652,225
1,000,000 California Department of Veterans Affairs Rev. (Home Purchase),
5 1/2% due 12/1/2018*..................................................... Aa3/AA- 1,026,720
2,000,000 California Department of Veterans Affairs Rev. (Home Purchase),
5.20% due 12/1/2028....................................................... Aa3/AA- 1,993,840
2,190,000 California Department of Water Resources Water System Rev.
(Central Valley Project), 6% due 12/1/2020................................ Aa2/AA 2,317,042
500,000 California Educational Facilities Authority Rev. (Los Angeles College
of Chiropractic Medicine), 5.60% due 11/1/2017........................... Baa2/NR 516,095
2,500,000 California Educational Facilities Authority Rev. (Loyola Marymount
University), 5 3/4% due 10/1/2024......................................... A1/NR 2,645,875
3,000,000 California Educational Facilities Authority Rev. (Pepperdine University),
5% due 11/1/2029.......................................................... A1/NR 2,926,440
2,500,000 California Health Facilities Financing Authority Rev. (Cedars-Sinai
Medical Center), 5 1/4% due 8/1/2027...................................... Aaa/AAA 2,541,700
2,500,000 California Health Facilities Financing Authority Rev. (Kaiser Permanente),
5.40% due 5/1/2028....................................................... A3/A 2,514,375
1,500,000 California Housing Finance Agency Home Mortgage Rev.,
6 3/8% due 8/1/2027*...................................................... Aa2/AA- 1,601,445
2,500,000 California Housing Finance Agency (Single Family Mortgage),
5.40% due 8/1/2028*....................................................... Aaa/AAA 2,516,100
2,500,000 California Pollution Control Financing Authority Rev. (San Diego
Gas & Electric Co.), 5.85% due 6/1/2021*.................................. A1/AA- 2,560,100
1,750,000 California Pollution Control Financing Authority Rev. (Pacific Gas &
Electric Co.), 5 7/8% due 6/1/2023*....................................... A1/AA- 1,821,785
1,000,000 California Pollution Control Financing Authority Rev. (Pacific Gas &
Electric Co.), 5.85% due 12/1/2023*....................................... A1/AA- 1,049,340
2,000,000 California State GOs, 5 1/4% due 10/1/2019.................................. Aa3/A+ 2,027,360
2,500,000 Cupertino, CA Certificates of Participation (Capital Improvement Projects),
5 3/4% due 1/1/2016....................................................... A1/A+ 2,611,525
3,000,000 Foothill/Eastern Transportation Corridor Agency, CA Toll Road Rev.,
6% due 1/1/2034........................................................... Baa3/BBB- 3,224,430
1,300,000 Los Angeles, CA Wastewater System Rev., 7.10% due 6/1/2018.................. A1/A+ 1,334,580
1,275,000 Modesto, CA Irrigation District Certificates of Participation,
5.30% due 7/1/2022........................................................ A2/A+ 1,275,166
1,000,000 Oxnard Union High School District, CA Certificates of Participation
(Union High School), 7.70% due 11/1/2019.................................. NR/NR 1,046,630
<FN>
- --------------------------
+ Ratings have not been audited by Deloitte & Touche llp.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
8
<PAGE>
Portfolios of Investments
March 31, 1999
California High-Yield Series (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ---------------- --------------
<S> <C> <C> <C>
$ 645,000 Petaluma, CA Community Development Commission Tax Allocation Bonds
(Central Business District), 9.30% due 5/15/2010.......................... Baa1/NR $ 647,986
2,020,000 Pleasanton, CA Joint Powers Financing Authority Reassessment Rev.,
6.15% due 9/2/2012........................................................ Baa1/NR 2,164,289
4,000,000 Puerto Rico Highway & Transportation Authority Rev., 5 1/2% due 7/1/2036.... Baa1/A 4,238,560
3,000,000 San Bernardino, CA Joint Powers Financing Authority (California Dept. of
Transportation Lease), 5 1/2% due 12/1/2020............................... A/A 3,091,470
2,500,000 San Joaquin Hills, CA Transportation Corridor Agency Rev. (Orange County
Toll Road), 5 1/2% due 1/15/2028.......................................... Baa3/BBB- 2,547,150
3,000,000 San Joaquin Hills, CA Transportation Corridor Agency Rev. (Orange County
Senior Lien Toll Road), 6 3/4% due 1/1/2032............................... Aaa/AAA 3,383,250
2,500,000 Santa Barbara, CA Certificates of Participation, 5.70% due 3/1/2011......... A1/A+ 2,650,000
1,000,000 Southern California Public Power Authority Power Project Rev.
(Multiple Projects), 6% due 7/1/2018..................................... A/A 1,018,070
645,000 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+ 668,833
1,160,000 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+ 1,204,938
2,500,000 Washington Township, CA Hospital District Hospital Healthcare System Rev.,
5 1/2% due 7/1/2018....................................................... A2/NR 2,534,050
2,230,000 West Covina, CA Certificates of Participation (Queen of the Valley Hospital),
6 1/2% due 8/15/2024...................................................... A2/NR 2,563,474
-----------
TOTAL MUNICIPAL BONDS (Cost $63,034,416) -- 100.4%......................................................... 66,914,843
VARIABLE RATE DEMAND NOTES (Cost $2,600,000) -- 3.9%....................................................... 2,600,000
OTHER ASSETS LESS LIABILITIES -- (4.3)%.................................................................... (2,891,826)
-----------
NET ASSETS -- 100.0%....................................................................................... $66,623,017
===========
</TABLE>
California Quality Series
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ---------------- --------------
<S> <C> <C> <C>
$3,000,000 California Department of Water Resources Water System Rev.
(Central Valley Project), 6.10% due 12/1/2029............................. Aaa/AA $ 3,427,710
3,440,000 California Educational Facilities Authority Rev. (Pomona College),
6% due 2/15/2017.......................................................... Aaa/AAA 3,686,132
<FN>
- -------------------------
+ Ratings have not been audited by Deloitte & Touche llp.
See Notes to Financial Statements.
</FN>
</TABLE>
9
<PAGE>
Portfolios of Investments
March 31, 1999
California Quality Series (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ---------------- --------------
<S> <C> <C> <C>
$4,000,000 California Educational Facilities Authority Rev. (California Institute
of Technology), 6% due 1/1/2021........................................... Aaa/AAA $ 4,167,280
2,000,000 California Educational Facilities Authority Rev. (Stanford University),
5.35% due 6/1/2027........................................................ Aaa/AAA 2,060,720
4,000,000 California Educational Facilities Authority Rev. (University of San Diego),
5% due 10/1/2028.......................................................... Aaa/NR 3,945,320
4,000,000 California Educational Facilities Authority Rev. (University of Southern
California), 5% due 10/1/2028............................................. Aa2/AA 3,933,320
3,000,000 California Health Facilities Financing Authority Rev. (Kaiser Permanente),
6 1/2% due 12/1/2020...................................................... A3/A 3,218,370
2,000,000 California Health Facilities Financing Authority Rev. (Stanford Health Care),
5% due 11/15/2028......................................................... Aaa/AAA 1,969,500
360,000 California Housing Finance Agency (Housing Revenue Insured Bonds),
8 5/8% due 8/1/2015....................................................... Aaa/AAA 373,479
2,765,000 California Housing Finance Agency Home Mortgage Rev.,
6 3/4% due 2/1/2025*...................................................... Aa2/AA- 2,946,826
4,000,000 California Pollution Control Financing Authority Rev. (Mobil Oil Corporation
Project), 5 1/2% due 12/1/2029*........................................... Aa2/AA 4,096,080
890,000 California Public Capital Improvements Financing Authority
(Pooled Projects), 8.10% due 3/1/2018.................................... Aaa/AAA 906,937
2,000,000 California Public Works Board Lease Rev. (Correctional Facilities
Improvements), 5 3/4% due 9/1/2021........................................ A1/A 2,107,760
4,000,000 California State GOs, 5% due 10/1/2023...................................... Aa3/A+ 3,955,440
2,500,000 California Statewide Communities Development Authority Certificates of
Participation (Citrus Valley Health Partners, Inc.), 5 1/8% due 4/1/2023.. Aaa/AAA 2,513,575
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 2,960,790
4,500,000 Contra Costa, CA Water District Rev., 5% due 10/1/2024...................... Aaa/AAA 4,436,190
3,500,000 East Bay, CA Municipal Utility District Water System Rev., 5% due 6/1/2026.. Aaa/AAA 3,453,660
2,500,000 Eastern Municipal Water District Riverside County, CA Water and Sewer Rev.,
6 3/4% due 7/1/2012....................................................... Aaa/AAA 3,045,375
3,000,000 Fresno, CA Sewer System Rev., 5 1/4% due 9/1/2019........................... Aaa/AAA 3,122,550
2,000,000 Marin, CA Municipal Water District Water Rev., 5.65% due 7/1/2023........... A1/AA 2,095,100
2,000,000 Metropolitan Water District of Southern California Waterworks GOs,
4 3/4% due 3/1/2037....................................................... Aaa/AAA 1,889,380
4,500,000 Orange County, CA Local Transportation Authority (Measure M Sales
Tax Rev.), 6% due 2/15/2009............................................... Aaa/AAA 5,121,540
<FN>
- ---------------------
+ Ratings have not been audited by Deloitte & Touche llp.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
10
<PAGE>
Portfolios of Investments
March 31, 1999
California Quality Series (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ---------------- --------------
<S> <C> <C> <C>
$2,500,000 Rancho, CA Water District Financing Authority Rev., 5.90% due 11/1/2015..... Aaa/AAA $ 2,726,025
4,000,000 Regents of the University of California Rev. (Multiple Purpose Projects),
5 3/8% due 9/1/2024....................................................... Aaa/AAA 4,143,480
4,300,000 San Diego, CA Public Facilities Financing Authority Sewer Rev.,
5% due 5/15/2029.......................................................... Aaa/AAA 4,240,445
4,250,000 San Francisco Bay Area Rapid Transit District, CA (Sales Tax Rev.),
5% due 7/1/2028........................................................... Aaa/AAA 4,191,775
3,000,000 San Francisco, CA City and County Airports Commission Rev.
(International Airport), 6.60% due 5/1/2024*.............................. Aaa/AAA 3,323,910
-----------
TOTAL MUNICIPAL BONDS (Cost $83,342,144) -- 98.4%........................................................ 88,058,669
VARIABLE RATE DEMAND NOTES (Cost $300,000) -- 0.3%....................................................... 300,000
OTHER ASSETS LESS LIABILITIES -- 1.3%.................................................................... 1,102,002
-----------
NET ASSETS-- 100.0%...................................................................................... $89,460,671
===========
</TABLE>
Florida Series
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ---------------- --------------
<S> <C> <C> <C>
$2,000,000 Broward County, FL Airport System Rev., 5% due 10/1/2023.................... Aaa/AAA $ 1,955,780
1,000,000 Broward County, FL Water & Sewer Utility Rev., 5% due 10/1/2018............. Aaa/AAA 995,070
2,000,000 Collier County, FL Water & Sewer Rev., 5 1/4% due 7/1/2021.................. Aaa/AAA 2,026,400
1,000,000 Dade County, FL Aviation Rev., 6 1/8% due 10/1/2020*........................ Aaa/AAA 1,080,310
2,000,000 Dade County, FL Public Improvement GOs, 5 3/4% due 10/1/2016................ Aaa/AAA 2,140,340
2,000,000 Dade County, FL Water & Sewer System Rev., 5 3/4% due 10/1/2022............. Aaa/AAA 2,127,040
945,000 Florida Housing Finance Agency Rev. (General Mortgage),
6.35% due 6/1/2014........................................................ NR/AAA 1,004,374
705,000 Florida Housing Finance Agency Rev. (Single Family Mortgage),
6.55% due 7/1/2014*....................................................... Aaa/AAA 754,562
1,910,000 Florida Housing Finance Agency Rev. (Homeowner Mortgage),
6.20% due 7/1/2027*....................................................... Aa3/AA 2,017,972
2,500,000 Florida Ports Financing Commission Rev. (State Transportation Trust Fund),
5 3/8% due 6/1/2027*...................................................... Aaa/AAA 2,547,875
2,000,000 Florida State Department of Transportation GOs (Right of Way),
5.80% due 7/1/2021........................................................ Aa2/AA+ 2,210,480
2,500,000 Florida State Turnpike Authority Rev., 5 5/8% due 7/1/2025.................. Aaa/AAA 2,618,600
2,000,000 Greater Orlando Aviation Authority, FL Airport Facilities Rev.,
5 1/4% due 10/1/2023*..................................................... Aaa/AAA 2,017,680
2,500,000 Hillsborough County, FL Aviation Authority Rev. (Tampa International
Airport), 5 3/8% due 10/1/2023*........................................... Aaa/AAA 2,533,500
<FN>
- ----------------
+ Ratings have not been audited by Deloitte & Touche llp.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
11
<PAGE>
Portfolios of Investments
March 31, 1999
Florida Series (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ---------------- --------------
<S> <C> <C> <C>
$ 1,500,000 Jacksonville Electric Authority, FL Rev. (St. John's River Power Park System),
5 3/8% due 10/1/2016...................................................... Aa2/AA $ 1,548,690
1,000,000 Jacksonville Electric Authority, FL Rev. (Electric System),
5.10% due 10/1/2032....................................................... Aa2/AA 985,780
2,000,000 Jacksonville Electric Authority, FL Rev. (Water & Sewer System),
5 5/8% due 10/1/2037...................................................... Aa3/AA- 2,069,340
2,000,000 Jacksonville, FL Sewage & Solid Waste Disposal Facilities Rev.
(Anheuser-Busch Project), 5 7/8% due 2/1/2036*............................ A1/A+ 2,117,720
2,000,000 Jacksonville Health Facilities Authority, FL Hospital Rev. (Charity Obligated
Group--Baptist/St. Vincent's Health System Inc.), 5 1/4% due 8/15/2027.... Aa2/AA+ 1,996,940
1,000,000 Kissimmee Utility Authority, FL Electric System Improvement Rev.,
5 1/4% due 10/1/2018...................................................... Aaa/AAA 1,014,840
1,000,000 Lee County, FL Transportation Facilities Rev., 6% due 10/1/2015............. Aaa/AAA 1,093,950
1,000,000 Osceola County, FL Transportation Rev. (Osceola Parkway Project),
6.10% due 4/1/2017........................................................ Aaa/AAA 1,075,100
1,200,000 Palm Beach County, FL Criminal Justice Facilities Rev., 7 1/4% due 6/1/2011. Aaa/AAA 1,278,072
2,000,000 Polk County, FL Industrial Development Authority Solid Waste Disposal
Facilities Rev. (Tampa Electric Company Project), 5.85% due 12/1/2030*.... Aa2/AA 2,127,320
2,000,000 Reedy Creek Improvement District, FL Utilities Rev., 5 1/8% due 10/1/2019... Aaa/AAA 2,013,000
1,250,000 Volusia County, FL Educational Facilities Authority Rev. (Embry-Riddle
Aeronautical University Project), 6 5/8% due 10/15/2022................... NR/AAA 1,370,275
-----------
TOTAL MUNICIPAL BONDS (COST $42,110,520) -- 98.3%........................................................ 44,721,010
OTHER ASSETS LESS LIABILITIES -- 1.7%.................................................................... 754,193
-----------
NET ASSETS -- 100.0%..................................................................................... $45,475,203
===========
</TABLE>
North Carolina Series
<TABLE>
<CAPTION>
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 5/8% due 7/15/2015...................................................... Aaa/AAA $ 1,308,075
1,250,000 Asheville, NC Water System Rev., 5.70% due 8/1/2025......................... Aaa/AAA 1,330,063
2,000,000 Charlotte-Mecklenberg Hospital Authority, NC Health Care System Rev.,
5 3/4% due 1/15/2021...................................................... Aa3/AA 2,120,060
1,000,000 Charlotte, NC Certificates of Participation (Charlotte-Mecklenburg Law
Enforcement Center Project), 5 3/8% due 6/1/2013.......................... Aa1/AA 1,043,860
2,000,000 Charlotte, NC Water & Sewer GOs, 5.90% due 2/1/2017......................... Aaa/AAA 2,207,720
1,000,000 Concord, NC Utilities System Rev., 5% due 12/1/2022......................... Aaa/AAA 988,990
<FN>
- --------------
+ Ratings have not been audited by Deloitte & Touche llp.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
12
<PAGE>
Portfolios of Investments
March 31, 1999
North Carolina Series (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ---------------- --------------
<S> <C> <C> <C>
$ 1,500,000 Fayetteville, NC Public Works Commission Rev., 5 1/8% due 3/1/2024.......... Aaa/AAA $ 1,502,820
2,500,000 Martin County Industrial Facilities and Pollution Control Financing
Authority, NC Solid Waste Disposal Rev. (Weyerhaeuser Company
Project), 6% due 11/1/2025*............................................... A2/A 2,601,825
600,000 North Carolina Housing Finance Agency Rev. (Multi-Family),
5.80% due 7/1/2014........................................................ Aa2/AA 620,652
1,455,000 North Carolina Housing Finance Agency Rev. (Single Family),
6 1/2% due 3/1/2018....................................................... Aa2/AA 1,555,395
1,000,000 North Carolina Medical Care Commission Hospital Rev. (Memorial
Mission Hospital Project), 6% due 10/1/2022............................... Aaa/AAA 1,092,800
2,000,000 North Carolina Medical Care Commission Hospital Rev. (Presbyterian
Health Services Corp. Project), 6% due 10/1/2024.......................... Aa3/AA 2,178,680
1,500,000 North Carolina Medical Care Commission Hospital Rev. (FirstHealth
of the Carolinas Project), 5% due 10/1/2028............................... Aa3/AA- 1,444,050
1,500,000 North Carolina Medical Care Commission Hospital Rev. (Gaston Health
Care), 5% due 2/15/2029................................................... A1/A+ 1,424,190
1,500,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev.,
5 3/4% due 1/1/2015....................................................... Aaa/AAA 1,575,000
3,000,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev.,
5% due 1/1/2020........................................................... Aaa/AAA 3,022,980
1,000,000 Orange, NC Water & Sewer Authority Rev., 5.20% due 7/1/2016................. Aa2/AA 1,012,150
1,500,000 University of North Carolina Charlotte Rev. (Student Activity Center),
5 1/2% due 6/1/2021....................................................... Aaa/AAA 1,550,685
500,000 University of North Carolina Hospitals at Chapel Hill Rev.,
6 3/8% due 2/15/2017..................................................... Aa3/AA 539,680
1,000,000 University of North Carolina Hospitals at Chapel Hill Rev.,
5 1/4% due 2/15/2026...................................................... Aa3/AA 1,001,340
1,550,000 Wake County Industrial Facilities & Pollution Control Financing Authority,
NC (Carolina Power & Light), 6.90% due 4/1/2009........................... A2/A 1,627,515
-----------
TOTAL MUNICIPAL BONDS (COST $29,816,220) -- 98.1%......................................................... 31,748,530
VARIABLE RATE DEMAND NOTES (COST $100,000) -- 0.3%........................................................ 100,000
OTHER ASSETS LESS LIABILITIES -- 1.6%..................................................................... 499,613
-----------
NET ASSETS -- 100.0%...................................................................................... $32,348,143
===========
<FN>
- ----------------------------
+ Ratings have not been audited by Deloitte & Touche llp.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
13
<PAGE>
Statements of Assets and Liabilities
March 31, 1999
<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...................... $ 66,914,843 $88,058,669 $44,721,010 $31,748,530
Short-term holdings..................... 2,600,000 300,000 -- 100,000
--------------- --------------- ---------------- ---------------
69,514,843 88,358,669 44,721,010 31,848,530
Cash ...................................... 79,963 62,988 112,138 104,019
Interest receivable........................ 999,148 1,294,754 913,250 490,032
Receivable for Shares of Beneficial
Interest sold........................... 214,767 59,611 -- 30,206
Receivable for securities sold............. 30,000 -- -- --
Expenses prepaid to shareholder
service agent........................... 8,077 10,385 5,385 4,615
Other...................................... 647 922 1,988 352
--------------- --------------- ---------------- ---------------
Total Assets............................... 70,847,445 89,787,329 45,753,771 32,477,754
=============== =============== ================ ===============
LIABILITIES:
Payable for securities purchased........... 3,976,796 -- -- --
Dividends payable.......................... 112,362 149,904 75,596 54,099
Payable for Shares of Beneficial Interest
repurchased............................. 35,217 56,094 123,581 13,322
Accrued expenses and other................. 100,053 120,660 79,391 62,190
--------------- --------------- ---------------- ---------------
Total Liabilities ......................... 4,224,428 326,658 278,568 129,611
--------------- --------------- ---------------- ---------------
Net Assets................................. $66,623,017 $89,460,671 $45,475,203 $32,348,143
=============== =============== ================ ===============
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par:
Class A................................. $ 8,727 $ 12,191 $ 5,464 $ 3,820
Class D................................. 1,238 817 283 190
Additional paid-in capital................. 62,771,573 84,506,129 42,848,789 30,371,396
Undistributed (distribution in excess of)
net realized gain....................... (38,948) 225,009 10,177 40,427
Net unrealized appreciation
of investments.......................... 3,880,427 4,716,525 2,610,490 1,932,310
--------------- --------------- ---------------- ---------------
Net Assets................................. $66,623,017 $89,460,671 $45,475,203 $32,348,143
=============== =============== ================ ===============
NET ASSETS:
Class A................................. $58,337,321 $ 83,857,189 $43,231,132 $30,819,338
Class D................................. $ 8,285,696 $ 5,603,482 $ 2,244,071 $ 1,528,805
SHARES OF BENEFICIAL INTEREST
OUTSTANDING (UNLIMITED SHARES AUTHORIZED;
$.001 PAR VALUE):
Class A................................. 8,727,099 12,190,821 5,464,493 3,820,483
Class D ............................... 1,238,180 816,697 283,115 189,616
NET ASSET VALUE PER SHARE:
Class A.................................... $6.68 $6.88 $7.91 $8.07
Class D.................................... $6.69 $6.86 $7.93 $8.06
</TABLE>
- --------------------
See Notes to Financial Statements.
14
<PAGE>
Statements of Operations
For the Six Months Ended March 31, 1999
<TABLE>
<CAPTION>
CALIFORNIA CALIFORNIA NORTH
HIGH-YIELD QUALITY FLORIDA CAROLINA
SERIES SERIES SERIES SERIES
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ..................................... $1,780,551 $ 2,352,820 $1,204,885 $ 885,720
------------- -------------- -------------- ------------
EXPENSES:
Management fees............................... 161,937 221,638 113,813 82,504
Distribution and service fees................. 65,505 63,826 64,914 47,497
Shareholder account services.................. 42,911 55,019 30,810 24,225
Auditing and legal fees....................... 15,141 17,623 14,152 12,869
Custody and related services.................. 6,814 4,156 4,964 3,998
Trustees' fees and expenses................... 6,362 6,519 4,617 4,009
Shareholder reports and communications........ 5,252 4,436 2,693 3,985
Registration.................................. 4,827 5,376 4,367 4,527
Miscellaneous................................. 1,576 1,642 1,316 1,178
------------- -------------- -------------- ------------
Total Expenses................................ 310,325 380,235 241,646 184,792
------------- -------------- -------------- ------------
Net Investment Income......................... 1,470,226 1,972,585 963,239 700,928
------------- -------------- -------------- ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.............. 30,925 608,430 15,273 47,055
Net change in unrealized appreciation
of investments.............................. (864,094) (1,865,042) (599,892) (517,833)
------------- -------------- -------------- ------------
Net Loss on Investments ...................... (833,169) (1,256,612) (584,619) (470,778)
------------- -------------- -------------- ------------
Increase in Net Assets from Operations........ $ 637,057 $ 715,973 $ 378,620 $ 230,150
============= ============== ============== ============
</TABLE>
- ------------------
See Notes to Financial Statements.
15
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD SERIES CALIFORNIA QUALITY SERIES
---------------------------------------- ----------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ................... $ 1,470,226 $ 2,869,233 $ 1,972,585 $ 4,188,124
Net realized gain on investments......... 30,925 315,617 608,430 2,703,169
Net change in unrealized appreciation
of investments........................ (864,094) 1,697,381 (1,865,042) 429,796
----------- ----------- ----------- -----------
Increase in Net Assets from Operations... 637,057 4,882,231 715,973 7,321,089
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A............................... (1,337,739) (2,672,172) (1,902,107) (4,112,546)
Class D............................... (132,487) (197,061) (70,478) (75,578)
Net realized gain on investments:
Class A............................... (207,681) (255,159) (2,762,949) (410,719)
Class D............................... (23,942) (16,987) (100,451) (9,630)
----------- ----------- ----------- -----------
Decrease in Net Assets
from Distributions.................... (1,701,849) (3,141,379) (4,835,985) (4,608,473)
----------- ----------- ----------- -----------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sale of shares:
Class A............................... 5,607,928 8,495,720 1,496,406 2,910,248
Class D............................... 2,242,629 3,342,099 3,020,174 510,845
Shares issued in payment of dividends:
Class A............................... 724,872 1,407,211 950,104 2,074,707
Class D............................... 102,158 148,218 38,391 39,918
Exchanged from associated Funds:
Class A............................... 2,421,711 2,763,236 878,494 9,378,739
Class D............................... 447,933 549,807 1,100,485 2,156,556
Shares issued in payment of
gain distributions:
Class A............................... 142,616 174,948 1,679,573 249,515
Class D............................... 20,123 13,631 71,464 5,556
----------- ----------- ----------- -----------
Total.................................... 11,709,970 16,894,870 9,235,091 17,326,084
----------- ----------- ----------- -----------
Cost of shares repurchased:
Class A............................... (5,355,745) (8,007,292) (3,273,829) (9,140,974)
Class D............................... (300,735) (528,543) (604,138) (568,085)
Exchanged into associated Funds:
Class A............................... (2,626,130) (937,063) (1,434,856) (7,593,529)
Class D............................... (506,786) (598,369) (165,527) (1,581,236)
----------- ----------- ----------- -----------
Total.................................... (8,789,396) (10,071,267) (5,478,350) (18,883,824)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets
from Transactions in Shares
of Beneficial Interest................ 2,920,574 6,823,603 3,756,741 (1,557,740)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets........ 1,855,782 8,564,455 (363,271) 1,154,876
NET ASSETS:
Beginning of period...................... 64,767,235 56,202,780 89,823,942 88,669,066
----------- ----------- ----------- -----------
End of Period............................ $66,623,017 $64,767,235 $89,460,671 $89,823,942
=========== =========== =========== ===========
</TABLE>
- ---------------
See Notes to Financial Statements.
16
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
FLORIDA SERIES NORTH CAROLINA SERIES
-----------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98
----------------------- --------------- --------------- --------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ................... $ 963,239 $ 1,954,649 $ 700,928 $ 1,474,812
Net realized gain on investments......... 15,273 283,504 47,055 471,836
Net change in unrealized appreciation
of investments........................ (599,892) 1,624,389 (517,833) 828,922
----------- ----------- ----------- -----------
Increase in Net Assets from Operations... 378,620 3,862,542 230,150 2,775,570
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A............................... (922,022) (1,887,251) (674,845) (1,428,764)
Class D............................... (41,217) (67,398) (26,083) (46,048)
Net realized gain on investments:
Class A............................... (272,671) (385,124) (451,811) (259,010)
Class D............................... (14,496) (16,296) (20,721) (9,526)
----------- ----------- ----------- -----------
Decrease in Net Assets
from Distributions.................... (1,250,406) (2,356,069) (1,173,460) (1,743,348)
----------- ----------- ----------- -----------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sale of shares:
Class A............................... 2,855,583 1,820,657 457,701 1,639,241
Class D............................... 104,405 549,732 113,187 321,482
Shares issued in payment of dividends:
Class A............................... 343,219 735,335 354,569 749,183
Class D............................... 23,540 43,291 20,286 32,807
Exchanged from associated Funds:
Class A............................... 1,140,557 1,868,336 165,328 551,292
Class D............................... 735,692 247,755 -- 100,077
Shares issued in payment of
gain distributions:
Class A............................... 153,195 224,788 331,130 192,301
Class D............................... 10,367 12,044 20,065 8,729
----------- ----------- ----------- -----------
Total ................................... 5,366,558 5,501,938 1,462,266 3,595,112
----------- ----------- ----------- -----------
Cost of shares repurchased:
Class A............................... (2,208,611) (3,801,719) (1,584,831) (3,903,375)
Class D............................... (485,757) (441,648) (39,021) (260,357)
Exchanged into associated Funds:
Class A............................... (688,299) (1,850,538) (361,101) (545,626)
Class D............................... (40,566) (213,070) -- (4,500)
----------- ----------- ----------- -----------
Total ................................... (3,423,233) (6,306,975) (1,984,953) (4,713,858)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets
from Transactions in Shares
of Beneficial Interest................. 1,943,325 (805,037) (522,687) (1,118,746)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets........ 1,071,539 701,436 (1,465,997) (86,524)
NET ASSETS:
Beginning of period...................... 44,403,664 43,702,228 33,814,140 33,900,664
----------- ----------- ----------- -----------
End of Period............................ $45,475,203 $44,403,664 $32,348,143 $33,814,140
=========== =========== =========== ===========
</TABLE>
- ---------------
See Notes to Financial Statements.
17
<PAGE>
Notes to Financial Statements
1. Multiple Classes of Shares -- Seligman Municipal 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. Class A shares
are sold with an initial sales charge of up to 4.75% and a continuing service
fee of up to 0.25% on an annual basis. Class A shares purchased in an amount of
$1,000,000 or more are sold without an initial sales charge but are subject to a
contingent deferred sales charge ("CDSC") of 1% on redemptions within 18
months of purchase. Class D shares are sold without an initial sales charge but
are subject to a distribution fee of up to 0.75% and a service fee of up to
0.25% on an annual basis, and a CDSC of 1% imposed on redemptions made within
one year of purchase. The two classes of shares for each Series represent
interests in the same portfolio of investments, have the same rights and are
generally identical in all respects except that each class bears its separate
distribution and certain other class expenses, and has exclusive voting rights
with respect to any matter on which a separate vote of any class is required.
2. Significant Accounting Policies -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Trust:
a. Security Valuation -- All municipal securities and other short-term
holdings maturing in more than 60 days are valued based upon quotations
provided by an independent pricing service or, in their absence, at fair
value determined in accordance with procedures approved by the Trustees.
Short-term holdings maturing in 60 days or less are generally valued at
amortized cost.
b. Federal Taxes -- There is no provision for federal income tax. Each Series
has elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
c. Security Transactions and Related Investment Income -- Investment
transactions are recorded on trade dates. Identified cost of investments
sold is used for both financial statement and federal income tax purposes.
Interest income is recorded on the accrual basis. The Trust amortizes
original issue discounts and premiums paid on purchases of portfolio
securities. Discounts other than original issue discounts are not amortized.
d. Multiple Class Allocations -- All income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses are
allocated daily to each class of shares based upon the relative value of the
shares of each class. Class-specific expenses, which include distribution
and service fees and any other items that are specifically attributable to
a particular class, are charged directly to such class. For the six months
ended March 31, 1999, distribution and service fees were the only
class-specific expenses.
e. Distributions to Shareholders -- Dividends are declared daily and paid
monthly. Other distributions paid by the Trust are recorded on the
ex-dividend date. The treatment for financial statement purposes of
distributions made to shareholders during the year from net investment
income or net realized gains may differ from their ultimate treatment for
federal income tax purposes. These differences are caused primarily by
differences in the timing of the recognition of certain components of
income, expense, or realized capital gain for federal income tax purposes.
Where such differences are permanent in nature, they are reclassified in
the components of net assets based on their ultimate characterization for
federal income tax purposes. Any such 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 Securities -- Purchases and sales of portfolio
securities, excluding short-term investments, for the six months ended March 31,
1999, were as follows:
SERIES PURCHASES SALES
- ---------- ----------- ------------
California High-Yield $6,212,040 $1,175,300
California Quality 13,190,650 11,605,460
Florida 3,276,579 1,290,457
North Carolina -- 800,538
At March 31, 1999, each Series' cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
portfolio securities were as follows:
TOTAL TOTAL
UNREALIZED UNREALIZED
SERIES APPRECIATION DEPRECIATION
- ---------- ------------ ------------
California High-Yield $3,898,527 $ 18,100
California Quality 4,858,321 141,796
Florida 2,648,890 38,400
North Carolina 1,949,260 16,950
4. Management Fee, Distribution Services, and Other Transactions -- 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.
18
<PAGE>
Notes to Financial Statements
Seligman Advisors, Inc. (the "Distributor"), agent for the distribution of
each Series' shares and an affiliate of the Manager, received the following
concessions after commissions were paid to dealers for sales of Class A shares:
DISTRIBUTOR DEALER
SERIES CONCESSIONS COMMISSIONS
- ---------- ----------- ------------
California High-Yield $6,967 $51,598
California Quality 5,218 38,320
Florida 4,175 32,194
North Carolina 2,199 16,010
The Trust has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive continuing fees of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Trust pursuant to the Plan. For the six months ended March 31,
1999, for the California High-Yield, California Quality, Florida, and North
Carolina Series, fees incurred under the Plan aggregated $30,118, $44,250,
$53,197 and $40,117, respectively, or 0.10%, 0.10%, 0.25%, and 0.25%,
respectively, per annum of average daily net assets.
Under the Plan, with respect to Class D shares, service organizations can
enter into agreements with the Distributor and receive continuing fees for
providing personal services and/or the maintenance of shareholder accounts of up
to 0.25% on an annual basis of the average daily net assets of the Class D
shares for which the organizations are responsible, and fees for providing other
distribution assistance of up to 0.75% on an annual basis of such average daily
net assets. Such fees are paid monthly by the Trust to the Distributor pursuant
to the Plan. For the six months ended March 31, 1999, fees incurred under the
Plan amounted to $35,387, $19,576, $11,717, and $7,380, respectively, 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 CDSC imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the six months
ended March 31, 1999, such charges amounted to $10,243 for the California
High-Yield Series, $2 for the California Quality Series, and $594 for the
Florida Series.
Seligman Services, Inc., an affiliate of the Manager, is
eligible to receive commissions from certain sales of Trust shares, as well as
distribution and service fees pursuant to the Plan. For the six months ended
March 31, 1999, Seligman Services, Inc. received commissions from the sale of
shares of each Series, and distribution and service fees, pursuant to the Plan,
as follows:
DISTRIBUTION AND
SERIES COMMISSIONS SERVICE FEES
- ---------- ------------ ------------
California High-Yield $4,600 $1,066
California Quality 441 1,213
Florida 300 2,581
North Carolina 600 1,272
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 $42,911
California Quality 55,019
Florida 30,810
North Carolina 24,225
Certain officers and trustees of the Trust are officers or directors of the
Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
The Trust has a compensation agreement under which trustees who receive fees
may elect to defer receiving such fees. Trustees may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Trust or other funds in the Seligman Group of Investment Companies. Deferred
fees and related accrued earnings are not deductible for federal income tax
purposes until such amounts are paid. The cost of such fees and earnings accrued
thereon is included in trustees' fees and expenses, and the accumulated balances
thereof at March 31, 1999, are included in other liabilities as follows:
SERIES
- ----------
California High-Yield $26,136
California Quality 26,246
Florida 13,409
North Carolina 10,000
5. Committed Line of Credit -- Effective July 1, 1998, the Trust entered into a
joint $800 million committed line of credit that is shared by substantially all
funds in the Seligman Group of Investment Companies. Each Series' borrowings are
limited to 10% of its net assets. Borrowings pursuant to the credit facility are
subject to interest at a rate equal to the overnight federal funds rate plus
0.50%. Each Series incurs a commitment fee of 0.08% per annum on its share of
the unused portion of the credit facility. The credit facility may be drawn upon
only for temporary purposes and is subject to certain other customary
restrictions. The credit facility commitment expires one year from the date of
the agreement but is renewable with the consent of the participating banks. To
date, the Trust has not borrowed from the credit facility.
19
<PAGE>
Notes to Financial Statements
6. Transactions in Shares of Beneficial Interest -- 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
3/31/99 9/30/98 3/31/99 9/30/98
------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
Sales of shares:
Class A................................... 834,010 1,277,052 215,179 412,540
Class D................................... 333,954 499,452 436,505 72,661
Shares issued in payment of dividends:
Class A................................... 107,782 211,143 136,295 294,684
Class D................................... 15,170 22,196 5,538 5,681
Exchanged from associated Funds:
Class A................................... 361,120 413,298 124,448 1,335,307
Class D................................... 66,325 82,354 155,181 307,189
Shares issued in payment of gain distributions:
Class A................................... 21,223 26,588 242,713 35,850
Class D................................... 2,990 2,068 10,357 799
---------- ---------- --------- ----------
Total........................................ 1,742,574 2,534,151 1,326,216 2,464,711
---------- ---------- --------- ----------
Shares repurchased:
Class A................................... (795,483) (1,201,761) (469,869) (1,299,234)
Class D................................... (44,797) (79,088) (87,022) (80,796)
Exchanged into associated Funds:
Class A................................... (391,782) (140,692) (200,303) (1,081,747)
Class D................................... (75,267) (89,085) (23,894) (225,899)
---------- ---------- --------- ----------
Total........................................ (1,307,329) (1,510,626) (781,088) (2,687,676)
---------- ---------- --------- ----------
Increase (decrease) in shares................ 435,245 1,023,525 545,128 (222,965)
========== ========== ========= ==========
</TABLE>
<TABLE>
NORTH CAROLINA
FLORIDA SERIES SERIES
-------------------------------- ------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
3/31/99 9/30/98 3/31/99 9/30/98
-------------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Sales of shares:
Class A.................................... 359,008 231,028 56,116 202,159
Class D.................................... 12,981 69,634 13,940 39,497
Shares issued in payment of dividends:
Class A.................................... 43,161 93,274 43,527 92,259
Class D.................................... 2,954 5,481 2,493 4,042
Exchanged from associated Funds:
Class A.................................... 143,605 237,657 20,296 67,414
Class D.................................... 92,164 31,343 -- 12,161
Shares issued in payment of gain distributions:
Class A.................................... 19,319 29,005 40,880 24,008
Class D.................................... 1,306 1,550 2,477 1,091
-------- -------- -------- --------
Total......................................... 674,498 698,972 179,729 442,631
-------- -------- -------- --------
Shares repurchased:
Class A.................................... (278,745) (482,133) (194,547) (480,689)
Class D.................................... (61,161) (55,774) (4,822) (31,930)
Exchanged into associated Funds:
Class A.................................... (86,705) (234,463) (44,226) (67,042)
Class D.................................... (5,109) (27,097) -- (560)
-------- -------- -------- --------
Total......................................... (431,720) (799,467) (243,595) (580,221)
-------- -------- -------- --------
Increase (decrease) in shares................. 242,778 (100,495) (63,866) (137,590)
======== ======== ======== ========
</TABLE>
20
<PAGE>
Financial Highlights
The tables below are intended to help you understand the financial
performance of each Class of each Series for the past five and one-half years or
from its inception if less than five and one-half years. Certain information
reflects financial results for a single share of a Class that was held
throughout the periods shown. Per share amounts are calculated using average
shares outstanding. "Total return" shows the rate that you would have earned (or
lost) on an investment in each Class, assuming you reinvested all your dividend
and capital gain distributions. Total returns do not reflect any sales charges,
and are not annualized for periods of less than one year.
California High-Yield Series
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------
SIX
MONTHS YEAR ENDED SEPTEMBER 30,
ENDED --------------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
------------ ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period.............. $6.80 $6.61 $6.50 $6.47 $6.30 $6.73
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................. 0.16 0.32 0.34 0.36 0.37 0.37
Net realized and unrealized gain (loss)
on investments................................. (0.10) 0.22 0.20 0.05 0.17 (0.34)
----- ----- ----- ----- ----- -----
Total from Investment Operations.................. 0.06 0.54 0.54 0.41 0.54 0.03
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.............. (0.16) (0.32) (0.34) (0.36) (0.37) (0.37)
Distributions from net realized capital gain...... (0.02) (0.03) (0.09) (0.02) -- (0.09)
----- ----- ----- ----- ----- -----
Total Distributions............................... (0.18) (0.35) (0.43) (0.38) (0.37) (0.46)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period.................... $6.68 $6.80 $6.61 $6.50 $6.47 $6.30
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.89% 8.45% 8.74% 6.49% 8.85% 0.41%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted).......... $58,337 $58,374 $52,883 $50,264 $51,504 $48,007
Ratio of expenses to average net assets........... 0.86%+ 0.82% 0.87% 0.84% 0.90% 0.85%
Ratio of net income to average net assets......... 4.64%+ 4.81% 5.26% 5.49% 5.84% 5.74%
Portfolio turnover rate........................... 1.86% 10.75% 22.42% 34.75% 17.64% 8.36%
</TABLE>
<TABLE>
<CAPTION>
CLASS D
------------------------------------------------------------------------------
SIX
MONTHS YEAR ENDED SEPTEMBER 30, 2/1/94*
ENDED ------------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
------------- ------- ------- ------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period............. $6.80 $6.61 $6.51 $6.48 $6.31 $6.67
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................ 0.13 0.26 0.28 0.30 0.31 0.21
Net realized and unrealized gain (loss)
on investments................................ (0.09) 0.22 0.19 0.05 0.17 (0.36)
----- ----- ----- ----- ----- -----
Total from Investment Operations................. 0.04 0.48 0.47 0.35 0.48 (0.15)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income............. (0.13) (0.26) (0.28) (0.30) (0.31) (0.21)
Distributions from net realized capital gain..... (0.02) (0.03) (0.09) (0.02) -- --
----- ----- ----- ----- ----- -----
Total Distributions.............................. (0.15) (0.29) (0.37) (0.32) (0.31) (0.21)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period................... $6.69 $6.80 $6.61 $6.51 $6.48 $6.31
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.59% 7.47% 7.60% 5.53% 7.78% (2.47)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)......... $8,286 $6,393 $3,320 $1,919 $1,277 $650
Ratio of expenses to average net assets.......... 1.76%+ 1.73% 1.77% 1.74% 1.91% 1.74%+
Ratio of net income to average net assets........ 3.74%+ 3.90% 4.36% 4.59% 4.84% 4.73%+
Portfolio turnover rate.......................... 1.86% 10.75% 22.42% 34.75% 17.64% 8.36%++
</TABLE>
- ---------------
See footnotes on page 25.
21
<PAGE>
Financial Highlights
California Quality Series
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------
SIX
MONTHS YEAR ENDED SEPTEMBER 30,
ENDED --------------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
------------ ------- ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period............ $7.21 $6.99 $6.75 $6.65 $6.39 $7.28
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income........................... 0.16 0.33 0.34 0.35 0.34 0.35
Net realized and unrealized gain (loss)
on investments............................... (0.10) 0.25 0.24 0.11 0.32 (0.73)
----- ----- ----- ----- ----- -----
Total from Investment Operations................ 0.06 0.58 0.58 0.46 0.66 (0.38)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income............ (0.16) (0.33) (0.34) (0.35) (0.34) (0.35)
Distributions from net realized capital gain.... (0.23) (0.03) -- (0.01) (0.06) (0.16)
----- ----- ----- ----- ----- -----
Total Distributions............................. (0.39) (0.36) (0.34) (0.36) (0.40) (0.51)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period.................. $6.88 $7.21 $6.99 $6.75 $6.65 $6.39
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.81% 8.67% 8.87% 7.00% 10.85% (5.46)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)........ $83,857 $87,522 $86,992 $95,560 $94,947 $99,020
Ratio of expenses to average net assets......... 0.81%+ 0.77% 0.82% 0.79% 0.89% 0.81%
Ratio of net income to average net assets....... 4.49%+ 4.75% 4.99% 5.11% 5.34% 5.20%
Portfolio turnover rate......................... 13.30% 30.82% 12.16% 12.84% 11.24% 22.16%
</TABLE>
<TABLE>
CLASS D
--------------------------------------------------------------------------
SIX
MONTHS YEAR ENDED SEPTEMBER 30, 2/1/94*
ENDED ------------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
-------------- ------- ------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period............. $7.19 $6.97 $6.74 $6.63 $6.38 $7.13
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................ 0.12 0.27 0.28 0.28 0.28 0.19
Net realized and unrealized gain (loss)
on investments................................ (0.10) 0.25 0.23 0.12 0.31 (0.75)
----- ----- ----- ----- ----- -----
Total from Investment Operations................. 0.02 0.52 0.51 0.40 0.59 (0.56)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income............. (0.12) (0.27) (0.28) (0.28) (0.28) (0.19)
Distributions from net realized capital gain..... (0.23) (0.03) -- (0.01) (0.06) --
----- ----- ----- ----- ----- -----
Total Distributions.............................. (0.35) (0.30) (0.28) (0.29) (0.34) (0.19)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period................... $6.86 $7.19 $6.97 $6.74 $6.63 $6.38
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.36% 7.71% 7.75% 6.20% 9.61% (8.01)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)......... $5,604 $2,302 $1,677 $1,645 $ 863 $ 812
Ratio of expenses to average net assets.......... 1.71%+ 1.68% 1.72% 1.69% 1.88% 1.77%+
Ratio of net income to average net assets........ 3.59%+ 3.84% 4.09% 4.21% 4.36% 4.39%+
Portfolio turnover rate.......................... 13.30% 30.82% 12.16% 12.84% 11.24% 22.16%++
</TABLE>
- -------------
See footnotes on page 25.
22
<PAGE>
Financial Highlights
Florida Series
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
SIX
MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-------------- -------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
---------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period.............. $8.07 $7.80 $7.67 $7.71 $7.34 $8.20
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................. 0.17 0.35 0.36 0.38 0.40 0.42
Net realized and unrealized gain (loss)
on investments................................. (0.11) 0.34 0.23 0.04 0.37 (0.74)
----- ----- ----- ----- ----- -----
Total from Investment Operations.................. 0.06 0.69 0.59 0.42 0.77 (0.32)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.............. (0.17) (0.35) (0.36) (0.38) (0.40) (0.42)
Distributions from net realized capital gain...... (0.05) (0.07) (0.10) (0.08) -- (0.12)
----- ----- ----- ----- ----- -----
Total Distributions............................... (0.22) (0.42) (0.46) (0.46) (0.40) (0.54)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period.................... $7.91 $8.07 $7.80 $7.67 $7.71 $7.34
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.75% 9.16% 8.01% 5.54% 10.87% (3.99)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted).......... $43,231 $42,464 $42,024 $45,200 $49,030 $49,897
Ratio of expenses to average net assets........... 1.02%+ 1.00% 1.04% 0.97% 0.72% 0.42%
Ratio of net income to average net assets......... 4.27%+ 4.45% 4.70% 4.90% 5.38% 5.49%
Portfolio turnover rate........................... 2.93% 6.73% 33.68% 18.53% 11.82% 6.17%
Without expense reimbursement and/or
management fee waiver:**
Ratio of expenses to average net assets........... 0.97% 1.03% 1.00%
Ratio of net income to average net assets......... 4.90% 5.07% 4.91%
</TABLE>
<TABLE>
<CAPTION>
CLASS D
----------------------------------------------------------------------
SIX
MONTHS YEAR ENDED SEPTEMBER 30, 2/1/94*
ENDED ------------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
---------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period........... $8.08 $7.81 $7.68 $7.72 $7.34 $8.10
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income.......................... 0.14 0.29 0.30 0.32 0.34 0.24
Net realized and unrealized gain (loss)
on investments.............................. (0.10) 0.34 0.23 0.04 0.38 (0.76)
----- ----- ----- ----- ----- -----
Total from Investment Operations............... 0.04 0.63 0.53 0.36 0.72 (0.52)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income........... (0.14) (0.29) (0.30) (0.32) (0.34) (0.24)
Distributions from net realized capital gain... (0.05) (0.07) (0.10) (0.08) -- --
----- ----- ----- ----- ----- -----
Total Distributions............................ (0.19) (0.36) (0.40) (0.40) (0.34) (0.24)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period................. $7.93 $8.08 $7.81 $7.68 $7.72 $7.34
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.50% 8.32% 7.18% 4.74% 10.07% (6.64)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)....... $2,244 $1,940 $1,678 $1,277 $603 $244
Ratio of expenses to average net assets........ 1.77%+ 1.77% 1.81% 1.73% 1.66% 1.29%+
Ratio of net income to average net assets...... 3.52%+ 3.68% 3.93% 4.14% 4.53% 4.61%+
Portfolio turnover rate........................ 2.93% 6.73% 33.68% 18.53% 11.82% 6.17%++
Without expense reimbursement and/or
management fee waiver:**
Ratio of expenses to average net assets........ 1.73% 1.97% 1.84%+
Ratio of net income to average net assets...... 4.14% 4.22% 4.06%+
</TABLE>
- --------------
See footnotes on page 25.
23
<PAGE>
Financial Highlights
North Carolina Series
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
SIX
MONTHS YEAR ENDED SEPTEMBER 30,
ENDED -------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
---------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period............ $8.30 $8.05 $7.84 $7.74 $7.30 $8.22
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income........................... 0.17 0.36 0.37 0.37 0.39 0.41
Net realized and unrealized gain (loss)
on investments............................... (0.11) 0.31 0.24 0.11 0.45 (0.87)
----- ----- ----- ----- ----- -----
Total from Investment Operations................ 0.06 0.67 0.61 0.48 0.84 (0.46)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income............ (0.17) (0.36) (0.37) (0.37) (0.39) (0.41)
Distributions from net realized capital gain.... (0.12) (0.06) (0.03) (0.01) (0.01) (0.05)
----- ----- ----- ----- ----- -----
Total Distributions............................. (0.29) (0.42) (0.40) (0.38) (0.40) (0.46)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period.................. $8.07 $8.30 $8.05 $7.84 $7.74 $7.30
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.74% 8.60% 8.01% 6.39% 11.92% (5.80)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)........ $30,819 $32,358 $32,684 $35,934 $37,446 $38,920
Ratio of expenses to average net assets......... 1.08%+ 1.05% 1.09% 1.05% 0.82% 0.44%
Ratio of net income to average net assets....... 4.28%+ 4.41% 4.66% 4.75% 5.21% 5.29%
Portfolio turnover rate......................... -- 20.37% 13.04% 15.12% 4.38% 15.61%
Without expense reimbursement and/or
management fee waiver:**
Ratio of expenses to average net assets......... 1.06% 1.18% 1.13%
Ratio of net income to average net assets....... 4.74% 4.85% 4.60%
</TABLE>
- -----------
See footnotes on page 25.
24
<PAGE>
Financial Highlights
North Carolina Series (continued)
<TABLE>
<CAPTION>
CLASS D
----------------------------------------------------------------------
SIX
MONTHS YEAR ENDED SEPTEMBER 30, 2/1/94*
ENDED -------------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
-------- ------ ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period............. $8.30 $8.05 $7.83 $7.74 $7.29 $8.17
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................ 0.14 0.30 0.31 0.31 0.33 0.23
Net realized and unrealized gain (loss)
on investments................................ (0.12) 0.31 0.25 0.10 0.46 (0.88)
----- ----- ----- ----- ----- -----
Total from Investment Operations................. 0.02 0.61 0.56 0.41 0.79 (0.65)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income............. (0.14) (0.30) (0.31) (0.31) (0.33) (0.23)
Distributions from net realized capital gain..... (0.12) (0.06) (0.03) (0.01) (0.01) --
----- ----- ----- ----- ----- -----
Total Distributions.............................. (0.26) (0.36) (0.34) (0.32) (0.34) (0.23)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period................... $8.06 $8.30 $8.05 $7.83 $7.74 $7.29
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.24% 7.77% 7.33% 5.45% 11.19% (8.15)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)......... $1,529 $1,456 $1,217 $1,232 $1,257 $1,282
Ratio of expenses to average net assets.......... 1.83%+ 1.82% 1.85% 1.81% 1.64% 1.27%+
Ratio of net income to average net assets........ 3.53%+ 3.64% 3.90% 3.99% 4.42% 4.49%+
Portfolio turnover rate.......................... -- 20.37% 13.04% 15.12% 4.38% 15.61%++
Without expense reimbursement and/or
management fee waiver:**
Ratio of expenses to average net assets.......... 1.82% 2.00% 1.95%+
Ratio of net income to average net assets........ 3.98% 4.06% 3.82%+
<FN>
- -----------
*Commencement of operations.
**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.
+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 Seligman Municipal Series Trust (comprising,
respectively, the California High-Yield, California Quality, Florida, and North
Carolina Series), as of March 31, 1999, the related statements of operations for
the six months then ended and of changes in net assets for the six months then
ended and for the year ended September 30, 1998, and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of the 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, 1999 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 referred to
above 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 March 31, 1999, the results of their
operations, the changes in their net assets, and their financial highlights for
the respective stated periods, in conformity with generally accepted accounting
principles.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
April 30, 1999
26
<PAGE>
TRUSTEES
John R. Galvin 2, 4
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, Raytheon Company
Alice S. Ilchman 3, 4
Trustee, Committee for Economic Development
Chairman, The Rockefeller Foundation
Frank A. McPherson 2, 4
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
John E. Merow 2, 4
Retired Chairman and Senior Partner,
Sullivan & Cromwell, Law Firm
Director, Commonwealth Industries, Inc
Director, New York Presbyterian Hospital
Betsy S. Michel 2, 4
Trustee, The Geraldine R. Dodge Foundation
Chairman of the Board of Trustees, St. George's School
William C. Morris 1
Chairman
Chairman of the Board,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3, 4
Retired Partner, Pitney, Hardin, Kipp & Szuch,
Law Firm
James Q. Riordan 3, 4
Director, KeySpan Energy Corporation
Trustee, Committee for Economic Development
Director, Public Broadcasting Service
Richard R. Schmaltz 1
Managing Director, Director of Investments,
J. & W. Seligman & Co. Incorporated
Trustee Emeritus, Colby College
Robert L. Shafer 3, 4
Retired Vice President, Pfizer, Inc.
James N. Whitson 2, 4
Director and Consultant, Sammons Enterprises, Inc.
Director, CommScope, Inc.
Director, C-SPAN
Brian T. Zino 1
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
Director, ICI Mutual Insurance Company
Trustee Emeritus
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
4 Board Operations Committee
27
<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
FOR MORE INFORMATION
Manager
J. & W. Seligman & Co.
Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder
Services
(212) 682-7600 Outside the
United States
(800) 622-4597 24-Hour
Automated
Telephone
Access Service
28
<PAGE>
Glossary of Financial Terms
Capital Gain Distribution -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio.
Capital Appreciation/Depreciation -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
Compounding -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
Contingent Deferred Sales Charge (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC expires after a fixed time period).
Dividend -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
Dividend Yield -- A measurement of a fund's dividend as a percentage of the
maximum offering price or net asset value.
Expense Ratio -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
Investment Objective -- The shared investment goal of a fund and its
shareholders.
Management Fee -- The amount paid by a mutual fund to its investment advisor(s).
Multiple Classes of Shares -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
National Association of Securities Dealers, Inc. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
Net Asset Value (NAV) Per Share -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
Offering Price -- The price at which a mutual fund's share can be purchased. The
offering price per share is the current net asset value plus any sales charge.
Portfolio Turnover -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
Prospectus -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC Yield -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
Securities and Exchange Commission -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
Statement of Additional Information -- A document that contains more detailed
information about an investment company and that supplements the prospectus. It
is available at no charge upon request.
Total Return -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.
Yield on Securities -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- ------------
Adapted from the Investment Company Institute's 1998 Mutual Fund Fact Book.
29
<PAGE>
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.
SELIGMAN ADVISORS, INC.
an affiliate of
J. & W. Seligman & Co.
INCORPORATED
ESTABLISHED 1861
100 Park Avenue, New York, NY 10017
Printed on Recycled Paper
TEB3 3/99
