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.
James, Jesse, and Joseph Seligman, 1870
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................................. 22
Report of Independent Auditors...................... 26
Trustees............................................. 27
Executive Officers and For More Information.......... 28
Glossary of Financial Terms......................... 29
<PAGE>
TO THE SHAREHOLDERS
The fiscal year ended September 30, 1999, was a period of steadily rising
interest rates, creating a difficult environment for fixed-income securities and
for Seligman Municipal Series Trust.
At the end of the Fund's fiscal-year 1998, the Federal Reserve Board was easing
monetary policy in an effort to protect the US economy from the effects of the
global economic crisis. Central banks around the world also lowered key interest
rates in response to global turmoil. These easing actions were successful and
the world economy has rebounded. However, the global recovery, combined with
continued growth in the US, soon caused the US Fed to voice concerns about
inflation. In May, the Fed announced its bias toward a tighter policy and has
since followed through with two federal funds rate hikes, for a total of 50
additional basis points.
Throughout this fiscal year, continued robust growth in the US, the recovering
world economy, growing concerns regarding inflation, and tighter monetary policy
sent market interest rates steadily higher. On September 30, 1998, the 30-year
US Treasury bond was yielding 4.98%. One year later, the yield had moved to
6.06%. Municipal bonds (as measured by the Bond Buyer 20-bond General Obligation
Index) fluctuated within a much narrower range, but still rose significantly,
from 4.94% on September 30, 1998, to 5.73% on September 30, 1999. The additional
stability in the municipal market was largely the result of an imbalance in
municipal supply and demand. Rising yields were attracting investors, while
municipal issuers were reluctant to offer new supply at higher rates.
Looking ahead, we believe that the US economy will slow, as was intended by the
Fed's most recent actions, and that inflation fears will thus subside and reduce
bond market volatility. We anticipate that the municipal market will outperform
the Treasury market for the balance of calendar-year 1999, as a result of
improving municipal market fundamentals, the most significant of which is the
slowdown in municipal issuance, which is expected to continue into the new year.
As the millennium approaches, we have become concerned that the media's focus on
the Year 2000 (Y2K) computer issue, and the fears that this attention may spark,
will cause some investors to take actions that are not in their best long-term
interests. In our view, the primary danger to investors is losing sight of their
long-term financial goals and altering their portfolios and asset allocations in
an attempt to respond to the confusion surrounding this issue.
In the US, governments and businesses have committed substantial resources to
this issue and, while there may be scattered inconveniences, we believe that the
US will enter the year 2000 relatively seamlessly, and that much of the rest of
the developed world is also well positioned to deal with the new millennium.
For the past several years, J. & W. Seligman & Co. Incorporated (Seligman), your
Trust's manager, and Seligman Data Corp. (Seligman Data), your Trust's
shareholder service agent, have been working to ensure that shareholders do not
experience any Y2K-related inconveniences. We are pleased to report that the
early start has paid off. During the spring of this year, Seligman and Seligman
Data participated in Y2K testing conducted by the Securities Industry
Association. These tests were completed without any Y2K-related problems on the
part of Seligman or Seligman Data. Tests with key service providers were also
conducted, all of which were successfully completed in a Y2K environment.
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, as well as the Trust's portfolios of investments
and financial statements, follows this letter.
By order of the Trustees,
/s/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
-----------------
Brian T. Zino
President
November 5, 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 12 months?
A: The past 12 months have been challenging for the financial markets,
including the fixed-income markets. At this time last year, global equity
markets were struggling to recover from the Asian financial crisis, as well
as economic turmoil in Russia. In September 1998, the Federal Reserve Board
initiated a series of federal funds rate easings in an effort to restore
stability and liquidity to anxious world markets. At that time, market
participants generally expected that US economic growth would contract as a
result of world events, thereby preventing an acceleration in the rate of
inflation. Additionally, many experts predicted that, with the approach of
the new millennium, computer glitches would at best slow economic growth
and at worst cause major disruptions leading to worldwide recession. One
year later, the Fed has tightened to slow economic growth, world equity
markets have recovered, and most market watchers expect the transition to
the year 2000 to be uneventful.
During the past year, the municipal market did not exhibit the degree of
volatility that characterized the US Treasury market. This was largely the
result of the powerful influences of supply and demand that served to
mitigate both upward and downward movements in municipal yields. Last
year's Treasury market rallies were caused by heavy demand for Treasury
securities during periods of equity market declines. Conversely, demand for
municipal bonds was not greatly affected, which lessened municipal market
volatility. Further, year-to-date municipal issuance is down 20% over the
same period last year. This lack of supply held municipal yields steady and
was the primary reason municipal bonds outperformed Treasury bonds for much
of the past 12 months.
While the municipal market was relatively stable overall, it was not immune
to the effects of shifting economic and inflation expectations. By June
1999, municipal yields began moving higher in response to increasing
concern regarding the pace of economic activity and continued to move
higher through fiscal year end. Accordingly, net asset values of the
Trust's shares deteriorated during the last quarter of the fiscal year and
performance was disappointing.
Q: What was your investment strategy?
A: Over the past year, long-term municipal yields rose to levels not seen in
several years. This presented an opportunity to enhance Trust yields by
purchasing higher-yielding, longer-term bonds and by reducing positions in
shorter-term bonds. In general, the longer the maturity of a bond, the more
sensitive it is to changes in interest rates. During periods of declining
interest rates, longer-term bonds
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
outperform shorter-term bonds. However, during periods of rising interest
rates, such as we have been experiencing, longer-term bonds decline more in
price than shorter-term bonds.
New purchases were concentrated in higher-rated bonds due primarily to a
continuation of narrow yield spreads between higher- and lower-quality
bonds. Additionally, a number of holdings received credit-rating upgrades,
further contributing to the overall improvement in the Trust's credit
quality.
The Trust is well diversified among all major sectors of the municipal
marketplace. Most sectors remain stable with the exception of health care,
which remains vulnerable to further credit-quality deterioration mainly as
a result of government cutbacks and the growth of managed care. Many health
care issuers that have been well managed and have maintained consistently
healthy finances are suddenly facing serious budget deficits. As a result
of this alarming trend, we have been particularly diligent in monitoring
our health care holdings. During the past year, portfolio activity in the
sector has been heavier than usual as we restructured our positions.
Despite the current situation, the health care sector continues to offer
selective opportunities. Through in-depth credit analysis, we endeavor to
identify strong health care credits for inclusion in the Trust's portfolio.
Q: What is your outlook?
A: The long-awaited economic slowdown has yet to materialize, increasing the
risk that the rate of inflation will accelerate. In response, bond yields
have been rising steadily year to date. For the remainder of calendar year
1999, the bond markets will likely experience continued volatility until
solid signs that the economy is moderating emerge. Many market participants
expect the Fed to raise rates once more before year-end. This, together
with higher market rates, may ease inflationary pressures and spark a
bond-market rally.
As we head toward the new millennium, we believe that there is much to be
optimistic about. In the year 2000, the US economy will likely enter its
tenth year of expansion, an extraordinary achievement. The financial well
being of the nation's states, cities, and municipalities continues to
improve, with many reporting record budget surpluses. The jobless rate
remains below 5% nationally and consumer confidence remains high. Finally,
as one of the few remaining possible ways to shelter income, municipal bond
trusts currently offer attractive yields compared to the after-tax yields
of many taxable bond investments.
3
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
The following charts compare a $10,000 hypothetical investment made in each
Series of Seligman Municipal Series Trust Class A shares, with and without the
initial 4.75% maximum sales charge, and assume that all distributions within the
period are invested in additional shares for the 10-year or since-inception
(where applicable) periods ended September 30, 1999, to a $10,000 hypothetical
investment made in the Lehman Brothers Municipal Bond Index (Lehman Index) for
the same periods. The performances of each Series of Seligman Municipal Series
Trust Class C and Class D shares are not shown in the charts but are included in
the table below each chart. It is important to keep in mind that the Lehman
Index does not include any fees or sales charges and does not reflect
state-specific bond market performance. The table below each chart also includes
relevant portfolio characteristics for each Series.
Seligman California Municipal High-Yield Series
With Sales Without Sales
Charge Charge Lehman Index
9/30/89 $9,521 $10,000 $10,000
12/31/89 $9,809 $10,303 $10,384
3/31/90 $9,896 $10,394 $10,431
6/30/90 $10,109 $10,618 $10,675
9/30/90 $10,051 $10,557 $10,681
12/31/90 $10,398 $10,921 $11,142
3/31/91 $10,636 $11,172 $11,393
6/30/91 $10,866 $11,413 $11,636
9/30/91 $11,310 $11,879 $12,089
12/31/91 $11,488 $12,066 $12,495
3/31/92 $11,652 $12,238 $12,532
6/30/92 $12,070 $12,677 $13,009
9/30/92 $12,328 $12,948 $13,353
12/31/92 $12,583 $13,216 $13,596
3/31/93 $12,948 $13,600 $14,101
6/30/93 $13,322 $13,992 $14,562
9/30/93 $13,642 $14,329 $15,054
12/31/93 $13,829 $14,525 $15,265
3/31/94 $13,511 $14,191 $14,427
6/30/94 $13,587 $14,270 $14,587
9/30/94 $13,699 $14,388 $14,686
12/31/94 $13,443 $14,120 $14,475
3/31/95 $14,314 $15,035 $15,498
6/30/95 $14,589 $15,323 $15,871
9/30/95 $14,911 $15,661 $16,329
12/31/95 $15,400 $16,175 $17,001
3/31/96 $15,259 $16,026 $16,796
6/30/96 $15,471 $16,249 $16,925
9/30/96 $15,878 $16,677 $17,314
12/31/96 $16,250 $17,068 $17,756
3/31/97 $16,185 $17,000 $17,715
6/30/97 $16,738 $17,580 $18,326
9/30/97 $17,266 $18,135 $18,879
12/31/97 $17,668 $18,557 $19,391
3/31/98 $17,904 $18,805 $19,614
6/30/98 $18,204 $19,120 $19,912
9/30/98 $18,726 $19,668 $20,524
12/31/98 $18,759 $19,703 $20,647
3/31/99 $18,892 $19,842 $20,830
6/30/99 $18,544 $19,477 $20,462
9/30/99 $18,198 $19,114 $20,380
The performances of Class C and Class D shares will be greater than or less than
the performance shown for Class A shares, based on the differences in sales
charges and fees paid by shareholders.
Investment Results per Share
TOTAL RETURNS
For Periods Ended September 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS C CLASS D
SINCE INCEPTION SIX ONE FIVE 10 SINCE INCEPTION
5/27/99* MONTHS* YEAR YEARS YEARS 2/1/94
---------------- --------- --------- --------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge n/a (8.20)% (7.44)% 4.83% 6.17% n/a
Without Sales Charge n/a (3.67) (2.82) 5.85 6.69 n/a
Class C**
With Sales Charge and CDSC (5.74)% n/a n/a n/a n/a n/a
Without Sales Charge and CDSC (3.79) n/a n/a n/a n/a n/a
Class D**
With 1% CDSC n/a (5.04) (4.47) n/a n/a n/a
Without CDSC n/a (4.10) (3.54) 4.88 n/a 3.83%
Lehman Index*** (1.83)++ (2.16) (0.70) 6.77 7.38 5.02++++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended September 30, 1999
9/30/99 3/31/99 9/30/98 DIVIDENDS++ CAPITAL GAIN++ SEC YIELD+++
-------- -------- -------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $6.28 $6.68 $6.80 Class A $0.312 $0.024 4.71%
Class C 6.29 n/a n/a Class C 0.088 -- 3.99
Class D 6.29 6.69 6.80 Class D 0.253 0.024 4.03
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 95% Aaa/AAA 17%
General Obligation Bonds00 5 Aa/AA 16
A/A 52
Baa/BBB 15
WEIGHTED AVERAGE MATURITY 24.9 years
</TABLE>
- -----------------
See footnotes on page 7.
4
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
Seligman California Municipal Quality Series
With Sales Without Sales
Charge Charge Lehman Index
9/30/89 $9,529 $10,000 $10,000
12/31/89 $9,870 $10,358 $10,384
3/31/90 $9,858 $10,346 $10,431
6/30/90 $10,108 $10,607 $10,675
9/30/90 $9,931 $10,422 $10,681
12/31/90 $10,518 $11,038 $11,142
3/31/91 $10,695 $11,224 $11,393
6/30/91 $10,898 $11,437 $11,636
9/30/91 $11,356 $11,918 $12,089
12/31/91 $11,698 $12,277 $12,495
3/31/92 $11,680 $12,257 $12,532
6/30/92 $12,194 $12,797 $13,009
9/30/92 $12,442 $13,057 $13,353
12/31/92 $12,691 $13,319 $13,596
3/31/93 $13,296 $13,953 $14,101
6/30/93 $13,702 $14,380 $14,562
9/30/93 $14,174 $14,875 $15,054
12/31/93 $14,291 $14,998 $15,265
3/31/94 $13,344 $14,004 $14,427
6/30/94 $13,365 $14,026 $14,587
9/30/94 $13,400 $14,063 $14,686
12/31/94 $13,105 $13,753 $14,475
3/31/95 $14,281 $14,987 $15,498
6/30/95 $14,467 $15,183 $15,871
9/30/95 $14,853 $15,588 $16,329
12/31/95 $15,699 $16,475 $17,001
3/31/96 $15,368 $16,129 $16,796
6/30/96 $15,525 $16,293 $16,925
9/30/96 $15,894 $16,680 $17,314
12/31/96 $16,313 $17,120 $17,756
3/31/97 $16,203 $17,004 $17,715
6/30/97 $16,752 $17,580 $18,326
9/30/97 $17,304 $18,160 $18,879
12/31/97 $17,748 $18,626 $19,391
3/31/98 $17,907 $18,793 $19,614
6/30/98 $18,200 $19,100 $19,912
9/30/98 $18,804 $19,735 $20,524
12/31/98 $18,859 $19,792 $20,647
3/31/99 $18,958 $19,895 $20,830
6/30/99 $18,479 $19,392 $20,462
9/30/99 $18,113 $19,008 $20,380
The performances of Class C and Class D shares will be greater than or less than
the performance shown for Class A shares, based on the differences in sales
charges and fees paid by shareholders.
Investment Results per Share
TOTAL RETURNS
For Periods Ended September 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS C CLASS D
SINCE INCEPTION SIX ONE FIVE 10 SINCE INCEPTION
5/27/99* MONTHS* YEAR YEARS YEARS 2/1/94
---------------- --------- --------- --------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge n/a (8.96)% (8.26)% 5.18% 6.12% n/a
Without Sales Charge n/a (4.46) (3.68) 6.21 6.63 n/a
Class C**
With Sales Charge and CDSC (5.96)% n/a n/a n/a n/a n/a
Without Sales Charge and CDSC (4.04) n/a n/a n/a n/a n/a
Class D**
With 1% CDSC n/a (5.85) (5.47) n/a n/a n/a
Without CDSC n/a (4.91) (4.58) 5.21 n/a 3.06%
Lehman Index*** (1.83)++ (2.16) (0.70) 6.77 7.38 5.02++++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1999
9/30/99 3/31/99 9/30/98 DIVIDENDS++ CAPITAL GAIN++ SEC YIELD+++
------- -------- -------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $6.42 $6.88 $7.21 Class A $0.311 $0.230 4.47%
Class C 6.40 n/a n/a Class C 0.086 -- 3.76
Class D 6.40 6.86 7.19 Class D 0.249 0.230 3.79
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 85% Aaa/AAA 76%
General Obligation Bonds00 15 Aa/AA 18
A/A 6
WEIGHTED AVERAGE MATURITY 22.9 years
</TABLE>
- ----------------
See footnotes on page 7.
5
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
Seligman Florida Municipal Series
With Sales Without Sales
Charge Charge Lehman Index
9/30/89 $9,523 $10,000 $10,000
12/31/89 $9,924 $10,421 $10,384
3/31/90 $9,902 $10,398 $10,431
6/30/90 $10,161 $10,670 $10,675
9/30/90 $10,021 $10,523 $10,681
12/31/90 $10,565 $11,094 $11,142
3/31/91 $10,765 $11,304 $11,393
6/30/91 $10,986 $11,537 $11,636
9/30/91 $11,364 $11,933 $12,089
12/31/91 $11,686 $12,271 $12,495
3/31/92 $11,715 $12,301 $12,532
6/30/92 $12,177 $12,787 $13,009
9/30/92 $12,415 $13,037 $13,353
12/31/92 $12,746 $13,385 $13,596
3/31/93 $13,221 $13,883 $14,101
6/30/93 $13,794 $14,484 $14,562
9/30/93 $14,303 $15,019 $15,054
12/31/93 $14,470 $15,194 $15,265
3/31/94 $13,603 $14,284 $14,427
6/30/94 $13,710 $14,396 $14,587
9/30/94 $13,732 $14,420 $14,686
12/31/94 $13,671 $14,356 $14,475
3/31/95 $14,628 $15,361 $15,498
6/30/95 $14,859 $15,603 $15,871
9/30/95 $15,226 $15,988 $16,329
12/31/95 $15,951 $16,749 $17,001
3/31/96 $15,591 $16,372 $16,796
6/30/96 $15,707 $16,493 $16,925
9/30/96 $16,070 $16,874 $17,314
12/31/96 $16,392 $17,212 $17,756
3/31/97 $16,171 $16,981 $17,715
6/30/97 $16,807 $17,649 $18,326
9/30/97 $17,357 $18,226 $18,879
12/31/97 $17,921 $18,818 $19,391
3/31/98 $18,094 $19,000 $19,614
6/30/98 $18,369 $19,289 $19,912
9/30/98 $18,947 $19,896 $20,524
12/31/98 $18,937 $19,885 $20,647
3/31/99 $19,090 $20,046 $20,830
6/30/99 $18,717 $19,654 $20,462
9/30/99 $18,298 $19,215 $20,380
The performances of Class C and Class D shares will be greater than or less than
the performance shown for Class A shares, based on the differences in sales
charges and fees paid by shareholders.
Investment Results per Share
TOTAL RETURNS
For Periods Ended September 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS C CLASS D
SINCE INCEPTION SIX ONE FIVE 10 SINCE INCEPTION
5/27/99* MONTHS* YEAR YEARS YEARS 2/1/94
---------------- --------- --------- --------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge n/a (8.65)% (7.98)% 4.87% 6.23% n/a
Without Sales Charge n/a (4.15) (3.42) 5.91 6.75 n/a
Class C**
With Sales Charge and CDSC (5.87)% n/a n/a n/a n/a n/a
Without Sales Charge and CDSC (3.96) n/a n/a n/a n/a n/a
Class D**
With 1% CDSC n/a (5.43) (4.93) n/a n/a n/a
Without CDSC n/a (4.49) (4.01) 5.14 n/a 3.26%
Lehman Index*** (1.83)++ (2.16) (0.70) 6.77 7.38 5.02++++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1999
9/30/99 3/31/99 9/30/98 DIVIDENDS++ CAPITAL GAIN++ SEC YIELD+++
-------- -------- -------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $7.41 $7.91 $8.07 Class A $0.343 $0.051 4.49%
Class C 7.43 n/a n/a Class C 0.100 -- 3.92
Class D 7.43 7.93 8.08 Class D 0.284 0.051 3.96
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 88% Aaa/AAA 67%
General Obligation Bonds00 12 Aa/AA 23
A/A 10
WEIGHTED AVERAGE MATURITY 24.2 years
</TABLE>
- ----------------
See footnotes on page 7.
6
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
Seligman North Carolina Municipal Series
With Sales Without Sales
Charge Charge Lehman Index
8/27/90 $9,520 $10,000 $10,000
9/30/90 $9,387 $9,860 $10,006
12/31/90 $9,784 $10,277 $10,437
3/31/91 $9,982 $10,485 $10,673
6/30/91 $10,083 $10,591 $10,900
9/30/91 $10,510 $11,040 $11,325
12/31/91 $10,824 $11,370 $11,705
3/31/92 $10,779 $11,323 $11,740
6/30/92 $11,212 $11,777 $12,186
9/30/92 $11,479 $12,058 $12,509
12/31/92 $11,706 $12,297 $12,737
3/31/93 $12,197 $12,812 $13,209
6/30/93 $12,631 $13,268 $13,641
9/30/93 $13,139 $13,801 $14,102
12/31/93 $13,226 $13,893 $14,300
3/31/94 $12,335 $12,957 $13,515
6/30/94 $12,372 $12,996 $13,665
9/30/94 $12,377 $13,001 $13,758
12/31/94 $12,254 $12,872 $13,560
3/31/95 $13,323 $13,994 $14,518
6/30/95 $13,563 $14,247 $14,868
9/30/95 $13,852 $14,551 $15,296
12/31/95 $14,651 $15,390 $15,927
3/31/96 $14,255 $14,973 $15,734
6/30/96 $14,394 $15,120 $15,855
9/30/96 $14,738 $15,481 $16,220
12/31/96 $15,049 $15,807 $16,633
3/31/97 $14,993 $15,749 $16,595
6/30/97 $15,483 $16,264 $17,168
9/30/97 $15,918 $16,720 $17,686
12/31/97 $16,365 $17,190 $18,165
3/31/98 $16,504 $17,336 $18,374
6/30/98 $16,792 $17,638 $18,653
9/30/98 $17,287 $18,158 $19,226
12/31/98 $17,317 $18,190 $19,342
3/31/99 $17,415 $18,293 $19,514
6/30/99 $17,084 $17,946 $19,168
9/30/99 $16,757 $17,602 $19,092
The performances of Class C and Class D shares will be greater than or less than
the performance shown for Class A shares, based on the differences in sales
charges and fees paid by shareholders.
Investment Results per Share
TOTAL RETURNS
For Periods Ended September 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
--------------------------------------------------------
CLASS C CLASS A CLASS D
SINCE INCEPTION SIX ONE FIVE SINCE INCEPTION SINCE INCEPTION
5/27/99* MONTHS* YEAR YEARS 8/27/90 2/1/94
---------------- --------- --------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge n/a (8.32)% (7.63)% 5.23% 5.84% n/a
Without Sales Charge n/a (3.78) (3.07) 6.25 6.41 n/a
Class C**
With Sales Charge and CDSC (5.52)% n/a n/a n/a n/a n/a
Without Sales Charge and CDSC (3.62) n/a n/a n/a n/a n/a
Class D**
With 1% CDSC n/a (4.97) (4.71) n/a n/a n/a
Without CDSC n/a (4.03) (3.79) 5.47 n/a 3.25%
Lehman Index*** (1.83)++ (2.16) (0.70) 6.77 7.37+ 5.02++++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED SEPTEMBER 30, 1999
9/30/99 3/31/99 9/30/98 DIVIDENDS++ CAPITAL GAIN++ SEC YIELD+++
-------- -------- -------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $7.59 $8.07 $8.30 Class A $0.350 $0.117 4.26%
Class C 7.59 n/a n/a Class C 0.102 -- 3.68
Class D 7.59 8.06 8.30 Class D 0.290 0.117 3.72
HOLDINGS BY MARKET SECTOR0 MOODY'S/S&P RATINGS0
Revenue Bonds 77% Aaa/AAA 46%
General Obligation Bonds00 23 Aa/AA 35
A/A 19
WEIGHTED AVERAGE MATURITY 19.0 years
</TABLE>
- ----------------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price and assume all distributions
within the period are invested in additional shares. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class C shares are calculated with and
without the effect of the initial 1% maximum sales charge and the 1%
contingent deferred sales charge ("CDSC") that is charged on redemptions
made within 18 months of the date of purchase. Returns for Class D shares
are calculated with and without the effect of the 1% 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 Index is an unmanaged index that does not include any fees or
sales charges. It is composed of approximately 60% revenue bonds and 40%
state government obligations. Investors cannot invest directly in an index.
++ From 5/31/99.
++++ From 1/31/94.
+ From 8/31/90.
++ Represents per share amount declared for the year ended September 30, 1999
(for Class C shares, for the period May 27, 1999 to September 30, 1999).
+++ Current yield, representing the annualized yield for the 30-day period
ended September 30, 1999, has been computed in accordance with SEC
regulations and will vary.
0 Percentages based on current market values of long-term holdings at
September 30, 1999.
00 Includes pre-refunded and escrowed-to-maturity securities.
7
<PAGE>
Portfolios of Investments
September 30, 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 $ 2,548,175
1,000,000 California Department of Veterans Affairs Rev. (Home Purchase),
5 1/2% due 12/1/2018*................................................... Aa3/AA- 955,460
2,190,000 California Department of Water Resources Water System Rev.
(Central Valley Project), 6% due 12/1/2020.............................. Aa2/AA 2,243,611
500,000 California Educational Facilities Authority Rev. (Los Angeles College
of Chiropractic Medicine), 5.60% due 11/1/2017.......................... Baa2/NR 482,890
2,500,000 California Educational Facilities Authority Rev. (Loyola Marymount
University), 5 3/4% due 10/1/2024....................................... A2/NR 2,490,150
3,000,000 California Educational Facilities Authority Rev. (Pepperdine University),
5% due 11/1/2029........................................................ A1/NR 2,644,710
2,500,000 California Health Facilities Financing Authority Rev. (Cedars-Sinai
Medical Center), 5 1/4% due 8/1/2027.................................... Aaa/AAA 2,314,225
2,500,000 California Health Facilities Financing Authority Rev. (Kaiser Permanente),
5.40% due 5/1/2028...................................................... A3/A 2,286,450
1,500,000 California Housing Finance Agency Home Mortgage Rev.,
6 3/8% due 8/1/2027*.................................................... Aa2/AA- 1,533,870
2,500,000 California Housing Finance Agency (Single Family Mortgage),
5.40% due 8/1/2028*..................................................... Aaa/AAA 2,324,275
3,500,000 California Housing Finance Agency (Multi-family Housing Rev.),
5 3/8% due 2/1/2036*................................................... Aa3/AA- 3,168,165
2,500,000 California Pollution Control Financing Authority Rev. (San Diego
Gas & Electric Co.), 5.85% due 6/1/2021*................................ Aa3/AA- 2,426,625
1,750,000 California Pollution Control Financing Authority Rev. (Pacific Gas &
Electric Co.), 5 7/8% due 6/1/2023*..................................... A1/AA- 1,748,723
1,000,000 California Pollution Control Financing Authority Rev. (Pacific Gas &
Electric Co.), 5.85% due 12/1/2023*..................................... A1/AA- 1,001,960
3,500,000 California Statewide Certificates of Participation (Children's Hospital
of Los Angeles), 5 1/4% due 8/15/2029................................... A1/A+ 3,141,495
2,500,000 Cupertino, CA Certificates of Participation (Capital Improvement Projects),
5 3/4% due 1/1/2016..................................................... A1/A+ 2,503,100
3,000,000 Foothill/Eastern Transportation Corridor Agency, CA Toll Road Rev.,
5 3/4% due 1/15/2040.................................................... Baa3/BBB- 2,851,440
3,500,000 Los Angeles, CA Department of Water & Power Electric Plant Rev.,
5 1/2% due 6/15/2029.................................................... Aaa/AAA 3,395,105
3,000,000 Modesto, CA Irrigation District Certificates of Participation,
5.30% due 7/1/2022...................................................... A2/A+ 2,779,410
</TABLE>
- ----------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
See Notes to Financial Statements.
8
<PAGE>
Portfolios of Investments
September 30, 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 $ 647,580
2,010,000 Pleasanton, CA Joint Powers Financing Authority Reassessment Rev.,
6.15% due 9/2/2012...................................................... Baa1/NR 2,079,265
4,000,000 Puerto Rico Highway & Transportation Authority Rev., 5 1/2% due 7/1/2036.. Baa1/A 3,818,000
2,500,000 Sacramento, CA Municipal Utility District Electric Rev.,
5 1/4% due 7/1/2028..................................................... A2/A 2,282,525
3,000,000 San Bernardino, CA Joint Powers Financing Authority (California Dept. of
Transportation Lease), 5 1/2% due 12/1/2020............................. A1/A 2,869,710
3,000,000 San Joaquin Hills, CA Transportation Corridor Agency Rev. (Orange County
Senior Lien Toll Road), 6 3/4% due 1/1/20320............................ Aaa/AAA 3,294,060
2,500,000 Santa Barbara, CA Certificates of Participation, 5.70% due 3/1/2011....... A1/A+ 2,564,625
1,000,000 Southern California Public Power Authority Power Project Rev.
(Multiple Projects), 6% due 7/1/2018.................................... A2/A 1,002,220
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/A- 660,409
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/A- 1,188,431
2,000,000 Washington Township, CA Hospital District Hospital Healthcare System Rev.,
5 1/4% due 7/1/2029..................................................... A2/NR 1,777,720
-----------
TOTAL MUNICIPAL BONDS (Cost $66,395,041)--97.8%............................................................. 65,024,384
VARIABLE RATE DEMAND NOTES (Cost $300,000)--0.4%............................................................ 300,000
OTHER ASSETS LESS LIABILITIES--1.8%......................................................................... 1,181,859
-----------
NET ASSETS--100.0%.......................................................................................... $66,506,243
===========
</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 12/1/20290.......................... Aaa/AA $ 3,305,100
3,440,000 California Educational Facilities Authority Rev. (Pomona College),
6% due 2/15/2017........................................................ Aaa/AAA 3,559,816
2,000,000 California Educational Facilities Authority Rev. (Stanford University),
5.35% due 6/1/2027...................................................... Aaa/AAA 1,907,760
4,000,000 California Educational Facilities Authority Rev. (University of San Diego),
5% due 10/1/2028........................................................ Aaa/NR 3,563,600
</TABLE>
- --------------
+ Ratings have not been audited by Deloitte & Touche LLP.
0 Pre-refunded security.
See Notes to Financial Statements.
9
<PAGE>
Portfolios of Investments
September 30, 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. (University of Southern
California), 5% due 10/1/2028........................................... Aa2/AA $ 3,548,240
3,000,000 California Health Facilities Financing Authority Rev. (Kaiser Permanente),
6 1/2% due 12/1/20200................................................... A3/A 3,154,920
360,000 California Housing Finance Agency (Housing Revenue Insured Bonds),
8 5/8% due 8/1/2015..................................................... Aaa/AAA 367,160
2,730,000 California Housing Finance Agency Home Mortgage Rev.,
6 3/4% due 2/1/2025*.................................................... Aa2/AA- 2,807,750
4,000,000 California Pollution Control Financing Authority Rev. (Mobil Oil Corporation
Project), 5 1/2% due 12/1/2029*......................................... Aa2/AA 3,796,920
890,000 California Public Capital Improvements Financing Authority
(Pooled Projects), 8.10% due 3/1/2018................................... Aaa/AAA 906,287
4,000,000 California State GOs, 5% due 10/1/2023.................................... Aa3/AA- 3,597,680
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 2,296,950
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 2,676,870
4,000,000 Contra Costa, CA Water District Rev., 5% due 10/1/2024.................... Aaa/AAA 3,585,200
3,500,000 East Bay, CA Municipal Utility District Water System Rev., 5% due 6/1/2026 Aaa/AAA 3,130,750
2,500,000 Eastern Municipal Water District Riverside County, CA Water and Sewer Rev.,
6 3/4% due 7/1/2012..................................................... Aaa/AAA 2,880,475
3,000,000 Fresno, CA Sewer System Rev., 5 1/4% due 9/1/2019......................... Aaa/AAA 2,874,750
4,000,000 Los Angeles, CA Department of Water & Power Electric Plant Rev.,
5 1/2% due 6/15/2029.................................................... Aaa/AAA 3,880,120
2,000,000 Marin, CA Municipal Water District Water Rev., 5.65% due 7/1/2023......... A1/AA 1,968,980
2,000,000 Metropolitan Water District of Southern California Waterworks GOs,
4 3/4% due 3/1/2037..................................................... Aaa/AAA 1,656,920
4,500,000 Orange County, CA Local Transportation Authority (Measure M Sales
Tax Rev.), 6% due 2/15/2009............................................. Aaa/AAA 4,889,385
2,500,000 Rancho, CA Water District Financing Authority Rev., 5.90% due 11/1/2015... Aaa/AAA 2,579,575
4,000,000 Regents of the University of California Rev. (Multiple Purpose Projects),
5 3/8% due 9/1/2024..................................................... Aaa/AAA 3,838,200
4,300,000 San Diego, CA Public Facilities Financing Authority Sewer Rev.,
5% due 5/15/2029........................................................ Aaa/AAA 3,826,699
4,250,000 San Francisco Bay Area Rapid Transit District, CA (Sales Tax Rev.),
5% due 7/1/2028......................................................... Aaa/AAA 3,787,515
</TABLE>
- ----------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
0 Pre-refunded security.
See Notes to Financial Statements.
10
<PAGE>
Portfolios of Investments
September 30, 1999
CALIFORNIA QUALITY SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ----------------- -------------
<S> <C> <C> <C>
$3,000,000 San Francisco, CA City and County Airports Commission Rev.
(International Airport), 6.60% due 5/1/2024*............................ Aaa/AAA $ 3,214,110
-----------
TOTAL MUNICIPAL BONDS (Cost $79,057,826)--98.1%........................................................... 77,601,732
VARIABLE RATE DEMAND NOTES (Cost $100,000)--0.1%.......................................................... 100,000
OTHER ASSETS LESS LIABILITIES--1.8%....................................................................... 1,387,292
-----------
NET ASSETS--100.0%........................................................................................ $79,089,024
===========
</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 $ 1,765,800
1,000,000 Broward County, FL Water & Sewer Utility Rev., 5% due 10/1/2018........... Aaa/AAA 908,610
1,000,000 Dade County, FL Aviation Rev., 6 1/8% due 10/1/2020*...................... Aaa/AAA 1,023,680
2,000,000 Dade County, FL Public Improvement GOs, 5 3/4% due 10/1/2016.............. Aaa/AAA 2,020,980
2,000,000 Dade County, FL Water & Sewer System Rev., 5 3/4% due 10/1/2022........... Aaa/AAA 2,000,000
945,000 Florida Housing Finance Agency Rev. (General Mortgage),
6.35% due 6/1/2014...................................................... NR/AAA 981,723
705,000 Florida Housing Finance Agency Rev. (Single Family Mortgage),
6.55% due 7/1/2014*..................................................... Aaa/AAA 728,286
1,860,000 Florida Housing Finance Agency Rev. (Homeowner Mortgage),
6.20% due 7/1/2027*..................................................... Aa3/AA 1,886,133
2,500,000 Florida Ports Financing Commission Rev. (State Transportation Trust Fund),
5 3/8% due 6/1/2027*.................................................... Aaa/AAA 2,344,450
2,500,000 Florida State Turnpike Authority Rev., 5 5/8% due 7/1/2025................ Aaa/AAA 2,464,625
2,000,000 Greater Orlando Aviation Authority, FL Airport Facilities Rev.,
5 1/4% due 10/1/2023*................................................... Aaa/AAA 1,839,020
2,500,000 Hillsborough County, FL Aviation Authority Rev. (Tampa International
Airport), 5 3/8% due 10/1/2023*......................................... Aaa/AAA 2,354,000
2,000,000 Jacksonville Electric Authority, FL Rev. (Electric System),
5.10% due 10/1/2032..................................................... Aa2/AA 1,763,360
2,000,000 Jacksonville Electric Authority, FL Rev. (Water & Sewer System),
5 5/8% due 10/1/2037.................................................... Aa3/AA- 1,922,840
2,000,000 Jacksonville, FL Sewage & Solid Waste Disposal Facilities Rev.
(Anheuser-Busch Project), 5 7/8% due 2/1/2036*.......................... A1/A+ 1,960,100
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+ 1,807,960
1,000,000 Lee County, FL Transportation Facilities Rev., 6% due 10/1/2015........... Aaa/AAA 1,032,670
</TABLE>
- ---------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
See Notes to Financial Statements.
11
<PAGE>
Portfolios of Investments
September 30, 1999
FLORIDA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ----------------- -------------
<S> <C> <C> <C>
$2,000,000 Marion County, FL Hospital District Health System Rev. (Munroe
Regional Health System), 5 5/8% due 10/1/2024........................... A2/NR $ 1,876,500
1,000,000 Osceola County, FL Transportation Rev. (Osceola Parkway Project),
6.10% due 4/1/2017...................................................... Aaa/AAA 1,044,600
1,200,000 Palm Beach County, FL Criminal Justice Facilities Rev., 7 1/4% due 6/1/20110 Aaa/AAA 1,251,552
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/A1+ 1,982,800
2,000,000 Reedy Creek Improvement District, FL Utilities Rev., 5 1/8% due 10/1/2019. Aaa/AAA 1,837,420
1,750,000 Tampa Bay, FL Regional Water Supply Utility System Authority Rev.,
5 3/4% due 10/1/2029.................................................... Aaa/AAA 1,740,095
1,250,000 Volusia County, FL Educational Facilities Authority Rev. (Embry-Riddle
Aeronautical University Project), 6 5/8% due 10/15/20220................ NR/AAA 1,355,612
-----------
TOTAL MUNICIPAL BONDS (Cost $40,318,791)--100.5%.......................................................... 39,892,816
VARIABLE RATE DEMAND NOTES (Cost $500,000)--1.2%.......................................................... 500,000
OTHER ASSETS LESS LIABILITIES--(1.7)%..................................................................... (690,542)
-----------
NET ASSETS--100.0%........................................................................................ $39,702,274
===========
</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 $ 1,254,475
1,250,000 Asheville, NC Water System Rev., 5.70% due 8/1/2025....................... Aaa/AAA 1,246,538
2,000,000 Charlotte-Mecklenberg Hospital Authority, NC Health Care System Rev.,
5 3/4% due 1/15/2021.................................................... Aa3/AA 1,958,940
1,000,000 Charlotte, NC Certificates of Participation (Charlotte-Mecklenburg Law
Enforcement Center Project), 5 3/8% due 6/1/2013........................ Aa1/AA 992,760
2,000,000 Charlotte, NC Water & Sewer GOs, 5.90% due 2/1/20170...................... Aaa/AAA 2,145,140
1,000,000 Concord, NC Utilities System Rev., 5% due 12/1/2022....................... Aaa/AAA 893,980
1,500,000 Fayetteville, NC Public Works Commission Rev., 5 1/8% due 3/1/2024........ Aaa/AAA 1,366,755
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 2,456,200
600,000 North Carolina Housing Finance Agency Rev. (Multi-Family),
5.80% due 7/1/2014...................................................... Aa2/AA 606,150
1,370,000 North Carolina Housing Finance Agency Rev. (Single Family),
6 1/2% due 3/1/2018..................................................... Aa2/AA 1,417,745
</TABLE>
- ---------------
+ Ratings have not been audited by Deloitte & Touche LLP.
0 Pre-refunded security.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
See Notes to Financial Statements.
12
<PAGE>
Portfolios of Investments
September 30, 1999
NORTH CAROLINA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ----------------- -------------
<S> <C> <C> <C>
$1,000,000 North Carolina Medical Care Commission Hospital Rev. (Presbyterian
Health Services Corp. Project), 6% due 10/1/20240....................... Aa3/AA $ 1,064,570
1,500,000 North Carolina Medical Care Commission Hospital Rev. (First Health
of the Carolinas Project), 5% due 10/1/2028............................. Aa3/AA- 1,289,520
1,500,000 North Carolina Medical Care Commission Hospital Rev. (Gaston Health
Care), 5% due 2/15/2029................................................. A1/A+ 1,273,905
1,500,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev.,
5 3/4% due 1/1/2015..................................................... Aaa/AAA 1,503,810
3,000,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev.,
5% due 1/1/2020++....................................................... Aaa/AAA 2,759,490
1,000,000 Orange, NC Water & Sewer Authority Rev., 5.20% due 7/1/2016............... Aa2/AA 945,370
1,500,000 University of North Carolina Charlotte Rev. (Student Activity Center),
5 1/2% due 6/1/2021..................................................... Aaa/AAA 1,464,630
500,000 University of North Carolina Hospitals at Chapel Hill Rev.,
6 3/8% due 2/15/20170................................................... Aa3/AA 532,605
500,000 University of North Carolina Hospitals at Chapel Hill Rev.,
5% due 2/15/2024........................................................ Aaa/AAA 443,950
1,000,000 University of North Carolina Hospitals at Chapel Hill Rev.,
5 1/4% due 2/15/2026.................................................... Aa3/AA 906,110
1,550,000 Wake County Industrial Facilities & Pollution Control Financing Authority,
NC (Carolina Power & Light), 6.90% due 4/1/2009......................... A2/A1 1,600,607
-----------
TOTAL MUNICIPAL BONDS (Cost $28,288,397)--97.3%........................................................... 28,123,250
VARIABLE RATE DEMAND NOTES (Cost $300,000)--1.0%.......................................................... 300,000
OTHER ASSETS LESS LIABILITIES--1.7%....................................................................... 493,712
-----------
NET ASSETS-- 100.0%....................................................................................... $28,916,962
===========
</TABLE>
- --------------
+ Ratings have not been audited by Deloitte & Touche LLP.
++ Escrowed-to-maturity security.
0 Pre-refunded security.
See Notes to Financial Statements.
13
<PAGE>
Statements of Assets and Liabilities
September 30, 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...................... $65,024,384 $77,601,732 $39,892,816 $28,123,250
Short-term holdings..................... 300,000 100,000 500,000 300,000
--------------- --------------- ---------------- ---------------
65,324,384 77,701,732 40,392,816 28,423,250
Cash ...................................... 71,689 84,662 68,713 148,505
Interest receivable........................ 1,073,226 1,462,922 898,007 434,942
Receivable for Shares of Beneficial
Interest sold........................... 268,270 65,824 202,783 480
Expenses prepaid to shareholder
service agent........................... 7,939 9,829 4,914 4,158
Other...................................... 6,158 6,839 5,711 6,199
--------------- --------------- ---------------- ---------------
Total Assets............................... 66,751,666 79,331,808 41,572,944 29,017,534
=============== =============== ================ ===============
LIABILITIES:
Dividends payable.......................... 97,465 113,763 54,744 40,014
Payable for Shares of Beneficial Interest
repurchased............................. 45,844 14,893 170 --
Payable for securities purchased........... -- -- 1,742,510 --
Accrued expenses and other................. 102,114 114,128 73,246 60,558
--------------- --------------- ---------------- ---------------
Total Liabilities ......................... 245,423 242,784 1,870,670 100,572
--------------- --------------- ---------------- ---------------
Net Assets................................. $66,506,243 $79,089,024 $39,702,274 $28,916,962
=============== =============== ================ ===============
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par:
Class A................................. $ 9,205 $ 11,649 $ 5,072 $ 3,586
Class C................................. 166 2 34 1
Class D................................. 1,218 669 248 222
Additional paid-in capital................. 67,087,924 79,948,659 39,895,503 28,831,283
Undistributed net realized gain............ 778,387 584,139 227,392 247,017
Net unrealized depreciation
of investments.......................... (1,370,657) (1,456,094) (425,975) (165,147)
--------------- --------------- ---------------- ---------------
Net Assets................................. $66,506,243 $79,089,024 $39,702,274 $28,916,962
=============== =============== ================ ===============
NET ASSETS:
Class A................................. $57,806,975 $74,793,186 $37,605,866 $27,224,340
Class C................................. $ 1,041,062 $ 9,538 $ 253,579 $ 10,180
Class D................................. $ 7,658,206 $ 4,286,300 $1,842,829 $ 1,682,442
SHARES OF BENEFICIAL INTEREST OUTSTANDING (Unlimited shares authorized; $0.001
par value):
Class A................................. 9,205,204 11,649,366 5,072,047 3,585,733
Class C ............................... 165,621 1,490 34,134 1,341
Class D ............................... 1,218,263 669,391 248,053 221,717
NET ASSET VALUE PER SHARE:
Class A.................................... $6.28 $6.42 $7.41 $7.59
Class C.................................... $6.29 $6.40 $7.43 $7.59
Class D.................................... $6.29 $6.40 $7.43 $7.59
</TABLE>
- -------------------
See Notes to Financial Statements.
14
<PAGE>
Statements of Operations
For the Year Ended September 30, 1999
<TABLE>
<CAPTION>
CALIFORNIA CALIFORNIA NORTH
HIGH-YIELD QUALITY FLORIDA CAROLINA
SERIES SERIES SERIES SERIES
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ..................................... $ 3,760,581 $ 4,662,484 $ 2,410,303 $ 1,753,890
--------------- --------------- --------------- --------------
EXPENSES:
Management fees............................... 338,183 433,279 222,815 161,355
Distribution and service fees................. 139,123 129,616 128,502 94,006
Shareholder account services.................. 84,384 106,096 59,292 45,575
Auditing and legal fees....................... 31,744 38,302 28,825 21,377
Custody and related services.................. 14,747 8,182 9,328 8,820
Registration.................................. 9,877 13,157 9,780 9,356
Trustees' fees and expenses................... 9,789 10,184 7,437 6,709
Shareholder reports and communications........ 6,121 8,472 5,689 4,568
Miscellaneous................................. 3,645 3,336 3,078 2,790
--------------- --------------- --------------- --------------
Total Expenses................................ 637,613 750,624 474,746 354,556
--------------- --------------- --------------- --------------
Net Investment Income......................... 3,122,968 3,911,860 1,935,557 1,399,334
--------------- --------------- --------------- --------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.............. 848,260 967,560 232,488 253,645
Net change in unrealized appreciation
of investments.............................. (6,115,178) (8,037,661) (3,636,357) (2,615,290)
--------------- --------------- --------------- --------------
Net Loss on Investments ...................... (5,266,918) (7,070,101) (3,403,869) (2,361,645)
--------------- --------------- --------------- --------------
Decrease in Net Assets from Operations........ $(2,143,950) $(3,158,241) $(1,468,312) $ (962,311)
=============== =============== =============== ==============
</TABLE>
- --------------
See Notes to Financial Statements.
15
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD SERIES CALIFORNIA QUALITY SERIES
---------------------------------------- ----------------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
---------------------------------------- ----------------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ................... $ 3,122,968 $ 2,869,233 $ 3,911,860 $ 4,188,124
Net realized gain on investments......... 848,260 315,617 967,560 2,703,169
Net change in unrealized appreciation
of investments........................ (6,115,178) 1,697,381 (8,037,661) 429,796
------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
from Operations....................... (2,143,950) 4,882,231 (3,158,241) 7,321,089
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A............................... (2,825,817) (2,672,172) (3,747,630) (4,112,546)
Class C............................... (7,503) -- (114) --
Class D............................... (289,648) (197,061) (164,116) (75,578)
Net realized gain on investments:
Class A............................... (207,681) (255,159) (2,762,949) (410,719)
Class C............................... -- -- -- --
Class D............................... (23,942) (16,987) (100,451) (9,630)
------------ ------------ ------------ ------------
Decrease in Net Assets
from Distributions.................... (3,354,591) (3,141,379) (6,775,260) (4,608,473)
------------ ------------ ------------ ------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Net proceeds from sales of shares ....... 21,297,184 11,837,819 6,015,293 3,421,093
Investment of dividends.................. 1,817,908 1,555,429 1,932,726 2,114,625
Exchanged from associated Funds.......... 6,342,123 3,313,043 2,462,908 11,535,295
Value of shares issued in payment of
gain distributions.................... 162,740 188,579 1,751,037 255,071
------------ ------------ ------------ ------------
Total ................................... 29,619,955 16,894,870 12,161,964 17,326,084
------------ ------------ ------------ ------------
Cost of shares repurchased............... (15,119,823) (8,535,835) (10,056,106) (9,709,059)
Exchanged into associated Funds.......... (7,262,583) (1,535,432) (2,907,275) (9,174,765)
------------ ------------ ------------ ------------
Total ................................... (22,382,406) (10,071,267) (12,963,381) (18,883,824)
------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
from Transactions in Shares
of Beneficial Interest................ 7,237,549 6,823,603 (801,417) (1,557,740)
------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets........ 1,739,008 8,564,455 (10,734,918) 1,154,876
NET ASSETS:
Beginning of year........................ 64,767,235 56,202,780 89,823,942 88,669,066
------------ ------------ ------------ ------------
End of Year.............................. $66,506,243 $64,767,235 $79,089,024 $89,823,942
============ ============ ============ ============
</TABLE>
- ---------------
See Notes to Financial Statements.
16
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
FLORIDA SERIES NORTH CAROLINA SERIES
---------------------------------------- ----------------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
---------------------------------------- ----------------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ................... $ 1,935,557 $ 1,954,649 $ 1,399,334 $ 1,474,812
Net realized gain on investments......... 232,488 283,504 253,645 471,836
Net change in unrealized appreciation
of investments........................ (3,636,357) 1,624,389 (2,615,290) 828,922
------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
from Operations....................... (1,468,312) 3,862,542 (962,311) 2,775,570
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A............................... (1,853,149) (1,887,251) (1,341,165) (1,428,764)
Class C............................... (2,744) -- (113) --
Class D............................... (79,664) (67,398) (58,056) (46,048)
Net realized gain on investments:
Class A............................... (272,671) (385,124) (451,811) (259,010)
Class C............................... -- -- -- --
Class D............................... (14,496) (16,296) (20,721) (9,526)
------------ ------------ ------------ ------------
Decrease in Net Assets
from Distributions.................... (2,222,724) (2,356,069) (1,871,866) (1,743,348)
------------ ------------ ------------ ------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Net proceeds from sales of shares ....... 4,498,419 2,370,389 1,889,423 1,960,723
Investment of dividends.................. 732,052 778,626 747,439 781,990
Exchanged from associated Funds.......... 3,209,545 2,116,091 221,185 651,369
Value of shares issued in payment of
gain distributions.................... 163,562 236,832 351,195 201,030
------------ ------------ ------------ ------------
Total ................................... 8,603,578 5,501,938 3,209,242 3,595,112
------------ ------------ ------------ ------------
Cost of shares repurchased............... (6,378,034) (4,243,367) (4,748,910) (4,163,732)
Exchanged into associated Funds.......... (3,235,898) (2,063,608) (523,333) (550,126)
------------ ------------ ------------ ------------
Total ................................... (9,613,932) (6,306,975) (5,272,243) (4,713,858)
------------ ------------ ------------ ------------
Decrease in Net Assets
from Transactions in Shares
of Beneficial Interest................ (1,010,354) (805,037) (2,063,001) (1,118,746)
------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets........ (4,701,390) 701,436 (4,897,178) (86,524)
NET ASSETS:
Beginning of year........................ 44,403,664 43,702,228 33,814,140 33,900,664
------------ ------------ ------------ ------------
End of Year.............................. $39,702,274 $44,403,664 $28,916,962 $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 three 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. The Trust began offering Class C shares on May 27, 1999.
Class C shares are sold with an initial sales charge of up to 1% and 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, if applicable, of 1% imposed on redemptions made
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, if applicable, of 1% imposed on
redemptions made within one year of purchase. The three 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 -- Each Series' income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses are
allocated daily to each class of shares of that Series based upon the
relative value of the shares of each class. Class-specific expenses, which
include distribution and service fees and any other items that are
specifically attributable to a particular class, are charged directly to
such class. For the year ended September 30, 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 year ended September 30,
1999, were as follows:
SERIES PURCHASES SALES
- ---------- ----------- -----------
California High-Yield $25,843,638 $18,255,298
California Quality 17,190,650 20,244,980
Florida 7,925,059 7,946,257
North Carolina 481,430 3,017,128
At September 30, 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 $1,081,968 $2,452,625
California Quality 2,199,066 3,655,160
Florida 592,110 1,018,085
North Carolina 600,068 765,215
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,
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
equal to 0.50% per annum of each Series' average daily net assets.
Seligman Advisors, Inc. (the "Distributor"), agent for the distribution of
each Series' shares and an affiliate of the Manager, received the following
concessions after commissions were paid to dealers for sales of Class A and
Class C shares:
DISTRIBUTOR DEALER
SERIES CONCESSIONS COMMISSIONS
- ---------- ----------- ------------
California High-Yield $12,848 $100,460
California Quality 9,862 74,095
Florida 6,782 51,651
North Carolina 5,533 40,523
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 year ended September 30,
1999, for the California High-Yield, California Quality, Florida, and North
Carolina Series, fees incurred under the Plan aggregated $61,474, $84,881,
$105,809, and $78,017, respectively, or 0.10%, 0.10%, 0.25%, and 0.25%,
respectively, per annum of average daily net assets of Class A shares.
Under the Plan, with respect to Class C shares and 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 C and Class D shares for which the organizations are
responsible, and fees for providing other distribution assistance of up to 0.75%
on an annual basis of such average daily net assets. Such fees are paid monthly
by the Trust to the Distributor pursuant to the Plan. For the year ended
September 30, 1999, fees incurred under the Plan equivalent to 1% per annum of
the average daily net assets of Class C and Class D shares were as follows:
SERIES CLASS C CLASS D
- --------- ----------- ------------
California High-Yield $1,884 $75,765
California Quality 29 44,706
Florida 711 21,982
North Carolina 30 15,959
The Distributor is entitled to retain any CDSC imposed on certain
redemptions of Class A and Class C shares occurring within 18 months of purchase
and redemptions of Class D shares occurring within one year of purchase. For the
year ended September 30, 1999, such charges amounted to $14,468 for the
California High-Yield Series, $2,264 for the California Quality Series, $1,475
for the Florida Series, and $12 for the North Carolina 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 year ended September
30, 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 $5,005 $2,017
California Quality 1,156 2,438
Florida 1,318 4,753
North Carolina 2,175 2,644
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 $ 84,384
California Quality 106,096
Florida 59,292
North Carolina 45,575
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
selected Series 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 September 30, 1999, are included in other
liabilities as follows:
SERIES
- ----------
California High-Yield $27,329
California Quality 27,455
Florida 14,139
North Carolina 10,602
5. Committed Line of Credit -- The Trust is a participant in a joint $750
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 in June 2000, but is renewable annually with
the consent of the participating banks. For the year ended September 30, 1999,
the Trust had 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 SERIES CLASS A
------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
1999 1998
------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net proceeds from sales of shares.............. 2,624,733 $ 17,491,961 1,277,052 $ 8,495,720
Investment of dividends........................ 242,874 1,601,698 211,143 1,407,211
Exchanged from associated Funds................ 861,977 5,696,785 413,298 2,763,236
Shares issued in payment of gain distributions. 21,223 142,616 26,588 174,948
---------- ------------ ---------- ------------
Total.......................................... 3,750,807 24,933,060 1,928,081 12,841,115
---------- ------------ ---------- ------------
Cost of shares repurchased..................... (2,152,611) (14,122,052) (1,201,761) (8,007,292)
Exchanged into associated Funds................ (983,221) (6,519,246) (140,692) (937,063)
---------- ------------ ---------- ------------
Total.......................................... (3,135,832) (20,641,298) (1,342,453) (8,944,355)
---------- ------------ ---------- ------------
Increase....................................... 614,975 $ 4,291,762 585,628 $ 3,896,760
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA QUALITY SERIES CLASS A
------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
1999 1998
------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net proceeds from sales of shares.............. 392,761 $ 2,663,057 412,540 $ 2,910,248
Investment of dividends........................ 272,151 1,853,060 294,684 2,074,707
Exchanged from associated Funds................ 184,375 1,277,793 1,335,307 9,378,739
Shares issued in payment of gain distributions. 242,713 1,679,573 35,850 249,515
---------- ------------ ---------- ------------
Total.......................................... 1,092,000 7,473,483 2,078,381 14,613,209
---------- ------------ ---------- ------------
Cost of shares repurchased..................... (1,304,849) (8,809,973) (1,299,234) (9,140,974)
Exchanged into associated Funds................ (280,143) (1,967,426) (1,081,747) (7,593,529)
---------- ------------ ---------- ------------
Total.......................................... (1,584,992) (10,777,399) (2,380,981) (16,734,503)
---------- ------------ ---------- ------------
Increase (Decrease)............................ (492,992) $ (3,303,916) (302,600) $ (2,121,294)
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
FLORIDA SERIES CLASS A
------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
1999 1998
------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net proceeds from sales of shares.............. 519,451 $ 4,068,773 231,028 $ 1,820,657
Investment of dividends........................ 88,673 692,647 93,274 735,335
Exchanged from associated Funds................ 307,595 2,411,983 237,657 1,868,336
Shares issued in payment of gain distributions. 19,319 153,195 29,005 224,788
---------- ------------ ---------- ------------
Total.......................................... 935,038 7,326,598 590,964 4,649,116
---------- ------------ ---------- ------------
Cost of shares repurchased..................... (726,633) (5,630,569) (482,133) (3,801,719)
Exchanged into associated Funds................ (401,208) (3,048,712) (234,463) (1,850,538)
---------- ------------ ---------- ------------
Total.......................................... (1,127,841) (8,679,281) (716,596) (5,652,257)
---------- ------------ ---------- ------------
Increase (Decrease)............................ (192,803) $ (1,352,683) (125,632) $ (1,003,141)
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES CLASS A
------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
1999 1998
------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net proceeds from sales of shares............... 175,103 $ 1,412,517 202,159 $ 1,639,241
Investment of dividends......................... 88,130 704,629 92,259 749,183
Exchanged from associated Funds................. 26,310 212,683 67,414 551,292
Shares issued in payment of gain distributions.. 40,880 331,130 24,008 192,301
---------- ------------ ---------- ------------
Total........................................... 330,423 2,660,959 385,840 3,132,017
---------- ------------ ---------- ------------
Cost of shares repurchased...................... (578,427) (4,584,553) (480,689) (3,903,375)
Exchanged into associated Funds................. (64,700) (523,333) (67,042) (545,626)
---------- ------------ ---------- ------------
Total........................................... (643,127) (5,107,886) (547,731) (4,449,001)
---------- ------------ ---------- ------------
Increase (Decrease)............................. (312,704) $ (2,446,927) (161,891) $ (1,316,984)
========== ============ ========== ============
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD SERIES CLASS C CLASS D
------------------------ --------------------------------------------------
YEAR ENDED SEPTEMBER 30,
MAY 27, 1999* TO --------------------------------------------------
SEPTEMBER 30, 1999 1999 1998
------------------------ ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net proceeds from sales of shares................ 164,917 $1,063,949 409,465 $ 2,741,274 499,452 $ 3,342,099
Investment of dividends.......................... 707 4,509 31,985 211,701 22,196 148,218
Exchanged from associated Funds.................. -- -- 96,237 645,338 82,354 549,807
Shares issued in payment of gain distributions... -- -- 2,990 20,124 2,068 13,631
------- ---------- -------- ----------- -------- -----------
Total............................................ 165,624 1,068,458 540,677 3,618,437 606,070 4,053,755
------- ---------- -------- ----------- -------- -----------
Cost of shares redeemed.......................... (3) (21) (150,575) (997,750) (79,088) (528,543)
Exchanged into associated Funds.................. -- -- (111,644) (743,337) (89,085) (598,369)
------- ---------- -------- ----------- -------- -----------
Total............................................ (3) (21) (262,219) (1,741,087) (168,173) (1,126,912)
------- ---------- -------- ----------- -------- -----------
Increase......................................... 165,621 $1,068,437 278,458 $ 1,877,350 437,897 $ 2,926,843
======= ========== ======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA QUALITY SERIES CLASS C CLASS D
------------------------ --------------------------------------------------
YEAR ENDED SEPTEMBER 30,
MAY 27, 1999* TO --------------------------------------------------
SEPTEMBER 30, 1999 1999 1998
------------------------ ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net proceeds from sales of shares................ 1,474 $ 9,904 484,533 $ 3,342,332 72,661 $ 510,845
Investment of dividends.......................... 16 103 11,719 79,563 5,681 39,918
Exchanged from associated Funds.................. -- -- 167,993 1,185,115 307,189 2,156,556
Shares issued in payment of gain distributions... -- -- 10,357 71,464 799 5,556
------- ---------- -------- ----------- -------- -----------
Total............................................ 1,490 10,007 674,602 4,678,474 386,330 2,712,875
------- ---------- -------- ----------- -------- -----------
Cost of shares redeemed.......................... -- -- (183,777) (1,246,133) (80,796) (568,085)
Exchanged into associated Funds.................. -- -- (141,466) (939,849) (225,899) (1,581,236)
------- ---------- -------- ----------- -------- -----------
Total............................................ -- -- (325,243) (2,185,982) (306,695) (2,149,321)
------- ---------- -------- ----------- -------- -----------
Increase (Decrease).............................. 1,490 $ 10,007 349,359 $ 2,492,492 79,635 $ 563,554
======= ========== ======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
FLORIDA SERIES CLASS C CLASS D
------------------------ --------------------------------------------------
YEAR ENDED SEPTEMBER 30,
MAY 27, 1999* TO --------------------------------------------------
SEPTEMBER 30, 1999 1999 1998
------------------------ ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net proceeds from sales of shares................ 34,107 $ 263,437 20,914 $ 166,209 69,634 $ 549,732
Investment of dividends.......................... 27 204 4,975 39,201 5,481 43,291
Exchanged from associated Funds.................. -- -- 100,105 797,562 31,343 247,755
Shares issued in payment of gain distributions... -- -- 1,306 10,367 1,550 12,044
------- ---------- -------- ----------- -------- -----------
Total............................................ 34,134 263,641 127,300 1,013,339 108,008 852,822
------- ---------- -------- ----------- -------- -----------
Cost of shares redeemed.......................... -- -- (95,272) (747,465) (55,774) (441,648)
Exchanged into associated Funds.................. -- -- (23,955) (187,186) (27,097) (213,070)
------- ---------- -------- ----------- -------- -----------
Total............................................ -- -- (119,227) (934,651) (82,871) (654,718)
------- ---------- -------- ----------- -------- -----------
Increase (Decrease).............................. 34,134 $ 263,641 8,073 $ 78,688 25,137 $ 198,104
======= ========== ======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES CLASS C CLASS D
------------------------ --------------------------------------------------
YEAR ENDED SEPTEMBER 30,
MAY 27, 1999* TO --------------------------------------------------
SEPTEMBER 30, 1999 1999 1998
------------------------ ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net proceeds from sales of shares................ 1,329 $ 10,422 58,041 $ 466,484 39,497 $ 321,482
Investment of dividends.......................... 12 101 5,351 42,709 4,042 32,807
Exchanged from associated Funds.................. -- -- 1,053 8,502 12,161 100,077
Shares issued in payment of gain distributions... -- -- 2,477 20,065 1,091 8,729
------- ---------- -------- ----------- -------- -----------
Total............................................ 1,341 10,523 66,922 537,760 56,791 463,095
------- ---------- -------- ----------- -------- -----------
Cost of shares redeemed.......................... -- -- (20,733) (164,357) (31,930) (260,357)
Exchanged into associated Funds.................. -- -- -- -- (560) (4,500)
------- ---------- -------- ----------- -------- -----------
Total............................................ -- -- (20,733) (164,357) (32,490) (264,857)
------- ---------- -------- ----------- -------- -----------
Increase (Decrease).............................. 1,341 $ 10,523 46,189 $ 373,403 24,301 $ 198,238
======= ========== ======== =========== ======== ===========
</TABLE>
- ----------
*Commencement of offering of Class C shares.
21
<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 years or from its
inception if less than five 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 during
the period. "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 CLASS C
------------------------------------------------------- --------------
YEAR ENDED SEPTEMBER 30, 5/27/99*
------------------------------------------------------- to
1999 1998 1997 1996 1995 9/30/99
-------- ------- ------- ------- -------- --------------
<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 $6.62
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income......................... 0.31 0.32 0.34 0.36 0.37 0.09
Net realized and unrealized gain (loss)
on investments............................. (0.50) 0.22 0.20 0.05 0.17 (0.33)
----- ----- ----- ----- ----- -----
Total from Investment Operations.............. (0.19) 0.54 0.54 0.41 0.54 (0.24)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.......... (0.31) (0.32) (0.34) (0.36) (0.37) (0.09)
Distributions from net realized capital gain.. (0.02) (0.03) (0.09) (0.02) -- --
----- ----- ----- ----- ----- -----
Total Distributions........................... (0.33) (0.35) (0.43) (0.38) (0.37) (0.09)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period................ $6.28 $6.80 $6.61 $6.50 $6.47 $6.29
===== ===== ===== ===== ===== =====
TOTAL RETURN: (2.82)% 8.45% 8.74% 6.49% 8.85% (3.79)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)...... $57,807 $58,374 $52,883 $50,264 $51,504 $1,041
Ratio of expenses to average net assets....... 0.84% 0.82% 0.87% 0.84% 0.90% 1.72%+
Ratio of net income to average net assets..... 4.71% 4.81% 5.26% 5.49% 5.84% 3.95%+
Portfolio turnover rate....................... 27.61% 10.75% 22.42% 34.75% 17.64% 27.61%++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year............... $6.80 $6.61 $6.51 $6.48 $6.31
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................ 0.25 0.26 0.28 0.30 0.31
Net realized and unrealized gain (loss)
on investments................................ (0.49) 0.22 0.19 0.05 0.17
----- ----- ----- ----- -----
Total from Investment Operations................. (0.24) 0.48 0.47 0.35 0.48
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income............. (0.25) (0.26) (0.28) (0.30) (0.31)
Distributions from net realized capital gain..... (0.02) (0.03) (0.09) (0.02) --
----- ----- ----- ----- -----
Total Distributions.............................. (0.27) (0.29) (0.37) (0.32) (0.31)
----- ----- ----- ----- -----
Net Asset Value, End of Year..................... $6.29 $6.80 $6.61 $6.51 $6.48
===== ===== ===== ===== =====
TOTAL RETURN: (3.54)% 7.47% 7.60% 5.53% 7.78%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted)........... $7,658 $6,393 $3,320 $1,919 $1,277
Ratio of expenses to average net assets.......... 1.74% 1.73% 1.77% 1.74% 1.91%
Ratio of net income to average net assets........ 3.81% 3.90% 4.36% 4.59% 4.84%
Portfolio turnover rate.......................... 27.61% 10.75% 22.42% 34.75% 17.64%
</TABLE>
- ------------
See footnotes on page 25.
22
<PAGE>
FINANCIAL HIGHLIGHTS
CALIFORNIA QUALITY SERIES
<TABLE>
<CAPTION>
CLASS A CLASS C
------------------------------------------------------- --------------
YEAR ENDED SEPTEMBER 30, 5/27/99*
------------------------------------------------------- to
1999 1998 1997 1996 1995 9/30/99
-------- ------- ------- ------- -------- --------------
<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 $6.75
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................. 0.31 0.33 0.34 0.35 0.34 0.09
Net realized and unrealized gain (loss)
on investments................................. (0.56) 0.25 0.24 0.11 0.32 (0.35)
----- ----- ----- ----- ----- -----
Total from Investment Operations.................. (0.25) 0.58 0.58 0.46 0.66 (0.26)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.............. (0.31) (0.33) (0.34) (0.35) (0.34) (0.09)
Distributions from net realized capital gain...... (0.23) (0.03) -- (0.01) (0.06) --
----- ----- ----- ----- ----- -----
Total Distributions............................... (0.54) (0.36) (0.34) (0.36) (0.40) (0.09)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period.................... $6.42 $7.21 $6.99 $6.75 $6.65 $6.40
===== ===== ===== ===== ===== =====
TOTAL RETURN: (3.68)% 8.67% 8.87% 7.00% 10.85% (4.04)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted).......... $74,793 $87,522 $86,992 $95,560 $94,947 $10
Ratio of expenses to average net assets........... 0.82% 0.77% 0.82% 0.79% 0.89% 1.72%+
Ratio of net income to average net assets......... 4.56% 4.75% 4.99% 5.11% 5.34% 3.80%+
Portfolio turnover rate........................... 20.24% 30.82% 12.16% 12.84% 11.24% 20.24%++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year................ $7.19 $6.97 $6.74 $6.63 $6.38
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................. 0.25 0.27 0.28 0.28 0.28
Net realized and unrealized gain (loss)
on investments................................. (0.56) 0.25 0.23 0.12 0.31
----- ----- ----- ----- -----
Total from Investment Operations.................. (0.31) 0.52 0.51 0.40 0.59
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.............. (0.25) (0.27) (0.28) (0.28) (0.28)
Distributions from net realized capital gain...... (0.23) (0.03) -- (0.01) (0.06)
----- ----- ----- ----- -----
Total Distributions............................... (0.48) (0.30) (0.28) (0.29) (0.34)
----- ----- ----- ----- -----
Net Asset Value, End of Year...................... $6.40 $7.19 $6.97 $6.74 $6.63
===== ===== ===== ===== =====
TOTAL RETURN:..................................... (4.58)% 7.71% 7.75% 6.20% 9.61%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted)............ $4,286 $2,302 $1,677 $1,645 $863
Ratio of expenses to average net assets........... 1.72% 1.68% 1.72% 1.69% 1.88%
Ratio of net income to average net assets......... 3.66% 3.84% 4.09% 4.21% 4.36%
Portfolio turnover rate........................... 20.24% 30.82% 12.16% 12.84% 11.24%
</TABLE>
- ------------
See footnotes on page 25.
23
<PAGE>
FINANCIAL HIGHLIGHTS
FLORIDA SERIES
<TABLE>
<CAPTION>
CLASS A CLASS C
------------------------------------------------------- --------------
YEAR ENDED SEPTEMBER 30, 5/27/99*
------------------------------------------------------- to
1999 1998 1997 1996 1995 9/30/99
-------- ------- ------- ------- -------- --------------
<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 $7.83
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................. 0.34 0.35 0.36 0.38 0.40 0.10
Net realized and unrealized gain (loss)
on investments................................. (0.61) 0.34 0.23 0.04 0.37 (0.40)
----- ----- ----- ----- ----- -----
Total from Investment Operations.................. (0.27) 0.69 0.59 0.42 0.77 (0.30)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.............. (0.34) (0.35) (0.36) (0.38) (0.40) (0.10)
Distributions from net realized capital gain...... (0.05) (0.07) (0.10) (0.08) -- --
----- ----- ----- ----- ----- -----
Total Distributions............................... (0.39) (0.42) (0.46) (0.46) (0.40) (0.10)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period.................... $7.41 $8.07 $7.80 $7.67 $7.71 $7.43
===== ===== ===== ===== ===== =====
TOTAL RETURN: (3.42)% 9.16% 8.01% 5.54% 10.87% (3.96)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted).......... $37,606 $42,464 $42,024 $45,200 $49,030 $254
Ratio of expenses to average net assets........... 1.03% 1.00% 1.04% 0.97% 0.72% 1.78%+
Ratio of net income to average net assets......... 4.38% 4.45% 4.70% 4.90% 5.38% 3.82%+
Portfolio turnover rate........................... 18.31% 6.73% 33.68% 18.53% 11.82% 18.31%++
Without management fee waiver:**
Net investment income per share................... $0.38 $0.37
Ratio of expenses to average net assets........... 0.97% 1.03%
Ratio of net income to average net assets......... 4.90% 5.07%
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year................ $8.08 $7.81 $7.68 $7.72 $7.34
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................. 0.28 0.29 0.30 0.32 0.34
Net realized and unrealized gain (loss)
on investments................................. (0.60) 0.34 0.23 0.04 0.38
----- ----- ----- ----- -----
Total from Investment Operations.................. (0.32) 0.63 0.53 0.36 0.72
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.............. (0.28) (0.29) (0.30) (0.32) (0.34)
Distributions from net realized capital gain...... (0.05) (0.07) (0.10) (0.08) --
----- ----- ----- ----- -----
Total Distributions............................... (0.33) (0.36) (0.40) (0.40) (0.34)
----- ----- ----- ----- -----
Net Asset Value, End of Year...................... $7.43 $8.08 $7.81 $7.68 $7.72
===== ===== ===== ===== =====
TOTAL RETURN: (4.01)% 8.32% 7.18% 4.74% 10.07%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted)............ $1,843 $1,940 $1,678 $1,277 $603
Ratio of expenses to average net assets........... 1.78% 1.77% 1.81% 1.73% 1.66%
Ratio of net income to average net assets......... 3.63% 3.68% 3.93% 4.14% 4.53%
Portfolio turnover rate........................... 18.31% 6.73% 33.68% 18.53% 11.82%
Without management fee waiver:**
Net investment income per share................... $0.32 $0.31
Ratio of expenses to average net assets........... 1.73% 1.97%
Ratio of net income to average net assets......... 4.14% 4.22%
</TABLE>
- ----------------
See footnotes on page 25.
24
<PAGE>
FINANCIAL HIGHLIGHTS
NORTH CAROLINA SERIES
<TABLE>
<CAPTION>
CLASS A CLASS C
------------------------------------------------------- --------------
YEAR ENDED SEPTEMBER 30, 5/27/99*
------------------------------------------------------- to
1999 1998 1997 1996 1995 9/30/99
-------- ------- ------- ------- -------- --------------
<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 $7.97
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................. 0.35 0.36 0.37 0.37 0.39 0.10
Net realized and unrealized gain (loss)
on investments................................. (0.59) 0.31 0.24 0.11 0.45 (0.38)
----- ----- ----- ----- ----- -----
Total from Investment Operations.................. (0.24) 0.67 0.61 0.48 0.84 (0.28)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.............. (0.35) (0.36) (0.37) (0.37) (0.39) (0.10)
Distributions from net realized capital gain...... (0.12) (0.06) (0.03) (0.01) (0.01) --
----- ----- ----- ----- ----- -----
Total Distributions............................... (0.47) (0.42) (0.40) (0.38) (0.40) (0.10)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period.................... $7.59 $8.30 $8.05 $7.84 $7.74 $7.59
===== ===== ===== ===== ===== =====
TOTAL RETURN: (3.07)% 8.60% 8.01% 6.39% 11.92% (3.62)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted).......... $27,224 $32,358 $32,684 $35,934 $37,446 $10
Ratio of expenses to average net assets........... 1.06% 1.05% 1.09% 1.05% 0.82% 1.80%+
Ratio of net income to average net assets......... 4.38% 4.41% 4.66% 4.75% 5.21% 3.77%+
Portfolio turnover rate........................... 1.52% 20.37% 13.04% 15.12% 4.38% 1.52%++
Without management fee waiver:**
Net investment income per share................... $0.37 $0.36
Ratio of expenses to average net assets........... 1.06% 1.18%
Ratio of net income to average net assets......... 4.74% 4.85%
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year................ $8.30 $8.05 $7.83 $7.74 $7.29
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income............................. 0.29 0.30 0.31 0.31 0.33
Net realized and unrealized gain (loss)
on investments................................. (0.59) 0.31 0.25 0.10 0.46
----- ----- ----- ----- -----
Total from Investment Operations.................. (0.30) 0.61 0.56 0.41 0.79
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.............. (0.29) (0.30) (0.31) (0.31) (0.33)
Distributions from net realized capital gain...... (0.12) (0.06) (0.03) (0.01) (0.01)
----- ----- ----- ----- -----
Total Distributions............................... (0.41) (0.36) (0.34) (0.32) (0.34)
----- ----- ----- ----- -----
Net Asset Value, End of Year...................... $7.59 $8.30 $8.05 $7.83 $7.74
===== ===== ===== ===== =====
TOTAL RETURN: (3.79)% 7.77% 7.33% 5.45% 11.19%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted)............ $1,682 $1,456 $1,217 $1,232 $1,257
Ratio of expenses to average net assets........... 1.81% 1.82% 1.85% 1.81% 1.64%
Ratio of net income to average net assets......... 3.63% 3.64% 3.90% 3.99% 4.42%
Portfolio turnover rate........................... 1.52% 20.37% 13.04% 15.12% 4.38%
Without management fee waiver:**
Net investment income per share................... $0.31 $0.31
Ratio of expenses to average net assets........... 1.82% 2.00%
Ratio of net income to average net assets......... 3.98% 4.06%
<FN>
- --------------------
*Commencement of offering of Class C shares.
**During the periods stated, the Manager, at its discretion, waived a portion
of its fees for the Florida and North Carolina Series.
+Annualized.
++For the year ended September 30, 1999.
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 September 30, 1999, the related statements of operations
for the year then ended and of changes in net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 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 September 30, 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/s DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
New York, New York
November 5, 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
Director, Conoco Inc.
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
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
Member of the Board of Governors,
Investment Company Institute
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 compound ed, 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.
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Adapted from the Investment Company Institute's 1999 Mutual Fund Fact Book.
29
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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
LOGO Omitted
J.& W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
TEB2 9/99 Printed on Recycled Paper
<PAGE>
SELIGMAN
--------------
MUNICIPAL
SERIES TRUST
ANNUAL REPORT
SEPTEMBER 30, 1999
Providing Income
Exempt From Regular
Income Tax
LOGO Omitted
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
