SELIGMAN
-----------------
MUNICIPAL
SERIES TRUST
Annual Report
September 30, 2000
--------------
Providing Income
Exempt From Regular
Income Tax
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. Seligman & Co. Incorporated is a firm with a long tradition of
investment expertise, offering a broad array of investment choices to help
today's investors seek their long-term financial goals.
TIMES CHANGE...
Established in 1864, Seligman has a history of providing financial services
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 136 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 in the new millennium.
[PICTURE]
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 and
For More Information............................. 27
Trustees and Executive Officers .................... 28
Glossary of Financial Terms......................... 29
<PAGE>
TO THE SHAREHOLDERS
The past year has been an increasingly positive one for fixed-income securities.
The beginning of 2000 saw a climate of rising interest rates and uncertainty
about the US economy's direction. As the year progressed, however, general
economic trends and the law of supply and demand -- lower issuances and higher
investor demand -- converged to create a more favorable environment for bonds
overall and municipal bonds specifically. These factors were reflected in the
strong performances of the Series in Seligman Municipal Series Trust this year.
By June of this year it was apparent that the Federal Reserve Board's efforts to
slow the economy to a more sustainable pace were having an effect. Leading
economic indicators such as new home sales, manufacturing, corporate earnings,
and retail sales all pointed to an economy that is still strong, but whose
growth has slowed. The Fed responded to these signs by leaving interest rates
untouched in June, August, and October of this year.
Despite the slowing, the Fed indicated that inflation is still a concern going
forward because of high oil prices, the continued tight labor market, and the
fact that consumer spending still outpaces personal income. Nonetheless, because
of the presidential election and given the economic slowdown, we don't
anticipate further rate hikes in 2000, although they can't be ruled out at some
point in 2001.
Against this backdrop of stabilizing interest rates, both Treasuries and
municipal bonds have benefited from an environment of shrinking supply and
increased demand. The Treasury Department's debt buyback program, initiated in
January 2000 and intended to pay down the national debt, has reduced the supply
of Treasuries. In the case of municipal bonds, the strong economy has increased
government tax revenues, and many cities and states have therefore issued fewer
bonds for the purpose of raising funds. Moreover, higher interest rates have
made it more costly for municipalities to borrow money, further reducing the
pool of available municipal bonds. These two factors should work in conjunction
to restrain new issue supply, thus increasing the possibility of rising market
prices for issued municipal bonds.
At the same time, inflation fears and earnings warnings caused great volatility
in the stock market this year, prompting some equity investors to seek greater
stability in municipal and other fixed-income securities. If recent stock market
volatility continues and if market returns remain lackluster, there will be
further increased demand for the tax-free returns and the diversifying effect of
municipal bonds.
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 each Series' portfolio of investments,
financial statements, and performance history, 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 10, 2000
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
THOMAS G. MOLES
Q: What economic and market factors have influenced Seligman Municipal Series
Trust during the past twelve months?
A: Throughout the period, the direction of the municipal bond market was
influenced by a combination of factors, including the state of the economy,
supply and demand dynamics, and the planned reduction in US Treasury debt
issuance. At this time last year, long-term yields were trending higher in
response to a strengthening economy. By the start of the new year, it
appeared that the pace of growth was moderating and long-term municipal
yields began a long-awaited decline, supported by a slowdown in municipal
new issue supply. However, the rally would prove premature as the economy,
once again, surprised financial markets with its resilience, sending bond
yields sharply higher. It would take another round of tightening by the
Federal Reserve Board in May to reverse the bond market decline and to
restore investor confidence. For the remainder of the Trust's fiscal year,
municipal market sentiment was optimistic, which contributed to the
positive performance of the market and of the Series in the Trust.
Municipal new issue supply declined during the year due mostly to a
significant reduction in refunding volume. The higher cost of borrowing
prevented many issuers from retiring outstanding, higher-coupon debt
through the issuance of refunding bonds. Among individual states, issuance
varied widely, creating both challenges and opportunities for the Series.
The lack of supply helped to stabilize the market during periods of rising
interest rates.
In January 2000, the US Treasury Department announced its proposal to
eliminate the national debt by 2013 through a reduction in future issuance
and the buyback of outstanding Treasury issues. This decision had
wide-ranging implications, not the least of which was the impact on the
Treasury yield curve. As the supply of the benchmark 30-year Treasury bond
began to contract, the yield curve inverted, and the 30-year Treasury yield
fell below the 10-year yield. While the municipal yield curve remained
positively sloped during the period, it was nevertheless influenced by the
behavior of the Treasury curve, and the spread between short-term and
long-term municipal yields narrowed significantly. This flattening,
together with the overall decline in interest rates, caused long-term
municipal bonds, which comprise the majority of each of our Funds, to
significantly outperform short- and intermediate-term municipal bonds.
The unprecedented prosperity of the past decade has improved the financial
status of the nation's
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.
[PICTURE]
Seligman Municipals Team: (standing, from left) Audrey Kuchtyak,
Debra McGuinness, (seated, from left) Eileen Comerford, Theresa Barion,
Thomas G. Moles (Portfolio Manager)
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
THOMAS G. MOLES
states, cities, and municipalities. Credit rating upgrades have exceeded
downgrades by a wide margin in recent years, a trend that is expected to
continue. Further, the companies that insure municipal bonds have seen
their profit picture improve as a result of more conservative underwriting
policies, as well as an expansion into new, and often more lucrative,
markets. Seligman Municipal Series Trust has a significant percentage of
insured bonds in its portfolios (except for the California High-Yield
Series). The creditworthiness of these holdings is enhanced by a
strengthening municipal insurance industry.
Q: What was your strategy?
A: During the past year, periods of rising interest rates negatively impacted
net asset values among the Series in the Trust. As a result, Seligman
Municipal Series Trust experienced an increase in redemptions that
necessitated the selling of portfolio holdings. Given our positive
long-term outlook for the municipal market, we opted to reduce holdings of
defensive securities in order to better position the Trust to benefit from
an expected future decline in interest rates. Purchases were concentrated
in long-term bonds because they continue to offer the highest yields and
provide the greatest potential for price appreciation during periods of
declining interest rates. (Conversely, when interest rates rise, long-term
bonds will depreciate more in price than shorter maturity bonds.) This
strategy caused the Series to underperform the market while rates were
still climbing, but contributed to the competitive investment performance
results reported for the Trust's fiscal year.
The Series remain diversified among the various sectors of the municipal
market. While we seek opportunities in all sectors, we increased our focus
in the health care sector, which has been experiencing financial
difficulties due primarily to a reduction in government reimbursements and
the growth of managed care. Many hospitals have been downgraded by the
municipal rating agencies and remain vulnerable to further credit
deterioration. However, there are still many well-managed, financially
secure hospitals that are trading at attractive levels because of the
negative outlook for the industry as a whole. Through in-depth credit
analysis, we identified several opportunities and have selectively
purchased health care bonds. Our seasoned municipal team continually
monitors all portfolio holdings to ensure that they meet our credit
criteria.
Q: What is your outlook?
A: The Fed voted to leave policy unchanged at its October meeting, a move
widely anticipated by the financial markets. The decision was motivated by
growing evidence of a slowdown in the pace of US economic growth. Further,
productivity improvements continue to contain labor costs despite the
lowest unemployment rate in over 30 years. However, the Fed stressed its
intention to remain vigilant for signs of a buildup in inflationary
pressures given prevailing tight labor markets and the more recent uptick
in energy costs. Until the Fed has declared a victory in the war on
inflation, interest rates will likely fluctuate in response to the latest
economic reports. Any upward movement in long-term interest rates should
continue to be tempered by the supply contraction in the Treasury and
municipal markets. Investment performance for Seligman Municipal Series
Trust's fiscal year has been positive, and we remain hopeful that the year
2000 will end on a positive note as well.
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 period ended September
30, 2000, to a $10,000 hypothetical investment made in the Lehman Brothers
Municipal Bond Index (Lehman Index) for the same period. 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. Past performance is not indicative of future investment results.
CALIFORNIA HIGH-YIELD SERIES
VALUE
--------------------------
With Without
DATE Load Load Lehman*
-----------------------------------------------------
30-Sep-90 9,522 10,000 10,000
31-Dec-90 9,851 10,345 10,431
31-Mar-91 10,077 10,582 10,667
30-Jun-91 10,295 10,811 10,894
30-Sep-91 10,715 11,253 11,318
31-Dec-91 10,883 11,429 11,698
31-Mar-92 11,039 11,593 11,733
30-Jun-92 11,435 12,008 12,179
30-Sep-92 11,679 12,265 12,502
31-Dec-92 11,920 12,518 12,729
31-Mar-93 12,267 12,882 13,201
30-Jun-93 12,621 13,254 13,633
30-Sep-93 12,924 13,573 14,094
31-Dec-93 13,101 13,759 14,291
31-Mar-94 12,800 13,442 13,507
30-Jun-94 12,872 13,517 13,657
30-Sep-94 12,978 13,629 13,749
31-Dec-94 12,736 13,375 13,551
31-Mar-95 13,561 14,241 14,510
30-Jun-95 13,821 14,514 14,859
30-Sep-95 14,126 14,834 15,287
31-Dec-95 14,589 15,321 15,917
31-Mar-96 14,455 15,181 15,724
30-Jun-96 14,657 15,392 15,846
30-Sep-96 15,042 15,797 16,210
31-Dec-96 15,395 16,167 16,623
31-Mar-97 15,333 16,103 16,585
30-Jun-97 15,857 16,652 17,157
30-Sep-97 16,358 17,178 17,675
31-Dec-97 16,738 17,577 18,154
31-Mar-98 16,962 17,813 18,363
30-Jun-98 17,246 18,111 18,642
30-Sep-98 17,740 18,630 19,215
31-Dec-98 17,772 18,664 19,330
31-Mar-99 17,897 18,795 19,502
30-Jun-99 17,568 18,449 19,157
30-Sep-99 17,241 18,105 19,080
31-Dec-99 16,837 17,681 18,931
31-Mar-00 17,632 18,517 19,486
30-Jun-00 17,928 18,827 19,780
30-Sep-00 18,531 19,461 20,259
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, 2000
<TABLE>
<CAPTION>
AVERAGE ANNUAL
--------------------------------------------------------------------------------------
CLASS C CLASS D
SIX ONE FIVE 10 SINCE INCEPTION SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 5/27/99 2/1/94
--------- --------- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge 0.08% 2.43% 4.56% 6.36% n/a n/a
Without Sales Charge 5.10 7.49 5.58 6.88 n/a n/a
Class C**
With Sales Charge and CDSC 2.80 4.53 n/a n/a 0.34% n/a
Without Sales Charge and CDSC 4.80 6.53 n/a n/a 1.84 n/a
Class D**
With 1% CDSC 3.80 5.53 n/a n/a n/a n/a
Without CDSC 4.80 6.53 4.63 n/a n/a 4.23%
Lehman Index*** 3.97 6.18 5.79 7.32 3.16++ 5.20++++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended September 30, 2000
9/30/00 3/31/00 9/30/99 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
-------- -------- -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $6.33 $6.18 $6.28 Class A $0.321 $0.076 4.80%
Class C 6.34 6.18 6.29 Class C 0.265 0.076 4.12
Class D 6.34 6.18 6.29 Class D 0.265 0.076 4.16
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR 0 MOODY'S/S&P RATINGS 0
<S> <C> <C> <C>
Revenue Bonds 100% Aaa/AAA 9%
General Obligation Bonds -- Aa/AA 18
A/A 59
Baa/BBB 14
WEIGHTED AVERAGE MATURITY 25.8 years
<FN>
------------------
See footnotes on page 7.
</FN>
</TABLE>
4
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
CALIFORNIA QUALITY SERIES
VALUE
------------------------------
With Without
DATE Load Load Lehman
-------------------------------------------------------------
30-Sep-90 9,525 10,000 10,000
31-Dec-90 10,088 10,591 10,431
31-Mar-91 10,258 10,769 10,667
30-Jun-91 10,453 10,973 10,894
30-Sep-91 10,892 11,435 11,318
31-Dec-91 11,220 11,779 11,698
31-Mar-92 11,202 11,761 11,733
30-Jun-92 11,695 12,278 12,179
30-Sep-92 11,933 12,528 12,502
31-Dec-92 12,173 12,779 12,729
31-Mar-93 12,752 13,388 13,201
30-Jun-93 13,142 13,797 13,633
30-Sep-93 13,594 14,272 14,094
31-Dec-93 13,707 14,390 14,291
31-Mar-94 12,799 13,437 13,507
30-Jun-94 12,819 13,458 13,657
30-Sep-94 12,852 13,493 13,749
31-Dec-94 12,569 13,196 13,551
31-Mar-95 13,697 14,380 14,510
30-Jun-95 13,876 14,568 14,859
30-Sep-95 14,246 14,956 15,287
31-Dec-95 15,057 15,808 15,917
31-Mar-96 14,740 15,475 15,724
30-Jun-96 14,890 15,633 15,846
30-Sep-96 15,244 16,004 16,210
31-Dec-96 15,646 16,426 16,623
31-Mar-97 15,540 16,315 16,585
30-Jun-97 16,067 16,868 17,157
30-Sep-97 16,597 17,424 17,675
31-Dec-97 17,023 17,871 18,154
31-Mar-98 17,175 18,031 18,363
30-Jun-98 17,456 18,326 18,642
30-Sep-98 18,036 18,935 19,215
31-Dec-98 18,088 18,990 19,330
31-Mar-99 18,183 19,089 19,502
30-Jun-99 17,723 18,606 19,157
30-Sep-99 17,372 18,238 19,080
31-Dec-99 16,985 17,831 18,931
31-Mar-00 17,841 18,731 19,486
30-Jun-00 18,144 19,048 19,780
30-Sep-00 18,752 19,687 20,259
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, 2000
<TABLE>
<CAPTION>
AVERAGE ANNUAL
--------------------------------------------------------------------------------------
CLASS C CLASS D
SIX ONE FIVE 10 SINCE INCEPTION SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 5/27/99 2/1/94
--------- --------- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge 0.07% 2.82% 4.63% 6.49% n/a n/a
Without Sales Charge 5.11 7.95 5.65 7.01 n/a n/a
Class C**
With Sales Charge and CDSC 2.68 5.01 n/a n/a 0.49% n/a
Without Sales Charge and CDSC 4.65 7.00 n/a n/a 1.98 n/a
Class D**
With 1% CDSC 3.65 6.00 n/a n/a n/a n/a
Without CDSC 4.65 7.00 4.70 n/a n/a 3.64%
Lehman Index*** 3.97 6.18 5.79 7.32 3.16++ 5.20++++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended September 30, 2000
9/30/00 3/31/00 9/30/99 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
-------- -------- -------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $6.53 $6.36 $6.42 Class A $0.304 $0.072 4.23%
Class C 6.51 6.34 6.40 Class C 0.247 0.072 3.53
Class D 6.51 6.34 6.40 Class D 0.247 0.072 3.57
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR 0 MOODY'S/S&P RATINGS 0
<S> <C> <C> <C>
Revenue Bonds 88% Aaa/AAA 83%
General Obligation Bonds 00 12 Aa/AA 16
A/A 1
WEIGHTED AVERAGE MATURITY 23.1 years
<FN>
---------------
See footnotes on page 7.
</FN>
</TABLE>
5
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
FLORIDA SERIES
VALUE
------------------------------
With Without
DATE Load Load Lehman
-------------------------------------------------------------
30-Sep-90 9,530 10,000 10,000
31-Dec-90 10,048 10,543 10,431
31-Mar-91 10,238 10,743 10,667
30-Jun-91 10,449 10,964 10,894
30-Sep-91 10,808 11,341 11,318
31-Dec-91 11,114 11,662 11,698
31-Mar-92 11,141 11,690 11,733
30-Jun-92 11,581 12,152 12,179
30-Sep-92 11,807 12,389 12,502
31-Dec-92 12,123 12,720 12,729
31-Mar-93 12,574 13,194 13,201
30-Jun-93 13,119 13,765 13,633
30-Sep-93 13,603 14,273 14,094
31-Dec-93 13,762 14,440 14,291
31-Mar-94 12,938 13,575 13,507
30-Jun-94 13,039 13,681 13,657
30-Sep-94 13,060 13,704 13,749
31-Dec-94 13,002 13,643 13,551
31-Mar-95 13,912 14,598 14,510
30-Jun-95 14,132 14,829 14,859
30-Sep-95 14,480 15,194 15,287
31-Dec-95 15,170 15,918 15,917
31-Mar-96 14,828 15,559 15,724
30-Jun-96 14,938 15,674 15,846
30-Sep-96 15,283 16,036 16,210
31-Dec-96 15,589 16,358 16,623
31-Mar-97 15,380 16,138 16,585
30-Jun-97 15,985 16,773 17,157
30-Sep-97 16,507 17,321 17,675
31-Dec-97 17,044 17,884 18,154
31-Mar-98 17,209 18,057 18,363
30-Jun-98 17,470 18,331 18,642
30-Sep-98 18,020 18,908 19,215
31-Dec-98 18,010 18,898 19,330
31-Mar-99 18,156 19,050 19,502
30-Jun-99 17,801 18,678 19,157
30-Sep-99 17,403 18,261 19,080
31-Dec-99 17,151 17,996 18,931
31-Mar-00 17,907 18,789 19,486
30-Jun-00 18,160 19,054 19,780
30-Sep-00 18,582 19,498 20,259
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, 2000
<TABLE>
<CAPTION>
AVERAGE ANNUAL
--------------------------------------------------------------------------------------
CLASS C CLASS D
SIX ONE FIVE 10 SINCE INCEPTION SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 5/27/99 2/1/94
--------- --------- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge (1.18)% 1.70% 4.11% 6.39% n/a n/a
Without Sales Charge 3.77 6.78 5.11 6.91 n/a n/a
Class C**
With Sales Charge and CDSC 1.56 3.86 n/a n/a (0.14)% n/a
Without Sales Charge and CDSC 3.52 5.98 n/a n/a 1.32 n/a
Class D**
With 1% CDSC 2.52 4.98 n/a n/a n/a n/a
Without CDSC 3.52 5.98 4.35 n/a n/a 3.67%
Lehman Index*** 3.97 6.18 5.79 7.32 3.16++ 5.20++++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended September 30, 2000
9/30/00 3/31/00 9/30/99 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
-------- -------- -------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $7.48 $7.39 $7.41 Class A $0.372 $0.043 4.77%
Class C 7.50 7.40 7.43 Class C 0.317 0.043 4.24
Class D 7.50 7.40 7.43 Class D 0.317 0.043 4.28
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR 0 MOODY'S/S&P RATINGS 0
<S> <C> <C> <C>
Revenue Bonds 94% Aaa/AAA 66%
General Obligation Bonds 6 Aa/AA 23
A/A 11
WEIGHTED AVERAGE MATURITY 25.3 years
<FN>
---------------
See footnotes on page 7.
</FN>
</TABLE>
6
<PAGE>
PERFORMANCE OVERVIEW AND PORTFOLIO SUMMARY
NORTH CAROLINA SERIES
VALUE
------------------------------
With Without
DATE Load Load Lehman
--------------------------------------------------------------
30-Sep-90 9,526 10,000 10,000
31-Dec-90 9,930 10,423 10,431
31-Mar-91 10,131 10,634 10,667
30-Jun-91 10,233 10,742 10,894
30-Sep-91 10,666 11,197 11,318
31-Dec-91 10,985 11,531 11,698
31-Mar-92 10,940 11,484 11,733
30-Jun-92 11,379 11,945 12,179
30-Sep-92 11,650 12,230 12,502
31-Dec-92 11,881 12,471 12,729
31-Mar-93 12,379 12,994 13,201
30-Jun-93 12,820 13,457 13,633
30-Sep-93 13,335 13,997 14,094
31-Dec-93 13,423 14,090 14,291
31-Mar-94 12,519 13,141 13,507
30-Jun-94 12,556 13,181 13,657
30-Sep-94 12,561 13,185 13,749
31-Dec-94 12,437 13,055 13,551
31-Mar-95 13,521 14,193 14,510
30-Jun-95 13,765 14,449 14,859
30-Sep-95 14,058 14,757 15,287
31-Dec-95 14,869 15,608 15,917
31-Mar-96 14,467 15,186 15,724
30-Jun-96 14,608 15,334 15,846
30-Sep-96 14,957 15,701 16,210
31-Dec-96 15,273 16,032 16,623
31-Mar-97 15,216 15,973 16,585
30-Jun-97 15,714 16,495 17,157
30-Sep-97 16,155 16,958 17,675
31-Dec-97 16,609 17,435 18,154
31-Mar-98 16,750 17,583 18,363
30-Jun-98 17,041 17,889 18,642
30-Sep-98 17,544 18,416 19,215
31-Dec-98 17,575 18,448 19,330
31-Mar-99 17,674 18,553 19,502
30-Jun-99 17,339 18,201 19,157
30-Sep-99 17,006 17,852 19,080
31-Dec-99 16,693 17,523 18,931
31-Mar-00 17,310 18,171 19,486
30-Jun-00 17,513 18,384 19,780
30-Sep-00 17,918 18,809 20,259
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, 2000
<TABLE>
<CAPTION>
AVERAGE ANNUAL
--------------------------------------------------------------------------------------
CLASS C CLASS D
SIX ONE FIVE 10 SINCE INCEPTION SINCE INCEPTION
MONTHS* YEAR YEARS YEARS 5/27/99 2/1/94
--------- --------- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge (1.39)% 0.34% 3.94% 6.01% n/a n/a
Without Sales Charge 3.51 5.36 4.97 6.52 n/a n/a
Class C**
With Sales Charge and CDSC 1.18 2.51 n/a n/a (0.85)% n/a
Without Sales Charge and CDSC 3.27 4.58 n/a n/a 0.59 n/a
Class D**
With 1% CDSC 2.27 3.59 n/a n/a n/a n/a
Without CDSC 3.27 4.58 4.18 n/a n/a 3.45%
Lehman Index*** 3.97 6.18 5.79 7.32 3.16++ 5.20++++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended September 30, 2000
9/30/00 3/31/00 9/30/99 DIVIDENDS+ CAPITAL GAIN+ SEC YIELD++
-------- -------- -------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $7.54 $7.45 $7.59 Class A $0.343 $0.096 4.31%
Class C 7.54 7.44 7.59 Class C 0.287 0.096 3.76
Class D 7.54 7.44 7.59 Class D 0.287 0.096 3.80
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR 0 MOODY'S/S&P RATINGS 0 WEIGHTED AVERAGE MATURITY 19.8 years
<S> <C> <C> <C>
Revenue Bonds 86% Aaa/AAA 41%
General Obligation Bonds 00 14 Aa/AA 39
A/A 20
WEIGHTED AVERAGE MATURITY 19.8 years
<FN>
----------------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price and assume all distributions
within the period are invested in additional shares. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class 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.
+ Represents per share amount paid or declared for the year ended September
30, 2000.
++ Current yield, representing the annualized yield for the 30-day period
ended September 30, 2000, 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, 2000.
00 Includes pre-refunded and escrowed-to-maturity securities.
</FN>
</TABLE>
7
<PAGE>
PORTFOLIOS OF INVESTMENTS
September 30, 2000
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 $ 2,568,150
1,000,000 California Department of Veterans Affairs Rev. (Home Purchase), 5 1/2%
due 12/1/2018* ................................................................ Aa3/AA 984,130
2,190,000 California Department of Water Resources Water System Rev. (Central Valley
Project), 6% due 12/1/2020 .................................................... Aa2/AA 2,225,807
500,000 California Educational Facilities Authority Rev. (Los Angeles College of
Chiropractic Medicine), 5.60% due 11/1/2017 ................................... Baa2/NR 482,395
2,500,000 California Educational Facilities Authority Rev. (Loyola Marymount
University), 5 3/4% due 10/1/2024 ............................................. A2/NR 2,528,150
3,000,000 California Educational Facilities Authority Rev. (Pepperdine University),
5% due 11/1/2029 .............................................................. A1/NR 2,754,960
2,500,000 California Health Facilities Financing Authority Rev. (Kaiser Permanente),
5.40% due 5/1/2028 ............................................................ A3/A 2,327,375
3,000,000 California Health Facilities Financing Authority Rev. (Cedars-Sinai Medical
Center), 6 1/4% due 12/1/2034 ................................................. A2/NR 3,060,750
1,500,000 California Housing Finance Agency Home Mortgage Rev.,
6 3/8% due 8/1/2027* .......................................................... Aa2/AA- 1,559,310
2,500,000 California Housing Finance Agency (Single Family Mortgage),
5.40% due 8/1/2028* ........................................................... Aaa/AAA 2,408,550
2,500,000 California Housing Finance Agency (Multi-Family Housing Rev.),
5 3/8% due 2/1/2036* .......................................................... Aa3/AA- 2,302,375
2,500,000 California Pollution Control Financing Authority Rev. (San Diego Gas &
Electric Co.), 5.85% due 6/1/2021* ............................................ Aa3/AA- 2,526,475
1,750,000 California Pollution Control Financing Authority Rev. (Pacific Gas &
Electric Co.), 5 7/8% due 6/1/2023* ........................................... A1/AA- 1,772,960
1,000,000 California Pollution Control Financing Authority Rev. (Pacific Gas &
Electric Co.), 5.85% due 12/1/2023* ........................................... A1/AA- 1,012,480
3,500,000 California Statewide Certificates of Participation (Children's Hospital of
Los Angeles), 5 1/4% due 8/15/2029 ............................................ A1/A+ 3,213,245
2,500,000 Cupertino, CA Certificates of Participation (Capital Improvement Projects),
5 3/4% due 1/1/2016 ........................................................... A1/A+ 2,531,700
1,500,000 Foothill/Eastern Transportation Corridor Agency, CA Toll Road Rev.,
5 3/4% due 1/15/2040 .......................................................... Baa3/BBB- 1,463,355
2,500,000 Los Angeles, CA Department of Water & Power Electric Plant Rev.,
5 1/2% due 6/15/2029 .......................................................... Aaa/AAA 2,481,925
2,985,000 Modesto, CA Irrigation District Certificates of Participation,
5.30% due 7/1/2022 ............................................................ A2/A+ 2,847,660
<FN>
--------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
8
<PAGE>
PORTFOLIOS OF INVESTMENTS
September 30, 2000
CALIFORNIA HIGH-YIELD SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ------------ ------
<S> <C> <C> <C>
$ 610,000 Petaluma, CA Community Development Commission Tax Allocation Bonds
(Central Business District), 9.30% due 5/15/2010 .............................. Baa1/NR $ 614,069
2,005,000 Pleasanton, CA Joint Powers Financing Authority Reassessment Rev.,
6.15% due 9/2/2012 ............................................................ Baa1/NR 2,083,375
3,000,000 Puerto Rico Highway & Transportation Authority Rev.,
5 1/2% due 7/1/2036 ........................................................... Baa1/A 2,948,130
2,500,000 Sacramento, CA Municipal Utility District Electric Rev.,
5 1/4% due 7/1/2028 ........................................................... A2/A 2,347,175
3,000,000 San Bernardino, CA Joint Powers Financing Authority (California
Dept. of Transportation Lease), 5 1/2% due 12/1/2020 .......................... AA3/A 2,942,430
2,000,000 Washington Township, CA Hospital District Hospital Healthcare System Rev.,
5 1/4% due 7/1/2029 ........................................................... A2/NR 1,820,860
-----------
TOTAL MUNICIPAL BONDS (COST $54,159,386) -- 97.2% ......................................................... 53,807,791
VARIABLE RATE DEMAND NOTES (COST $1,300,000) -- 2.4% ...................................................... 1,300,000
OTHER ASSETS LESS LIABILITIES -- 0.4% ..................................................................... 233,980
-----------
NET ASSETS-- 100.0% ....................................................................................... $55,341,771
===========
</TABLE>
CALIFORNIA QUALITY SERIES
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ------------ ------
<S> <C> <C> <C>
$3,000,000 California Department of Water Resources Water System Rev.
(Central Valley Project), 6.10% due 12/1/2029 0 ............................... Aaa/AA $ 3,294,210
2,440,000 California Educational Facilities Authority Rev. (Pomona College),
6% due 2/15/2017 .............................................................. Aaa/AAA 2,532,110
2,000,000 California Educational Facilities Authority Rev. (Stanford University),
5.35% due 6/1/2027 ............................................................ Aaa/AAA 1,965,260
4,000,000 California Educational Facilities Authority Rev. (University of San Diego),
5% due 10/1/2028 .............................................................. Aaa/NR 3,710,560
4,000,000 California Educational Facilities Authority Rev. (University of Southern
California), 5% due 10/1/2028 ................................................. Aa2/AA- 3,710,560
2,710,000 California Housing Finance Agency Home Mortgage Rev.,
6 3/4% due 2/1/2025* .......................................................... Aa2/AA- 2,760,569
4,000,000 California Pollution Control Financing Authority Rev. (Mobil Oil
Corporation Project), 5 1/2% due 12/1/2029* ................................... Aaa/AAA 3,870,000
870,000 California Public Capital Improvements Financing Authority
(Pooled Projects), 8.10% due 3/1/2018 ......................................... Aaa/AAA 881,266
<FN>
----------------
+ 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.
</FN>
</TABLE>
9
<PAGE>
PORTFOLIOS OF INVESTMENTS
September 30, 2000
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 State GOs, 5% due 10/1/2023 .......................................... Aa2/AA $ 3,750,640
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 2,361,325
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 2,816,700
4,000,000 Contra Costa, CA Water District Rev., 5% due 10/1/2024 .......................... Aaa/AAA 3,745,320
3,500,000 East Bay, CA Municipal Utility District Water System Rev., 5% due 6/1/2026 ...... Aaa/AAA 3,260,565
2,500,000 Eastern Municipal Water District Riverside County, CA Water and Sewer Rev.,
6 3/4% due 7/1/2012 ........................................................... Aaa/AAA 2,961,100
3,000,000 Fresno, CA Sewer System Rev., 5 1/4% due 9/1/2019 ............................... Aaa/AAA 2,985,630
4,000,000 Los Angeles, CA Department of Water & Power Electric Plant Rev.,
5 1/2% due 6/15/2029 .......................................................... Aaa/AAA 3,971,080
1,000,000 Marin, CA Municipal Water District Water Rev., 5.65% due 7/1/2023 ............... A1/AA 1,008,270
2,000,000 Metropolitan Water District of Southern California Waterworks GOs,
4 3/4% due 3/1/2037 ........................................................... Aaa/AAA 1,724,840
4,500,000 Orange County, CA Local Transportation Authority (Measure M Sales
Tax Rev.), 6% due 2/15/2009 ................................................... Aaa/AAA 4,989,735
1,000,000 Rancho, CA Water District Financing Authority Rev., 5.90% due 11/1/2015 ......... Aaa/AAA 1,056,660
4,000,000 Regents of the University of California Rev. (Multiple Purpose Projects),
5 3/8% due 9/1/2024 ........................................................... Aaa/AAA 3,959,960
1,000,000 Sacramento County, CA Sanitation Districts Financing Authority Rev.,
(Sacramento Regional County Sanitation District), 5 7/8% due 12/1/2027 ........ Aa3/AA 1,026,730
4,300,000 San Diego, CA Public Facilities Financing Authority Sewer Rev.,
5% due 5/15/2029 .............................................................. Aaa/AAA 3,979,865
4,250,000 San Francisco Bay Area Rapid Transit District, CA (Sales Tax Rev.),
5% due 7/1/2028 ............................................................... Aaa/AAA 3,943,278
3,000,000 San Francisco, CA City and County Airports Commission Rev.
(International Airport), 6.60% due 5/1/2024* .................................. Aaa/AAA 3,217,260
-----------
TOTAL MUNICIPAL BONDS (Cost $73,236,354) -- 98.3% ......................................................... 73,483,493
VARIABLE RATE DEMAND NOTES (Cost $500,000) -- 0.7% ........................................................ 500,000
OTHER ASSETS LESS LIABILITIES -- 1.0% ..................................................................... 791,325
-----------
NET ASSETS--100.0% ........................................................................................ $74,774,818
===========
<FN>
----------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
10
<PAGE>
PORTFOLIOS OF INVESTMENTS
September 30, 2000
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 $ 1,791,160
1,000,000 Broward County, FL Water & Sewer Utility Rev., 5% due 10/1/2018 ................. Aaa/AAA 929,270
1,000,000 Dade County, FL Aviation Rev., 6 1/8% due 10/1/2020* ............................ Aaa/AAA 1,030,570
2,000,000 Dade County, Fl, Public Improvement GOs, 5 3/4% due 10/1/2016 ................... Aaa/AAA 2,048,920
1,750,000 Escambia County, FL Health Facilities Authority Rev. (Ascension
Health Credit Group), 6% due 11/15/2031 ....................................... Aa2/AA 1,787,940
945,000 Florida Housing Finance Agency Rev. (General Mortgage),
6.35% due 6/1/2014 ............................................................ NR/AAA 966,300
690,000 Florida Housing Finance Agency Rev. (Single Family Mortgage),
6.55% due 7/1/2014* ........................................................... Aaa/AAA 726,046
965,000 Florida Housing Finance Agency Rev. (Homeowner Mortgage),
6.20% due 7/1/2027* ........................................................... Aa3/AA 987,494
2,500,000 Florida Ports Financing Commission Rev. (State Transportation Trust Fund),
5 3/8% due 6/1/2027* .......................................................... Aaa/AAA 2,359,050
2,500,000 Florida State Turnpike Authority Rev., 5 5/8% due 7/1/2025 ...................... Aaa/AAA 2,498,100
2,000,000 Greater Orlando Aviation Authority, FL Airport Facilities Rev.,
5 1/4% due 10/1/2023* ......................................................... Aaa/AAA 1,866,040
2,500,000 Hillsborough County, FL Aviation Authority Rev. (Tampa International
Airport), 5 3/8% due 10/1/2023* ............................................... Aaa/AAA 2,378,150
2,000,000 Hillsborough County, FL School Board (Certificates of
Participation), 6% due 7/1/2025 ............................................... Aaa/AAA 2,074,520
2,000,000 Jacksonville Electric Authority, FL Rev. (Electric System),
5.10% due 10/1/2032 ........................................................... Aa2/AA 1,805,100
2,000,000 Jacksonville Electric Authority, FL Rev. (Water & Sewer System),
5 5/8% due 10/1/2037 .......................................................... Aa3/AA- 1,967,880
1,000,000 Jacksonville, FL Port Authority Airport Rev., 6 1/4% due 10/1/2024* ............. Aaa/AAA 1,034,900
2,000,000 Jacksonville, FL Sewage & Solid Waste Disposal Facilities Rev.
(Anheuser-Busch Project), 5 7/8% due 2/1/2036* ................................ A1/A+ 2,005,120
500,000 Lee County, FL Transportation Facilities Rev., 6% due 10/1/2015 ................. Aaa/AAA 523,235
2,000,000 Marion County, FL Hospital District Health System Rev. (Munroe
Regional Health System), 5 5/8% due 10/1/2024 ................................. A2/NR 1,838,660
2,000,000 Polk County, FL Industrial Development Authority Solid Waste Disposal
Facilities Rev. (Tampa Electric Company Project), 5.85% due 12/1/2030* ........ Aa2/AA 2,011,800
2,000,000 Reedy Creek Improvement District, FL Utilities Rev., 5 1/8% due 10/1/2019 ....... Aaa/AAA 1,876,400
<FN>
------------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
11
<PAGE>
PORTFOLIOS OF INVESTMENTS
September 30, 2000
FLORIDA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ------------ ------
<S> <C> <C> <C>
$1,750,000 Tampa Bay, FL Regional Water Supply Utility System Authority Rev.,
5 3/4% due 10/1/2029........................................................... Aaa/AAA $ 1,771,350
-----------
TOTAL MUNICIPAL BONDS (Cost $36,313,643) -- 97.8%.............................................. 36,278,005
OTHER ASSETS LESS LIABILITIES -- 2.2%.......................................................... 832,885
-----------
NET ASSETS -- 100.0%........................................................................... $37,110,890
===========
</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 $ 1,261,100
1,250,000 Asheville, NC Water System Rev., 5.70% due 8/1/2025 ............................. Aaa/AAA 1,254,588
2,000,000 Charlotte-Mecklenburg Hospital Authority, NC Health Care System Rev.,
5 3/4% due 1/15/2021 .......................................................... Aa3/AA 1,995,060
1,000,000 Charlotte, NC Certificates of Participation (Charlotte-Mecklenburg Law
Enforcement Center Project), 5 3/8% due 6/1/2013 .............................. Aa1/AA+ 1,004,630
1,000,000 Charlotte, NC Storm Water Fee Rev., 6% due 6/1/2025 ............................. Aa2/AA+ 1,039,050
2,000,000 Charlotte, NC Water & Sewer GOs, 5.90% due 2/1/20170 ............................ Aaa/AAA 2,117,680
1,250,000 Charlotte, NC Water & Sewer System Rev., 5 1/4% due 6/1/2025 .................... Aa1/AA+ 1,186,975
1,000,000 Concord, NC Utilities System Rev., 5% due 12/1/2022 ............................. Aaa/AAA 914,780
1,500,000 Fayetteville, NC Public Works Commission Rev., 5 1/8% due 3/1/2024 .............. Aaa/AAA 1,389,540
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 2,396,800
1,245,000 North Carolina Housing Finance Agency Rev. (Single Family),
6 1/2% due 3/1/2018 ........................................................... Aa2/AA 1,283,458
1,000,000 North Carolina Housing Finance Agency Rev. (Home Ownership),
6.40% due 7/1/2028* ........................................................... Aa2/AA 1,029,410
1,500,000 North Carolina Medical Care Commission Hospital Rev. (First Health
of the Carolinas Project), 5% due 10/1/2028 ................................... Aa3/AA- 1,305,585
1,500,000 North Carolina Medical Care Commission Hospital Rev. (Gaston Health
Care), 5% due 2/15/2029 ....................................................... A1/A+ 1,266,165
1,500,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev.,
5 3/4% due 1/1/2015 ........................................................... Aaa/AAA 1,510,230
1,750,000 North Carolina Municipal Power Agency No. 1 Catawba Electric Rev.,
5% due 1/1/2020++ ............................................................. Aaa/AAA 1,648,710
<FN>
---------------
+Ratings have not been audited by Deloitte & Touche LLP.
++Escrowed-to-maturity security.
0Pre-refunded security.
*Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
12
<PAGE>
PORTFOLIOS OF INVESTMENTS
September 30, 2000
NORTH CAROLINA SERIES (continued)
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- --------------------- ------------ ------
<S> <C> <C> <C>
$1,000,000 Orange, NC Water & Sewer Authority Rev., 5.20% due 7/1/2016 Aa2/AA $ 974,840
1,250,000 University of North Carolina Charlotte Rev. (Student Activity Center),
5 1/2% due 6/1/2021....................................................... Aaa/AAA 1,237,712
1,000,000 University of North Carolina Hospitals at Chapel Hill Rev.,
5 1/4% due 2/15/2026...................................................... Aa3/AA 919,870
1,550,000 Wake County Industrial Facilities & Pollution Control Financing Authority,
NC (Carolina Power & Light), 6.90% due 4/1/2009........................... A2/A 1,583,263
-----------
TOTAL MUNICIPAL BONDS (Cost $27,476,362) -- 102.0%........................................ 27,319,446
VARIABLE RATE DEMAND NOTES (Cost $200,000) -- 0.8%........................................ 200,000
OTHER ASSETS LESS LIABILITIES -- (2.8)%................................................... (738,719)
-----------
NET ASSETS -- 100.0%...................................................................... $26,780,727
===========
<FN>
----------------
+ Ratings have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</FN>
</TABLE>
13
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 2000
<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...................... $53,807,791 $73,483,493 $36,278,005 $27,319,446
Short-term holdings..................... 1,300,000 500,000 -- 200,000
----------- ----------- ----------- -----------
55,107,791 73,983,493 36,278,005 27,519,446
Cash ...................................... 125,802 133,912 124,842 130,610
Interest receivable........................ 901,906 1,279,376 858,886 419,771
Receivable for Shares of Beneficial
Interest sold........................... 46,725 52,257 48,015 480
Expenses prepaid to shareholder
service agent........................... 4,680 5,683 3,009 2,340
Other...................................... 20,959 946 12,480 343
----------- ----------- ----------- -----------
Total Assets............................... 56,207,863 75,455,667 37,325,237 28,072,990
=========== =========== =========== ===========
LIABILITIES:
Payable for Shares of Beneficial Interest
repurchased............................. 676,005 441,062 76,590 --
Dividends payable.......................... 96,693 121,065 65,343 42,340
Payable for securities purchased........... -- -- -- 1,193,534
Accrued expenses and other................. 93,394 118,722 72,414 56,389
----------- ----------- ----------- -----------
Total Liabilities ......................... 866,092 680,849 214,347 1,292,263
----------- ----------- ----------- -----------
Net Assets................................. $55,341,771 $74,774,818 $37,110,890 $26,780,727
=========== =========== =========== ===========
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par:
Class A................................. $ 7,567 $ 10,857 $ 4,671 $ 3,312
Class C................................. 244 31 93 72
Class D................................. 928 563 195 166
Additional paid-in capital................. 55,865,430 74,523,986 37,039,374 26,927,590
Undistributed/accumulated net realized
gain (loss)............................. (180,803) (7,758) 102,195 6,503
Net unrealized appreciation (depreciation)
of investments.......................... (351,595) 247,139 (35,638) (156,916)
----------- ----------- ----------- -----------
Net Assets................................. $55,341,771 $74,774,818 $37,110,890 $26,780,727
=========== =========== =========== ===========
NET ASSETS:
Class A................................. $47,915,436 $70,905,016 $34,949,401 $24,986,744
Class C................................. $ 1,546,451 $ 203,723 $ 698,932 $ 543,950
Class D................................. $ 5,879,884 $ 3,666,079 $ 1,462,557 $ 1,250,033
SHARES OF BENEFICIAL INTEREST
OUTSTANDING (Unlimited shares
authorized; $0.001 par value):
Class A................................. 7,566,859 10,857,345 4,670,874 3,311,920
Class C ............................... 243,933 31,278 93,222 72,173
Class D ............................... 927,592 562,879 195,081 165,794
NET ASSET VALUE PER SHARE:
Class A.................................... $6.33 $6.53 $7.48 $7.54
Class C.................................... $6.34 $6.51 $7.50 $7.54
Class D.................................... $6.34 $6.51 $7.50 $7.54
<FN>
------------------
See Notes to Financial Statements.
</FN>
</TABLE>
14
<PAGE>
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 2000
<TABLE>
<CAPTION>
CALIFORNIA CALIFORNIA NORTH
HIGH-YIELD QUALITY FLORIDA CAROLINA
SERIES SERIES SERIES SERIES
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ..................................... $3,383,424 $4,261,809 $2,189,333 $1,567,717
---------- ---------- ---------- ----------
EXPENSES:
Management fees............................... 285,163 373,310 188,618 135,811
Distribution and service fees................. 124,908 108,027 109,836 80,923
Shareholder account services.................. 74,969 92,768 50,917 39,055
Auditing and legal fees....................... 33,822 40,447 29,482 28,232
Custody and related services.................. 31,871 25,837 14,110 6,619
Shareholder reports and communications........ 11,767 13,938 7,092 5,040
Registration.................................. 9,327 20,114 16,017 17,127
Trustees' fees and expenses................... 8,314 8,514 6,686 6,180
Miscellaneous................................. 2,789 3,158 2,273 2,005
---------- ---------- ---------- ----------
Total Expenses Before Reimbursement........... 582,930 686,113 425,031 320,992
Reimbursement of expenses..................... (113,448) -- (138,929) --
---------- ---------- ---------- ----------
Total Expenses After Reimbursement............ 469,482 686,113 286,102 320,992
---------- ---------- ---------- ----------
Net Investment Income......................... 2,913,942 3,575,696 1,903,231 1,246,725
---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments....... (180,803) 288,511 107,669 121,975
Net change in unrealized depreciation
of investments.............................. 1,019,062 1,703,233 390,337 8,231
---------- ---------- ---------- ----------
Net Gain on Investments ...................... 838,259 1,991,744 498,006 130,206
---------- ---------- ---------- ----------
Increase in Net Assets from Operations........ $3,752,201 $5,567,440 $2,401,237 $1,376,931
========== ========== ========== ==========
<FN>
------------------
See Notes to Financial Statements.
</FN>
</TABLE>
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,
-------------------------------- --------------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................... $ 2,913,942 $ 3,122,968 $ 3,575,696 $ 3,911,860
Net realized gain (loss) on investments. (180,803) 848,260 288,511 967,560
Net change in unrealized appreciation/
depreciation of investments.......... 1,019,062 (6,115,178) 1,703,233 (8,037,661)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets
from Operations...................... 3,752,201 (2,143,950) 5,567,440 (3,158,241)
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A.............................. (2,583,071) (2,825,817) (3,416,025) (3,747,630)
Class C.............................. (54,390) (7,503) (4,261) (114)
Class D.............................. (276,481) (289,648) (155,410) (164,116)
Net realized gain on investments:
Class A.............................. (681,175) (207,681) (824,137) (2,762,949)
Class C.............................. (14,435) -- (108) --
Class D.............................. (94,111) (23,942) (48,062) (100,451)
----------- ----------- ----------- -----------
Decrease in Net Assets
from Distributions................... (3,703,663) (3,354,591) (4,448,003) (6,775,260)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares....... 6,242,146 21,297,184 3,003,653 6,015,293
Investment of dividends................. 1,653,092 1,817,908 1,659,067 1,932,726
Exchanged from associated Funds......... 4,370,134 6,342,123 2,549,385 2,462,908
Shares issued in payment of
gain distributions................... 557,051 162,740 503,970 1,751,037
----------- ----------- ----------- -----------
Total................................... 12,822,423 29,619,955 7,716,075 12,161,964
----------- ----------- ----------- -----------
Cost of shares repurchased.............. (18,350,524) (15,119,823) (10,873,129) (10,056,106)
Exchanged into associated Funds......... (5,684,909) (7,262,583) (2,276,589) (2,907,275)
----------- ----------- ----------- -----------
Total................................... (24,035,433) (22,382,406) (13,149,718) (12,963,381)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets
from Capital Share
Transactions......................... (11,213,010) 7,237,549 (5,433,643) (801,417)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets....... (11,164,472) 1,739,008 (4,314,206) (10,734,918)
NET ASSETS:
Beginning of year....................... 66,506,243 64,767,235 79,089,024 89,823,942
----------- ----------- ----------- -----------
End of Year............................. $55,341,771 $66,506,243 $74,774,818 $79,089,024
=========== =========== =========== ===========
<FN>
------------------
See Notes to Financial Statements.
</FN>
</TABLE>
16
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FLORIDA SERIES NORTH CAROLINA SERIES
-------------------------------- --------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
-------------------------------- --------------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................... $ 1,903,231 $ 1,935,557 $ 1,246,725 $ 1,399,334
Net realized gain on investments........ 107,669 232,488 121,975 253,645
Net change in unrealized appreciation/
depreciation of investments.......... 390,337 (3,636,357) 8,231 (2,615,290)
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets
from Operations...................... 2,401,237 (1,468,312) 1,376,931 (962,311)
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A.............................. (1,818,184) (1,853,149) (1,185,581) (1,341,165)
Class C.............................. (15,993) (2,744) (4,991) (113)
Class D.............................. (69,054) (79,664) (56,153) (58,056)
Net realized gain on investments:
Class A.............................. (222,212) (272,671) (342,478) (451,811)
Class C.............................. (1,469) -- (129) --
Class D.............................. (10,618) (14,496) (19,882) (20,721)
----------- ----------- ----------- -----------
Decrease in Net Assets
from Distributions................... (2,137,530) (2,222,724) (1,609,214) (1,871,866)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares....... 3,114,826 4,498,419 1,363,046 1,889,423
Investment of dividends................. 683,899 732,052 623,699 747,439
Exchanged from associated Funds......... 2,330,562 3,209,545 563,578 221,185
Shares issued in payment of
gain distributions................... 113,527 163,562 265,268 351,195
----------- ----------- ----------- -----------
Total................................... 6,242,814 8,603,578 2,815,591 3,209,242
----------- ----------- ----------- -----------
Cost of shares repurchased.............. (6,943,778) (6,378,034) (4,464,682) (4,748,910)
Exchanges into associated Funds......... (2,154,127) (3,235,898) (254,861) (523,333)
----------- ----------- ----------- -----------
Total................................... (9,097,905) (9,613,932) (4,719,543) (5,272,243)
----------- ----------- ----------- -----------
Decrease in Net Assets from Capital
Share Transactions................... (2,855,091) (1,010,354) (1,903,952) (2,063,001)
----------- ----------- ----------- -----------
Decrease in Net Assets.................. (2,591,384) (4,701,390) (2,136,235) (4,897,178)
Net Assets:
Beginning of year....................... 39,702,274 44,403,664 28,916,962 33,814,140
----------- ----------- ----------- -----------
End of Year............................. $37,110,890 $39,702,274 $26,780,727 $28,916,962
=========== =========== =========== ===========
<FN>
------------------
See Notes to Financial Statements.
</FN>
</TABLE>
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
con tin gent deferred sales charge ("CDSC") of 1% on redemp tions 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-specific 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 accounting principles generally accepted in the
United States of America, 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 in come tax. Each Series
has elected to be taxed as a regulated investment company and intends to
distribute sub stantially 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 specifi
cally attributable to a particular class, are charged directly to such
class. For the year ended September 30, 2000, 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 values 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,
2000, were as follows:
SERIES PURCHASES SALES
---------- ----------- ------------
California High-Yield $2,916,810 $14,960,070
California Quality 976,660 7,078,375
Florida 4,685,915 8,798,733
North Carolina 3,179,653 4,113,130
At September 30, 2000, 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 $997,257 $1,348,852
California Quality 2,139,058 1,891,919
Florida 653,042 688,680
North Carolina 479,593 636,509
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 of the Manager, and all
personnel of the Trust and the Manager is paid by the Manager. The Manager's fee
is calculated daily and payable monthly, equal to 0.50% per annum of each
Series' average daily net assets. Effective October 18, 1999, the Manager, at
its discretion, agreed to reimburse expenses, other than distribution and
service fees, that exceed 0.60% and 0.45% per annum of the average daily net
assets of California High-Yield Series and Florida Series, respectively.
Seligman Advisors, Inc. (the "Distributor"), agent for the distribution of
each Series' shares and an affiliate of the Manager, received the following
concessions from sales of Class A shares, after commissions were paid to dealers
for sales of Class A and Class C shares:
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DISTRIBUTOR DEALER
SERIES CONCESSIONS COMMISSIONS
---------- ----------- ------------
California High-Yield $6,444 $55,233
California Quality 4,397 32,758
Florida 5,175 41,031
North Carolina 2,422 18,083
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,
2000, for California High-Yield Series, California Quality Series, Florida
Series, and North Carolina Series, fees incurred under the Plan aggregated
$48,237, $67,363, $90,170, and $65,092, 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, 2000, 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 $12,560 $64,111
California Quality 1,084 39,580
Florida 3,695 15,971
North Carolina 1,287 14,544
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 on redemptions of Class D shares occurring within one year of purchase. For
the year ended September 30, 2000, such charges amounted to $31,025 for
California High-Yield Series, $26 for California Quality Series, $478 for
Florida Series, and $626 for 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, 2000,
Seligman Services, Inc. received commissions from the sales of shares of each
Series and distribution and service fees, pursuant to the Plan, as follows:
DISTRIBUTION AND
SERIES COMMISSIONS SERVICE FEES
---------- ------------ ------------
California High-Yield $544 $3,352
California Quality 599 2,287
Florida 210 3,630
North Carolina 1,725 2,395
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 $74,969
California Quality 92,768
Florida 50,917
North Carolina 39,055
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, 2000, are included in other
liabilities as follows:
SERIES
----------
California High-Yield $25,616
California Quality 25,756
Florida 13,582
North Carolina 10,348
5. COMMITTED LINE OF CREDIT -- The Trust is a participant in a joint $825
million committed line of credit that is shared by substantially all open-end
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 per annum rate equal to the overnight federal funds
rate plus 0.50%. Each Series incurs a commitment fee of 0.10% 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 2001, but is
renewable annually with the consent of the participating banks. For the year
ended September 30, 2000, the Trust did not borrow from the credit facility.
6. CAPITAL LOSS CARRYFORWARD -- At September 30, 2000, the California High-Yield
Series had a net capital loss carryforward for federal income tax purposes of
$180,803, which is available for offset against future taxable net capital
gains, expiring in 2008. Accordingly, no capital gain distribution is expected
to be paid to shareholders of this Series until net capital gains have been
realized in excess of the available capital loss carryforward.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
7. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST -- Transactions in Shares of
Beneficial Interest were as follows:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
CALIFORNIA HIGH-YIELD SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 903,405 $ 5,517,451 2,624,733 $17,491,961
Investment of dividends ..................... 234,409 1,434,543 242,874 1,601,698
Exchanged from associated Funds ............. 516,737 3,175,081 861,977 5,696,785
Shares issued in payment of
gain distributions ........................ 79,138 483,536 21,223 142,616
----------- ----------- ----------- -----------
Total ....................................... 1,733,689 10,610,611 3,750,807 24,933,060
----------- ----------- ----------- -----------
Shares repurchased .......................... (2,677,244) (16,355,798) (2,152,611) (14,122,052)
Exchanged into associated Funds ............. (694,790) (4,215,175) (983,221) (6,519,246)
----------- ----------- ----------- -----------
Total ....................................... (3,372,034) (20,570,973) (3,135,832) (20,641,298)
----------- ----------- ----------- -----------
Increase (decrease) ......................... (1,638,345) $(9,960,362) 614,975 $ 4,291,762
=========== =========== =========== ===========
<CAPTION>
CLASS A
--------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
CALIFORNIA QUALITY SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 437,371 $ 2,790,181 392,761 $ 2,663,057
Investment of dividends ..................... 255,867 1,608,821 272,151 1,853,060
Exchanged from associated Funds ............. 319,104 1,996,568 184,375 1,277,793
Shares issued in payment of
gain distributions ........................ 77,695 487,923 242,713 1,679,573
----------- ----------- ----------- -----------
Total ....................................... 1,090,037 6,883,493 1,092,000 7,473,483
----------- ----------- ----------- -----------
Shares repurchased .......................... (1,565,272) (9,853,889) (1,304,849) (8,809,973)
Exchanged into associated Funds ............. (316,786) (1,987,983) (280,143) (1,967,426)
----------- ----------- ----------- -----------
Total ....................................... (1,882,058) (11,841,872) (1,584,992) (10,777,399)
----------- ----------- ----------- -----------
Increase (decrease) ......................... (792,021) $(4,958,379) (492,992) $(3,303,916)
=========== =========== =========== ===========
<CAPTION>
CLASS A
--------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
FLORIDA SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 342,659 $ 2,513,913 519,451 $ 4,068,773
Investment of dividends ..................... 91,309 667,830 88,673 692,647
Exchanged from associated Funds ............. 288,712 2,096,553 307,595 2,411,983
Shares issued in payment of
gain distributions ........................ 15,100 110,685 19,319 153,195
----------- ----------- ----------- -----------
Total ....................................... 737,780 5,388,981 935,038 7,326,598
----------- ----------- ----------- -----------
Shares repurchased .......................... (877,533) (6,392,812) (726,633) (5,630,569)
Exchanged into associated Funds ............. (261,420) (1,904,091) (401,208) (3,048,712)
----------- ----------- ----------- -----------
Total ....................................... (1,138,953) (8,296,903) (1,127,841) (8,679,281)
----------- ----------- ----------- -----------
Increase (decrease) ......................... (401,173) $(2,907,922) (192,803) $(1,352,683)
=========== =========== =========== ===========
<CAPTION>
CLASS A
--------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
NORTH CAROLINA SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 107,275 $ 798,174 175,103 $ 1,412,517
Investment of dividends ..................... 79,404 588,024 88,130 704,629
Exchanged from associated Funds ............. 72,301 533,516 26,310 212,683
Shares issued in payment of
gain distributions ........................ 33,442 248,811 40,880 331,130
----------- ----------- ----------- -----------
Total ....................................... 292,422 2,168,525 330,423 2,660,959
----------- ----------- ----------- -----------
Shares repurchased .......................... (538,330) (3,980,124) (578,427) (4,584,553)
Exchanged into associated Funds ............. (27,905) (206,748) (64,700) (523,333)
----------- ----------- ----------- -----------
Total ....................................... (566,235) (4,186,872) (643,127) (5,107,886)
----------- ----------- ----------- -----------
Increase (decrease) ......................... (273,813) $(2,018,347) (312,704) $(2,446,927)
=========== =========== =========== ===========
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------------------
YEAR ENDED 5/27/99* TO
SEPTEMBER 30, 2000 9/30/99
-------------------------------- --------------------------------
CALIFORNIA QUALITY SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 88,081 $547,540 164,917 $1,063,949
Investment of dividends ..................... 6,384 39,157 707 4,509
Exchanged from associated Funds ............. -- -- -- --
Shares issued in payment of
gain distributions ........................ 2,158 13,206 -- --
----------- ----------- ----------- -----------
Total ....................................... 96,623 599,903 165,624 1,068,458
----------- ----------- ----------- -----------
Shares repurchased .......................... (16,621) (100,155) (3) (21)
Exchanged into associated Funds ............. (1,690) (10,399) -- --
----------- ----------- ----------- -----------
Total ....................................... (18,311) (110,554) (3) (21)
----------- ----------- ----------- -----------
Increase (decrease) ......................... 78,312 $489,349 165,621 $1,068,437
=========== =========== =========== ===========
<CAPTION>
CLASS C
--------------------------------------------------------------------------
YEAR ENDED 5/27/99* TO
SEPTEMBER 30, 2000 9/30/99
-------------------------------- --------------------------------
CALIFORNIA QUALITY SERIES SHARES AMOUNT SHARES AMOUNT
x ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 29,160 $183,372 1,474 $ 9,904
Investment of dividends ..................... 612 3,870 16 103
Exchanged from associated Funds ............. -- -- -- --
Shares issued in payment of
gain distributions ........................ 17 108 -- --
----------- ----------- ----------- -----------
Total ....................................... 29,789 187,350 1,490 10,007
----------- ----------- ----------- -----------
Shares repurchased .......................... (1) (6) -- --
Exchanged into associated Funds ............. -- -- -- --
----------- ----------- ----------- -----------
Total ....................................... (1) (6) -- --
----------- ----------- ----------- -----------
Increase (decrease) ......................... 29,788 $187,344 1,490 $ 10,007
=========== =========== =========== ===========
<CAPTION>
CLASS C
--------------------------------------------------------------------------
YEAR ENDED 5/27/99* TO
SEPTEMBER 30, 2000 9/30/99
-------------------------------- --------------------------------
FLORIDA SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 65,682 $482,545 34,107 $ 263,437
Investment of dividends ..................... 66 493 27 204
Exchanged from associated Funds ............. -- -- -- --
Shares issued in payment of
gain distributions ........................ -- -- -- --
----------- ----------- ----------- -----------
Total ....................................... 65,748 483,038 34,134 263,641
----------- ----------- ----------- -----------
Shares repurchased .......................... (5,228) (39,261) -- --
Exchanged into associated Funds ............. (1,432) (10,279) -- --
----------- ----------- ----------- -----------
Total ....................................... (6,660) (49,540) -- --
----------- ----------- ----------- -----------
Increase (decrease) ......................... 59,088 $433,498 34,134 $ 263,641
=========== =========== =========== ===========
<CAPTION>
CLASS C
--------------------------------------------------------------------------
YEAR ENDED 5/27/99* TO
SEPTEMBER 30, 2000 9/30/99
-------------------------------- --------------------------------
NORTH CAROLINA SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 70,473 $525,343 1,329 $ 10,422
Investment of dividends ..................... 343 2,577 12 101
Exchanged from associated Funds ............. -- -- -- --
Shares issued in payment of
gain distributions ........................ 17 129 -- --
----------- ----------- ----------- -----------
Total ....................................... 70,833 528,049 1,341 10,523
----------- ----------- ----------- -----------
Shares repurchased .......................... (1) (8) -- --
Exchanged into associated Funds ............. -- -- -- --
----------- ----------- ----------- -----------
Total ....................................... (1) (8) -- --
----------- ----------- ----------- -----------
Increase (decrease) ......................... 70,832 $528,041 1,341 $ 10,523
=========== =========== =========== ===========
<CAPTION>
CLASS D
--------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
CALIFORNIA HIGH-YIELD SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 28,874 $ 177,155 409,465 $2,741,274
Investment of dividends ..................... 29,282 179,392 31,985 211,701
Exchanged from associated Funds ............. 195,109 1,195,053 96,237 645,338
Shares issued in payment of
gain distributions ........................ 9,854 60,309 2,990 20,124
----------- ----------- ----------- -----------
Total ....................................... 263,119 1,611,909 540,677 3,618,437
----------- ----------- ----------- -----------
Shares repurchased .......................... (313,988) (1,894,571) (150,575) (997,750)
Exchanged into associated Funds ............. (239,802) (1,459,335) (111,644) (743,337)
----------- ----------- ----------- -----------
Total ....................................... (553,790) (3,353,906) (262,219) (1,741,087)
----------- ----------- ----------- -----------
Increase (decrease) ......................... (290,671) $(1,741,997) 278,458 $1,877,350
=========== =========== =========== ===========
<CAPTION>
CLASS D
--------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
CALIFORNIA QUALITY SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 4,778 $ 30,100 484,533 $ 3,342,332
Investment of dividends ..................... 7,400 46,376 11,719 79,563
Exchanged from associated Funds ............. 89,165 552,817 167,993 1,185,115
Shares issued in payment of
gain distributions ........................ 2,546 15,939 10,357 71,464
----------- ----------- ----------- -----------
Total ....................................... 103,889 645,232 674,602 4,678,474
----------- ----------- ----------- -----------
Shares repurchased .......................... (164,014) (1,019,234) (183,777) (1,246,133)
Exchanged into associated Funds ............. (46,387) (288,606) (141,466) (939,849)
----------- ----------- ----------- -----------
Total ....................................... (210,401) (1,307,840) (325,243) (2,185,982)
----------- ----------- ----------- -----------
Increase (decrease) ......................... (106,512) $ (662,608) 349,359 $ 2,492,492
=========== =========== =========== ===========
<CAPTION>
CLASS D
--------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
FLORIDA SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 16,339 $ 118,368 20,914 $ 166,209
Investment of dividends ..................... 2,126 15,576 4,975 39,201
Exchanged from associated Funds ............. 32,543 234,009 100,105 797,562
Shares issued in payment of
gain distributions ........................ 387 2,842 1,306 10,367
----------- ----------- ----------- -----------
Total ....................................... 51,395 370,795 127,300 1,013,339
----------- ----------- ----------- -----------
Shares repurchased .......................... (70,909) (511,705) (95,272) (747,465)
Exchanged into associated Funds ............. (33,458) (239,757) (23,955) (187,186)
----------- ----------- ----------- -----------
Total ....................................... (104,367) (751,462) (119,227) (934,651)
----------- ----------- ----------- -----------
Increase (decrease) ......................... (52,972) $ (380,667) 8,073 $ 78,688
=========== =========== =========== ===========
<CAPTION>
CLASS D
--------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
NORTH CAROLINA SERIES SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales of shares ............................. 5,298 $ 39,529 58,041 $ 466,484
Investment of dividends ..................... 4,481 33,098 5,351 42,709
Exchanged from associated Funds ............. 4,135 30,062 1,053 8,502
Shares issued in payment of
gain distributions ........................ 2,198 16,328 2,477 20,065
----------- ----------- ----------- -----------
Total ....................................... 16,112 119,017 66,922 537,760
----------- ----------- ----------- -----------
Shares repurchased .......................... (65,497) (484,550) (20,733) (164,357)
Exchanged into associated Funds ............. (6,538) (48,113) -- --
----------- ----------- ----------- -----------
Total ....................................... (72,035) (532,663) (20,733) (164,357)
----------- ----------- ----------- -----------
Increase (decrease) ......................... (55,923) $ (413,646) 46,189 $ 373,403
=========== =========== =========== ===========
<FN>
----------------------
* Commencement of offering of Class C shares.
</FN>
</TABLE>
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, YEAR 5/27/99*
--------------------------------------------- ENDED TO
2000 1999 1998 1997 1996 9/30/00 9/30/99
----- ----- ----- ----- ----- ------- -------
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................ $6.28 $6.80 $6.61 $6.50 $6.47 $6.29 $6.62
----- ----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income ............................... 0.32 0.31 0.32 0.34 0.36 0.27 0.09
Net realized and unrealized gain (loss)
on investments ................................... 0.13 (0.50) 0.22 0.20 0.05 0.13 (0.33)
----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .................... 0.45 (0.19) 0.54 0.54 0.41 0.40 (0.24)
----- ----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income ................ (0.32) (0.31) (0.32) (0.34) (0.36) (0.27) (0.09)
Distributions from net realized capital gain ........ (0.08) (0.02) (0.03) (0.09) (0.02) (0.08) --
----- ----- ----- ----- ----- ----- -----
Total Distributions ................................. (0.40) (0.33) (0.35) (0.43) (0.38) (0.35) (0.09)
----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period ...................... $6.33 $6.28 $6.80 $6.61 $6.50 $6.34 $6.29
===== ===== ===== ===== ===== ===== =====
TOTAL RETURN: 7.49% (2.82)% 8.45% 8.74% 6.49% 6.53% (3.79)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $47,915 $57,807 $58,374 $52,883 $50,264 $1,546 $1,041
Ratio of expenses to average net assets ............. 0.71% 0.84% 0.82% 0.87% 0.84% 1.61% 1.72%+
Ratio of net income to average net assets ........... 5.23% 4.71% 4.81% 5.26% 5.49% 4.33% 3.95%+
Portfolio turnover rate ............................. 5.20% 27.61% 10.75% 22.42% 34.75% 5.20% 27.61%++
Without expense reimbursement:**
Ratio of expenses to average net assets ............. 0.91% 1.81%
Ratio of net income to average net assets ........... 5.04% 4.13%
<FN>
------------------
See footnotes on page 26.
</FN>
</TABLE>
22
<PAGE>
FINANCIAL HIGHLIGHTS
CALIFORNIA HIGH-YIELD SERIES (continued)
<TABLE>
<CAPTION>
CLASS D
--------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
2000 1999 1998 1997 1996
PER SHARE DATA: ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ....................... $6.29 $6.80 $6.61 $6.51 $6.48
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income .................................... 0.27 0.25 0.26 0.28 0.30
Net realized and unrealized gain (loss)
on investments ........................................ 0.13 (0.49) 0.22 0.19 0.05
----- ----- ----- ----- -----
Total from Investment Operations ......................... 0.40 (0.24) 0.48 0.47 0.35
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income ..................... (0.27) (0.25) (0.26) (0.28) (0.30)
Distributions from net realized capital gain ............. (0.08) (0.02) (0.03) (0.09) (0.02)
----- ----- ----- ----- -----
Total Distributions ...................................... (0.35) (0.27) (0.29) (0.37) (0.32)
----- ----- ----- ----- -----
Net Asset Value, End of Year ............................. $6.34 $6.29 $6.80 $6.61 $6.51
===== ===== ===== ===== =====
TOTAL RETURN: 6.53% (3.54)% 7.47% 7.60% 5.53%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted) ................... $5,880 $7,658 $6,393 $3,320 $1,919
Ratio of expenses to average net assets .................. 1.61% 1.74% 1.73% 1.77% 1.74%
Ratio of net income to average net assets ................ 4.33% 3.81% 3.90% 4.36% 4.59%
Portfolio turnover rate .................................. 5.20% 27.61% 10.75% 22.42% 34.75%
Without expense reimbursement:**
Ratio of expenses to average net assets .................. 1.81%
Ratio of net income to average net assets ................ 4.13%
<FN>
------------------
See footnotes on page 26.
</FN>
</TABLE>
23
<PAGE>
FINANCIAL HIGHLIGHTS
CALIFORNIA QUALITY SERIES
<TABLE>
<CAPTION>
CLASS A CLASS C
--------------------------------------------- ----------------
YEAR ENDED SEPTEMBER 30, YEAR 5/27/99*
--------------------------------------------- ENDED TO
2000 1999 1998 1997 1996 9/30/00 9/30/99
----- ----- ----- ----- ----- ------- -------
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................ $6.42 $7.21 $6.99 $6.75 $6.65 $6.40 $6.75
----- ----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income ............................... 0.30 0.31 0.33 0.34 0.35 0.25 0.09
Net realized and unrealized gain (loss)
on investments ................................... 0.18 (0.56) 0.25 0.24 0.11 0.18 (0.35)
----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .................... 0.48 (0.25) 0.58 0.58 0.46 0.43 (0.26)
----- ----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income ................ (0.30) (0.31) (0.33) (0.34) (0.35) (0.25) (0.09)
Distributions from net realized capital gain ........ (0.07) (0.23) (0.03) -- (0.01) (0.07) --
----- ----- ----- ----- ----- ----- -----
Total Distributions ................................. (0.37) (0.54) (0.36) (0.34) (0.36) (0.32) (0.09)
----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period ...................... $6.53 $6.42 $7.21 $6.99 $6.75 $6.51 $6.40
===== ===== ===== ===== ===== ===== =====
TOTAL RETURN: 7.95% (3.68)% 8.67% 8.87% 7.00% 7.00% (4.04)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $70,905 $74,793 $87,522 $86,992 $95,560 $204 $10
Ratio of expenses to average net assets ............. 0.87% 0.82% 0.77% 0.82% 0.79% 1.77% 1.72%+
Ratio of net income to average net assets ........... 4.83% 4.56% 4.75% 4.99% 5.11% 3.93% 3.80%+
Portfolio turnover rate ............................. 1.33% 20.24% 30.82% 12.16% 12.84% 1.33% 20.24%++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
--------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
2000 1999 1998 1997 1996
PER SHARE DATA: ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ....................... $6.40 $7.19 $6.97 $6.74 $6.63
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income .................................... 0.25 0.25 0.27 0.28 0.28
Net realized and unrealized gain (loss)
on investments ........................................ 0.18 (0.56) 0.25 0.23 0.12
----- ----- ----- ----- -----
Total from Investment Operations ......................... 0.43 (0.31) 0.52 0.51 0.40
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income ..................... (0.25) (0.25) (0.27) (0.28) (0.28)
Distributions from net realized capital gain ............. (0.07) (0.23) (0.03) -- (0.01)
----- ----- ----- ----- -----
Total Distributions ...................................... (0.32) (0.48) (0.30) (0.28) (0.29)
----- ----- ----- ----- -----
Net Asset Value, End of Year ............................. $6.51 $6.40 $7.19 $6.97 $6.74
===== ===== ===== ===== =====
TOTAL RETURN: 7.00% (4.58)% 7.71% 7.75% 6.20%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted) ................... $3,666 $4,286 $2,302 $1,677 $1,645
Ratio of expenses to average net assets .................. 1.77% 1.72% 1.68% 1.72% 1.69%
Ratio of net income to average net assets ................ 3.93% 3.66% 3.84% 4.09% 4.21%
Portfolio turnover rate .................................. 1.33% 20.24% 30.82% 12.16% 12.84%
<FN>
------------------
See footnotes on page 26.
</FN>
</TABLE>
24
<PAGE>
FINANCIAL HIGHLIGHTS
FLORIDA SERIES
<TABLE>
<CAPTION>
CLASS A CLASS C
--------------------------------------------- ----------------
YEAR ENDED SEPTEMBER 30, YEAR 5/27/99*
--------------------------------------------- ENDED TO
2000 1999 1998 1997 1996 9/30/00 9/30/99
----- ----- ----- ----- ----- ------- -------
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................ $7.41 $8.07 $7.80 $7.67 $7.71 $7.43 $7.83
----- ----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income ............................... 0.37 0.34 0.35 0.36 0.38 0.32 0.10
Net realized and unrealized gain (loss)
on investments ................................... 0.11 (0.61) 0.34 0.23 0.04 0.11 (0.40)
----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .................... 0.48 (0.27) 0.69 0.59 0.42 0.43 (0.30)
----- ----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income ................ (0.37) (0.34) (0.35) (0.36) (0.38) (0.32) (0.10)
Distributions from net realized capital gain ........ (0.04) (0.05) (0.07) (0.10) (0.08) (0.04) --
----- ----- ----- ----- ----- ----- -----
Total Distributions ................................. (0.41) (0.39) (0.42) (0.46) (0.46) (0.36) (0.10)
----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period ...................... $7.48 $7.41 $8.07 $7.80 $7.67 $7.50 $7.43
===== ===== ===== ===== ===== ===== =====
TOTAL RETURN: 6.78% (3.42)% 9.16% 8.01% 5.54% 5.98% (3.96)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $34,949 $37,606 $42,464 $42,024 $45,200 $699 $254
Ratio of expenses to average net assets ............. 0.72% 1.03% 1.00% 1.04% 0.97% 1.47% 1.78%+
Ratio of net income to average net assets ........... 5.08% 4.38% 4.45% 4.70% 4.90% 4.33% 3.82%+
Portfolio turnover rate ............................. 12.68% 18.31% 6.73% 33.68% 18.53% 12.68% 18.31%++
Without expense reimbursement/
management fee waiver:**
Ratio of expenses to average net assets ............. 1.09% 0.97% 1.84%
Ratio of net income to average net assets ........... 4.71% 4.90% 3.96%
</TABLE>
<TABLE>
<CAPTION>
CLASS D
--------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
2000 1999 1998 1997 1996
PER SHARE DATA: ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ....................... $7.43 $8.08 $7.81 $7.68 $7.72
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income .................................... 0.32 0.28 0.29 0.30 0.32
Net realized and unrealized gain (loss)
on investments ........................................ 0.11 (0.60) 0.34 0.23 0.04
----- ----- ----- ----- -----
Total from Investment Operations ......................... 0.43 (0.32) 0.63 0.53 0.36
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income ..................... (0.32) (0.28) (0.29) (0.30) (0.32)
Distributions from net realized capital gain ............. (0.04) (0.05) (0.07) (0.10) (0.08)
----- ----- ----- ----- -----
Total Distributions ...................................... (0.36) (0.33) (0.36) (0.40) (0.40)
----- ----- ----- ----- -----
Net Asset Value, End of Year ............................. $7.50 $7.43 $8.08 $7.81 $7.68
===== ===== ===== ===== =====
TOTAL RETURN: 5.98% (4.01)% 8.32% 7.18% 4.74%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted) ................... $1,463 $1,843 $1,940 $1,678 $1,277
Ratio of expenses to average net assets .................. 1.47% 1.78% 1.77% 1.81% 1.73%
Ratio of net income to average net assets ................ 4.33% 3.63% 3.68% 3.93% 4.14%
Portfolio turnover rate .................................. 12.68% 18.31% 6.73% 33.68% 18.53%
Without expense reimbursement/
management fee waiver:**
Ratio of expenses to average net assets .................. 1.84% 1.73%
Ratio of net income to average net assets ................ 3.96% 4.14%
<FN>
------------------
See footnotes on page 26.
</FN>
</TABLE>
25
<PAGE>
FINANCIAL HIGHLIGHTS
NORTH CAROLINA SERIES
<TABLE>
<CAPTION>
CLASS A CLASS C
--------------------------------------------- ----------------
YEAR ENDED SEPTEMBER 30, YEAR 5/27/99*
--------------------------------------------- ENDED TO
2000 1999 1998 1997 1996 9/30/00 9/30/99
----- ----- ----- ----- ----- ------- -------
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................ $7.59 $8.30 $8.05 $7.84 $7.74 $7.59 $7.97
----- ----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income ............................... 0.34 0.35 0.36 0.37 0.37 0.29 0.10
Net realized and unrealized gain (loss)
on investments ................................... 0.05 (0.59) 0.31 0.24 0.11 0.05 (0.38)
----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .................... 0.39 (0.24) 0.67 0.61 0.48 0.34 (0.28)
----- ----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income ................ (0.34) (0.35) (0.36) (0.37) (0.37) (0.29) (0.10)
Distributions from net realized capital gain ........ (0.10) (0.12) (0.06) (0.03) (0.01) (0.10) --
----- ----- ----- ----- ----- ----- -----
Total Distributions ................................. (0.44) (0.47) (0.42) (0.40) (0.38) (0.39) (0.10)
----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period ...................... $7.54 $7.59 $8.30 $8.05 $7.84 $7.54 $7.59
===== ===== ===== ===== ===== ===== =====
TOTAL RETURN: 5.36% (3.07)% 8.60% 8.01% 6.39% 4.58% (3.62)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............ $24,987 $27,224 $32,358 $32,684 $35,934 $544 $10
Ratio of expenses to average net assets ............. 1.13% 1.06% 1.05% 1.09% 1.05% 1.88% 1.80%+
Ratio of net income to average net assets ........... 4.63% 4.38% 4.41% 4.66% 4.75% 3.88% 3.77%+
Portfolio turnover rate ............................. 11.96% 1.52% 20.37% 13.04% 15.12% 11.96% 1.52%++
Without management fee waiver:**
Ratio of expenses to average net assets ............. 1.06%
Ratio of net income to average net assets ........... 4.74%
</TABLE>
<TABLE>
<CAPTION>
CLASS D
--------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
2000 1999 1998 1997 1996
PER SHARE DATA: ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year........................ $7.59 $8.30 $8.05 $7.83 $7.74
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income..................................... 0.29 0.29 0.30 0.31 0.31
Net realized and unrealized gain (loss)
on investments......................................... 0.05 (0.59) 0.31 0.25 0.10
----- ----- ----- ----- -----
Total from Investment Operations.......................... 0.34 (0.30) 0.61 0.56 0.41
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income...................... (0.29) (0.29) (0.30) (0.31) (0.31)
Distributions from net realized capital gain.............. (0.10) (0.12) (0.06) (0.03) (0.01)
----- ----- ----- ----- -----
Total Distributions....................................... (0.39) (0.41) (0.36) (0.34) (0.32)
----- ----- ----- ----- -----
Net Asset Value, End of Year.............................. $7.54 $7.59 $8.30 $8.05 $7.83
===== ===== ===== ===== =====
TOTAL RETURN: 4.58% (3.79)% 7.77% 7.33% .45%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted).................... $1,250 $1,682 $1,456 $1,217 $1,232
Ratio of expenses to average net assets................... 1.88% 1.81% 1.82% 1.85% 1.81%
Ratio of net income to average net assets................. 3.88% 3.63% 3.64% 3.90% 3.99%
Portfolio turnover rate................................... 11.96% 1.52% 20.37% 13.04% 15.12%
Without management fee waiver:**
Ratio of expenses to average net assets................... 1.82%
Ratio of net income to average net assets................. 3.98%
<FN>
------------------
*Commencement of offering of Class C shares.
**During the periods stated, the Manager, at its discretion, reimbursed
expenses and/or waived a portion of its fees for California High-
Yield Series, Florida Series, and North Carolina Series.
+Annualized.
++For the year ended September 30, 1999.
See Notes to Financial Statements.
</FN>
</TABLE>
26
<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, California High-Yield, California Quality, Florida, and North
Carolina Series), as of September 30, 2000, and the related statements of
operations for the year then ended and of changes in net assets for each of the
two years in the 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
California High-Yield, California Quality, Florida, and North Carolina Series of
Seligman Municipal Series Trust as of September 30, 2000, the results of their
operations for the year then ended and the changes in their net assets and their
financial highlights for all the respective stated periods, in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
November 10, 2000
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
27
<PAGE>
TRUSTEES
John R. Galvin 2, 4
Director, Raytheon Company
Dean Emeritus, Fletcher School of Law and Diplomacy
at Tufts University
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
Director, Commonwealth Industries, Inc.
Trustee, New York-Presbyterian Hospital
Retired Chairman and Senior Partner,
Sullivan & Cromwell, Law Firm
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
Leroy C. Richie 4
Chairman & CEO, Q Standards Worldwide, Inc.
James Q. Riordan 3, 4
Director, KeySpan Energy Corporation
Trustee, Committee for Economic Development
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, C-SPAN
Director, CommScope, Inc.
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
Fred E. Brown
Trustee Emeritus
----------------
Member: 1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
4 Board Operations Committee
EXECUTIVE OFFICERS
William C. Morris
Chairman
Brian T. Zino
President
Thomas G. Moles
Vice President
Lawrence P. Vogel
Vice President and Treasurer
Frank J. Nasta
Secretary
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.
-----------------
Adapted from the Investment Company Institute's 2000 Mutual Fund Fact Book.
29
<PAGE>
SELIGMAN ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
www.seligman.com
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Beneficial Interest of
Seligman Municipal Series Trust, which contains information about the sales
charges, management fee, and other costs. Please read the prospectus carefully
before investing or sending money.
TEB2 9/00 Printed on Recycled Paper
