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11th ANNUAL REPORT
SELIGMAN
PENNSYLVANIA
MUNICIPAL
FUND
September 30, 1996
[Logo]
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Providing Income
Free From Regular Income Tax
Since 1986
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TO THE SHAREHOLDERS
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We are pleased to update you on Seligman Pennsylvania Municipal Fund, at its
fiscal year-end, September 30, 1996.
After reducing interest rates twice in 1995, and again in January 1996,
the Federal Reserve Board left rates unchanged for the next eight months. The
economy's rate of growth, which slowed in the fourth quarter of 1995, bounced
back in the second quarter of 1996. It continued to grow at a healthy pace all
year with virtually no inflationary repercussions. Reports issued in September
supported this view, showing continued increases in production, new home
sales, wages, and spending.
With the lowest unemployment rate since June 1990, strong personal
incomes, interest rates far below their 1980s levels, and few signs of
inflationary pressure, consumer confidence as measured by The Conference
Board rose 25% above its January 1996 level.
In the municipal bond market, interest rates began to decline in the
third quarter of 1995 and continued to do so until February 1996. However, as
the economy picked up steam late in the first quarter of this year, and
continued to grow in the second quarter, municipal market sentiment turned
from enthusiasm to concern regarding inflation. For the last six months,
every Fed meeting was under intense scrutiny by market participants. The
inability of municipal bond investors to gauge the future direction of rates
exaggerated their response to each economic report, with municipal bond
yields drifting up or down in response to the latest data.
On September 24, the Fed decided to maintain the current fed funds
rate. Once the decision was announced, long-term municipal bond yields, as
measured by the Bond Buyer 20-Bond General Obligation Index, declined
slightly and ended the quarter at 5.76%. The unchanged monetary policy
somewhat stabilized the municipal bond market by the end of the Fund's fourth
quarter.
Going forward, we foresee continued, albeit moderate, economic growth
and a benign level of inflation. This environment of modest growth, combined
with relatively stable interest rates, should be beneficial for financial
markets in the months ahead. As always, there could be short-term volatility,
but we remain confident in the long-term outlook.
As we near the end of the year, we encourage you to review your
overall investment portfolio. When doing so, you may wish to consult your
financial advisor to discuss financial issues such as tax planning, and to
ensure that you are following the best investment strategy to help you seek
your financial goals.
At the Special Meeting of Shareholders, held on September 30, 1996, a
proposal was passed permitting the Fund to invest any portion of its net
assets in securities subject to the federal alternative minimum tax.
Consequently, your Fund's name was changed to Seligman Pennsylvania Municipal
Fund. For specific results of the Special Meeting of Shareholders, please
refer to page 14.
A discussion with your Portfolio Manager about your Fund, along with
highlights of performance, long-term investment results, portfolio holdings,
and financial statements, follows this letter.
We thank you for your continued interest in Seligman Pennsylvania
Municipal Fund, and look forward to serving your investment needs in the many
years to come.
By order of the Trustees,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
October 30, 1996
1
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SELIGMAN PENNSYLVANIA MUNICIPAL FUND
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HIGHLIGHTS September 30, 1996 Class A Class D
Net Assets (in thousands) $31,139 $876
Yield* 4.45% 3.89%
Dividends** $0.376 $0.316
Capital Gain Distribution** $0.093 $0.093
NET ASSET Value per share
September 30, 1996 $7.82 $7.81
September 30, 1995 7.79 7.78
MAXIMUM OFFERING PRICE PER SHARE
September 30, 1996 $8.21 $7.81
September 30, 1995 8.18 7.78
Moody's/S&P Ratings+
Aaa/AAA 62%
Aa/AA 29
A/A 7
Baa/BBB 2
Holdings by Market Sector
Revenue Bonds 89%
General Obligation Bonds 11
Weighted Average maturity (Years) 23.4
* Current yield representing the annualized yield for the 30-day period ended
September 30, 1996.
** Represents per share amount paid or declared for the year ended
September 30, 1996.
+ Percentages based on current market values of long-term holdings.
Note: The yields have been computed in accordance with current SEC regulations
and will vary, and the principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. A
small portion of the Fund's income dividends 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.
2
<PAGE>
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ANNUAL PERFORMANCE OVERVIEW
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The following is a discussion with your Portfolio Manager regarding Seligman
Pennsylvania Municipal Fund, and a chart and table comparing your Fund's
performance to the performance of the Lehman Brothers Municipal Bond Index.
YOUR PORTFOLIO MANAGER
[PICTURE OF THOMAS G. MOLES]
Thomas G. Moles is a Managing Director of J. & W. Seligman & Co.
Incorporated, Vice President and Portfolio Manager of Seligman Pennsylvania
Municipal Fund and the other Seligman municipal mutual funds which include 19
separate portfolios, and President and Portfolio Manager of Seligman Select
Municipal Fund and Seligman Quality Municipal Fund. He is responsible for
more than $2 billion in municipal securities. Mr. Moles, with more than 25
years of experience, has spearheaded Seligman's municipal investment efforts
since joining the firm in 1983.
What economic factors affected Seligman Pennsylvania Municipal Fund over the
past 12 months?
Throughout the fourth quarter of 1995, the majority of market participants
believed that the economy was growing at a moderate pace and that inflation
remained under control. This bullish outlook caused long-term interest rates
to decline steadily during the fourth quarter of 1995 and into the new year.
By February 1996, however, the economy began to exhibit signs of unexpected
strength and interest rates rose sharply on renewed inflation concerns. Since
then, economic data has been mixed, suggesting weakness in some areas and
vigor in others. Given these conflicting economic reports, market
participants have been unable to form a consensus with respect to the
economy. As a result, each new economic release has led to an amplified shift
in interest rates.
On September 24, the Federal Reserve Board stated that it had not
seen sufficient evidence of an acceleration in inflation to warrant an
increase in the fed funds rate. The Fed's decision to hold monetary policy
steady helped stabilize the bond market and prompted a modest decline in
long-term yields. Further, by September 30, 1996, long-term municipal yields,
as measured by the Bond Buyer 20-Bond General Obligation Index, stood at
5.76%, down from 6.00% a year ago.
What market factors influenced the Fund over the past 12 months?
In the municipal bond market, year-to-date new issue supply has increased
only marginally over 1995 levels. However, demand, in particular retail
demand, has been strong, resulting in shortages of certain types of municipal
bonds. The supply imbalance pushed buyers to bid up prices to obtain the
specific bonds they required, which caused a compression of yield spreads, or
a narrowing of yield differentials, within the various sectors of the
municipal market. For example, hospital bonds typically trade at higher
yields than similarly rated general obligation bonds, due to their
complexity. This year, many typically higher-yielding issues such as hospital
bonds have been trading at or near general obligation levels. This market
aberration provided us an opportunity to improve the relative value of the
portfolio.
3
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ANNUAL PERFORMANCE OVERVIEW (continued)
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What was your investment strategy in the past 12 months?
We believe that the economy is expanding at an acceptable rate of
growth and that inflation remains in check. Therefore, we have
been comfortable purchasing long-term municipal bonds in spite of the
market's frequent ups and downs. Yields on long-term municipal bonds are
significantly higher than yields on short-term municipal securities. For that
reason, short-term positions were kept to a minimum.
Further, to better protect the net asset value of the Fund during
periods of rising interest rates, we concentrated new acquisitions in current
coupon bonds rather than in discount or zero coupon bonds, as the prices of
discount and zero coupon bonds are more vulnerable to rising interest rates.
Though we primarily focus on our long-term goals rather than short-term
gains, we continuously search for ways to improve the relative value of the
Fund by taking advantage of aberrations and inefficiencies within the
municipal marketplace.
What is your outlook for the Fund?
Thus far, 1996 has been a challenging year for fixed-income investors. The
debate within the municipal markets over the strength of the economy most
likely will continue to influence the direction of interest rates in the
short term. Our team, however, takes a long-term, conservative approach to
managing your Fund. We believe municipal bond funds will continue to play an
important role in helping investors meet their long-term financial goals, and
we remain committed to maintaining a diversified portfolio of quality
municipal bonds while providing our Shareholders with competitive yields.
4
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PERFORMANCE COMPARISON CHART AND TABLE September 30, 1996
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This chart compares a $10,000 hypothetical investment made in
Seligman Pennsylvania Municipal Fund Class A shares with and
without the maximum initial sales charge of 4.75%, for the 10-year period
ended September 30, 1996, to a $10,000 hypothetical investment made in the
Lehman Brothers Municipal Bond Index (Lehman Index) for the same period. The
performance of Seligman Pennsylvania Municipal Fund Class D shares is not
shown in this chart but is included in the table below. 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.
With sales Without sales
charge charge Lehman Index
- ------------------------------------------------------
9/30/86 $9,522.02 $10,000.00 $10,000
12/31/86 $9,861.15 $10,356.16 $10,346
3/31/87 $10,112.75 $10,620.39 $10,596
6/30/87 $9,589.35 $10,070.72 $10,309
9/30/87 $9,121.12 $9,578.99 $10,052
12/31/87 $9,721.22 $10,209.21 $10,501
3/31/88 $10,052.75 $10,557.39 $10,863
6/30/88 $10,318.34 $10,836.31 $11,072
9/30/88 $10,598.75 $11,130.80 $11,356
12/31/88 $10,926.40 $11,474.89 $11,566
3/31/89 $11,001.43 $11,553.68 $11,642
6/30/89 $11,641.24 $12,225.68 $12,331
9/30/89 $11,608.78 $12,191.51 $12,340
12/31/89 $12,045.27 $12,649.91 $12,814
3/31/90 $12,008.60 $12,611.39 $12,872
6/30/90 $12,274.26 $12,890.39 $13,173
9/30/90 $12,088.65 $12,695.48 $13,181
12/31/90 $12,688.99 $13,325.96 $13,749
3/31/91 $12,881.71 $13,528.37 $14,060
6/30/91 $13,187.63 $13,849.65 $14,359
9/30/91 $13,708.08 $14,396.65 $14,918
12/31/91 $14,121.64 $14,830.57 $15,419
3/31/92 $14,166.24 $14,877.41 $15,465
6/30/92 $14,723.55 $15,462.69 $16,053
9/30/92 $15,084.47 $15,841.73 $16,478
12/31/92 $15,438.30 $16,213.33 $16,778
3/31/93 $16,028.26 $16,832.91 $17,401
6/30/93 $16,631.95 $17,466.91 $17,970
9/30/93 $17,302.83 $18,171.47 $18,577
12/31/93 $17,430.91 $18,305.97 $18,837
3/31/94 $16,315.87 $17,134.96 $17,803
6/30/94 $16,402.08 $17,225.49 $18,001
9/30/94 $16,437.03 $17,262.19 $18,123
12/31/94 $16,206.41 $17,020.00 $17,862
3/31/95 $17,436.63 $18,311.97 $19,125
6/30/95 $17,813.23 $18,707.48 $19,586
9/30/95 $18,172.09 $19,084.36 $20,150
12/31/95 $19,125.82 $20,085.96 $20,980
3/31/96 $18,698.90 $19,637.62 $20,726
6/30/96 $18,812.19 $19,756.59 $20,886
9/30/96 $19,366.24 $20,338.46 $21,367
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The table below shows the average annual total returns for the one-, five-,
and 10-year periods through September 30, 1996, for Seligman Pennsylvania
Municipal Fund Class A shares, with and without the maximum initial sales
charge of 4.75%, and the Lehman Index. Also included in the table are the
average annual total returns for the one-year and since-inception periods
through September 30, 1996, for Seligman Pennsylvania Municipal Fund Class D
shares, with and without the effect of the 1% contingent deferred sales load
("CDSL") imposed on shares redeemed within one year of purchase, and the
Lehman Index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Seligman Pennsylvania Seligman Pennsylvania
Municipal Fund Municipal Fund
Class A with Sales Charge 1.49% 6.11% 6.83% Class D with CDSL 4.76% n/a
Class A without Sales Charge 6.57 7.16 7.36 Class D without CDSL 5.76 2.62%
Lehman Index 6.04 7.45 7.89 Lehman Index 6.04 4.40
</TABLE>
The performance of 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. Performance data quoted represent
changes in prices and assume that all distributions within the periods are
invested in additional shares. The investment return and principal value of
an investment will fluctuate so that shares, if redeemed, may be worth more
or less than their original cost. Past performance is not indicative of
future investment results.
5
<PAGE>
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PORTFOLIO OF INVESTMENTS September 30, 1996
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<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ----------- ------
<S> <C> <C> <C>
$1,000,000 Berks County Municipal Authority, PA Hospital Rev. (The Reading Hospital & Medical
Center Project), 5.70% due 10/1/2014............................................ Aaa/AAA $ 1,006,050
1,000,000 Berks County Municipal Authority, PA Hospital Rev. (The Reading Hospital & Medical
Center Project), 6.10% due 10/1/2023............................................ Aaa/AAA 1,017,210
1,000,000 Delaware County Authority, PA (Haverford College Rev.), 5cents% due 11/15/2023.... Aaa/AAA 961,810
1,000,000 Delaware County Industrial Development Authority, PA (Philadelphia Suburban
Water Company), 6.35% due 8/15/2025*............................................ Aaa/AAA 1,047,110
1,000,000 Delaware County, PA GOs, 6% due 11/15/2022........................................ Aa/AA 1,005,610
1,000,000 Franklin County, PA Industrial Development Authority Hospital Rev.
(The Chambersburg Hospital Project), 6-1/4% due 7/1/2022........................ Aaa/AAA 1,039,050
1,750,000 Lehigh County, PA Industrial Development Authority Pollution Control Rev.
(Pennsylvania Power & Light Company Project), 6.40% due 11/1/2021............... Aaa/AAA 1,842,260
500,000 Montgomery County, PA Industrial Development Authority Pollution Control Rev.
(Philadelphia Electric Co.), 7.60% due 4/1/2021*................................ Baa2/BBB+ 535,895
2,000,000 Pennsylvania Higher Education Assistance Agency Student Loan Rev.,
6.40% due 3/1/2022*............................................................. Aaa/AAA 2,044,660
1,500,000 Pennsylvania Higher Educational Facilities Authority College & University Rev.
(University of Pennsylvania), 5.90% due 9/1/2014................................ Aa/AA 1,521,720
2,000,000 Pennsylvania Higher Educational Facilities Authority Rev. (Temple University),
6-1/2% due 4/1/2021............................................................. Aaa/AAA 2,132,440
2,000,000 Pennsylvania Housing Finance Agency (Single Family Mortgage Rev.),
5.45% due 10/1/2017............................................................. Aa/AA+ 1,927,380
1,800,000 Pennsylvania Housing Finance Agency (Rental Housing Rev.), 6-1/2% due 7/1/2023.... Aaa/AAA 1,860,570
2,000,000 Pennsylvania State GOs, 6-1/2% due 11/15/2011..................................... A1/AA- 2,118,180
1,500,000 Pennsylvania State Turnpike Commission Rev., 6% due 12/1/2017..................... Aaa/AAA 1,525,980
2,500,000 Philadelphia Hospitals & Higher Educational Facilities Authority, PA Hospital Rev.
(Children's Hospital of Philadelphia Project), 5% due 2/15/2021................. Aa/AA 2,231,625
1,500,000 Philadelphia, PA Airport Rev., 6.10% due 6/15/2025*............................... Aaa/AAA 1,513,920
450,000 Philadelphia Redevelopment Authority, PA (Home Mortgage Rev.), 9% due 6/1/2017 NR/AA 472,091
1,500,000 Pittsburgh, PA Water & Sewer Authority Rev., 5.65% due 9/1/2025................... Aaa/AAA 1,483,065
2,000,000 Pottsville Hospital Authority, PA Hospital Rev. (Daughters of Charity National
Health System -- Good Samaritan Regional Medical Center), 5% due 8/15/2012....... Aa/AA 1,854,900
1,500,000 University of Pittsburgh Capital Project, 6-1/8% due 6/1/2021..................... Aaa/AAA 1,525,980
-----------
Total Municipal Bonds (Cost $29,761,630) -- 95.8% ............................................................ 30,667,506
Variable Rate Demand Notes (Cost $900,000) -- 2.8%............................................................ 900,000
Other Assets Less Liabilities -- 1.4%......................................................................... 447,865
-----------
NET ASSETS -- 100.0%.......................................................................................... $32,015,371
-----------
</TABLE>
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* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
6
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STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
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<TABLE>
Assets:
<S> <C> <C>
Investments, at value:
Long-term holdings (cost $29,761,630)............................ $30,667,506
Short-term holdings (cost $900,000).............................. 900,000 $31,567,506
-----------
Cash..................................................................... 57,347
Interest receivable...................................................... 546,697
Receivable for Shares of Beneficial Interest sold........................ 9,595
Expenses prepaid to shareholder service agent ........................... 4,542
Other ................................................................... 5,170
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Total Assets ............................................................ 32,190,857
-----------
Liabilities:
Dividends payable........................................................ 53,486
Payable for Shares of Beneficial Interest repurchased.................... 23,932
Accrued expenses, taxes, and other....................................... 98,068
-----------
Total Liabilities........................................................ 175,486
-----------
Net Assets........................................................... $32,015,371
-----------
-----------
Composition of Net Assets:
Shares of Beneficial Interest, at par ($.001 par value; unlimited shares
authorized; 4,095,344 shares outstanding):
Class A.............................................................. $ 3,983
Class D.............................................................. 112
Additional paid-in capital............................................... 30,720,050
Undistributed net realized gain.......................................... 385,350
Net unrealized appreciation of investments............................... 905,876
-----------
Net Assets........................................................... $32,015,371
-----------
-----------
Net Asset Value per share:
Class A ($31,138,860 / 3,983,151 shares)................................. $7.82
-----
-----
Class D ($876,511 / 112,193 shares)...................................... $7.81
-----
-----
</TABLE>
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See notes to financial statements.
7
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STATEMENT OF OPERATIONS For the Year Ended September 30, 1996
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<TABLE>
<S> <C> <C>
Investment income:
Interest.............................................................. $1,978,977
Expenses:
Management fee........................................................ $166,894
Distribution and service fees......................................... 82,641
Shareholder account services.......................................... 43,462
Auditing and legal fees............................................... 32,769
Trustees' fees and expenses........................................... 23,293
Shareholder reports and communications................................ 11,867
Custody and related services.......................................... 8,243
Registration.......................................................... 6,663
Miscellaneous......................................................... 2,153
Total expenses........................................................ 377,985
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Net investment income................................................. 1,600,992
Net realized and unrealized gain on investments:
Net realized gain on investments...................................... 387,910
Net change in unrealized appreciation of investments.................. 106,542
--------
Net gain on investments............................................... 494,434
----------
Increase in Net Assets from Operations................................ $2,095,426
----------
----------
</TABLE>
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See notes to financial statements.
8
<PAGE>
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STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
Year Ended September 30,
1996 1995
________________
<S> <C> <C>
Operations:
Net investment income............................................................. $ 1,600,992 $ 1,701,722
Net realized gain on investments.................................................. 387,910 402,850
Net change in unrealized appreciation/depreciation of investments................. 106,524 1,230,484
----------- -----------
Increase in net assets from operations............................................ 2,095,426 3,335,056
----------- -----------
Distributions to shareholders:
Net investment income:
Class A....................................................................... (1,564,162) (1,694,167)
Class D....................................................................... (36,830) (7,555)
Net realized gain on investments:
Class A....................................................................... (395,780) (600,438)
Class D....................................................................... (5,886) (820)
----------- -----------
Decrease in net assets from distributions......................................... (2,002,658) (2,302,980)
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
TRANSACTIONS IN SHARES
OF BENEFICIAL INTEREST: SHARES
YEAR ENDED SEPTEMBER 30,
1996 1995
-------- -------
<S> <C> <C> <C> <C>
Net proceeds from sales of shares:
Class A...................................... 88,034 106,330 689,856 804,851
Class D...................................... 98,385 49,571 773,322 382,449
Shares issued in payment of dividends:
Class A...................................... 104,328 121,691 814,679 917,938
Class D...................................... 2,293 706 17,887 5,454
Exchanged from associated Funds:
Class A...................................... 50,822 31,638 400,478 235,025
Class D...................................... 12,819 1,759 102,336 13,441
Shares issued in payment of gain distributions:
Class A...................................... 33,940 59,014 266,766 406,603
Class D...................................... 644 72 5,117 498
-------- ------- ----------- -----------
Total............................................ 391,265 370,781 3,070,441 2,766,259
-------- ------- ----------- -----------
Cost of shares repurchased:
Class A...................................... (476,571) (656,287) (3,712,004) (4,898,866)
Class D...................................... (40,966) (3,075) (318,471) (23,950)
Exchanged into associated Funds:
Class A ..................................... (86,031) (24,434) (668,822) (184,951)
Class D ..................................... (15,725) -- (125,209) --
-------- ------- ----------- -----------
Total............................................ (619,293) (683,796) (4,824,506) (5,107,767)
-------- ------- ----------- -----------
Decrease in net assets from transactions
in Shares of Beneficial Interest ............ (228,028) (313,015) (1,754,065) (2,341,508)
-------- ------- ----------- -----------
-------- -------
Decrease in net assets............................................................. (1,661,297) (1,309,432)
Net Assets:
Beginning of year.................................................................. 33,676,668 34,986,100
----------- -----------
End of year ....................................................................... $32,015,371 $33,676,668
----------- -----------
----------- -----------
</TABLE>
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See notes to financial statements.
9
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
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1. Seligman Pennsylvania Municipal Fund, formerly Seligman Pennsylvania
Tax-Exempt Fund (the "Fund") offers two classes of shares. All
shares existing prior to February 1, 1994, were classified as Class A
shares. Class A shares are sold with an initial sales charge of up to 4.75%
and a continuing service fee of up to 0.25% on an annual basis. Class A
shares purchased in an amount of $1,000,000 or more are sold without an
initial sales charge but are subject to a contingent deferred sales load
("CDSL") of 1% on redemptions within 18 months of purchase. Class D shares
are sold without an initial sales charge but are subject to a distribution
fee of up to 0.75% and a service fee of up to 0.25% on an annual basis, and a
CDSL of 1% imposed on certain redemptions made within one year of purchase.
The two classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain other
class expenses, and has exclusive voting rights with respect to any matter to
which a separate vote of any class is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. All tax-exempt securities and other short-term holdings maturing
in more than 60 days are valued based upon quotations
provided by an independent pricing service or, in their absence, at fair
value determined in accordance with procedures adopted by the Trustees.
Short-term holdings maturing in 60 days or less are generally valued at
amortized cost.
b. There is no provision for federal income or excise tax. The Fund
has elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
Dividends are declared daily and paid monthly.
c. Investment transactions are recorded on trade dates. Identified
cost of investments sold is used for both financial statement and federal
income tax purposes. Interest income is recorded on the accrual basis.
The Fund amortizes original issue discounts and premiums paid on
purchases of portfolio securities. Discounts other than original issue
discounts are not amortized.
d. All income, expenses (other than class-specific expenses), and
realized and unrealized gains or losses are allocated daily to each class
of shares based upon the relative value of each class. Class-specific
expenses, which include distribution and service fees and any other items
that are specifically attributed to a particular class, are charged
directly to such class. For the year ended September 30, 1996,
distribution and service fees were the only class-specific expenses.
e. The treatment for financial statement purposes of distributions
made during the year from net investment income or net realized gains may
differ from their ultimate treatment for federal income tax purposes.
These differences are caused primarily by differences in the timing of
the recognition of certain components of income, expense, and capital
gain for federal income tax purposes. Where such differences are
permanent in nature, they are reclassified in the components of net
assets based on their ultimate characterization for federal income tax
purposes. Any such reclassifications will have no effect on net assets,
results of operations, or net asset value per share of the Fund.
3. Purchases and sales of portfolio securities excluding short-term
investments, for the year ended September 30, 1996, amounted to $1,483,365 and
$3,824,150, respectively.
At September 30, 1996, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
investments amounted to $1,062,406 and $156,530, respectively.
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all trustees of the Fund who are employees or
consultants of the Manager, and all personnel of the Fund and the Manager is
paid by the Manager. The Manager's fee, calculated daily and payable monthly,
is equal to 0.50% per annum of the Fund's average daily net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an
10
<PAGE>
affiliate of the Manager, received concessions of $3,383 from the sale of
Class A shares, after commissions of $25,360 paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution
Plan (the "Plan") with respect to Class A shares under which service
organizations can enter into agreements with the Distributor and receive a
continuing fee 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 Fund
pursuant to the Plan. For the year ended September 30, 1996, fees paid
aggregated $73,531, or 0.23% per annum of the average daily net assets of
Class A shares.
The Fund has a Plan with respect to Class D shares under which service
organizations can enter into agreements with the Distributor and receive a
continuing fee for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on an annual basis of the average daily
net assets of the Class D shares for which the organizations are responsible,
and fees for providing other distribution assistance of up to 0.75% on an
annual basis of such average daily net assets. Such fees are paid monthly by
the Fund to the Distributor pursuant to the Plan. For the year ended
September 30, 1996, fees paid amounted to $9,110, or 1% per annum of the
average daily net assets of Class D shares.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions of Class D shares occurring within one year of purchase. For the
year ended September 30, 1996, such charges amounted to $2,658.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of fund shares, as well as
distribution and service fees pursuant to the Plan. For the year ended
September 30, 1996, Seligman Services, Inc. received commissions of $337 from
sales of shares of the Fund. Seligman Services, Inc. also received
distribution and service fees of $3,735, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost $43,462 for shareholder account services.
Certain officers and trustees of the Fund are officers or directors of
the Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data
Corp.
Fees of $8,000 were incurred by the Fund for the legal services of
Sullivan & Cromwell, a member of which firm is a trustee of the Fund.
The Fund has a compensation arrangement under which trustees who receive
fees may elect to defer receiving such fees. Interest is accrued on the
deferred balances. The annual cost of such fees and interest is included in
trustees' fees and expenses, and the accumulated balance thereof at September
30, 1996, of $43,340 is included in other liabilities. Deferred fees and
related accrued interest are not deductible for federal income tax purposes
until such amounts are paid.
11
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from each class' beginning net asset value
to the ending net asset value so that they can understand what effect the
individual items have on their investment, assuming it was held throughout
the period. Generally, the per share amounts are derived by converting the
actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per share amounts using average shares
outstanding.
The total return based on net asset value measures each class'
performance assuming investors purchased Fund shares at net asset value as of
the beginning of the period, reinvested dividends and capital gains paid at
net asset value, and then sold their shares at the net asset value per share
on the last day of the period. The total return computations do not reflect
any sales charges investors may incur in purchasing or selling shares of the
Fund. The total return for the period of less than one year is not annualized.
<TABLE>
<CAPTION>
Class A Class D
-------------------------------------------- --------------------------
Year Ended
Year Ended September 30, September 30, 2/1/94*
-------------------------------------------- --------------- to
1996 1995 1994 1993 1992 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of period .................... $7.79 $7.55 $8.61 $8.02 $7.74 $7.78 $7.54 $8.37
----- ----- ----- ----- ----- ----- ----- -----
Net investment income**......... .38 .38 .39 .42 .46 .32 .31 .22
Net realized and unrealized
investment gain (loss)........ .12 .37 (.80) .71 .30 .12 .37 (.83)
----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease) from
investment operations ........ .50 .75 (.41) 1.13 .76 .44 .68 (.61)
Dividends paid or declared...... (.38) (.38) (.39) (.42) (.46) (.32) (.31) (.22)
Distributions from
net gain realized ............ (.09) (.13) (.26) (.12) (.02) (.09) (.13) --
----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in
net asset value............... .03 .24 (1.06) .59 .28 .03 .24 (.83)
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period $7.82 $7.79 $7.55 $8.61 $8.02 $7.81 $7.78 $7.54
----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN BASED ON
NET ASSET VALUE: 6.57% 10.55% (5.00)% 14.71% 10.04% 5.76% 9.53% (7.50)%
RATIOS/SUPPLEMENTAL
DATA:**
Expenses to average net assets 1.11% 1.21% 1.16% 1.19% 1.01% 1.88% 2.23% 2.00%+
Net investment income to
average net assets........... 4.82% 5.05% 4.91% 5.14% 5.79% 4.05% 4.10% 4.20%+
Portfolio turnover............. 4.56% 11.78% 7.71% 40.74% 32.87% 4.56% 11.78% 7.71%++
Net assets, end of period
(000s omitted) .............. $31,139 $33,251 $34,943 $41,296 $39,431 $876 $426 $43
<FN>
- -----------------
* Commencement of offering of Class D shares.
** Had the Manager, at its discretion, not waived a portion of its fees for the fiscal year ended 9/30/92, the net investment
income per share would have been $.45. The ratios of expenses to average net assets and of net investment income to
average net assets for the same period would have been 1.16% and 5.64%, respectively.
+ Annualized.
++ For the year ended September 30, 1994.
</FN>
</TABLE>
See notes to financial statements.
12
<PAGE>
============================================================================
REPORT OF INDEPENDENT AUDITORS
- ----------------------------------------------------------------------------
The Trustees and Shareholders,
Seligman Pennsylvania Municipal Fund:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Seligman Pennsylvania Municipal
Fund (formerly Seligman Pennsylvania Tax-Exempt Fund) as of September 30,
1996, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 1996 by correspondence with the Fund's
custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman
Pennsylvania Municipal Fund as of September 30, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for
the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
October 30, 1996
13
<PAGE>
=============================================================================
PROXY RESULTS
- -----------------------------------------------------------------------------
Seligman Pennsylvania Municipal Fund Shareholders voted on the following
proposals at the Special Meeting of Shareholders held on September 30, 1996, in
New York, NY. Each Trustee was elected, and all other proposals were approved.
The description of each proposal and number of shares voted are as follows:
ELECTION OF TRUSTEES:
For Withheld
--------- --------
Fred E. Brown 2,473,847 39,658
John R. Galvin 2,473,847 39,658
Alice S. Ilchman 2,473,847 39,658
Frank A. McPherson 2,474,770 38,735
John E. Merow 2,474,291 39,214
Betsy S. Michel 2,474,291 39,214
William C. Morris 2,474,770 38,735
James C. Pitney 2,473,847 39,658
James Q. Riordan 2,473,847 39,658
Ronald T. Schroeder 2,474,770 38,735
Robert L. Shafer 2,474,770 38,735
James N. Whitson 2,474,770 38,735
Brian T. Zino 2,474,770 38,735
RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS:
For Against Abstain Non-Vote
--------- ------- ------- --------
2,435,487 1,719 76,299 n/a
APPROVAL TO PERMIT ANY PORTION OF INVESTMENTS IN SECURITIES SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX:
For Against Abstain Non-Vote
--------- ------- ------- --------
1,968,738 286,693 136,707 121,367
14
<PAGE>
============================================================================
TRUSTEES
- ----------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
John R. Galvin 2
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, USLIFE Corporation
Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Chairman, The Rockefeller Foundation
Frank A. McPherson 2
Chairman and CEO, Kerr-McGee Corporation
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
John E. Merow
Partner, Sullivan & Cromwell, Law Firm
Director, Commonwealth Aluminum Corporation
Betsy S. Michel 2
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
Director, Public Service Enterprise Group
James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Ronald T. Schroeder 1
Managing Director,
J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3
Director or Trustee,
Various Organizations
James N. Whitson 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, Red Man Pipe and Supply Company
Brian T. Zino 1
President
Managing Director,
J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
- ---------------
Member:
1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
- ---------------------------------------------------------------------------
EXECUTIVE OFFICERS
William C. Morris
Chairman
Brian T. Zino
President
Thomas G. Moles
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- ---------------------------------------------------------------------------
Manager
J. & W. Seligman & Co.
Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder
Services
(800) 622-4597 24-Hour Automated
Telephone Access
Service
15
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Beneficial Interest
of Seligman Pennsylvania Municipal Fund, which contains information about the
sales charges, management fee, and other costs. Please read the prospectus
carefully before investing or sending money.
TEDPA2 9/96
