- -------------------------------------------------------------------------------
SELIGMAN
SELIGMAN
PENNSYLVANIA
MUNICIPAL
FUND
- -------------------------------------------------------------------------------
Providing Income Free From
Regular Income Tax
SEPTEMBER 30, 1997 * ANNUAL REPORT
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[GRAPHIC OMITTED]
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 9/97
<PAGE>
To the Shareholders
Seligman Pennsylvania Municipal Fund posted strong results in its fiscal year
ended September 30, 1997. Based on the net asset value of Class A shares, the
Fund posted a 7.89% total return on a pre-tax basis for the year. This is
equivalent to a taxable total return of 11.18%, assuming all dividends paid are
adjusted for the maximum federal income tax rate of 39.6%. The steady growth of
the economy, combined with benign levels of inflation, reduced yields in the
municipal bond market beginning in May. Bond prices rose, improving your Fund's
total return as the Fund continued to provide monthly income free from regular
income tax. Additional information on the Fund's investment results begins on
page 4.
Long-term municipal bond yields fluctuated within a narrow range during the
Fund's first quarter and into the early part of 1997. By March, yields began to
rise in response to reports of strong economic growth and in anticipation of a
Federal Reserve Board interest rate increase. After raising the federal funds
rate to 5.50% from 5.25% on March 25, the Fed left rates unchanged. As economic
growth continued without prompting a noticeable increase in inflation, the
municipal bond market rallied from May to July, and then traded within a narrow
range from August to September.
The yield on the Bond Buyer 20-Bond General Obligation Index, a benchmark for
the municipal market, ended the Fund's fiscal year at 5.36% on September 30,
1997, significantly lower than its 12-month high of 5.88% on April 10, and only
slightly higher than the July 31 low of 5.23%. The yield for the Bond Buyer
20-Bond General Obligation Index stood at 5.76% on September 30, 1996.
While economic indicators have been mixed recently, the overall tone of the
environment is good. Unemployment levels have remained historically low,
consumer and producer prices have been fairly stable, consumer spending has been
increasing at a reasonable rate, and orders for durable goods -- goods that have
a life span of three or more years -- have been rising. This economic expansion
has improved the financial well-being of municipalities and increased investor
confidence in the municipal bond market.
The next few months could be more challenging, given the recent volatility in
the global equity markets and the business slowdown in Southeast Asia. Never
theless, US economic reports remain positive overall. There are still a few
areas where potential inflationary problems persist, particularly in the labor
market. A significant increase in labor costs could prompt the Fed to become
more restrictive and move interest rates up another notch, though this is a
fading risk given recent international events. Nonetheless, the future prospects
of both the municipal bond market and your Fund remain positive. Supply and
demand levels in the municipal market should remain favorable regardless of the
short-term impact of any Fed move.
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.
A discussion with your Portfolio Manager, the performance overview, portfolio
holdings, and financial statements follow this letter.
By order of the Trustees,
/S/ William C. Morris
Chairman
/S/ Brian T. Zino
President
October 31, 1997
1
<PAGE>
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Interview With Your Portfolio Manager, Thomas G. Moles
Q. What economic factors affected Seligman Pennsylvania Municipal Fund in the
last 12 months?
A. A healthy economy and a stable rate of inflation would seem the best of all
possible worlds. However, for much of the past year, the fixed-income
markets were most heavily influenced by economic growth and whether or not
inflation was an important risk factor. The longer the economic expansion
endured, the more anxious some market participants became that rising
inflation was just around the corner. The strong employment picture was of
particular concern. While low unemployment resulted in scattered labor
shortages, it did not translate into meaningfully higher wages. To date,
wage pressures continue to be restrained, mainly due to productivity
improvements and global competition. The market's reluctance to accept the
premise that economic vigor and low inflation are not mutually exclusive
has prevented long-term interest rates from falling to levels that would
better reflect this remarkable economic environment.
Q. What market factors affected Seligman Pennsylvania Municipal Fund in the
last 12 months?
A. Seligman Pennsylvania Municipal Fund ended its 12th year on a positive note.
During the past 12 months, long-term municipal yields, as measured by the
Bond Buyer 20-Bond General Obligation Index, fluctuated within a narrow
trading range. At September 30, 1997, yields were almost a half-point lower
than at the beginning of the Fund's fiscal year. The declining interest rate
environment led to rising prices for the majority of the Fund's holdings and
favorable performance results.
Investor demand for municipal securities generally kept pace with supply,
contributing to the relative stability of the municipal bond market. While
new issue volume has increased modestly over the
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A TEAM APPROACH
Seligman Pennsylvania Municipal Fund is managed by the Seligman Municipals Team,
headed by Thomas G. Moles. Mr. Moles is assisted in the management of the Fund
by a group of seasoned professionals who are responsible for research and
trading consistent with the Fund's investment objective.
YOUR PORTFOLIO MANAGER
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 that 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 $1.8 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.
Seligman Municipals Team: (from left) Audrey Kuchtyak, Theresa Barion,
Debra McGuinness, (seated) Eileen Comerford, Thomas G. Moles
(Portfolio Manager)
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2
<PAGE>
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Interview With Your Portfolio Manager, Thomas G. Moles
past several years, it has had a negligible impact on the total
outstanding supply of municipal bonds due to a record number of bond
calls and redemptions.
Additionally, the extraordinary economic expansion, now in its seventh
year, continued to im prove credit trends for the nation's states, cities,
and municipalities. Year-to-date, credit rating upgrades significantly
outnumbered rating downgrades. Within the Fund, the overall credit quality
of the portfolio improved as several of our holdings received upgraded
ratings.
Q. What was your investment strategy?
A. Consistent with our positive long-term interest rate outlook, new purchases
were concentrated in longer maturity bonds. Generally, for a parallel
decline in yields, long-term bonds appreciate more in price than
shorter-term bonds. Long-term bonds also offer significantly higher yields
than shorter-term bonds, allowing us to improve the Fund's yield. Further,
given the market's short-term volatility, we sought to lessen the impact of
temporary interest rate increases on the Fund's net asset value without
sacrificing future upside potential. To do so, we elected to purchase mostly
current coupon bonds (bonds with coupon rates at or near current market
rates). Current coupon bonds are intrinsically less sensitive to changes in
interest rates than lower coupon bonds of the same maturity.
As the Fund matures, older, callable portfolio holdings are approaching
their optional call dates, resulting in increased reinvestment risk.
(Callable bonds are bonds that are redeemable on specified dates and at
specified prices -- prior to maturity -- at the option of the issuer.) In
general, an open-end fund's income distributions will, over time, move
toward current market levels as a result of portfolio activity, shareholder
transactions, and bond calls and redemptions. In the past year, we focused
on improving the Fund's call protection by selling shorter-call bonds and
replacing them with longer-call bonds, while attempting to minimize the
impact on income distributions.
Q. What is the outlook?
A. While fixed-income market participants remain cautious, economic
fundamentals point to a continuation of steady, moderate growth with low
inflation. We, therefore, remain optimistic regarding the long-term
prospects of the Fund. Stable long-term interest rates, improving credit
trends, and attractive real rates of return bode well for the performance of
the municipal bond market going forward. We believe municipal bond funds
will continue to play an important role in helping investors meet their
investment goals. At Seligman, we have a straightforward approach to
managing your municipal bond fund. We invest for the long term, building a
diversified portfolio of quality bonds, and always work to provide our
shareholders with competitive investment returns.
3
<PAGE>
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Performance Overview and Portfolio Summary
This chart compares a $10,000 hypothetical investment made in Seligman
Pennsylvania Municipal Fund Class A shares with and without the initial 4.75%
maximum sales charge, for the 10-year period ended September 30, 1997, 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 on page 5. 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 on page 5 also includes relevant portfolio
characteristics.
SELIGMAN PENNSYLVANIA MUNICIPAL FUND
SELIGMAN PENNSYLVANIA MUNICIPAL FUND CLASS A
<TABLE>
<CAPTION>
VALUE Without
Sales Sales
DATE Charge Charge Lehman Index
--------- ------ ------- ------------
<S> <C> <C> <C> <C>
30-Sep-87 $9,521 $10,000 10,000
31-Dec-87 10,148 10,658 10,447
31-Mar-88 10,494 11,021 10,806
30-Jun-88 10,771 11,313 11,015
30-Sep-88 11,064 11,620 11,297
31-Dec-88 11,406 11,979 11,506
31-Mar-89 11,484 12,061 11,582
30-Jun-89 12,152 12,763 12,268
30-Sep-89 12,118 12,727 12,276
31-Dec-89 12,574 13,206 12,747
31-Mar-90 12,535 13,166 12,805
30-Jun-90 12,813 13,457 13,104
30-Sep-90 12,619 13,253 13,112
31-Dec-90 13,245 13,912 13,677
31-Mar-91 13,447 14,123 13,987
30-Jun-91 13,766 14,458 14,285
30-Sep-91 14,309 15,029 14,840
31-Dec-91 14,741 15,482 15,339
31-Mar-92 14,788 15,531 15,385
30-Jun-92 15,369 16,142 15,969
30-Sep-92 15,746 16,538 16,393
31-Dec-92 16,115 16,926 16,691
31-Mar-93 16,731 17,573 17,310
30-Jun-93 17,361 18,235 17,876
30-Sep-93 18,062 18,970 18,480
31-Dec-93 18,195 19,111 18,739
31-Mar-94 17,031 17,888 17,710
30-Jun-94 17,121 17,983 17,907
30-Sep-94 17,158 18,021 18,029
31-Dec-94 16,917 17,768 17,769
31-Mar-95 18,201 19,117 19,025
30-Jun-95 18,594 19,530 19,484
30-Sep-95 18,969 19,923 20,045
31-Dec-95 19,965 20,969 20,871
31-Mar-96 19,519 20,501 20,618
30-Jun-96 19,637 20,625 20,777
30-Sep-96 20,216 21,232 21,255
31-Dec-96 20,651 21,689 21,797
31-Mar-97 20,488 21,518 21,747
30-Jun-97 21,190 22,255 22,497
30-Sep-97 21,811 22,908 23,177
</TABLE>
The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on differences in sales charges and
fees paid by shareholders.
Performance data quoted represent changes in prices and assume that all dis
tri bu tions within the period are invested in ad di tion al shares. 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. Past
per for mance is not indicative of future in vest ment results.
4
<PAGE>
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Performance Overview and Portfolio Summary
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
For Periods Ended September 30, 1997
<TABLE>
<CAPTION>
AVERAGE ANNUAL
--------------------------------------------
CLASS D
SINCE
ONE FIVE 10 INCEPTION
SIX MONTHS YEAR YEARS YEARS 2/1/94
-------------- ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C>
CLASS A*
With Sales Charge 1.42% 2.77% 5.70% 8.11% n/a
Without Sales Charge 6.46 7.89 6.73 8.64 n/a
CLASS D*
With 1% CDSL 4.92 6.07 n/a n/a n/a
Without CDSL 5.92 7.07 n/a n/a 3.82%
LEHMAN INDEX** 6.57 9.03 7.17 8.77 5.64+
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended September 30, 1997
9/30/97 3/31/97 9/30/96 DIVIDENDS 0 CAPITAL GAIN 0 SEC YIELD 00
-------- -------- -------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $7.96 $7.65 $7.82 CLASS A $0.364 $0.096 3.86%
CLASS D 7.95 7.65 7.81 CLASS D 0.299 0.096 3.31
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR++ MOODY'S/S&P RATINGS++
<S> <C> <C> <C>
Revenue Bonds 90% Aaa/AAA 86%
General Obligation Bonds 10 Aa/AA 12
A/A --
Baa/BBB 2
</TABLE>
WEIGHTED AVERAGE MATURITY 23.3 years
- ------------------
* Return figures reflect any change in price and assume all distributions
within the period are invested in additional shares. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class D shares are calculated with and
without the effect of the 1% contingent deferred sales load ("CDSL"),
charged only on redemptions made within one year of the date of
purchase.
A portion of the Fund's income may be subject to applicable state and local
taxes, and any amount may be subject to the federal alternative minimum tax.
** The Lehman Index is an unmanaged index that does not include any fees or
sales charges and does not reflect state-specific bond market performance.
Investors cannot invest directly in an index.
+ From 1/31/94.
0 Represents per share amount paid or declared for the year ended September
30, 1997.
00 Current yield, representing the annualized yield for the 30-day period ended
September 30, 1997, has been computed in accordance with SEC regulations and
will vary.
++ Percentages based on market values of long-term holdings at September 30,
1997.
5
<PAGE>
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Portfolio of Investments
September 30, 1997
<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 $ 1,065,320
1,000,000 Berks County Municipal Authority, PA Hospital Rev. (The Reading
Hospital & Medical Center Project), 6.10% due 10/1/2023.............. Aaa/AAA 1,050,120
1,000,000 Delaware County Authority, PA (Haverford College Rev.),
5-1/2% due 11/15/2023 ................................................. Aaa/AAA 1,001,880
1,000,000 Delaware County Industrial Development Authority, PA (Philadelphia
Suburban Water Company), 6.35% due 8/15/2025*......................... Aaa/AAA 1,069,530
1,000,000 Delaware Valley, PA Regional Finance Authority Local Government Rev.,
7-3/4% due 7/1/2027.................................................... Aaa/AAA 1,364,460
1,000,000 Franklin County, PA Industrial Development Authority Hospital Rev.
(The Chambersburg Hospital Project), 6-1/4% due 7/1/2022............... Aaa/AAA 1,060,590
1,500,000 Lehigh County, PA Industrial Development Authority Pollution Control Rev.
(Pennsylvania Power & Light Company Project), 6.15% due 8/1/2029...... Aaa/AAA 1,596,630
1,500,000 Montgomery County, PA GOs, 5.45% due 9/15/2022 .......................... Aaa/NR 1,510,980
500,000 Montgomery County, PA Industrial Development Authority Pollution
Control Rev. (Philadelphia Electric Co.), 7.60% due 4/1/2021*......... Baa2/BBB+ 544,315
2,000,000 Pennsylvania Higher Education Assistance Agency Student Loan Rev.,
6.40% due 3/1/2022*................................................... Aaa/AAA 2,067,480
1,500,000 Pennsylvania Higher Educational Facilities Authority College & University
Rev. (University of Pennsylvania), 5.90% due 9/1/2014 ................ Aa2/AA 1,552,620
2,000,000 Pennsylvania Higher Educational Facilities Authority Rev. (Temple
University), 6-1/2% due 4/1/2021....................................... Aaa/AAA 2,165,240
1,500,000 Pennsylvania Higher Educational Facilities Authority Rev. (Drexel
University), 5-3/4% due 5/1/2022....................................... Aaa/AAA 1,546,005
1,500,000 Pennsylvania Housing Finance Agency (Single Family Mortgage Rev.),
5.85% due 4/1/2017*................................................... Aa2/AA+ 1,525,125
1,500,000 Pennsylvania Housing Finance Agency (Rental Housing Rev.),
6-1/2% due 7/1/2023.................................................... Aaa/AAA 1,570,590
1,500,000 Pennsylvania Intergovernmental Co-Op Authority Special Tax Rev.
(Philadelphia Funding Program), 5-1/2% due 6/15/2016................... Aaa/AAA 1,517,445
1,000,000 Pennsylvania State GOs, 6-1/2% due 11/15/2011............................. A1/AAA 1,098,060
1,500,000 Pennsylvania State Turnpike Commission Rev., 6% due 12/1/2017............ Aaa/AAA 1,576,425
</TABLE>
- ------------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
See Notes to Financial Statements.
6
<PAGE>
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Portfolio of Investments
September 30, 1997
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- ------------------- -------------- -----------
<S> <C> <C> <C>
$1,500,000 Philadelphia, PA Airport Rev., 6.10% due 6/15/2025*...................... Aaa/AAA $ 1,566,855
1,000,000 Philadelphia, PA Parking Authority Airport Parking Rev., 5-1/2% due 9/1/2018 Aaa/AAA 1,010,410
450,000 Philadelphia Redevelopment Authority, PA (Home Mortgage Rev.),
9% due 6/1/2017....................................................... NR/AA 479,740
1,500,000 Pittsburgh, PA Water & Sewer Authority Rev., 5.65% due 9/1/2025.......... Aaa/AAA 1,520,940
-----------
TOTAL MUNICIPAL BONDS (Cost $27,935,699)-- 95.3%....................................................... 29,460,760
VARIABLE RATE DEMAND NOTES (Cost $1,200,000)-- 3.9%.................................................... 1,200,000
OTHER ASSETS LESS LIABILITIES-- 0.8%................................................................... 247,419
-----------
NET ASSETS-- 100.0%.................................................................................... $30,908,179
===========
</TABLE>
- ------------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
See Notes to Financial Statements.
7
<PAGE>
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Statement of Assets and Liabilities
September 30, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value:
Long-term holdings (Cost $27,935,699)............................... $29,460,760
Short-term holdings (Cost $1,200,000)............................... 1,200,000 $30,660,760
----------
Cash................................................................................. 67,118
Interest receivable 495,381
Receivable for Shares of Beneficial Interest sold.................................... 5,960
Expenses prepaid to shareholder service agent........................................ 4,598
Other................................................................................ 6,659
-----------
Total Assets......................................................................... 31,240,476
-----------
LIABILITIES:
Payable for Shares of Beneficial Interest repurchased................................ 177,344
Dividends payable.................................................................... 47,575
Accrued expenses, taxes, and other................................................... 107,378
-----------
Total Liabilities.................................................................... 332,297
-----------
Net Assets........................................................................... $30,908,179
===========
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par ($.001 par value; unlimited shares
authorized; 3,884,175 shares outstanding):
Class A........................................................................... $ 3,781
Class D........................................................................... 103
Additional paid-in capital........................................................... 29,071,413
Undistributed net realized gain...................................................... 307,821
Net unrealized appreciation of investments........................................... 1,525,061
-----------
Net Assets........................................................................... $30,908,179
===========
NET ASSET VALUE PER SHARE:
Class A ($30,092,044 / 3,781,533 shares)............................................. $7.96
=====
Class D ($816,135 / 102,642 shares).................................................. $7.95
=====
</TABLE>
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See Notes to Financial Statements.
8
<PAGE>
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Statement of Operations
For the Year Ended September 30, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................................................................ $1,809,617
EXPENSES:
Management fee.................................................................. $156,173
Distribution and service fees................................................... 78,441
Shareholder account services.................................................... 48,962
Auditing and legal fees......................................................... 33,393
Trustees' fees and expenses..................................................... 17,612
Shareholder reports and communications.......................................... 15,659
Registration.................................................................... 8,834
Custody and related services.................................................... 8,799
Shareholders' meeting........................................................... 7,250
Miscellaneous................................................................... 3,654
--------
Total Expenses.................................................................................. 378,777
----------
Net Investment Income........................................................................... 1,430,840
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments................................................ 311,880
Net change in unrealized appreciation of investments............................ 619,185
--------
Net Gain on Investments......................................................................... 931,065
----------
Increase in Net Assets from Operations.......................................................... $2,361,905
==========
</TABLE>
- ------------------
See Notes to Financial Statements.
9
<PAGE>
- -------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------
1997 1996
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................... $ 1,430,840 $ 1,600,992
Net realized gain on investments................................................ 311,880 387,910
Net change in unrealized appreciation of investments............................ 619,185 106,524
----------- ----------
Increase in Net Assets from Operations.......................................... 2,361,905 2,095,426
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A...................................................................... (1,399,949) (1,564,162)
Class D...................................................................... (30,891) (36,830)
Net realized gain on investments:
Class A...................................................................... (378,660) (395,780)
Class D...................................................................... (10,749) (5,886)
----------- -----------
Decrease in Net Assets from Distributions....................................... (1,820,249) (2,002,658)
----------- -----------
</TABLE>
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
<TABLE>
<CAPTION>
SHARES
---------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------
1997 1996
-------- --------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A............................................ 144,416 88,034 1,125,297 689,856
Class D............................................ 9,028 98,385 70,043 773,322
Shares issued in payment of dividends:
Class A............................................ 91,536 104,328 715,104 814,679
Class D............................................ 2,977 2,293 23,276 17,887
Exchanged from associated Funds:
Class A............................................ 54,868 50,822 427,336 400,478
Class D............................................ 3,180 12,819 24,302 102,336
Shares issued in payment of gain distributions:
Class A............................................ 33,111 33,940 258,269 266,766
Class D............................................ 698 644 5,445 5,117
-------- -------- ----------- -----------
Total 339,814 391,265 2,649,072 3,070,441
-------- -------- ----------- -----------
Cost of shares repurchased:
Class A............................................ (502,058) (476,571) (3,917,233) (3,712,004)
Class D............................................ (25,434) (40,966) (197,052) (318,471)
Exchanged into associated Funds:
Class A............................................ (23,491) (86,031) (183,635) (668,822)
Class D............................................ -- (15,725) -- (125,209)
-------- -------- ----------- -----------
Total (550,983) (619,293) (4,297,920) (4,824,506)
-------- -------- ----------- -----------
Decrease in Net Assets from Transactions
in Shares of Beneficial Interest...................... (211,169) (228,028) (1,648,848) (1,754,065)
-------- -------- ----------- -----------
-------- --------
Decrease in Net Assets................................................................ (1,107,192) (1,661,297)
NET ASSETS:
Beginning of year..................................................................... 32,015,371 33,676,668
----------- -----------
End of Year........................................................................... $30,908,179 $32,015,371
=========== ===========
</TABLE>
- ------------------
See Notes to Financial Statements.
10
<PAGE>
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Notes to Financial Statements
1. Multiple Classes of Shares -- Seligman Pennsylvania Municipal Fund (the
"Fund") offers two classes of shares. All shares existing prior to February 1,
1994, the commencement date of Class D shares, 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
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 on which a separate vote of any class is
required.
2. Significant Accounting Policies -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. Security Valuation -- All municipal securities and other short-term holding
s 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. Federal Taxes -- There is no provision for federal income 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.
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 Fund amortizes
original issue discounts and premiums paid on purchases of portfolio
securities. Discounts other than original issue discounts are not amortized.
d. Multiple Class Allocations -- All income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses are
allocated daily to each class of shares based upon the relative value of the
shares of each class. Class-specific expenses, which include distribution
and service fees and any other items that are specifically attributable to a
particular class, are charged directly to such class. For the year ended
September 30, 1997, 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 Fund 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 recog nition of certain components of
income, expense, or realized capital gain for federal income tax purposes.
Where such differ ences 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.
11
<PAGE>
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Notes to Financial Statements
3. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding short-term investments, for the year ended September 30,
1997, amounted to $10,025,453 and $12,156,751, respectively.
At September 30, 1997, 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 of investments
amounted to $1,525,061.
4. Management Fee, Administrative Services, and Other Transactions -- 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 affiliate of the Manager, received
concessions of $3,421 from the sale of Class A shares, after commissions of
$25,503 paid to dealers.
The Fund 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 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,
1997, fees paid aggregated $70,383, or 0.23% per annum of the average daily net
assets of Class A shares.
Under the Plan, with respect to Class D shares, 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, 1997, fees paid amounted to
$8,058, or 1% per annum of the average daily net assets of Class D shares.
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the year ended
September 30, 1997, such charges amounted to $32.
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, 1997,
Seligman Services, Inc. received commissions of $752 from the sale of shares of
the Fund. Seligman Services, Inc. also received distribution and service fees of
$3,276, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost $48,351 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.
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 cost of such fees and interest is included in trustees' fees and
expenses, and the accumulated balance thereof at September 30, 1997, of $47,740
is included in other liabilities. Deferred fees and related accrued interest are
not deductible for federal income tax purposes until such amounts are paid.
12
<PAGE>
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Financial Highlights
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of each Class, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, 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, based on average shares
outstanding.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value 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. Total returns for periods
of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year...................... $7.82 $7.79 $7.55 $8.61 $8.02
----- ----- ----- ----- -----
Net investment income................................... .36 .38 .38 .39 .42
Net realized and unrealized investment gain (loss)...... .24 .12 .37 (.80) .71
----- ----- ----- ----- -----
Increase (Decrease) from Investment Operations.......... .60 .50 .75 (.41) 1.13
Dividends paid or declared.............................. (.36) (.38) (.38) (.39) (.42)
Distributions from net gain realized.................... (.10) (.09) (.13) (.26) (.12)
----- ----- ----- ----- -----
Net Increase (Decrease) in Net Asset Value.............. .14 .03 .24 (1.06) .59
----- ----- ----- ----- -----
Net Asset Value, End of Year............................ $7.96 $7.82 $7.79 $7.55 $8.61
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: 7.89% 6.57% 10.55% (5.00)% 14.71%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets.......................... 1.19% 1.11% 1.21% 1.16% 1.19%
Net investment income to average net assets............. 4.60% 4.82% 5.05% 4.91% 5.14%
Portfolio turnover...................................... 32.99% 4.56% 11.78% 7.71% 40.74%
Net Assets, End of Year
(000s omitted).......................................... $30,092 $31,139 $33,251 $34,943 $41,296
</TABLE>
- ------------------
See footnotes on page 14.
13
<PAGE>
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Financial Highlights
<TABLE>
<CAPTION>
CLASS D
--------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94*
------------------------------- TO
1997 1996 1995 9/30/94
----- ----- ----- -------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Period.................... $7.81 $7.78 $7.54 $8.37
----- ----- ----- -----
Net investment income................................... .30 .32 .31 .22
Net realized and unrealized investment gain (loss)...... .24 .12 .37 (.83)
----- ----- ----- -----
Increase (Decrease) from Investment Operations.......... .54 .44 .68 (.61)
Dividends paid or declared.............................. (.30) (.32) (.31) (.22)
Distributions from net gain realized.................... (.10) (.09) (.13) --
----- ----- ----- -----
Net Increase (Decrease) in Net Asset Value.............. .14 .03 .24 (.83)
----- ----- ----- -----
Net Asset Value, End of Period.......................... $7.95 $7.81 $7.78 $7.54
===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: 7.07% 5.76% 9.53% (7.50)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets.......................... 1.96% 1.88% 2.23% 2.00%+
Net investment income to average net assets............. 3.83% 4.05% 4.10% 4.20%+
Portfolio turnover...................................... 32.99% 4.56% 11.78% 7.71%++
Net Assets, End of Period
(000s omitted).......................................... $816 $876 $426 $43
</TABLE>
- ------------------
* Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended September 30, 1994.
See Notes to Financial Statements.
14
<PAGE>
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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 as of
September 30, 1997, 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,
1997 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, 1997, 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.
/S/ DELOITTE & TOUCHE LLP
New York, New York
October 31, 1997
15
<PAGE>
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Trustees
Fred E. Brown
Trustee Emeritus
Director and Consultant, J. & W. Seligman & Co. Incorporated
John R. Galvin 2
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, Raytheon Company
Director, USLIFE Corporation
Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Chairman, The Rockefeller Foundation
Frank A. McPherson 2
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
John E. Merow
Retired Chairman and Senior Partner,
Sullivan & Cromwell, Law Firm
Director, Commonwealth Aluminum Corporation
Betsy S. Michel 2
Trustee, Geraldine R. Dodge Foundation
Chairman of the Board of Trustees, St. George's School
William C. Morris 1
Chairman
Chairman of the Board, J. & W. Seligman & Co.
Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3
Retired Partner, Pitney, Hardin, Kipp & Szuch,
Law Firm
James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Richard R. Schmaltz 1
Managing Director, J. & W. Seligman & Co.
Incorporated
Trustee Emeritus, Colby College
Robert L. Shafer 3
Retired Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, Red Man Pipe and Supply Company
Brian T. Zino 1
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
16
<PAGE>
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Executive Officers
William C. Morris
Chairman
Brian T. Zino
President
Thomas G. Moles
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
FOR MORE INFORMATION
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman 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
17
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Glossary of Financial Terms
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in the fund's portfolio. For tax purposes,
these profits may be considered short-, mid-, or long-term capital gains and may
be taxed at different rates.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will be based not on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES LOAD (CDSL) -- Depending on the class of shares owned,
a fee charged by a mutual fund when shares are sold back to the fund (the CDSL
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.
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 (OP) -- 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, officers and directors, how shares are bought and
redeemed, fund fees and other charges, and the fund's financial statements.
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 -- Document that contains updated or more
detailed information about a mutual fund and 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 1997 Mutual Fund Fact Book.
18
<PAGE>
