<PAGE>
SELIGMAN
--------------
Pennsylvania
Municipal Fund
Mid-Year Report
March 31, 1998
Providing Income
Free From Regular
Income Tax
<PAGE>
To the Shareholders
For the six months ended March 31, 1998, Seligman ia Municipal Fund posted a
4.30% total return based on the net asset value of Class A shares. Throughout
the period, the US economy's expansion continued unabated and inflation was
virtually nonexistent, supporting the lasting rally in the municipal bond
market. As a result, the Fund's investment results improved as the portfolio's
bond prices appreciated.
The municipal bond market has also benefited from favorable municipal tax
receipts and a reduced federal budget deficit. The Federal Reserve Board's
decision to maintain current short-term interest rate levels in the period also
helped maintain the optimism of municipal market participants. While greater
uncertainty regarding the sustainability of the rate of economic growth slightly
increased yields in the first calendar quarter of 1998, they remained in a
narrow range. Municipal bond issuers took advantage of the market environment
and issued a record number of bonds in the first three months of the year, which
historically is a slow period for new issuance. The yield on the Bond Buyer
20-Bond General Obligation Index, a benchmark for the municipal bond market,
stood at 5.20% on March 31, 1998, having declined from the 5.36% yield on
September 30, 1997.
Looking ahead, the ultimate effect of the Asian recession on the US economy
remains to be seen. Thus far, the primary effect has been a countering of US
inflationary pressures, with the reduced cost of imported goods offsetting the
increase in wages caused by the tight US labor market. However, we still
anticipate a net slowdown in the rate of economic expansion for the balance of
1998. Nonetheless, while the stock markets may become more volatile as corporate
earnings weaken, the outlook for the municipal bond market remains optimistic. A
continuation of the positive fundamentals, which characterized the municipal
market for the past six months, should support the municipal bond market for the
remainder of the year. Further, a decrease in US Treasury bond issuance will
likely benefit the municipal bond market, as a reduction in Treasury supply
would likely force Treasury yields lower relative to municipal yields.
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 and the Fund's portfolio of
investments and financial statements follow this letter. The Fund's investment
results appear on page 4.
By order of the Trustees,
/s/ William Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
May 1, 1998
1
<PAGE>
Interview With Your Portfolio Manager,
Thomas G. Moles
Q. What economic and market factors influenced Seligman Pennsylvania
Municipal Fund in the last six months?
A. Seligman Pennsylvania Municipal Fund ended the first six months of
fiscal-year 1998 on a positive note, as declining long-term municipal yields
boosted the Fund's net asset value. The rally in the municipal bond market
continued throughout the past six months and, by mid-January 1998, positive
fundamentals caused long-term municipal yields to fall to the lowest level
in 26 years. Soon after, though, the rally stalled due to signs of an
increase in the pace of economic growth. Yields rose modestly, but then
settled into a narrow trading range for the remainder of the first quarter
of 1998. At March 31, long-term municipal yields were a quarter point above
the January 1998 lows, but still remained at the lowest level in almost five
years.
Further, in a widely anticipated move, the Federal Reserve Board voted on
March 31 to leave the fed funds rate unchanged. Additionally, the minutes
of the Fed's February meeting, released on April 2, revealed that the Fed
elected to maintain a neutral policy directive, rather than to reinstate a
tightening bias. This suggests that the Fed was not overly concerned that
economic growth was in imminent danger of exceeding its non-inflationary
potential. The Fed's "wait-and-see" posture in the face of robust economic
growth suggests that the Fed believes that the impact of the Asian
financial crisis could be sufficient to slow the economy and preclude any
intervention. Further, while inflation remains
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.
Seligman Municipals Team: (from left) Audrey Kuchtyak, Theresa Barion, Debra
McGuinness, (seated) Eileen Comerford, Thomas G. Moles (Portfolio Manager)
2
<PAGE>
Interview With Your Portfolio Manager,
Thomas G. Moles
at such a favorable rate, the risk of waiting is likely
minimal.
Q. What was your investment strategy?
A. The positive interest rate environment prompted a sharp increase in
municipal bond issuance. For the first quarter of 1998, total volume rose
70% versus the same period last year. More specifically, municipal bonds
issued for refunding purposes surged a dramatic 136%. (Refunding bonds are
issued to retire outstanding, higher-coupon debt. Proceeds from the
refunding issue are deposited in an escrow account, generally comprised of
government obligations, which provides debt service on the refunded bonds.)
Seligman Pennsylvania Municipal Fund benefited from the supply situation
in two ways: First, municipal bond prices were temporarily depressed by
the heavy supply. This presented us with an opportunity to purchase bonds
at cheaper levels than would have existed during a period of light supply.
Second, as a direct result of the increase in refunding activity, the Fund's
portfolio had several bonds refunded. In general, when a municipal bond is
refunded, total return performance is improved, and the bond's rating is
often upgraded.
Finally, the current economic expansion, now in its eighth year, has
contributed to an improvement in the financial condition of the nation's
states, cities, and municipalities. Through in-depth credit analysis, we
are able to identify those credits most likely to be upgraded by one or
more of the nationally recognized rating agencies. We are, therefore, able
to purchase bonds prior to an upgrade when its yield reflects the lower
rating. Over the past six months, rating upgrades of portfolio holdings
significantly outnumbered rating downgrades.
Q. What is your outlook?
A. We anticipate a continuation of the positive fundamentals that have
characterized the municipal market over the past six months. Going
forward, stable long-term interest rates, improving credit trends, and
attractive real rates of return bode well for the performance of the
municipal bond market. Consequently, we remain optimistic regarding the
long-term prospects for Seligman Pennsylvania Municipal Fund.
3
<PAGE>
Performance Overview and Portfolio Summary
INVESTMENT RESULTS PER SHARE
<TABLE>
<CAPTION>
TOTAL RETURNS
For Periods Ended March 31, 1998
AVERAGE ANNUAL
-------------------------------------------------
CLASS D
SINCE
SIX ONE FIVE 10 INCEPTION
MONTHS* YEAR YEARS YEARS 2/1/94
---------- ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (0.69)% 5.78% 5.30% 7.52% n/a
Without Sales Charge 4.30 11.04 6.34 8.04 n/a
CLASS D**
With 1% CDSL 2.90 9.05 n/a n/a n/a
Without CDSL 3.90 10.05 n/a n/a 4.31%
LEHMAN BROTHERS MUNICIPAL BOND INDEX*** 3.89 10.72 6.83 8.34 5.91+
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended March 31, 1998
3/31/98 9/30/97 3/31/97 DIVIDENDS 0 CAPITAL GAIN 0 SEC YIELD 00
-------- -------- -------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A $8.04 $7.96 $7.65 CLASS A $0.177 $0.081 3.76%
CLASS D 8.03 7.95 7.65 CLASS D 0.146 0.081 3.13
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR++ MOODY'S/S&P RATINGS++
<S> <C> <C> <C>
Revenue Bonds 76% Aaa/AAA 78%
General Obligation Bonds 24 Aa/AA 20
A/A --
Baa/BBB 2
WEIGHTED AVERAGE MATURITY 21.3 years
<FN>
- ------------------
*Returns for periods of less than one year are not annualized.
**Return figures reflect any change in price and assume all distributions
within the period are invested in additional shares. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class D shares are calculated with and
without the effect of the 1% contingent deferred sales load ("CDSL"),
charged 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.
0Represents per share amount paid or declared for the six months ended March
31, 1998.
00Current yield, representing the annualized yield for the 30-day period ended
March 31, 1998, has been computed in accordance with SEC regulations and
will vary.
++Percentages based on market values of long-term holdings at March 31, 1998.
</FN>
</TABLE>
4
<PAGE>
Portfolio of Investments
March 31, 1998
<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 $ 1,088,630
1,000,000 Berks County Municipal Authority, PA Hospital Rev. (The Reading
Hospital & Medical Center Project), 6.10% due 10/1/2023.............. Aaa/AAA 1,093,190
1,000,000 Bucks County, PA GOs, 5% due 5/1/2017++.................................. Aa2/AA 984,250
1,000,000 Delaware County Authority, PA (Haverford College Rev.),
5 1/2% due 11/15/2023 ................................................ Aaa/AAA 1,023,670
1,000,000 Delaware County Industrial Development Authority, PA (Philadelphia
Suburban Water Company), 6.35% due 8/15/2025*......................... Aaa/AAA 1,096,220
1,000,000 Delaware Valley, PA Regional Finance Authority Local Government Rev.,
7 3/4% due 7/1/2027................................................... Aaa/AAA 1,406,660
1,000,000 Franklin County, PA Industrial Development Authority Hospital Rev.
(The Chambersburg Hospital Project), 6 1/4% due 7/1/2022.............. Aaa/AAA 1,096,540
1,300,000 Lehigh County, PA Industrial Development Authority Pollution Control Rev.
(Pennsylvania Power & Light Company Project), 6.15% due 8/1/2029...... Aaa/AAA 1,415,791
1,500,000 Montgomery County, PA GOs, 5.45% due 9/15/2022 .......................... Aaa/NR 1,528,680
500,000 Montgomery County, PA Industrial Development Authority Pollution
Control Rev. (Philadelphia Electric Co.), 7.60% due 4/1/2021*......... Baa2/BBB 543,770
2,000,000 Pennsylvania Higher Education Assistance Agency Student Loan Rev.,
6.40% due 3/1/2022*................................................... Aaa/AAA 2,076,420
1,350,000 Pennsylvania Higher Educational Facilities Authority College & University
Rev. (University of Pennsylvania), 5.90% due 9/1/2014 ................ Aa2/AA 1,438,398
2,000,000 Pennsylvania Higher Educational Facilities Authority Rev. (Temple University),
6 1/2% due 4/1/2021................................................... Aaa/AAA 2,151,940
1,350,000 Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University),
5 3/4% due 5/1/2022................................................... Aaa/AAA 1,427,044
1,500,000 Pennsylvania Housing Finance Agency (Single Family Mortgage Rev.),
5.85% due 4/1/2017*................................................... Aa2/AA+ 1,556,700
1,350,000 Pennsylvania Housing Finance Agency (Rental Housing Rev.),
6 1/2% due 7/1/2023................................................... Aaa/AAA 1,443,596
1,500,000 Pennsylvania Intergovernmental Co-Op Authority Special Tax Rev.
(Philadelphia Funding Program), 5 1/2% due 6/15/2016.................. Aaa/AAA 1,545,780
<FN>
- ------------------
+ Ratings have not been audited by Deloitte & Touche LLP.
++ When-issued security.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
5
<PAGE>
Portfolio of Investments
March 31, 1998
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
----------- ------------------- ------------- ------------
<S> <C> <C> <C>
$1,500,000 Pennsylvania State GOs, 5% due 3/1/2017.................................. Aa3/AA- $ 1,472,940
1,250,000 Pennsylvania State Turnpike Commission Rev., 6% due 12/1/2017............ Aaa/AAA 1,347,800
1,300,000 Philadelphia, PA Airport Rev., 6.10% due 6/15/2025*...................... Aaa/AAA 1,394,445
1,000,000 Philadelphia, PA Parking Authority Airport Parking Rev., 5 1/2% due 9/1/2018 Aaa/AAA 1,022,080
450,000 Philadelphia Redevelopment Authority, PA (Home Mortgage Rev.),
9% due 6/1/2017....................................................... NR/AA 484,857
1,500,000 Pittsburgh, PA Water & Sewer Authority Rev., 5.65% due 9/1/2025.......... Aaa/AAA 1,623,420
-----------
TOTAL MUNICIPAL BONDS (Cost $28,284,655)--99.2%....................................................... 30,262,821
VARIABLE RATE DEMAND NOTES (Cost $800,000)--2.6%...................................................... 800,000
OTHER ASSETS LESS LIABILITIES--(1.8)%................................................................. (569,771)
-----------
NET ASSETS--100.0%.................................................................................... $30,493,050
===========
<FN>
- ------------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal alternative minimum tax.
See Notes to Financial Statements.
</FN>
</TABLE>
6
<PAGE>
Statement of Assets and Liabilities
March 31, 1998
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments, at value:
Long-term holdings (Cost $28,284,655) ......................... $30,262,821
Short-term holdings (Cost $800,000) ........................... 800,000 $31,062,821
-----------
Cash ................................................................................ 98,065
Interest receivable ................................................................. 445,135
Expenses prepaid to shareholder service agent ....................................... 6,096
Other ............................................................................... 8,539
-----------
TOTAL ASSETS ........................................................................ 31,620,656
-----------
LIABILITIES:
Payable for securities purchased .................................................... 970,903
Dividends payable ................................................................... 52,017
Payable for Shares of Beneficial Interest repurchased ............................... 85
Accrued expenses, taxes, and other .................................................. 104,601
-----------
TOTAL LIABILITIES ................................................................... 1,127,606
-----------
NET ASSETS .......................................................................... $30,493,050
===========
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par ($.001 par value; unlimited shares
authorized; 3,792,568 shares outstanding):
Class A .......................................................................... $ 3,686
Class D .......................................................................... 107
Additional paid-in capital .......................................................... 28,335,062
Undistributed net realized gain ..................................................... 176,029
Net unrealized appreciation of investments .......................................... 1,978,166
-----------
NET ASSETS .......................................................................... $30,493,050
===========
NET ASSET VALUE PER SHARE:
CLASS A ($29,633,454 / 3,685,572 shares) ............................................ $8.04
=====
CLASS D ($859,596 / 106,996 shares) ................................................. $8.03
=====
</TABLE>
- ------------------
See Notes to Financial Statements.
7
<PAGE>
Statement of Operations
For the Six Months Ended March 31, 1998
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
INTEREST ..................................................................................... $ 859,898
EXPENSES:
Management fee ................................................................. $ 76,993
Distribution and service fees .................................................. 36,176
Shareholder account services ................................................... 27,701
Auditing and legal fees ........................................................ 17,471
Shareholder reports and communications ......................................... 7,352
Registration ................................................................... 5,088
Trustees' fees and expenses .................................................... 4,092
Custody and related services ................................................... 2,808
Miscellaneous .................................................................. 1,450
--------
TOTAL EXPENSES ............................................................................... 179,131
----------
NET INVESTMENT INCOME ........................................................................ 680,767
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments ............................................... 181,771
Net change in unrealized appreciation of investments ........................... 453,105
--------
NET GAIN ON INVESTMENTS ...................................................................... 634,876
---------
INCREASE IN NET ASSETS FROM OPERATIONS ....................................................... $1,315,643
==========
</TABLE>
- ------------------
See Notes to Financial Statements.
8
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
3/31/98 9/30/97
OPERATIONS: ------------- -----------
<S> <C> <C>
NET INVESTMENT INCOME ................................................... $ 680,767 $1,430,840
Net realized gain on investments ........................................ 181,771 311,880
Net change in unrealized appreciation of investments .................... 453,105 619,185
---------- ----------
INCREASE IN NET ASSETS FROM OPERATIONS .................................. 1,315,643 2,361,905
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A .............................................................. (665,574) (1,399,949)
Class D .............................................................. (15,193) (30,891)
Net realized gain on investments:
Class A .............................................................. (305,259) (378,660)
Class D .............................................................. (8,304) (10,749)
---------- ----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS ............................... (994,330) (1,820,249)
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------
SIX MONTHS YEAR
TRANSACTIONS IN SHARES OF ENDED ENDED
BENEFICIAL INTEREST: 3/31/98 9/30/97
--------- --------------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A ................................. 42,116 144,416 336,389 1,125,297
Class D ................................. 4,230 9,028 34,086 70,043
Shares issued in payment of dividends:
Class A ................................. 42,740 91,536 342,170 715,104
Class D ................................. 1,454 2,977 11,632 23,276
Exchanged from associated Funds:
Class A ................................. 9,996 54,868 80,643 427,336
Class D ................................. -- 3,180 -- 24,302
Shares issued in payment of gain distributions:
Class A ................................. 26,265 33,111 207,232 258,269
Class D ................................. 1,015 698 8,002 5,445
------- ------- ----------- -----------
Total ...................................... 127,816 339,814 1,020,154 2,649,072
------- ------- ----------- -----------
Cost of shares repurchased:
Class A ................................. (162,478) (502,058) (1,304,004) (3,917,233)
Class D ................................. (2,345) (25,434) (18,761) (197,052)
Exchanged into associated Funds:
Class A ................................. (54,600) (23,491) (433,831) (183,635)
Class D ................................. -- -- -- --
------- ------- ----------- -----------
Total ...................................... (219,423) (550,983) (1,756,596) (4,297,920)
------- ------- ----------- -----------
DECREASE IN NET ASSETS FROM TRANSACTIONS
IN SHARES OF BENEFICIAL INTEREST ........... (91,607) (211,169) (736,442) (1,648,848)
======= ======= ----------- -----------
DECREASE IN NET ASSETS (415,129) (1,107,192)
NET ASSETS:
Beginning of period ............................................................. 30,908,179 32,015,371
----------- -----------
END OF PERIOD ................................................................... $30,493,050 $30,908,179
=========== ===========
</TABLE>
- ------------------
See Notes to Financial Statements.
9
<PAGE>
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
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. 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 six months
ended March 31, 1998, 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 recognition of certain components of
income, expense, or realized capital gain for federal income tax purposes.
Where such differences are permanent in nature, they are reclassified in
the components of net assets based on their ultimate characterization for
federal income tax purposes. Any such reclassifications will have no effect
on net assets, results of operations or net asset value per share of the
Fund.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding short-term investments, for the six months ended March
31, 1998, amounted to $2,434,145 and $2,259,817, respectively.
10
<PAGE>
Notes to Financial Statements
At March 31, 1998, 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 $1,978,166.
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 $1,551 for sales of Class A shares, after commissions of $11,676
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 six months ended March 31,
1998, fees incurred aggregated $32,018, or 0.21% 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 six months ended March 31, 1998, fees incurred under the
Plan amounted to $4,158, 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 six months
ended March 31, 1998, there were no such charges.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the six months ended March 31, 1998,
Seligman Services, Inc. received commissions of $261 for sales of shares of the
Fund. Seligman Services, Inc. also received distribution and service fees of
$1,937, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost $27,701 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. Trustees may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued thereon is included in trustees' fees and
expenses, and the accumulated balance thereof at March 31, 1998, of $49,253 is
included in other liabilities. Deferred fees and related accrued earnings 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. "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
-----------------------------------------------------------
SIX
MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------
3/31/98 1997 1996 1995 1994 1993
---------- ------- ------- ------- ------- -----
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................... $7.96 $7.82 $7.79 $7.55 $8.61 $8.02
----- ----- ----- ----- ----- -----
Net investment income .................................. 0.18 0.36 0.38 0.38 0.39 0.42
Net realized and unrealized investment gain (loss) ..... 0.16 0.24 0.12 0.37 (0.80) 0.71
----- ----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS ......... 0.34 0.60 0.50 0.75 (0.41) 1.13
Dividends paid or declared ............................. (0.18) (0.36) (0.38) (0.38) (0.39) (0.42)
Distributions from net gain realized ................... (0.08) (0.10) (0.09) (0.13) (0.26) (0.12)
----- ----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ............. 0.08 0.14 0.03 0.24 (1.06) 0.59
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ......................... $8.04 $7.96 $7.82 $7.79 $7.55 $8.61
===== ===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: 4.30% 7.89% 6.57% 10.55% (5.00)% 14.71%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ......................... 1.14%+ 1.19% 1.11% 1.21% 1.16% 1.19%
Net investment income to average net assets ............ 4.44%+ 4.60% 4.82% 5.05% 4.91% 5.14%
Portfolio turnover ..................................... 7.58% 32.99% 4.56% 11.78% 7.71% 40.74%
NET ASSETS, END OF PERIOD (000s omitted) ............... $29,633 $30,092 $31,139 $33,251 $34,943 $41,296
</TABLE>
- ------------------
See footnotes on page 13.
12
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
CLASS D
------------------------------------------------------------
SIX
MONTHS YEAR ENDED SEPTEMBER 30, 2/1/94*
ENDED --------------------------------- TO
3/31/98 1997 1996 1995 9/30/94
-------- ------- ------ ------ --------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD .................. $7.95 $7.81 $7.78 $7.54 $8.37
----- ----- ----- ----- -----
Net investment income ................................. 0.15 0.30 0.32 0.31 0.22
Net realized and unrealized investment gain (loss) .... 0.16 0.24 0.12 0.37 (0.83)
----- ----- ----- ----- -----
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS ........ 0.31 0.54 0.44 0.68 (0.61)
Dividends paid or declared ............................ (0.15) (0.30) (0.32) (0.31) (0.22)
Distributions from net gain realized .................. (0.08) (0.10) (0.09) (0.13) --
----- ----- ----- ----- -----
NET INCREASE (DECREASE) IN NET ASSET VALUE ............ 0.08 0.14 0.03 0.24 (0.83)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ........................ $8.03 $7.95 $7.81 $7.78 $7.54
===== ===== ===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: 3.90% 7.07% 5.76% 9.53% (7.50)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ........................ 1.93%+ 1.96% 1.88% 2.23% 2.00%+
Net investment income to average net assets ........... 3.65%+ 3.83% 4.05% 4.10% 4.20%+
Portfolio turnover .................................... 7.58% 32.99% 4.56% 11.78% 7.71%++
NET ASSETS, END OF PERIOD (000s omitted) .............. $860 $816 $876 $426 $43
<FN>
- ------------------
* Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended September 30, 1994.
See Notes to Financial Statements.
</FN>
</TABLE>
13
<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 as of
March 31, 1998, the related statements of operations for the six months then
ended and of changes in net assets for the six months then ended and for the
year ended September 30, 1997, 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
March 31, 1998 by correspondence with the Fund's custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman
Pennsylvania Municipal Fund as of March 31, 1998, 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
May 1, 1998
14
<PAGE>
Trustees
JOHN R. GALVIN 2
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, Raytheon Company
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 Industries, Inc.
Trustee, The New York and Presbyterian Hospital
BETSY S. MICHEL 2
Trustee, The Geraldine R. Dodge Foundation
Chairman of the Board of Trustees, St. George's School
WILLIAM C. MORRIS 1
Chairman
Chairman of the Board, J. & W. Seligman & Co.
Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
JAMES C. PITNEY 3
Retired Partner, Pitney, Hardin, Kipp & Szuch,
Law Firm
JAMES Q. RIORDAN 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
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.
JAMES N. WHITSON 2
Director and Consultant, Sammons Enterprises, Inc.
Director, CommScope, Inc.
Director, C-SPAN
BRIAN T. ZINO 1
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
Trustee Emeritus
FRED E. BROWN
Director and Consultant, J. & W. Seligman & Co. Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
15
<PAGE>
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
Chairman
BRIAN T. ZINO
President
THOMAS G. MOLES
Vice President
LAWRENCE P. VOGEL
Vice President
THOMAS G. ROSE
Treasurer
FRANK J. NASTA
Secretary
FOR MORE INFORMATION
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman 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
(212) 682-7600 Outside the
Continental
United States
(800) 622-4597 24-Hour
Automated
Telephone
Access Service
16
<PAGE>
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 taxed at different rates, primarily depending upon the
length of time the securities were owned by the fund.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market
value of a mutual fund's portfolio securities, which is reflected in the net
asset value of the fund's shares. Capital appreciation/depreciation of an
individual security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at
a fixed rate of 7% a year, the initial investment is worth $1,070 after one
year. If the return is compounded, second year earnings will not be based on
the original $1,000, but on the $1,070, which includes the first year's
earnings.
CONTINGENT DEFERRED SALES 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 -- A document that contains updated or more
detailed information about a mutual fund and that supplements the prospectus.
It is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- -------------
Adapted from the Investment Company Institute's 1997 Mutual Fund Fact Book.
17
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
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.
TEDPA3 3/98
