To the Shareholders
The fiscal year ended September 30, 1999, was a period of steadily rising
interest rates, creating a difficult environment for fixed-income securities and
for Seligman Pennsylvania Municipal Fund.
At the end of the Fund's fiscal-year 1998, the Federal Reserve Board was easing
monetary policy in an effort to protect the US economy from the effects of the
global economic crisis. Central banks around the world also lowered key
interest rates in response to global turmoil. These easing actions were
successful and the world economy rebounded. However, the global recovery,
combined with continued growth in the US, soon caused the US Fed to voice
concerns about inflation. In May, the Fed announced its bias toward a tighter
policy and has since followed through with two federal funds rate hikes, for a
total of 50 additional basis points.
Throughout this fiscal year, continued robust growth in the US, the recovering
world economy, growing concerns regarding inflation, and tighter monetary
policy, sent market interest rates steadily higher. On September 30, 1998, the
30-year US Treasury bond was yielding 4.98%. One year later, the yield had
moved to 6.06%. The Pennsylvania State general obligation 30-year municipal
bond fluctuated within a narrower range, but still rose significantly, from
4.93% on September 30, 1998, to 5.77% on September 30, 1999. The additional
stability in the Pennsylvania municipal market was largely the result of an
imbalance in municipal supply and demand. For much of the past year, rising
yields were attracting investors, while municipal issuers were reluctant to
offer new supply at higher rates.
Looking ahead, we believe that the US economy will slow, as was intended by the
Fed's most recent actions, and that inflation fears will thus subside and reduce
bond market volatility. We anticipate that the municipal market will outperform
the Treasury market for the balance of calendar-year 1999, as a result of
improving municipal market fundamentals, the most significant of which is the
slowdown in municipal issuance which is expected to continue into the new year.
As the millennium approaches, we have become concerned that the media's focus on
the Year 2000 (Y2K) computer issue, and the fears that this attention may spark,
will cause some investors to take actions that are not in their best long-term
interests. In our view, the primary danger to investors is losing sight of their
long-term financial goals and altering their portfolios and asset allocations in
an attempt to respond to the confusion surrounding this issue.
In the US, governments and businesses have committed substantial resources to
this issue and, while there may be scattered inconveniences, we believe that
the US will enter the year 2000 relatively seamlessly, and that much of the
rest of the developed world is also well positioned to deal with the new
millennium.
For the past several years, J. & W. Seligman & Co. Incorporated (Seligman),
your Fund's manager, and Seligman Data Corp. (Seligman Data), your Fund's
shareholder service agent, have been working to ensure that shareholders do not
experience any Y2K-related inconveniences at Seligman. We are pleased to report
that the early start has paid off. During the spring of this year, Seligman and
Seligman Data participated in Y2K testing conducted by the Securities Industry
Association. These tests were completed without any Y2K-related problems on the
part of Seligman or Seligman Data. Tests with key service providers were also
conducted, all of which were successfully completed in a Y2K environment.
We appreciate your confidence in Seligman Pennsylvania Municipal Fund and look
forward to serving your investment needs for many years to come. A discussion
with your Portfolio Manager, as well as the Fund's portfolio of investments and
financial statements, follows this letter. By order of the Trustees,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
-----------------
Brian T. Zino
President
November 5, 1999
1
<PAGE>
Interview With Your Portfolio Manager,
Thomas G. Moles
Q: What economic and market factors influenced Seligman Pennsylvania Municipal
Fund in the last 12 months?
A: The past 12 months have been challenging for the financial markets, including
the fixed-income markets. At this time last year, global equity markets were
struggling to recover from the Asian financial crisis, as well as economic
turmoil in Russia. In September 1998, the Federal Reserve Board initiated a
series of federal funds rate easings in an effort to restore stability and
liquidity to anxious world markets. At that time, market participants
generally expected that US economic growth would contract as a result of
world events, thereby preventing an acceleration in the rate of inflation.
Additionally, many experts predicted that, with the approach of the new
millennium, computer glitches would at best slow economic growth and at
worst cause major disruptions leading to worldwide recession. One year
later, the Fed has tightened to slow economic growth, world equity markets
have recovered, and most market watchers expect the transition to the year
2000 to be uneventful.
During the past year, the municipal market did not exhibit the degree of
volatility that characterized the US Treasury market. This was largely the
result of the powerful influences of supply and demand that served to
mitigate both upward and downward movements in municipal yields. Last year's
Treasury market rallies were caused by heavy demand for Treasury securities
during periods of equity market declines. Conversely, demand for municipal
bonds was not greatly affected, which lessened municipal market volatility.
Further, year-to-date municipal issuance is down 20% over the same period
last year. This lack of supply held municipal yields steady and was the
primary reason municipal bonds outperformed Treasury bonds for much of the
past 12 months.
While the municipal market was relatively stable overall, it was not immune
to the effects of shifting economic and inflation expectations. By June
1999,
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.
[PICTURE OMITTED]
Seligman Municipals Team: (standing from left) Audrey Kuchtyak,
Theresa Barion, Debra McGuinness, (seated) Eileen Comerford,
Thomas G. Moles (Portfolio Manager)
2
<PAGE>
Interview With Your Portfolio Manager,
Thomas G. Moles
municipal yields began moving higher in response to increasing concern
regarding the pace of economic activity and continued to move higher
through fiscal year end. Accordingly, net asset values of the Fund's
shares deteriorated during the last quarter of the fiscal year, and
performance was disappointing.
Q: What was your investment strategy?
A: Over the past year, long-term municipal yields rose to levels not seen in
several years. This presented an opportunity to enhance Fund yields by
purchasing higher-yielding, longer-term bonds and by reducing positions in
shorter-term bonds. In general, the longer the maturity of a bond, the more
sensitive it is to changes in interest rates. During periods of declining
interest rates, longer-term bonds outperform shorter-term bonds. However,
during periods of rising interest rates, such as we have been experiencing,
longer-term bonds decline more in price than shorter-term bonds.
New purchases were concentrated in higher-rated bonds due primarily to a
continuation of narrow yield spreads between higher- and lower-quality
bonds. Additionally, a number of holdings received credit-rating upgrades,
further contributing to the overall improvement in the Fund's credit
quality.
The Fund is well diversified among all major sectors of the municipal
marketplace. Most sectors remain stable with the exception of health care,
which remains vulnerable to further credit-quality deterioration mainly as a
result of government cutbacks and the growth of managed care. Many health
care issuers that have been well managed and have maintained consistently
healthy finances are suddenly facing serious budget deficits. As a result of
this alarming trend, we have been particularly diligent in monitoring our
health care holdings. Despite the current situation, the health care sector
continues to offer selective opportunities. Through in-depth credit
analysis, we endeavor to identify strong health care credits for inclusion
in the Fund's portfolio. Currently, Seligman Pennsylvania Municipal Fund has
12% of assets in health care issues, the majority of which are insured and
rated AAA, with the balance rated AA.
Q: What is your outlook?
A: The long-awaited economic slowdown has yet to materialize, increasing the
risk that the rate of inflation will accelerate. In response, bond yields
have been rising steadily year to date. For the remainder of calendar year
1999, the bond markets will likely experience continued volatility until
solid signs that the economy is moderating emerge. Many market participants
expect the Fed to raise rates once more before year-end. This, together with
higher market rates, may ease inflationary pressures and spark a bond-market
rally.
As we head toward the new millennium, we believe that there is much to be
optimistic about. In the year 2000, the US economy will likely enter its
tenth year of expansion, an extraordinary achievement. The financial well
being of the nation's states, cities, and municipalities continues to
improve, with many reporting record budget surpluses. The jobless rate
remains below 5% nationally and consumer confidence remains high. Finally,
as one of the few remaining possible ways to shelter income, municipal bond
funds currently offer attractive yields compared to the after-tax yields of
many taxable bond investments.
3
<PAGE>
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, and assumes that all distributions within the period are
invested in additional shares for the 10-year period ended September 30, 1999,
to a $10,000 hypothetical investment made in the Lehman Brothers Municipal Bond
Index (Lehman Index) for the same period. The performances of Seligman
Pennsylvania Municipal Fund Class C and Class D shares are not shown in this
chart but are 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.
With Sales Without Sales
Charge Charge Lehman Index
9/30/89 $9,530 $10,000 $10,000
12/31/89 $9,888 $10,376 $10,384
3/31/90 $9,858 $10,344 $10,431
6/30/90 $10,076 $10,573 $10,675
9/30/90 $9,924 $10,413 $10,681
12/31/90 $10,417 $10,931 $11,142
3/31/91 $10,575 $11,097 $11,393
6/30/91 $10,826 $11,360 $11,636
9/30/91 $11,253 $11,808 $12,089
12/31/91 $11,593 $12,165 $12,495
3/31/92 $11,629 $12,203 $12,532
6/30/92 $12,087 $12,683 $13,009
9/30/92 $12,383 $12,994 $13,353
12/31/92 $12,674 $13,299 $13,596
3/31/93 $13,158 $13,807 $14,101
6/30/93 $13,654 $14,327 $14,562
9/30/93 $14,204 $14,905 $15,054
12/31/93 $14,309 $15,015 $15,265
3/31/94 $13,394 $14,055 $14,427
6/30/94 $13,465 $14,129 $14,587
9/30/94 $13,494 $14,159 $14,686
12/31/94 $13,304 $13,961 $14,475
3/31/95 $14,314 $15,020 $15,498
6/30/95 $14,623 $15,345 $15,871
9/30/95 $14,918 $15,654 $16,329
12/31/95 $15,701 $16,475 $17,001
3/31/96 $15,350 $16,108 $16,796
6/30/96 $15,443 $16,205 $16,925
9/30/96 $15,898 $16,682 $17,314
12/31/96 $16,240 $17,041 $17,756
3/31/97 $16,112 $16,907 $17,715
6/30/97 $16,664 $17,486 $18,326
9/30/97 $17,153 $17,999 $18,879
12/31/97 $17,652 $18,523 $19,391
3/31/98 $17,890 $18,773 $19,614
6/30/98 $18,156 $19,052 $19,912
9/30/98 $18,731 $19,655 $20,524
12/31/98 $18,736 $19,661 $20,647
3/31/99 $18,858 $19,789 $20,830
6/30/99 $18,488 $19,400 $20,462
9/30/99 $18,098 $18,990 $20,380
The performances of Class C and Class D shares will be greater than or less
than the performance shown for Class A shares, based on the differences in
sales charges and fees paid by shareholders.
Performance data quoted represent changes in prices and assume that all
distributions within the period are invested in additional 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
performance is not indicative of future investment results.
4
<PAGE>
Performance Overview and Portfolio Summary
Investment Results Per Share
TOTAL RETURNS
For Periods Ended September 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
------------------------------------------
CLASS C CLASS D
SINCE SINCE
INCEPTION SIX ONE FIVE 10 INCEPTION
5/27/99* MONTHS* YEAR YEARS YEARS 2/1/94
------------ ---------- ------ ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge n/a (8.61)% (7.96)% 5.01% 6.11% n/a
Without Sales Charge n/a (4.03) (3.38) 6.05 6.62 n/a
Class C**
With Sales Charge and CDSC (5.74)% n/a n/a n/a n/a n/a
Without Sales Charge and CDSC (3.84) n/a n/a n/a n/a n/a
Class D**
With 1% CDSC n/a (5.22) (4.90) n/a n/a n/a
Without CDSC n/a (4.28) (3.99) 5.23 n/a 3.17%
Lehman Brothers
Municipal Bond Index*** (1.83)+ (2.16) (0.70) 6.77 7.38 5.02++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended September 30, 1999
9/30/99 3/31/99 9/30/98 DIVIDENDS 0 CAPITAL GAIN 0 SEC YIELD 00
-------- -------- -------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $7.49 $7.98 $8.24 Class A $0.336 $0.148 4.15%
Class C 7.49 n/a n/a Class C 0.097 -- 3.56
Class D 7.49 7.97 8.23 Class D 0.276 0.148 3.60
</TABLE>
<TABLE>
<CAPTION>
HOLDINGS BY MARKET SECTOR++ MOODY'S/S&P RATINGS++
<S> <C> <C> <C>
Revenue Bonds 82% Aaa/AAA 76%
General Obligation Bonds++ 18 Aa/AA 22
Baa/BBB 2
<FN>
WEIGHTED AVERAGE MATURITY 21.8 years
------------------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price and assume all distributions
within the period are invested in additional shares. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class C shares are calculated with and
without the effect of the initial 1% maximum sales charge and the 1%
contingent deferred sales charge ("CDSC") that is charged on redemptions
made within 18 months of the date of purchase. Returns for Class D shares
are calculated with and without the effect of the 1% CDSC, charged on
redemptions made within one year of the date of purchase. 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. It is composed of approximately 60% revenue bonds and 40%
state government obligations. Investors cannot invest directly in an index.
+ From 5/31/99.
++ From 1/31/94.
0 Represents per share amount paid or declared for the year ended September
30, 1999 (for Class C shares, for the period May 27, 1999 to September 30,
1999).
00 Current yield, representing the annualized yield for the 30-day period ended
September 30, 1999, has been computed in accordance with SEC regulations and
will vary.
D+ Percentages based on market values of long-term holdings at
September 30, 1999.
D+D+ Includes pre-refunded and escrowed-to-maturity securities.
</FN>
</TABLE>
5
<PAGE>
Portfolio of Investments
September 30, 1999
<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 $1,027,180
1,000,000 Berks County Municipal Authority, PA Hospital Rev. (The Reading
Hospital & Medical Center Project), 6.10% due 10/1/2023 ............. Aaa/AAA 1,012,310
1,000,000 Bucks County, PA GOs, 5% due 5/1/2017 ................................... Aa2/AA 923,890
1,000,000 Delaware County Authority, PA (Haverford College Rev.),
5 1/2% due 11/15/2023 ................................................ Aaa/AAA 963,740
1,000,000 Delaware County Industrial Development Authority, PA (Philadelphia
Suburban Water Company), 6.35% due 8/15/2025* ........................ Aaa/AAA 1,031,740
1,000,000 Delaware Valley, PA Regional Finance Authority Local Government Rev.,
7 3/4% due 7/1/2027 .................................................. Aaa/AAA 1,285,600
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 1,324,115
1,250,000 Montgomery County, PA GOs, 5.45% due 9/15/2022 .......................... Aaa/NR 1,197,888
500,000 Montgomery County, PA Industrial Development Authority Pollution
Control Rev. (Philadelphia Electric Co.), 7.60% due 4/1/2021* ........ Baa1/A 527,880
2,000,000 Pennsylvania Higher Education Assistance Agency Student Loan Rev.,
6.40% due 3/1/2022* .................................................. Aaa/AAA 2,145,900
1,000,000 Pennsylvania Higher Educational Facilities Authority College & University
Rev. (University of Pennsylvania), 5.90% due 9/1/2014 ................ Aa3/AA 1,019,620
1,250,000 Pennsylvania Higher Educational Facilities Authority Rev. (Temple University),
5% due 4/1/2029 ...................................................... Aaa/AAA 1,090,488
1,350,000 Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University),
5 3/4% due 5/1/2022 .................................................. Aaa/AAA 1,334,786
1,500,000 Pennsylvania Housing Finance Agency (Single Family Mortgage Rev.),
5.85% due 4/1/2017* .................................................. Aa2/AA+ 1,500,000
1,350,000 Pennsylvania Housing Finance Agency (Rental Housing Rev.),
6 1/2% due 7/1/2023 .................................................. Aaa/AAA 1,414,233
1,250,000 Pennsylvania Intergovernmental Co-Op Authority Special Tax Rev.
(Philadelphia Funding Program), 5% due 6/15/2021 ..................... Aaa/AAA 1,117,387
1,000,000 Pennsylvania State GOs, 5% due 3/1/2017 ................................. Aa3/AA 919,140
1,000,000 Pennsylvania State Turnpike Commission Rev., 6% due 12/1/2017 ........... Aaa/AAA 1,023,500
</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>
Portfolio of Investments (continued)
September 30, 1999
<TABLE>
<CAPTION>
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- ---------------- ----------- --------
<S> <C> <C> <C>
$1,300,000 Philadelphia, PA Airport Rev., 6.10% due 6/15/2025* ..................... Aaa/AAA $ 1,308,580
1,000,000 Philadelphia, PA Parking Authority Airport Parking Rev.,
5 1/2% due 9/1/2018................................................... Aaa/AAA 969,100
450,000 Philadelphia Redevelopment Authority, PA (Home Mortgage Rev.),
9% due 6/1/2017++ .................................................... NR/AA 468,193
1,000,000 Pittsburgh, PA Water & Sewer Authority Rev., 5.65% due 9/1/20250......... Aaa/AAA 1,051,720
1,000,000 Schuylkill County, PA Industrial Development Authority Rev. (Charity
Obligated Group), 5% due 11/1/2028 ................................... Aa2/AA+ 860,700
-----------
TOTAL MUNICIPAL BONDS (Cost $25,461,658) -- 97.6% ..................................................... 25,517,690
VARIABLE RATE DEMAND NOTES (Cost $100,000) -- 0.4% .................................................... 100,000
OTHER ASSETS LESS LIABILITIES -- 2.0% ................................................................. 523,428
-----------
NET ASSETS -- 100.0% .................................................................................. $26,141,118
===========
</TABLE>
------------------
+ Ratings have not been audited by Deloitte & Touche LLP.
++ Escrowed-to-maturity security.
0 Pre-refunded security.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
See notes to financial statements.
7
<PAGE>
Statement of Assets and Liabilities
September 30, 1999
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value:
Long-term holdings (Cost $25,461,658)........................... $25,517,690
Short-term holdings (Cost $100,000)............................. 100,000 $25,617,690
------------
Cash.............................................................................. 149,470
Interest receivable............................................................... 417,725
Receivable for Shares of Beneficial Interest sold................................. 76,226
Expenses prepaid to shareholder service agent..................................... 4,099
Other............................................................................. 3,910
-----------
Total Assets...................................................................... 26,269,120
-----------
LIABILITIES:
Dividends payable................................................................. 35,256
Accrued expenses and other........................................................ 92,746
-----------
Total Liabilities................................................................. 128,002
-----------
Net Assets........................................................................ $26,141,118
===========
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par ($.001 par value; unlimited shares
authorized; 3,488,642 shares outstanding):
Class A........................................................................ $ 3,355
Class C........................................................................ 19
Class D........................................................................ 114
Additional paid-in capital........................................................ 25,914,579
Undistributed net realized gain................................................... 167,019
Net unrealized appreciation of investments........................................ 56,032
-----------
Net Assets........................................................................ $26,141,118
===========
NET ASSET VALUE PER SHARE:
Class A ($25,141,531 / 3,355,118 shares).......................................... $7.49
=====
Class C ($143,131 / 19,122 shares)................................................ $7.49
=====
Class D ($856,456 / 114,402 shares)............................................... $7.49
=====
</TABLE>
------------------
See notes to financial statements.
8
<PAGE>
Statement of Operations
For the Year Ended September 30, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest.......................................................................... $1,558,689
EXPENSES:
Management fee .................................................... $ 142,802
Distribution and service fees ..................................... 79,054
Shareholder account services....................................... 43,774
Auditing and legal fees ........................................... 39,302
Registration....................................................... 18,683
Trustees' fees and expenses........................................ 12,434
Shareholder reports and communications............................. 8,122
Custody and related services....................................... 6,158
Miscellaneous ..................................................... 3,740
----------
Total Expenses.................................................................... 354,069
----------
Net Investment Income............................................................. 1,204,620
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments .................................. 173,072
Net change in unrealized appreciation of investments............... (2,275,350)
----------
Net Loss on Investments........................................................... (2,102,278)
----------
Decrease in Net Assets from Operations............................................ $ (897,658)
==========
</TABLE>
------------------
See notes to financial statements.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------
OPERATIONS: 1999 1998
----------- -----------
<S> <C> <C>
Net investment income ..................................................... $ 1,204,620 $ 1,316,340
Net realized gain on investments .......................................... 173,072 544,834
Net change in unrealized appreciation of investments....................... (2,275,350) 806,321
----------- -----------
Increase (Decrease) in Net Assets from Operations ......................... (897,658) 2,667,495
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ................................................................ (1,174,204) (1,288,647)
Class C ................................................................ (515) --
Class D ................................................................ (29,901) (27,693)
Net realized gain on investments:
Class A ................................................................ (531,302) (305,259)
Class C ................................................................ -- --
Class D ................................................................ (13,843) (8,304)
----------- -----------
Decrease in Net Assets from Distributions ................................. (1,749,765) (1,629,903)
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------
1999 1998
---------- -----------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:*
<S> <C> <C> <C> <C>
Net proceeds from sales of shares:
Class A .............................. 57,213 79,757 451,863 640,708
Class C ............................... 19,122 -- 145,878 --
Class D ............................... 35,065 13,895 281,062 112,854
Shares issued in payment of dividends:
Class A ............................... 76,467 83,374 604,487 669,895
Class C ............................... -- -- -- --
Class D ............................... 1,956 2,463 15,477 19,744
Exchanged from associated Funds:
Class A ............................... 17,197 26,798 138,701 216,297
Class C ............................... -- -- -- --
Class D ............................... 33,251 629 267,612 5,046
Shares issued in payment of gain distributions:
Class A ............................... 46,128 26,265 369,025 207,232
Class C ............................... -- -- -- --
Class D ............................... 1,200 1,015 9,588 8,002
-------- -------- ----------- -----------
Total .................................... 287,599 234,196 2,283,693 1,879,778
-------- -------- ----------- -----------
Cost of shares repurchased:
Class A ............................... (384,498) (346,731) (3,048,387) (2,789,014)
Class C ............................... -- -- -- --
Class D ............................... (23,050) (44,446) (182,932) (358,480)
Exchanged into associated Funds:
Class A ............................... (49,311) (59,074) (390,745) (469,552)
Class C ............................... -- -- -- --
Class D ............................... (7,742) (2,476) (61,602) (19,989)
-------- -------- ----------- -----------
Total .................................... (464,601) (452,727) (3,683,666) (3,637,035)
-------- -------- ----------- -----------
Decrease in Net Assets from Transactions
in Shares of Beneficial Interest ...... (177,002) (218,531) (1,399,973) (1,757,257)
======== ======== ----------- -----------
Decrease in Net Assets .................................................... (4,047,396) (719,665)
NET ASSETS:
Beginning of year ......................................................... 30,188,514 30,908,179
----------- -----------
End of Year ............................................................... $26,141,118 $30,188,514
=========== ===========
</TABLE>
------------------
* The Fund began offering Class C shares on May 27, 1999.
See notes to financial statements.
10
<PAGE>
Notes to Financial Statements
1. Multiple Classes of Shares -- Seligman Pennsylvania Municipal Fund (the
"Fund") offers three classes of shares. Class A shares are sold with an initial
sales charge of up to 4.75% and a continuing service fee of up to 0.25% on an
annual basis. Class A shares purchased in an amount of $1,000,000 or more are
sold without an initial sales charge but are subject to a contingent deferred
sales charge ("CDSC") of 1% on redemptions within 18 months of purchase. The
Fund began offering Class C shares on May 27, 1999. Class C shares are sold with
an initial sales charge of up to 1% and are subject to a distribution fee of up
to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSC, if
applicable, of 1% imposed on redemptions made within 18 months of purchase.
Class D shares are sold without an initial sales charge but are subject to a
distribution fee of up to 0.75% and a service fee of up to 0.25% on an annual
basis, and a CDSC, if applicable, of 1% imposed on redemptions made within one
year of purchase. The three classes of shares 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 year ended
September 30, 1999, distribution and service fees were the only
class-specific expenses.
e. Distributions to Shareholders-- Dividends are declared daily and paid
monthly. Other distributions paid by the 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
11
<PAGE>
Notes to Financial Statements
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 year ended September 30,
1999, amounted to $2,183,788 and $3,443,649, respectively.
At September 30, 1999, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
investments amounted to $585,774 and $529,742, respectively.
4. Management Fee, Distribution 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 Advisors, Inc. (the "Distributor"), agent for the distribution of
the Fund's shares and an affiliate of the Manager, received concessions of
$2,255 for sales of Class A shares. Commissions of $17,993 and $1,530 were paid
to dealers for sales of Class A and Class C shares, respectively.
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,
1999, fees incurred aggregated $70,388, or 0.25% per annum of the average daily
net assets of Class A shares.
Under the Plan, with respect to Class C and 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 C and Class D shares for which the organizations are
responsible, and fees for providing other distribution assistance of up to 0.75%
on an annual basis of such average daily net assets. Such fees are paid monthly
by the Fund to the Distributor pursuant to the Plan. For the year ended
September 30, 1999, fees incurred under the Plan amounted to $136 and $8,530,
for Class C and Class D shares, respectively, which is equivalent to 1% per
annum of the average daily net assets of each class.
The Distributor is entitled to retain any CDSC imposed on certain redemptions
of Class A and Class C shares occurring within 18 months of purchase and on
redemptions of Class D shares occurring within one year of purchase. For the
year ended September 30, 1999, such charges amounted to $6.
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 year ended September 30, 1999,
Seligman Services, Inc. received commissions of $213 from the sale of shares of
the Fund. Seligman Services, Inc. also received distribution and service fees of
$3,999, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost $43,774 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
12
<PAGE>
Notes to Financial Statements
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 September 30, 1999, of $46,481 is included in other liabilities.
Deferred fees and related accrued earnings are not deductible for federal
income tax purposes until such amounts are paid.
5. Committed Line of Credit -- The Fund is a participant in a joint $750
million committed line of credit that is shared by substantially all funds in
the Seligman Group of Investment Companies. The Fund's borrowings are limited
to 10% of its net assets. Borrowings pursuant to the credit facility are
subject to interest at a rate equal to the overnight federal funds rate plus
0.50% on an overnight basis. The Fund incurs a commitment fee of 0.08% per
annum on its share of the unused portion of the credit facility. The credit
facility may be drawn upon only for temporary purposes and is subject to
certain other customary restrictions. The credit facility commitment expires in
June 2000, but is renewable annually with the consent of the participating
banks. For the year ended September 30, 1999, the Fund had not borrowed from
the credit facility.
13
<PAGE>
Financial Highlights
The tables below are intended to help you understand each Class's financial
performance for the past five years or from its inception if less than five
years. Certain information reflects financial results for a single share of a
Class that was held throughout the periods shown. Per share amounts are
calculated using average shares outstanding during the period. "Total return"
shows the rate that you would have earned (or lost) on an investment in each
Class, assuming you reinvested all your dividend and capital gain distributions.
Total returns do not reflect any sales charges and are not annualized for
periods of less than one year.
<TABLE>
<CAPTION>
CLASS A CLASS C
----------------------------------------------- --------
YEAR ENDED SEPTEMBER 30, 5/27/99*
----------------------------------------------- TO
1999 1998 1997 1996 1995 9/30/99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period.................. $8.24 $7.96 $7.82 $7.79 $7.55 $7.88
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income................................. 0.34 0.35 0.36 0.38 0.38 0.10
Net realized and unrealized investment gain (loss)
on investments ..................................... (0.60) 0.36 0.24 0.12 0.37 (0.39)
----- ----- ----- ----- ----- -----
Total from Investment Operations...................... (0.26) 0.71 0.60 0.50 0.75 (0.29)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income.................. (0.34) (0.35) (0.36) (0.38) (0.38) (0.10)
Distributions from net realized capital gain ......... (0.15) (0.08) (0.10) (0.09) (0.13) --
----- ----- ----- ----- ----- -----
Total Distributions .................................. (0.49) (0.43) (0.46) (0.47) (0.51) (0.10)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period ........................ $7.49 $8.24 $7.96 $7.82 $7.79 $7.49
===== ===== ===== ===== ===== =====
TOTAL RETURN: (3.38)% 9.20% 7.89% 6.57% 10.55% (3.84)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted) ............. $25,142 $29,582 $30,092 $31,139 $33,251 $143
Ratio of expenses to average net assets .............. 1.21% 1.19% 1.19% 1.11% 1.21% 1.93%+
Ratio of net income to average net assets ............ 4.25% 4.34% 4.60% 4.82% 5.05% 3.69%+
Portfolio turnover rate .............................. 7.80% 13.05% 32.99% 4.56% 11.78% 7.80%++
</TABLE>
------------------
See footnotes on page 15.
14
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Per Share DATA:
Net Asset Value, Beginning of Year .................... $8.23 $7.95 $7.81 $7.78 $7.54
----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income ................................. 0.28 0.29 0.30 0.32 0.31
Net realized and unrealized gain (loss)
on investments ...................................... (0.59) 0.36 0.24 0.12 0.37
----- ----- ----- ----- -----
Total from Investment Operations....................... (0.31) 0.65 0.54 0.44 0.68
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income .................. (0.28) (0.29) (0.30) (0.32) (0.31)
Distributions from net gain realized .................. (0.15) (0.08) (0.10) (0.09) (0.13)
----- ----- ----- ----- -----
Total Distributions ................................... (0.43) (0.37) (0.40) (0.41) (0.44)
----- ----- ----- ----- -----
Net Asset Value, End of Year .......................... $7.49 $8.23 $7.95 $7.81 $7.78
===== ===== ===== ===== =====
TOTAL RETURN: (3.99)% 8.36% 7.07% 5.76% 9.53%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000s omitted)................. $856 $607 $816 $876 $426
Ratio of expenses to average net assets ............... 1.96% 1.97% 1.96% 1.88% 2.23%
Ratio of net income to average net assets.............. 3.50% 3.56% 3.83% 4.05% 4.10%
Portfolio turnover rate ............................... 7.80% 13.05% 32.99% 4.56% 11.78%
</TABLE>
------------------
* Commencement of offering of Class C shares.
+ Annualized.
++ For the year ended September 30, 1999.
See notes to financial statements.
15
<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
September 30, 1999, the related statements of operations for the year then ended
and of changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
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,
1999, 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, 1999, 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
-------------------------
DELOITTE & TOUCHE LLP
New York, New York
November 5, 1999
16
<PAGE>
TRUSTEES
John R. Galvin 2, 4
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, Raytheon Company
Alice S. Ilchman 3, 4
Trustee, Committee for Economic Development
Chairman, The Rockefeller Foundation
Frank A. McPherson 2, 4
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
Director, Conoco Inc.
John E. Merow 2, 4
Retired Chairman and Senior Partner,
Sullivan & Cromwell, Law Firm
Director, Commonwealth Industries, Inc.
Director, New York Presbyterian Hospital
Betsy S. Michel 2, 4
Trustee, The Geraldine R. Dodge Foundation
William C. Morris 1
Chairman
Chairman of the Board,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3, 4
Retired Partner, Pitney, Hardin, Kipp & Szuch,
Law Firm
James Q. Riordan 3, 4
Director, KeySpan Energy Corporation
Trustee, Committee for Economic Development
Director, Public Broadcasting Service
Richard R. Schmaltz 1
Managing Director, Director of Investments,
J. & W. Seligman & Co. Incorporated
Trustee Emeritus, Colby College
Robert L. Shafer 3, 4
Retired Vice President, Pfizer Inc.
James N. Whitson 2, 4
Director and Consultant, Sammons Enterprises, Inc.
Director, CommScope, Inc.
Director, C-SPAN
Brian T. Zino 1
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
Director, ICI Mutual Insurance Company
Member of the Board of Governors,
Investment Company Institute
Trustee Emeritus
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
----------------
Member: 1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
4 Board Operations Committee
17
<PAGE>
EXECUTIVE OFFICERS
William C. Morris
Chairman
Brian T. Zino
President
Thomas G. Moles
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
FOR MORE INFORMATION
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder Services
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated
Telephone Access Service
18
<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.
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 Charge (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund.
The CDSC expires after a fixed time period.
Dividend -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
Dividend Yield -- A measurement of a fund's dividend as a percentage of the
maximum offering price or net asset value.
Expense Ratio -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
Investment Objective -- The shared investment goal of a fund and its
shareholders.
Management Fee -- The amount paid by a mutual fund to its investment
advisor(s).
Multiple Classes of Shares -- Although an individual mutual fund invests in
only one portfolio of securities, it may offer investors several purchase
options which are "classes" of shares. Multiple classes permit shareholders to
choose the fee structure that best meets their needs and goals. Generally, each
class will differ in terms of how and when sales charges and certain fees are
assessed.
National Association of Securities Dealers, Inc. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
Net Asset Value (NAV) Per Share -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by
the number of shares outstanding.
Offering Price -- The price at which a mutual fund's share can be purchased.
The offering price is the current net asset value per share 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, such as the fund's investment objective and policies, services,
investment restrictions, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC Yield -- SEC Yield refers to the net income earned by a fund during a
recent 30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
Securities and Exchange Commission -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
Statement of Additional Information -- A document that contains more detailed
information about an investment company and that supplements the prospectus. It
is available at no charge upon request.
Total Return -- A measure of fund 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 maximum offering price of the stock.
-------------
Adapted from the Investment Company Institute's 1999 Mutual Fund Fact Book.
19
<PAGE>
SELIGMAN ADVISORS, INC.
an affiliate of
J&WS
Logo omitted
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 9/99
SELIGMAN
----------------
PENNSYLVANIA
MUNICIPAL FUND
Annual Report
September 30, 1999
------
Providing Income
Exempt From Regular
Income Tax
