SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES, 485BPOS, 1999-05-28

SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES
485BPOS, 1999-05-28

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|

Pre-Effective Amendment No. __ |_|

Post-Effective Amendment No. 20 |X|

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|

Amendment No. 22 |X|

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SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES
(Exact name of registrant as specified in charter)

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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)

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Registrant's Telephone Number: 212-850-1864 or
Toll-Free 800-221-2450

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THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)

- --------------------------------------------------------------------------------

It is proposed that this filing will become effective
(check the appropriate box).

|_| immediately upon filing pursuant to paragraph (b) of rule 485

|X| on May 28, 1999 pursuant to paragraph (b) of rule 485

|_| 60 days after filing pursuant to paragraph (a)(1) of rule 485

|_| on (date) pursuant to paragraph (a)(1) of rule 485

|_| 75 days after filing pursuant to paragraph (a)(2) of rule 485

|_| on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE>

SELIGMAN
- -------------------------------
MUNICIPAL FUNDS

SELIGMAN MUNICIPAL FUND
SERIES, INC.

SELIGMAN MUNICIPAL
SERIES TRUST

SELIGMAN NEW JERSEY
MUNICIPAL FUND, INC.

SELIGMAN PENNSYLVANIA
MUNICIPAL FUND SERIES

The Securities and Exchange Commission has neither approved nor disapproved
these Funds, and it has not determined the prospectus to be accurate or
adequate. Any representation to the contrary is a criminal offense.

An investment in these Funds or any other fund cannot provide a complete
investment program. The suitability of an investment in a Fund should be
evaluated based on the investment objective, strategies and risks described
herein, considered in light of all of the other investments in your portfolio,
as well as your risk tolerance, financial goals, and time horizons. We recommend
that you consult your financial advisor to determine if one or more of these
Funds is suitable for you.

MUNI-1 6/99

[GRAPHIC OMITTED]

PROSPECTUS

JUNE 1, 1999

Seeking

Income

Exempt From

Regular

Income Tax

managed by

[LOGO]

J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864

<PAGE>

Table of Contents

The Funds

A discussion of the investment strategies, risks, performance and expenses of
the Funds.

Overview of the Funds 1

National Fund 4

California High-Yield Fund 6

California Quality Fund 8

Colorado Fund 10

Florida Fund 12

Georgia Fund 14

Louisiana Fund 16

Maryland Fund 18

Massachusetts Fund 20

Michigan Fund 22

Minnesota Fund 24

Missouri Fund 26

New Jersey Fund 28

New York Fund 30

North Carolina Fund 32

Ohio Fund 34

Oregon Fund 36

Pennsylvania Fund 38

South Carolina Fund 40

Management of the Funds 42

Year 2000 43

Shareholder Information

Deciding Which Class of Shares
to Buy 44

Pricing of Fund Shares 46

Opening Your Account 46

How to Buy Additional Shares 47

How to Exchange Shares Among
the Seligman Mutual Funds 47

How to Sell Shares 48

Important Policies That May Affect
Your Account 49

Dividends and Capital Gain
Distributions 50

Taxes 50

Financial Highlights 51

How to Contact Us inside back cover

For More Information back cover

TIMES CHANGE ... VALUES ENDURE

<PAGE>

The Funds

OVERVIEW OF THE FUNDS

This Prospectus contains information about four separate funds, which together
offer 19 investment options:

Seligman Municipal Fund Series offers the following 13 series:

National Fund Massachusetts Fund New York Fund
Colorado Fund Michigan Fund Ohio Fund
Georgia Fund Minnesota Fund Oregon Fund
Louisiana Fund Missouri Fund South Carolina Fund
Maryland Fund

Seligman Municipal Series Trust offers the following four series:

California High-Yield Fund Florida Fund
California Quality Fund North Carolina Fund

Seligman New Jersey Municipal Fund, Inc. (New Jersey Fund)

Seligman Pennsylvania Municipal Fund Series (Pennsylvania Fund)

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

Each Fund has its own objectives, strategies and risks. You should read the
discussion of a particular Fund, in addition to the information below, before
making an investment decision about that Fund.

The Seligman Municipal Funds seek to provide income exempt from regular federal
income taxes and, as applicable, regular state and local personal income taxes.

The Funds are managed for total return, which means, in addition to income
considerations, the Funds (except the Pennsylvania Fund) look to enhance
portfolio returns by pursuing opportunities for capital appreciation. The
Pennsylvania Fund does not pursue capital appreciation as one of its objectives.
At all times, safety of principal is a primary concern of all of the Funds.
However, there is no assurance that the Funds will meet their objectives.

Each Fund normally invests at least 80% of its net assets in municipal
securities that pay interest that is exempt from regular federal income taxes
and (except the National Fund) regular personal income taxes in its respective
state. Income may be subject to the federal alternative minimum tax and, where
applicable, state alternative minimum tax.

Municipal securities are issued by state and local governments, their agencies
and authorities, as well as territories and possessions of the United States,
and the District of Columbia. Municipal bonds are issued to obtain funds to
finance various public or private projects, to meet general expenses, and to
refinance outstanding debt.

The Funds use a top-down method of selecting securities to purchase. This means
the investment manager analyzes the current interest rate environment and trends
in the municipal market to formulate investment strategy before selecting
individual securities for each Fund. The investment manager determines the
appropriate cash positions, quality parameters, market sectors, and bond
duration and then uses in-depth credit analysis to evaluate individual
securities considered for purchase.

Portfolio holdings are continually monitored to identify securities which should
be sold as a result of a deterioration in credit quality. A Fund may also sell a
security when there is a better investment opportunity available in the market.

- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT):

A tax imposed on certain types of income to ensure that all taxpayers pay at
least a minimum amount of taxes.
- --------------------------------------------------------------------------------

The Funds (except the California High-Yield Fund) will purchase only investment
grade municipal securities, defined as those issues rated in the four highest
rating categories by independent rating agencies at the time of purchase. The
Funds may also purchase non-rated securities if, based on credit analysis, the
investment manager believes that they are of comparable quality to investment
grade securities.

1
<PAGE>

Under normal market conditions, the Funds will invest in longer maturity bonds
(typically, bonds with maturities in excess of ten years). However, a Fund may
shorten or lengthen maturities to achieve its objective.

The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its objective.

PRINCIPAL RISKS

The value of your investment in a Fund will fluctuate with fluctuations in the
value of the Fund's investment portfolio. The principal factors that may affect
the value of a Fund's portfolio are changes in interest rates and the credit
worthiness of the Fund's portfolio holdings.

Interest rate risk. Changes in market interest rates will affect the value of a
Fund's investment portfolio. In general, the market value of a municipal bond
moves in the opposite direction of interest rates: the market value decreases
when interest rates rise and increases when interest rates decline. A Fund's net
asset value per share moves in the same direction as the market value of the
municipal securities held in its portfolio. Therefore, if interest rates rise,
you should expect a Fund's net asset value per share to fall, and if interest
rates decline, the Fund's net asset value per share should rise.

Additionally, longer maturity bonds (like those held by the Funds) are generally
more sensitive to changes in interest rates. Each Fund's strategy of investing
in longer maturity bonds could subject its portfolio holdings to a greater
degree of market price volatility.

Declining interest rates increase the risk that portfolio holdings which contain
call features could be redeemed by the issuer. Proceeds of called bonds may be
reinvested at lower yields, which could affect the level of income a Fund
generates.

Credit risk. A municipal bond issue could deteriorate in quality to the extent
that its rating is downgraded or its market value declines relative to
comparable municipal securities. Credit risk also includes the risk that an
issuer of a municipal bond would be unable to make interest and principal
payments.

The investment manager seeks to minimize the credit risk inherent in municipal
securities by performing its own in-depth credit analysis on every municipal
security before purchase and by continuing to monitor all securities while they
remain in the portfolio. Each Fund may purchase municipal bonds that are insured
as to the payment of principal and interest. However, the Funds view insurance
as an enhancement of quality, not as a substitute for it. A Fund and will not
purchase a bond unless the investment manager approves the underlying credit.

The Funds are also subject to the following risks:

Concentration risk. Each Fund (except the National Fund) invests in municipal
securities issued by a single state and its municipalities. Specific events or
factors affecting a particular state may have an impact on the municipal
securities of that state without affecting the municipal market in general. The
Funds seek to minimize this risk by diversifying investments within the state.
In addition, each Fund is subject to certain investment restrictions limiting
the amount of its assets that can be invested in the securities of a single
issuer.

Market risk. At times, market conditions could result in a lack of liquidity.
The municipal market is an over-the-counter market, which means that the Funds
purchase and sell portfolio holdings through municipal bond dealers. A Fund's
ability to sell securities held in its portfolio is dependent on the willingness
and ability of market participants to provide bids that reflect current market
levels. Adverse market conditions could result in a lack of liquidity by
reducing the number of ready buyers. Lower-rated securities may be less liquid
than higher-rated securities.

An investment in any of the Funds is not a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

2
<PAGE>

PAST PERFORMANCE

Each Fund offers three Classes of shares. The performance information presented
for each Fund provides some indication of the risks of investing in the Fund by
showing how the performance of Class A shares has varied year to year, as well
as how the performance of each Class (except Class C) compares to the Lehman
Brothers Municipal Bond Index, a widely-used measure of municipal bond
performance. Class Cis a new class of shares, effective June 1, 1999, so no
performance information is available. Although each Fund's fiscal year ends on
September 30, the performance information is provided on a calendar year basis
to assist you in comparing the returns of the Funds with the returns of other
mutual funds. How a Fund has performed in the past, however, is not necessarily
an indication of how the Fund will perform in the future. Total returns will
vary between each Fund's Class A and Class D shares due to their different fees
and expenses.

FEES AND EXPENSES

The fee and expense table provided for each Fund summarizes the fees and
expenses that you may pay as a shareholder of a Fund. Each Class of shares has
its own sales charge schedule and is subject to different ongoing fees.
Shareholder fees are charged directly to you. Annual fund operating expenses are
deducted from a Fund's assets and are therefore paid indirectly by you and other
Fund shareholders.

Accompanying each Fund's fee and expense table is an example intended to help
you compare the expenses of investing in that Fund with the expenses of
investing in other mutual funds.

Discussions of each Fund begin on page 4.

3
<PAGE>

NATIONAL FUND

INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES

The National Fund seeks to maximize income exempt from regular federal income
taxes to the extent consistent with preservation of capital and with
consideration given to opportunities for capital gain.

The National Fund uses the following strategies to pursue its objective:

The National Fund invests at least 80% of its net assets in municipal securities
of states, territories, and possessions of the United States, and the District
of Columbia, and their political subdivisions, agencies, and instrumentalities
that are rated investment grade when purchased.

The Fund generally invests in long-term quality municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.

In abnormal market conditions, the Fund may temporarily invest more than 20% of
its assets in taxable investment-grade fixed-income securities. Under these
circumstances, the Fund may not achieve its investment objective.

PRINCIPAL RISKS

The National Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o Generally, the longer the maturity (duration) of a bond, the more
sensitive it is to movements in interest rates. Therefore, long-term
bonds, while generally providing higher current income, may be subject to
greater price volatility than bonds with shorter maturities.

o The Fund is subject to credit risk. If the Fund holds securities that are
downgraded or whose issuers become unable to pay interest or principal,
the Fund's net asset value may decline. Revenue bonds held by the Fund may
be downgraded or may default on payment if revenues from their underlying
facilities decline.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

4
<PAGE>

NATIONAL FUND

PAST PERFORMANCE

The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table do reflect the
effect of the applicable sales charges. Both the bar chart and table assume that
all dividends and capital gain distributions were reinvested. Past performance
does not indicate future results.

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 9.82
90 5.82
91 11.47
92 7.88
93 14.10
94 -9.95
95 20.10
96 3.33
97 10.38
98 5.67

Best calendar quarter return: 8.25% - quarter ended 3/31/95

Worst calendar return: -8.20% - quarter ended 3/31/94

Class A annual total return for the quater ended 3/31/99: 0.55%

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.61% 4.41% 7.07% --
Class D 3.60 n/a n/a 4.27%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) . 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less) .. none(1) 1% 1%

Annual Fund Operating
Expenses for Fiscal 1998
- ------------------------
(as a percentage of average net assets)

Management Fees ........................ .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................. .09% 1.00% 1.00%
Other Expenses ......................... .21% .21% .21%
---- ---- ----
Total Annual Fund Operating Expenses ... .80% 1.71% 1.71%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

This example assumes (1) you invest $10,000 in the Fund for each period and then
sell all of your shares at the end of that period, (2) your investment has a 5%
return each year, and (3) the Fund's operating expenses remain the same.
Although your actual expenses may be higher or lower, based on these assumptions
your expenses would be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 372 633 1,019 2,099
Class D 274 539 928 2,019

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------ ------ --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 272 633 1,019 2,099
Class D 174 539 928 2,019

5
<PAGE>

CALIFORNIA HIGH-YIELD FUND

INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES

The California High-Yield Fund seeks the maximum income exempt from regular
federal income taxes and from the personal income taxes of California consistent
with preservation of capital and with consideration given to capital gain.

The California High-Yield Fund uses the following strategies to pursue its
objective:

The California High-Yield Fund invests at least 80% of its net assets in
California municipal securities that are within any rating category, including
securities rated below investment grade or securities that are not rated.

In selecting securities to purchase, the investment manager may consider the
current market conditions, the availability of lower-rated securities, and
whether lower-rated securities offer yields high enough relative to yields on
investment grade securities to justify their higher risk.

The Fund generally invests in long-term municipal bonds. The Fund favors
investing in revenue bonds, which pay interest and principal from revenues
derived from a particular facility or class of facilities. Revenue bonds
generally offer a higher yield than general obligation bonds, the payment on
which is secured by the general taxing power of the issuer.

PRINCIPAL RISKS

The California High-Yield Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o Lower-rated municipal bonds are subject to a greater degree of credit risk
than higher-rated bonds. They generally involve greater price volatility
and risk of loss of principal and income than higher-rated bonds.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of California
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems, such
as the 1994 bankruptcy of Orange County.

6
<PAGE>

CALIFORNIA HIGH-YIELD FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 9.28
90 6.00
91 10.48
92 9.53
93 9.91
94 -2.79
95 14.55
96 5.52
97 8.72
98 6.18

Best calendar quarter return: 6.48% - quarter ended 3/31/95

Worst calendar quarter return: -2.30% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.71%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.16% 5.26% 7.13% --
Class D 4.21 n/a n/a 5.22%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price).... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .23% .23% .23%
----- ----- -----
Total Annual Fund Operating Expenses ..... .82% 1.73% 1.73%
===== ===== =====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 555 $ 724 $ 908 $1,440
Class C 374 639 1,029 2,121
Class D 276 545 939 2,041

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 555 $ 724 $ 908 $1,440
Class C 274 639 1,029 2,121
Class D 176 545 939 2,041

7
<PAGE>

CALIFORNIA QUALITY FUND

INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES

The California Quality Fund seeks high income exempt from regular federal income
taxes and from the personal income taxes of California consistent with
preservation of capital and with consideration given to capital gain.

The California Quality Fund uses the following strategies to pursue its
objective:

The California Quality Fund invests at least 80% of its net assets in California
municipal securities that are within the three highest ratings of Moody's (Aaa,
Aa, or A) or S&P (AAA, AA, or A) on the date of purchase.

PRINCIPAL RISKS

The California Quality Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

8
<PAGE>

CALIFORNIA QUALITY FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 9.77
90 6.57
91 11.22
92 8.49
93 12.61
94 -8.30
95 19.79
96 3.91
97 8.80
98 6.26

Best calendar quarter return: 8.97% - quarter ended 3/31/95

Worst calendar quarter return: -6.63% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.52%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.23% 4.69% 7.16% --
Class D 4.33 n/a n/a 4.54%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Shareholder Fees Class A Class C Class D
- ---------------- ------- ------- -------
Maximum Sales Charge (Load) on
Purchases (as a % of offering price) ... 4.75%(1) 1% none
Maximum Deferred Sales
Charge (Load) (CDSC) on
Redemptions (as a % of original
purchase price or current
net asset value, whichever is less)..... none(1) 1% 1%

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .18% .18% .18%
---- ---- ----
Total Annual Fund Operating Expenses ..... .77% 1.68% 1.68%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 550 $ 709 $ 883 $1,384
Class C 369 624 1,003 2,067
Class D 271 530 913 1,987

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 550 $ 709 $ 883 $1,384
Class C 269 624 1,003 2,067
Class D 171 530 913 1,987

9
<PAGE>

COLORADO FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Colorado Fund seeks to maximize income exempt from regular federal income
taxes and from Colorado personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.

The Colorado Fund uses the following strategies to pursue its objective:

The Colorado Fund invests at least 80% of its net assets in Colorado municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Colorado Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Colorado issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Colorado's
largest trading partner is Japan, and the State is sensitive to national
and international business cycles. Turmoil in the world economy,
especially in Asia, has the potential to dramatically affect Colorado's
economy.

10
<PAGE>

COLORADO FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 10.04
90 5.05
91 9.40
92 7.67
93 11.11
94 -5.13
95 13.96
96 3.39
97 7.52
98 5.80

Best calendar quarter return: 6.34% - quarter ended 3/31/95

Worst calendar quarter return: -4.87% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.31%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.83% 3.91% 6.24% --
Class D 3.83 n/a n/a 3.71%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .10% 1.00% 1.00%
Other Expenses ........................... .30% .30% .30%
---- ---- ----
Total Annual Fund Operating Expenses..... .90% 1.80% 1.80%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 748 $ 950 $1,530
Class C 381 661 1,065 2,195
Class D 283 566 975 2,116

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 748 $ 950 $1,530
Class C 281 661 1,065 2,195
Class D 183 566 975 2,116

11
<PAGE>

FLORIDA FUND

INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES

The Florida Fund seeks high income exempt from regular federal income taxes
consistent with preservation of capital and with consideration given to capital
gain.

The Florida Fund uses the following strategies to pursue its objective:

The Florida Fund invests at least 80% of its net assets in Florida municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Florida Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Florida issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. The lack of an
income tax in Florida exposes total tax collections to more volatility
than would otherwise be the case and, in the event of an economic
downturn, could affect the State's ability to pay principal and interest
in a timely manner. Florida's economy may be affected by foreign trade,
crop failures, and severe weather conditions and is sensitive to trends in
the tourism and construction industries.

12
<PAGE>

FLORIDA FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 11.35
90 6.46
91 10.62
92 9.07
93 13.52
94 -5.52
95 16.67
96 2.76
97 9.33
98 5.67

Best calendar quarter return: 7.49% - quarter ended 6/30/89

Worst calendar quarter return: -5.99% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.81%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.69% 4.51% 7.31% --
Class D 3.85 n/a n/a 4.59%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .23% 1.00% 1.00%
Other Expenses ........................... .27% .27% .27%
---- ---- ----
Total Annual Fund Operating Expenses ..... 1.00% 1.77% 1.77%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 572 $ 778 $1,001 $1,641
Class C 378 652 1,050 2,163
Class D 280 557 959 2,084

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 572 $ 778 $1,001 $1,641
Class C 278 652 1,050 2,163
Class D 180 557 959 2,084

13
<PAGE>

GEORGIA FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Georgia Fund seeks to maximize income exempt from regular federal income
taxes and from Georgia personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.

The Georgia Fund uses the following strategies to pursue its objective:

The Georgia Fund invests at least 80% of its net assets in Georgia municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Georgia Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Georgia issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local policy changes, economics, natural
disasters, and the possibility of credit problems. Georgia's economy will
be affected by trends in the services, wholesale and retail trade,
manufacturing, and transportation industries, as these industries, along
with government, comprise the largest sources of employment within the
State.

14
<PAGE>

GEORGIA FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 9.87
90 7.01
91 10.97
92 9.00
93 12.21
94 -7.64
95 19.16
96 3.86
97 9.02
98 5.94

Best calendar quarter return: 7.71% - quarter ended 3/31/95

Worst calendar quarter return: -6.83% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.61%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.90% 4.70% 7.21% --
Class D 3.99 n/a n/a 4.67%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .30% .30% .30%
---- ---- ----
Total Annual Fund Operating Expenses ..... .89% 1.80% 1.80%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 381 661 1,065 2,195
Class D 283 566 975 2,116

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 281 661 1,065 2,195
Class D 183 566 975 2,116

15
<PAGE>

LOUISIANA FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Louisiana Fund seeks to maximize income exempt from regular federal income
taxes and from Louisiana personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.

The Louisiana Fund uses the following strategies to pursue its objective:

The Louisiana Fund invests at least 80% of its net assets in Louisiana municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Louisiana Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Louisiana issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Louisiana's
economy is affected by trends in the oil and gas, tourism, and gaming
industries within the State.

16
<PAGE>

LOUISIANA FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 10.14
90 6.86
91 11.38
92 7.83
93 11.45
94 -5.89
95 17.10
96 3.49
97 8.45
98 5.93

Best calendar quarter return: 6.57% - quarter ended 3/31/95

Worst calendar quarter return: -5.38% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.43%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.87% 4.54% 6.99% --
Class D 3.86 n/a n/a 4.43%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .10% 1.00% 1.00%
Other Expenses ........................... .28% .28% .28%
---- ---- ----
Total Annual Fund Operating Expenses ..... .88% 1.78% 1.78%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 561 $ 742 $ 939 $1,508
Class C 379 655 1,055 2,174
Class D 281 560 964 2,095

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 561 $ 742 $ 939 $1,508
Class C 279 655 1,055 2,174
Class D 181 560 964 2,095

17
<PAGE>

MARYLAND FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Maryland Fund seeks to maximize income exempt from regular federal income
taxes and from Maryland personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.

The Maryland Fund uses the following strategies to pursue its objective:

The Maryland Fund invests at least 80% of its net assets in Maryland municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Maryland Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Maryland issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Because the
Fund favors investing in revenue bonds, its performance may also be
affected by economic developments impacting a specific facility or type of
facility. The performance of general obligation bonds of the State of
Maryland may be affected by efforts to limit or reduce state or local
taxes.

18
<PAGE>

MARYLAND FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 10.49
90 6.15
91 10.47
92 8.24
93 11.93
94 -5.48
95 16.84
96 3.66
97 8.09
98 5.85

Best calendar quarter return: 6.96% - quarter ended 3/31/95

Worst calendar quarter return: -5.29% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 6.79%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.80% 4.52% 6.95% --
Class D 3.89 n/a n/a 4.42%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .30% .30% .30%
---- ---- ----
Total Annual Fund Operating Expenses ..... .89% 1.80% 1.80%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 381 661 1,065 2,195
Class D 283 566 975 2,116

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 281 661 1,065 2,195
Class D 183 566 975 2,116

19
<PAGE>

MASSACHUSETTS FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Massachusetts Fund seeks to maximize income exempt from regular federal
income taxes and from Massachusetts personal income taxes to the extent
consistent with preservation of capital and with consideration given to
opportunities for capital gain.

The Massachusetts Fund uses the following strategies to pursue its objective:

The Massachusetts Fund invests at least 80% of its net assets in Massachusetts
municipal securities rated investment grade when purchased.

PRINCIPAL RISKS

The Massachusetts Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Massachusetts
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems.
Massachusetts and certain of its cities, towns, counties, and other
political subdivisions have at certain times in the past experienced
serious financial difficulties which have adversely affected their credit
standing. The recurrence of these financial difficulties could adversely
affect the market value and marketability of, or result in default
payments on, outstanding obligations issued by Massachusetts or its public
authorities or municipalities.

20
<PAGE>

MASSACHUSETTS FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 8.67
90 5.42
91 12.97
92 9.08
93 11.52
94 -4.43
95 15.20
96 4.14
97 8.68
98 6.55

Best calendar quarter return: 6.16% - quarter ended 3/31/95

Worst calendar quarter return: -4.69% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.61%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.49% 4.81% 7.13% --
Class D 4.59 n/a n/a 4.69%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .21% .21% .21%
---- ---- ----
Total Annual Fund Operating Expenses ..... .80% 1.71% 1.71%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 372 633 1,019 2,099
Class D 274 539 928 2,019

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 272 633 1,019 2,099
Class D 174 539 928 2,019

21
<PAGE>

MICHIGAN FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Michigan Fund seeks to maximize income exempt from regular federal income
taxes and from Michigan personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.

The Michigan Fund uses the following strategies to pursue its objective:

The Michigan Fund invests at least 80% of its net assets in Michigan municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Michigan Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Michigan issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. The principal
sectors of Michigan's economy are manufacturing of durable goods
(including automobiles and components and office equipment), tourism, and
agriculture. The cyclical nature of these industries can adversely affect
the revenue stream of the State and its political subdivisions because it
may adversely impact tax sources, particularly sales taxes, income taxes
and single business taxes.

22
<PAGE>

MICHIGAN FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 10.71
90 5.85
91 12.01
92 9.31
93 11.48
94 -4.84
95 15.78
96 3.74
97 8.73
98 6.12

Best calendar quarter return: 6.57% - quarter ended 3/31/95

Worst calendar quarter return: -4.63% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.68%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.09% 4.66% 7.23% --
Class D 4.06 n/a n/a 4.51%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .20% .20% .20%
---- ---- ----
Total Annual Fund Operating Expenses ..... .79% 1.70% 1.70%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 552 $ 715 $ 893 $1,406
Class C 371 630 1,014 2,089
Class D 273 536 923 2,009

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 552 $ 715 $ 893 $1,406
Class C 271 630 1,014 2,089
Class D 173 536 923 2,009

23
<PAGE>

MINNESOTA FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Minnesota Fund seeks to maximize income exempt from regular federal income
taxes and from regular Minnesota personal income taxes to the extent consistent
with preservation of capital and with consideration given to opportunities for
capital gain.

The Minnesota Fund uses the following strategies to pursue its objective:

The Minnesota Fund invests at least 80% of its net assets in Minnesota municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Minnesota Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Minnesota issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Pursuant to
Minnesota legislation enacted in 1995, dividends that would otherwise be
exempt from Minnesota personal income tax in the case of individuals,
estates, and trusts, could become subject to the Minnesota personal income
tax if it were judicially determined that exempting such dividends would
discriminate against interstate commerce.

24
<PAGE>

MINNESOTA FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 9.89
90 6.52
91 7.53
92 7.67
93 13.49
94 -2.54
95 11.41
96 3.39
97 7.02
98 6.43

Best calendar quarter return: 6.01% - quarter ended 6/30/89

Worst calendar quarter return: -3.23% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.63%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.18% 3.97% 6.45% --
Class D 4.26 n/a n/a 3.89%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .22% .22% .22%
---- ---- ----
Total Annual Fund Operating Expenses ..... .81% 1.72% 1.72%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 554 $ 721 $ 903 $1,429
Class C 373 636 1,024 2,110
Class D 275 542 933 2,030

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 554 $ 721 $ 903 $1,429
Class C 273 636 1,024 2,110
Class D 175 542 933 2,030

25
<PAGE>

MISSOURI FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Missouri Fund seeks to maximize income exempt from regular federal income
taxes and from Missouri personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.

The Missouri Fund uses the following strategies to pursue its objective:

The Missouri Fund invests at least 80% of its net assets in Missouri municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Missouri Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Missouri issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. The national
economic recession of the early 1980s had a disproportionately adverse
impact on Missouri's economy, and its unemployment levels. A return to a
pattern of high unemployment could adversely affect the Missouri debt
obligations acquired by the Fund. Defense related business plays an
important role in Missouri's economy. Negative trends in this industry or
relocations of major employers could have a negative impact on the economy
of the State and particularly on the economy of the St. Louis metropolitan
area.

26
<PAGE>

MISSOURI FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 9.44
90 6.93
91 11.37
92 7.25
93 11.40
94 -6.32
95 16.95
96 3.71
97 8.08
98 5.77

Best calendar quarter return: 7.31% - quarter ended 3/31/95

Worst calendar quarter return: -6.11% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.44%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.76% 4.34% 6.78% --
Class D 3.83 n/a n/a 4.20%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .10% 1.00% 1.00%
Other Expenses ........................... .29% .29% .29%
---- ---- ----
Total Annual Fund Operating Expenses ..... .89% 1.79% 1.79%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 380 658 1,060 2,184
Class D 282 563 970 2,105

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 562 $ 745 $ 945 $1,519
Class C 280 658 1,060 2,184
Class D 182 563 970 2,105

27
<PAGE>

NEW JERSEY FUND

INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES

The New Jersey Fund seeks to maximize income exempt from regular federal income
tax and New Jersey gross income tax consistent with preservation of capital and
with consideration given to opportunities for capital gain.

The New Jersey Fund uses the following strategies to pursue its objective:

The New Jersey Fund invests at least 80% of its net assets in New Jersey
municipal securities rated investment grade when purchased.

PRINCIPAL RISKS

The New Jersey Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of New Jersey
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems. New
Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction, and service industries, supplemented by rural
areas with selective commercial agriculture. New Jersey's economy will be
affected by trends in these sectors.

28
<PAGE>

NEW JERSEY FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 10.56
90 6.78
91 11.04
92 8.99
93 12.37
94 -6.15
95 15.57
96 3.40
97 8.93
98 6.00

Best calendar quarter return: 6.78% - quarter ended 3/31/95

Worst calendar quarter return: -5.63% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.67%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.96% 4.29% 7.07% --
Class D 4.03 n/a n/a 4.52%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .22% 1.00% 1.00%
Other Expenses ........................... .30% .30% .30%
---- ---- ----
Total Annual Fund Operating Expenses ..... 1.02% 1.80% 1.80%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 574 $ 784 $1,011 $1,664
Class C 381 661 1,065 2,195
Class D 283 566 975 2,116

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 574 $ 784 $1,011 $1,664
Class C 281 661 1,065 2,195
Class D 183 566 975 2,116

29
<PAGE>

NEW YORK FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The New York Fund seeks to maximize income exempt from regular federal income
taxes and from New York personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.

The New York Fund uses the following strategies to pursue its objective:

The New York Fund invests at least 80% of its net assets in New York municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The New York Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of New York issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. New York City
and certain localities outside New York City have experienced financial
problems. These problems may affect the fiscal health of the State.

30
<PAGE>

NEW YORK FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 9.39
90 4.18
91 13.53
92 9.31
93 13.26
94 -7.93
95 19.31
96 3.83
97 10.04
98 6.86

Best calendar quarter return: 8.13% - quarter ended 3/31/95

Worst calendar quarter return: -6.61% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.50%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.73% 5.03% 7.42% --
Class D 4.90 n/a n/a 4.93%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .22% .22% .22%
---- ---- ----
Total Annual Fund Operating Expenses ..... .81% 1.72% 1.72%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 554 $ 721 $ 903 $1,429
Class C 373 636 1,024 2,110
Class D 275 542 933 2,030

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 554 $ 721 $ 903 $1,429
Class C 273 636 1,024 2,110
Class D 175 542 933 2,030

31
<PAGE>

NORTH CAROLINA FUND

INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES

The North Carolina Fund seeks high income exempt from regular federal income
taxes and North Carolina personal income taxes consistent with preservation of
capital and with consideration given to capital gain.

The North Carolina Fund uses the following strategies to pursue its objective:

The North Carolina Fund invests at least 80% of its net assets in North Carolina
municipal securities rated investment grade when purchased.

PRINCIPAL RISKS

The North Carolina Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of North Carolina
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems.
North Carolina's total expenditures for each fiscal period covered by the
budget must not exceed total receipts during the period and the surplus in
the State Treasury at the beginning of the period. During the State's
1990-1991 fiscal year, it began facing a substantial budget shortfall
resulting from the failure of revenues received by the State to meet
projected levels. While the State was successful in dealing with the
problem, pressure on state revenues may be an ongoing problem.

32
<PAGE>

NORTH CAROLINA FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

90* 2.80
91 10.63
92 8.15
93 12.98
94 -7.35
95 19.56
96 2.71
97 8.75
98 5.81

* For the period 8/27/90 to 12/31/90

Best calendar quarter return: 8.72% - quarter ended 3/31/95

Worst calendar quarter return: -6.73% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.57%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.85% 4.53% 6.80% --
Class D 4.14 n/a -- 4.57%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.24(1) 6.09(2)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 8/31/90.

(2) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .23% 1.00% 1.00%
Other Expenses ........................... .32% .32% .32%
---- ---- ----
Total Annual Fund Operating Expenses ..... 1.05% 1.82% 1.82%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 577 $ 793 $1,027 $1,697
Class C 383 667 1,075 2,216
Class D 285 573 985 2,137

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 577 $ 793 $1,027 $1,697
Class C 283 667 1,075 2,216
Class D 185 573 985 2,137

33
<PAGE>

OHIO FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Ohio Fund seeks to maximize income exempt from regular federal income taxes
and from Ohio personal income taxes to the extent consistent with preservation
of capital and with consideration given to opportunities for capital gain.

The Ohio Fund uses the following strategies to pursue its objective:

The Ohio Fund invests at least 80% of its net assets in Ohio municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Ohio Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Ohio issuers, its
performance may be affected by local, state, and regional factors. These
may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Ohio's economy
relies in part on durable goods manufacturing largely concentrated in
motor vehicles and equipment, steel, rubber products and household
appliances. As a result, general economic activity, as in many other
industrially developed states, tends to be more cyclical than in other
states and in the nation as a whole.

34
<PAGE>

OHIO FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 9.94
90 6.58
91 11.31
92 8.43
93 11.64
94 -4.91
95 15.23
96 3.77
97 8.39
98 5.89

Best calendar quarter return: 6.47% - quarter ended 3/31/95

Worst calendar quarter return: -4.89% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.68%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.85% 4.44% 6.97% --
Class D 3.94 n/a n/a 4.41%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .19% .19% .19%
---- ---- ----
Total Annual Fund Operating Expenses ..... .78% 1.69% 1.69%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 551 $ 712 $ 888 $1,395
Class C 370 627 1,009 2,078
Class D 272 533 918 1,998

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 551 $ 712 $ 888 $1,395
Class C 270 627 1,009 2,078
Class D 172 533 918 1,998

35
<PAGE>

OREGON FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The Oregon Fund seeks to maximize income exempt from regular federal income
taxes and from Oregon personal income taxes to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.

The Oregon Fund uses the following strategies to pursue its objective:

The Oregon Fund invests at least 80% of its net assets in Oregon municipal
securities rated investment grade when purchased.

PRINCIPAL RISKS

The Oregon Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Oregon issuers,
its performance may be affected by local, state, and regional factors.
These may include state or local legislation or policy changes, economics,
natural disasters, and the possibility of credit problems. Oregon's
economy has been affected by the high technology manufacturing, forest
products, and agriculture industries, which have all been slowed by
declining exports to Asia.

36
<PAGE>

OREGON FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 10.44
90 6.50
91 10.82
92 7.78
93 10.90
94 -4.56
95 14.55
96 3.81
97 9.05
98 6.09

Best calendar quarter return: 6.49% - quarter ended 6/30/89

Worst calendar quarter return: -4.48% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.83%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.09% 4.57% 6.89% --
Class D 4.13 n/a n/a 4.53%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .29% .29% .29%
---- ---- ----
Total Annual Fund Operating Expenses ..... .88% 1.79% 1.79%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 561 $ 742 $ 939 $1,508
Class C 380 658 1,060 2,184
Class D 282 563 970 2,105

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 561 $ 742 $ 939 $1,508
Class C 280 658 1,060 2,184
Class D 182 563 970 2,105

37
<PAGE>

PENNSYLVANIA FUND

INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES

The Pennsylvania Fund seeks high income exempt from regular federal income tax
and Pennsylvania income taxes consistent with preservation of capital.

The Pennsylvania Fund uses the following strategies to pursue its objective:

The Pennsylvania Fund invests at least 80% of its net assets in Pennsylvania
municipal securities rated investment grade when purchased. The Fund will
ordinarily hold securities with maturities in excess of one year.

PRINCIPAL RISKS

The Pennsylvania Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of Pennsylvania
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems. From
time to time, Pennsylvania and various of its political subdivisions
(including particularly the City of Philadelphia and the City of Scranton)
have encountered financial difficulty due to slowdowns in the pace of
economic activity and to other factors.

38
<PAGE>

PENNSYLVANIA FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 10.24
90 5.35
91 11.29
92 9.32
93 12.91
94 -7.03
95 18.01
96 3.44
97 8.70
98 6.14

Best calendar quarter return: 7.59% - quarter ended 3/31/95

Worst calendar quarter return: -6.40% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.65%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 1.10% 4.53% 7.12% --
Class D 4.32 n/a n/a 4.49%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .22% 1.00% 1.00%
Other Expenses ........................... .47% .47% .47%
---- ---- ----
Total Annual Fund Operating Expenses ..... 1.19% 1.97% 1.97%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 591 $ 835 $1,098 $1,850
Class C 398 712 1,152 2,373
Class D 300 618 1,062 2,296

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 591 $ 835 $1,098 $1,850
Class C 298 712 1,152 2,373
Class D 200 618 1,062 2,296

39
<PAGE>

SOUTH CAROLINA FUND

INVESTMENT OBJECTIVES/PRINCIPAL STRATEGIES

The South Carolina Fund seeks to maximize income exempt from regular federal
income taxes and from South Carolina personal income taxes to the extent
consistent with preservation of capital and with consideration given to
opportunities for capital gain.

The South Carolina Fund uses the following strategies to pursue its objective:

The South Carolina Fund invests at least 80% of its net assets in South Carolina
municipal securities rated investment grade when purchased.

PRINCIPAL RISKS

The South Carolina Fund is subject to the following principal risks:

o The Fund is subject to interest rate risk. When interest rates rise,
municipal bond prices fall. Movements in interest rates may affect the
Fund's yield, net asset value, and total return.

o If certain securities or market sectors represented in the Fund's
portfolio do not perform as expected, the Fund's net asset value may
decline.

o Because the Fund invests primarily in the securities of South Carolina
issuers, its performance may be affected by local, state, and regional
factors. These may include state or local legislation or policy changes,
economics, natural disasters, and the possibility of credit problems.
While South Carolina has not defaulted on its bonded debt since 1879, the
State did experience certain budgeting difficulties over several recent
years through June 30, 1993. Such difficulties have not to date impacted
the State's ability to pay its indebtedness but did result in S&P lowering
its rating on South Carolina general obligation bonds in 1993. The rating
was restored to AAA in 1996.

40
<PAGE>

SOUTH CAROLINA FUND

PAST PERFORMANCE

Class A Annual Total Returns
Calendar Years

[The following points were depicted as a bar chart in the printed material.]

89 10.61
90 6.01
91 11.52
92 8.39
93 11.71
94 -6.70
95 17.65
96 3.93
97 8.72
98 5.73

Best calendar quarter return: 7.23% - quarter ended 3/31/95

Worst calendar quarter return: -6.18% - quarter ended 3/31/94

Class A annual total return for the quarter ended 3/31/99: 0.51%.

- --------------------------------------------------------------------------------
Average Annual Total Returns
Periods Ended 12/31/98

CLASS D
SINCE
ONE FIVE TEN INCEPTION
YEAR YEARS YEARS 2/1/94
---- ----- ----- ---------
Class A 0.70% 4.54% 7.06% --
Class D 3.78 n/a n/a 4.46%
Lehman Brothers
Municipal Bond Index 6.48 6.23 8.22 6.09(1)

The Lehman Brothers Municipal Bond Index is an unmanaged index that does not
reflect any fees or sales charges, and does not reflect state-specific bond
market performance.

(1) From 1/31/94.
- --------------------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating
Expenses for Fiscal 1998
- -----------------------
(as a percentage of average net assets)

Management Fees .......................... .50% .50% .50%
Distribution and/or
Service (12b-1) Fees ................... .09% 1.00% 1.00%
Other Expenses ........................... .21% .21% .21%
---- ---- ----
Total Annual Fund Operating Expenses ..... .80% 1.71% 1.71%
==== ==== ====

(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 372 633 1,019 2,099
Class D 274 539 928 2,019

If you did not sell your shares at the end of each period, your expenses would
be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 553 $ 718 $ 898 $1,418
Class C 272 633 1,019 2,099
Class D 174 539 928 2,019

41
<PAGE>

MANAGEMENT OF THE FUNDS

A Board of Directors or Board of Trustees (as applicable) provides broad
supervision over the affairs of each Fund.

J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of each Fund. Seligman manages the investment of each
Fund's assets, including making purchases and sales of portfolio securities
consistent with each Fund's investment objective and strategies, and administers
each Fund's business and other affairs.

Established in 1864, Seligman currently serves as manager to 18 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $21.5 billion in assets as of April 30, 1999. Seligman also
provides investment management or advice to institutional or other accounts
having an aggregate value at April 30, 1999, of approximately $10.2 billion.

Each Fund pays Seligman a fee for its management services. The fee for each Fund
is equal to an annual rate of .50% of the Fund's average daily net assets.

- --------------------------------------------------------------------------------
Affiliates of Seligman:

Seligman Advisors, Inc.:

Each Fund's general distributor; responsible for accepting orders for purchases
and sales of Fund shares.

Seligman Services, Inc.:

A limited purpose broker/dealer; acts as the broker/dealer of record for
shareholder accounts that do not have a designated financial advisor.

Seligman Data Corp. (SDC):

Each Fund's shareholder service agent; provides shareholder account services to
the Fund at cost.
- --------------------------------------------------------------------------------

Portfolio Management

The Funds are managed by the Seligman Municipals Team, headed by Mr. Thomas G.
Moles. Mr. Moles, a Managing Director of Seligman, has been Vice President and
Portfolio Manager of each Fund since its inception. Mr. Moles is also President
and Portfolio Manager of Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc., two closed-end investment companies.

42
<PAGE>

YEAR 2000

As the millennium approaches, mutual funds, financial and business
organizations, and individuals could be adversely affected if their computer
systems do not properly process and calculate date-related information and data
on and after January 1, 2000. Like other mutual funds, the Funds rely upon
service providers and their computer systems for its day-to-day operations. Many
of the Funds' service providers in turn depend upon computer systems of their
vendors. Seligman and SDC, have established a year 2000 project team. The team's
purpose is to assess the state of readiness of Seligman and SDC and the Funds'
other service providers and vendors. The team is comprised of several
information technology and business professionals, as well as outside
consultants. The Project Manager of the team reports directly to the
Administrative Committee of Seligman. The Project Manager and other members of
the team also report to each Fund's Board and its Audit Committee.

The team has identified the service providers and vendors who furnish critical
services or software systems to the Funds, including securities firms that
execute portfolio transactions for the Funds and firms responsible for
shareholder account recordkeeping. The team is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Funds. The team will
assess the feasibility of their year 2000 plans. The team has made progress on
its year 2000 contingency plans -- recovery efforts the team will employ in the
event that year 2000 issues adversely affect the Funds. The team anticipates
finalizing these plans in the near future.

The Funds anticipate the team will have implemented all significant components
of the team's year 2000 plans by mid-1999, including appropriate testing of
critical systems and receipt of satisfactory assurances from critical service
providers and vendors regarding their year 2000 compliance. The Funds believe
that the critical systems on which they rely will function properly on and after
the year 2000, but this is not guaranteed. If these systems do not function
properly, or the Funds' critical service providers are not successful in
implementing their year 2000 plans, the Funds' operations may be adversely
affected, including pricing, securities trading and settlement, and the
provision of shareholder services.

In addition, the Funds hold securities issued by governmental or
quasi-governmental issuers, which, like other organizations, may be susceptible
to year 2000 concerns. Year 2000 issues may affect an issuer's operations,
creditworthiness, and ability to make timely payment on any indebtedness and
could have an adverse impact on the value of its securities. If a Fund holds
these securities, its performance could be negatively affected. Seligman seeks
to identify an issuer's state of year 2000 readiness as part of the research it
employs. However, the perception of an issuer's year 2000 preparedness is only
one of the many factors considered in determining whether to buy, sell, or
continue to hold a security. Information provided by issuers concerning their
state of readiness may or may not be accurate or readily available. Further, the
Funds may be adversely affected if the domestic or foreign exchanges, markets,
depositories, clearing agencies, or governments or third parties responsible for
infrastructure needs do not address their year 2000 issues in a satisfactory
manner.

SDC has informed the Funds that it does not expect the cost of its services to
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The Funds will not pay to remediate the
systems of Seligman or bear directly the costs to remediate the systems of any
other service providers or vendors, other than SDC.

43
<PAGE>

Shareholder Information

DECIDING WHICH CLASS OF SHARES TO BUY

Each Fund's Classes represent an interest in the same portfolio of investments.
However, each Class has its own sales charge schedule, and its ongoing 12b-1
fees may differ from other classes. When deciding which Class of shares to buy,
you should consider, among other things:

o The amount you plan to invest.

o How long you intend to remain invested in the Fund, or another Seligman
mutual fund.

o If you would prefer to pay an initial sales charge and lower ongoing 12b-1
fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.

o Whether you may be eligible for reduced or no sales charges when you buy
or sell shares.

Your financial advisor will be able to help you decide which Class of
shares best meets your needs.

- --------------------------------------------------------------------------------
Class A

o Initial sales charge on Fund purchases, as set forth below:

<TABLE>
<CAPTION>
Sales Charge Regular Dealer
Sales Charge as a % Discount
as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
-------------------------- ---------------- ---------------- --------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.25%
$50,000 - $ 99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0.00 0.00 0.00
</TABLE>

(1) "Offering Price" is the amount that you actually pay for Fund
shares; it includes the initial sales charge.

(2) You will not pay a sales charge on purchases of $1 million or
more, but you will be subject to a 1% CDSC if you sell your
shares within 18 months.

o Annual 12b-1 fee (for shareholder services) of up to 0.25%.

o No sales charge on reinvested dividends or capital gain
distributions.

o Certain employer-sponsored defined contribution-type plans can
purchase shares with no initial sales charge.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Class C

o Initial sales charge on Fund purchases, as set forth below:

<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Discount
as a % as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
-------------------------- ----------------- ----------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0.00 0.00 0.00
</TABLE>

(1) "Offering Price" is the amount that you actually pay for Fund
shares; it includes the initial sales charge.

(2) Your purchase of Class C shares must be for less than
$1,000,000 because if you invest $1,000,000 or more you will
pay less in fees and charges if you buy Class A shares.

o A 1% CDSC on shares sold within eighteen months of purchase.

o Annual 12b-1 fee (for distribution and shareholder services) of
1.00%.

o No automatic conversion to Class Ashares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.

o No CDSC when you sell shares purchased with reinvested dividends
or capital gain distributions.
- --------------------------------------------------------------------------------

44
<PAGE>

- --------------------------------------------------------------------------------
Class D*

o No initial sales charge on purchases.

o A 1% CDSC on shares sold within one year of purchase.

o Annual 12b-1 fee (for distribution and shareholder services) of
1.00%.

o No CDSC when you sell shares purchased with reinvested dividends
or capital gain distributions.

*Class D shares are not available to all investors. Beginning June 1,
1999, you may purchase Class D shares only if (1) you already own Class D
shares of the Fund or another Seligman mutual fund, (2) if your financial
advisor of record maintains an omnibus account at SDC, or (3) pursuant
to a 401(k) or other retirement plan program for which Class D shares are
already available or for which the sponsor requests Class D shares because
the sales charge structure of Class D shares is comparable to the sales
charge structure of the other funds offered under the program.
- --------------------------------------------------------------------------------

Each Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940. The plan allows each Class to pay distribution and/or service fees for the
sale and distribution of its shares and/or for providing services to
shareholders.

Because 12b-1 fees are paid out of each Class's assets on an ongoing basis, over
time these fees will increase your investment expenses and may cost you more
than other types of sales charges.

The Board of Directors or Trustees, as applicable, believes that no conflict of
interest currently exists between a Fund's Class A, Class C and Class D shares.
On an ongoing basis, the Directors or Trustees, in the exercise of their
fiduciary duties under the Investment Company Act of 1940 and applicable state
law, will seek to ensure that no such conflict arises.

How CDSCs Are Calculated

To minimize the amount of the CDSC you may pay when you sell your shares, each
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.

You will not pay a CDSC when you exchange shares of any Fund to buy shares of
the same class of any other Seligman mutual fund. For the purpose of calculating
the CDSC when you sell shares that you acquired by exchanging shares of a Fund,
it will be assumed that you held the shares since the date you purchased the
shares of that Fund.

45
<PAGE>

PRICING OF FUND SHARES

When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be included in the purchase price for Class A shares. Purchase or
sale orders received by an authorized dealer or financial advisor by the close
of regular trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m.
Eastern time) and accepted by Seligman Advisors before the close of business
(5:00 p.m. Eastern time) on the same day will be executed at the Class's NAV
calculated as of the close of regular trading on the NYSE on that day. Your
broker/dealer or financial advisor is responsible for forwarding your order to
Seligman Advisors before the close of business.

If your buy or sell order is received by your broker/dealer or financial advisor
after the close of regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be executed at the Class's
NAV calculated as of the close of regular trading on the next NYSE trading day.
When you sell shares, you receive the Class's per share NAV, less any applicable
CDSC.

- --------------------------------------------------------------------------------
NAV:

Computed separately for each Class of a Fund by dividing that Class's share of
the value of the net assets of the Fund (i.e., its assets less liabilities) by
the total number of outstanding shares of the Class.
- --------------------------------------------------------------------------------

The NAV of a Fund's shares is determined each day, Monday through Friday, on
days that the NYSE is open for trading. Because of their higher 12b-1 fees, the
NAV of Class C shares and Class D shares will generally be lower than the NAV of
Class A shares of a Fund.

Securities owned by a Fund are valued at current market prices. If reliable
market prices are unavailable,securities are valued in accordance with
procedures approved by the Board of Directors or Trustees, as applicable.

OPENING YOUR ACCOUNT

The Funds' shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you. Class D shares are not available to all investors. For more information,
see "Deciding Which Class of Shares to Buy-Class D."

To make your initial investment in a Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares.

The required minimum initial investments are:

o Regular (non-retirement) accounts: $1,000

o For accounts opened concurrently with Invest-A-Check(R):

$100 to open if you will be making monthly investments

$250 to open if you will be making quarterly investments

If you buy shares by check and subsequently sell the shares, SDC will not send
your proceeds until your check clears, which could take up to 15 calendar days
from the date of your purchase.

You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in the Fund and the other Seligman funds
you own under the same account number. Duplicate account statements will be sent
to you free of charge for the current year and most recent prior year. Copies of
year-end statements for prior years are available for a fee of $10 per year, per
account, with a maximum charge of $150 per account request. Send your request
and a check for the fee to SDC.

IF YOU WANT TO BE ABLE TO BUY, SELL, OR EXCHANGE SHARES BY TELEPHONE, YOU SHOULD
COMPLETE AN APPLICATION WHEN YOU OPEN YOUR ACCOUNT. THIS WILL PREVENT YOU FROM
HAVING TO COMPLETE A SUPPLEMENTAL ELECTION FORM (WHICH MAY REQUIRE A SIGNATURE
GUARANTEE) AT A LATER DATE.

46
<PAGE>

HOW TO BUY ADDITIONAL SHARES

After you have made your initial investment, there are many options available to
make additional purchases of Fund shares. Subsequent purchases must be for $100
or more.

Shares may be purchased through your authorized broker/ dealer or financial
advisor, or you may send a check directly to SDC. Please provide either an
investment slip or a note that provides your name(s), Fund name, and account
number. Your investment will be made in the Class you already own.

Send investment checks to:

Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766

Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.

You may also use the following account services to make additional investments:

Invest-a-Check(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.

Automatic Dollar-Cost-Averaging. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of any Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares, or Class C
shares, you may pay an initial sales charge to buy shares.

Automatic CD Transfer. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.

Dividends From Other Investments. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name and Class of shares.)

Direct Deposit. You may buy Fund shares electronically with funds from your
employer, the IRS or any other institution that provides direct deposit. Call
SDC for more information.

Seligman Time Horizon MatrixSM. (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.

Seligman Harvester. If you are a retiree or nearing retirement, this program is
designed to help you establish an investment strategy that seeks to meet your
income needs throughout your retirement. The strategy is customized to your
personal financial situation by allocating your assets to seek to address your
income requirements, and prioritizing your expenses and establishing a prudent
withdrawal schedule.

HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS

You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares or
Class C shares of Seligman Cash Management Fund to buy shares of the same class
of a Fund or another Seligman mutual fund.

Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.

If you exchange into a new fund, you must exchange enough to meet the new fund's
required minimum initial investment.

Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es). You should read and understand a fund's
prospectus before investing. Some funds may not offer all classes of shares.

47
<PAGE>

HOW TO SELL SHARES

The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."

When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).

You may sell shares to the Fund through a broker/dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction; however, the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.

You may always send a written request to sell shares of any Fund. It may take
longer to get your money if you send your request by mail.

As an additional measure to protect you and the Fund, SDCmay confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be paid
to an alternate payee or sent to an address other than the address of record,
with you or your financial advisor by telephone before sending your money. This
will not effect the date on which your redemption request is actually processed.

You will need to guarantee your signature(s) if the proceeds are:

(1) $50,000 or more;

(2) to be paid to someone other than all account owners, or

(3) mailed to other than your address of record.

- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE:

PROTECTS YOU AND THE FUNDS FROM FRAUD. IT GUARANTEES THAT A SIGNATURE IS
GENUINE. A GUARANTEE MUST BE OBTAINED FROM AN ELIGIBLE FINANCIAL INSTITUTION.
NOTARIZATION BY A NOTARY PUBLIC IS NOT AN ACCEPTABLE GUARANTEE.
- --------------------------------------------------------------------------------

You may need to provide additional documents to sell shares if you are:

o a corporation;

o an executor or administrator;

o a trustee or custodian; or

o in a retirement plan.

If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.

Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.

You may also use the following account services to sell shares:

Systematic Withdrawal Plan. If you have at least $5,000 in a Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class C shares and Class D shares
and reinvest your dividends and capital gain distri butions, you may annually
withdraw 10%, respectively, of the value of your Fund account (at the time of
election) without a CDSC.

Check Redemption Service. If you have at least $25,000 in a Fund, you ask SDCto
provide checks which may be drawn against your account in amounts of $500 or
more. You may elect this service on your initial application or contact SDC for
the appropriate forms to establish this service. If you own Class A shares that
were bought at NAV because of the size of your purchase, or if you own Class B
shares, check redemptions may be subject to a CDSC. If you own Class D or Class
C shares, you may use this service only with respect to shares that you have
held for at least one year or eighteen months, respectively.

48
<PAGE>

IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT

To protect you and other shareholders, each Fund reserves the right to:

o Refuse an exchange request if:

1. you have exchanged twice from the same fund in any three-month
period;

2. the amount you wish to exchange equals the lesser of
$1,000,000 or 1% of a Fund's net assets; or

3. you or your financial advisor have been advised that previous
patterns of purchases and sales or exchanges have been
considered excessive.

o Refuse any request to buy Fund shares;

o Reject any request received by telephone;

o Suspend or terminate telephone services;

o Reject a signature guarantee that SDC believes may be fraudulent;

o Close your fund account if its value falls below $500;

o Close your account if it does not have a certified taxpayer
identification number.

Telephone Services

You and your broker/dealer or financial representative or advisor will be able
to place the following requests by telephone, unless you indicate on your
account application that you do not want telephone services:

o Sell uncertificated shares (up to $50,000 per day, payable to
account owner(s) and mailed to address of record);

o Exchange shares between funds;

o Change dividend and/or capital gain distribution options;

o Change your address;

o Establish systematic withdrawals to address of record.

If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form (which may
require a signature guarantee).

Restrictions apply to certain types of accounts:

o Trust accounts on which the current trustee is not listed may not
sell Fund shares by phone.

o Corporations may not sell Fund shares by phone.

o IRAs may only exchange Fund shares or request address changes by
phone.

o Group retirement plans may not sell Fund shares by phone; plans that
allow participants to exchange by phone must provide a letter of
authorization signed by the plan custodian or trustee and provide a
supple mental election form signed by all plan participants.

Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.

Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.

You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative or financial advisor may not establish
telephone services without your written authorization. SDC will send written
confirmation to the address of record when telephone services are added or
terminated.

During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of shares. In this case, you may need to
write, and it may take longer for your request to be processed. A Fund's NAV may
fluctuate during this time.

The Funds and SDC will not be liable for processing requests received by phone
as long as it was reasonable to believe that the request was genuine.

Reinstatement Privilege

If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the same Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.

49
<PAGE>

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS

Each Fund generally declares any dividends from net investment income daily and
pays dividends on the 17th of each month. If the 17th day of a month falls on a
weekend or on a NYSE holiday, the dividend will be distributed on the previous
business day. The Funds distribute net capital gains realized on investments
annually. It is expected that the Funds' distri butions will be primarily income
dividends.

You may elect to:

(1) reinvest both dividends and capital gain distributions;

(2) receive dividends in cash and reinvest capital gain distributions; or

(3) receive both dividends and capital gain distributions in cash.

Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise.

If you want to change your election, you may write SDC at the address listed on
the back cover of this prospectus, or, if you have telephone services, you or
your financial advisor may call SDC. Your request must be received by SDC before
the record date to be effective for that dividend or capital gain distribution.

- --------------------------------------------------------------------------------
Dividend:

A payment by a mutual fund, usually derived from the fund's net investment
income (dividends and interest earned on portfolio securities less expenses).

Capital Gain Distribution:

A payment to mutual fund shareholders which represents profits realized on the
sale of securities in a Fund's portfolio.

Ex-dividend Date:

The day on which any declared distributions (dividends or capital gains) are
deducted from the Fund's assets before it calculates its NAV.
- --------------------------------------------------------------------------------

Cash dividends or capital gain distributions will be sent by check to your
address of record or, if you have current ACH bank information on file, directly
deposited into your pre designated bank account within 3-4 business days from
the payable date.

Dividends and capital gain distributions are reinvested to buy additional shares
on the payable date using the NAV of the payable date.

Dividends on Class C shares and Class D shares will be lower than the dividends
on Class A shares as a result of their higher 12b-1 fees. Capital gain
distributions, if any, will be paid in the same amount for each Class.

TAXES

The Funds intend to pay dividends that are exempt from regular income tax. A
Fund may invest a portion of its assets in securities that generate income that
is not exempt from federal or state income tax. Income exempt from federal tax
may be subject to state and local tax. If you wish more specific information on
the possible tax consequences of investing in a particular Fund, you should read
that Fund's Statement of Additional Information.

Dividends paid by the Funds are taxable to you as ordinary income. Any capital
gains distributed by a Fund may be taxable, whether you take them in cash or
reinvest them to buy additional Fund shares. Capital gains may be taxed at
different rates depending on the length of time the Fund holds its assets.

When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.

An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.

Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.

50
<PAGE>

FINANCIAL HIGHLIGHTS

The tables below are intended to help you understand the financial performance
of each Fund's Classes for the past five and one-half years or, if less than
five and one-half years, the period of the Class's operations. Class C is a new
Class, effective June 1, 1999, so financial highlights are not available.
Certain information reflects financial results for a single share of a Class
that was held throughout the periods shown. "Total return" shows the rate that
you would have earned (or lost) on an investment in the Fund, assuming you
reinvested all your dividends and capital gain distributions. Total returns do
not reflect any sales charges. Deloitte & Touche LLP, independent auditors, have
audited this information for each Fund. Their reports, along with the financial
statements, are included in each Fund's Annual and Mid-Year Reports, which are
available upon request.

<TABLE>
<CAPTION>
NATIONAL FUND
CLASS A
-------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.32 $ 8.01 $ 7.70 $ 7.58 $ 7.18 $ 8.72
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.39 0.39 0.40 0.40 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.15) 0.31 0.31 0.12 0.40 (1.04)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.04 0.70 0.70 0.52 0.80 (0.63)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.39) (0.39) (0.40) (0.40) (0.41)
Distributions (from capital gains).. -- -- -- -- -- (0.50)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.19) (0.39) (0.39) (0.40) (0.40) (0.91)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.17 $ 8.32 $ 8.01 $ 7.70 $ 7.58 $ 7.18
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.51% 9.00% 9.40% 6.97% 11.48% (7.83)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 100,557 $ 101,909 $ 97,481 $ 98,767 $ 104,184 $ 111,374
Ratio of expenses to average
net assets ....................... 0.83%(3) 0.80% 0.84% 0.80% 0.86% 0.85%
Ratio of net income to
average net assets ............... 4.71%(3) 4.82% 5.05% 5.19% 5.46% 5.30%
Portfolio turnover rate ............ 2.76% 18.00% 20.63% 33.99% 24.91% 24.86%

<CAPTION>
NATIONAL FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- --------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.31 $ 8.02 $ 7.70 $ 7.57 $ 7.18 $ 8.20
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.32 0.32 0.33 0.32 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.15) 0.29 0.32 0.13 0.39 (1.02)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.01 0.61 0.64 0.46 0.71 (0.80)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.32) (0.32) (0.33) (0.32) (0.22)
Distributions (from capital gains).. -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.16) (0.32) (0.32) (0.33) (0.32) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.16 $ 8.31 $ 8.02 $ 7.70 $ 7.57 $ 7.18
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.08% 7.76% 8.56% 6.13% 10.17% (9.96)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 7,968 $ 7,392 $ 2,279 $ 4,826 $ 1,215 $ 446
Ratio of expenses to average
net assets ....................... 1.73%(3) 1.71% 1.75% 1.67% 1.95% 1.76%(3)
Ratio of net income to
average net assets ............... 3.81%(3) 3.91% 4.15% 4.27% 4.40% 4.37%(3)
Portfolio turnover rate ............ 2.76% 18.00% 20.63% 33.99% 24.91% 24.86%(4)
</TABLE>

- ----------
See footnotes on page 60.

51
<PAGE>

<TABLE>
<CAPTION>
CALIFORNIA HIGH-YIELD FUND
CLASS A
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ----------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 6.80 $ 6.61 $ 6.50 $ 6.47 $ 6.30 $ 6.73
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.32 0.34 0.36 0.37 0.37
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.22 0.20 0.05 0.17 (0.34)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.54 0.54 0.41 0.54 0.03
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.32) (0.34) (0.36) (0.37) (0.37)
Distributions (from capital gains).. (0.02) (0.03) (0.09) (0.02) -- (0.09)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.18) (0.35) (0.43) (0.38) (0.37) (0.46)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 6.68 $ 6.80 $ 6.61 $ 6.50 $ 6.47 $ 6.30
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.89% 8.45% 8.74% 6.49% 8.85% 0.41%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 58,337 $ 58,374 $ 52,883 $ 50,264 $ 51,504 $ 48,007
Ratio of expenses to average
net assets ....................... 0.86%(3) 0.82% 0.87% 0.84% 0.90% 0.85%
Ratio of net income to
average net assets ............... 4.64%(3) 4.81% 5.26% 5.49% 5.84% 5.74%
Portfolio turnover rate ............ 1.86% 10.75% 22.42% 34.75% 17.64% 8.36%

<CAPTION>
CALIFORNIA QUALITY FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.21 $ 6.99 $ 6.75 $ 6.65 $ 6.39 $ 7.28
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.33 0.34 0.35 0.34 0.35
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.25 0.24 0.11 0.32 (0.73)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.58 0.58 0.46 0.66 (0.38)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.33) (0.34) (0.35) (0.34) (0.35)
Distributions (from capital gains).. (0.23) (0.03) -- (0.01) (0.06) (0.16)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.39) (0.36) (0.34) (0.36) (0.40) (0.51)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 6.88 $ 7.21 $ 6.99 $ 6.75 $ 6.65 $ 6.39
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.81% 8.67% 8.87% 7.00% 10.85% (5.46)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 83,857 $ 87,522 $ 86,992 $ 95,560 $ 94,947 $ 99,020
Ratio of expenses to average
net assets ....................... 0.81%(3) 0.77% 0.82% 0.79% 0.89% 0.81%
Ratio of net income to
average net assets ............... 4.49%(3) 4.75% 4.99% 5.11% 5.34% 5.20%
Portfolio turnover rate ............ 13.30% 30.82% 12.16% 12.84% 11.24% 22.16%

<CAPTION>
CALIFORNIA HIGH-YIELD FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 6.80 $ 6.61 $ 6.51 $ 6.48 $ 6.31 $ 6.67
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.13 0.26 0.28 0.30 0.31 0.21
Net gains or losses on securities
(both realized and unrealized) . (0.09) 0.22 0.19 0.05 0.17 (0.36)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.04 0.48 0.47 0.35 0.48 (0.15)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.13) (0.26) (0.28) (0.30) (0.31) (0.21)
Distributions (from capital gains).. (0.02) (0.03) (0.09) (0.02) -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.15) (0.29) (0.37) (0.32) (0.31) (0.21)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 6.69 $ 6.80 $ 6.61 $ 6.51 $ 6.48 $ 6.31
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.59% 7.47% 7.60% 5.53% 7.78% (2.47)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 8,286 $ 6,393 $ 3,320 $ 1,919 $ 1,277 $ 650
Ratio of expenses to average
net assets ....................... 1.76%(3) 1.73% 1.77% 1.74% 1.91% 1.74%(3)
Ratio of net income to
average net assets ............... 3.74%(3) 3.90% 4.36% 4.59% 4.84% 4.73%(3)
Portfolio turnover rate ............ 1.86% 10.75% 22.42% 34.75% 17.64% 8.36%(4)

<CAPTION>
CALIFORNIA QUALITY FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.19 $ 6.97 $ 6.74 $ 6.63 $ 6.38 $ 7.13
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.12 0.27 0.28 0.28 0.28 0.19
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.25 0.23 0.12 0.31 (0.75)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.02 0.52 0.51 0.40 0.59 (0.56)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.12) (0.27) (0.28) (0.28) (0.28) (0.19)
Distributions (from capital gains).. (0.23) (0.03) -- (0.01) (0.06) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.35) (0.30) (0.28) (0.29) (0.34) (0.19)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 6.86 $ 7.19 $ 6.97 $ 6.74 $ 6.63 $ 6.38
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.36% 7.71% 7.75% 6.20% 9.61% (8.01)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 5,604 $ 2,302 $ 1,677 $ 1,645 $ 863 $ 812
Ratio of expenses to average
net assets ....................... 1.71%(3) 1.68% 1.72% 1.69% 1.88% 1.77%(3)
Ratio of net income to
average net assets ............... 3.59%(3) 3.84% 4.09% 4.21% 4.36% 4.39%(3)
Portfolio turnover rate ............ 13.30% 30.82% 12.16% 12.84% 11.24% 22.16%(4)
</TABLE>

- ----------
See footnotes on page 60.

52
<PAGE>

<TABLE>
<CAPTION>
COLORADO FUND
CLASS A
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.64 $ 7.42 $ 7.27 $ 7.30 $ 7.09 $ 7.76
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.17 0.36 0.37 0.37 0.38 0.37
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.22 0.15 (0.03) 0.21 (0.59)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.05 0.58 0.52 0.34 0.59 (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.36) (0.37) (0.37) (0.38) (0.37)
Distributions (from capital gains).. -- -- -- -- -- (0.08)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.17) (0.36) (0.37) (0.37) (0.38) (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.52 $ 7.64 $ 7.42 $ 7.27 $ 7.30 $ 7.09
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.65% 8.03% 7.30% 4.76% 8.56% (2.92)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 46,896 $ 45,583 $ 49,780 $ 52,295 $ 54,858 $ 58,197
Ratio of expenses to average
net assets ....................... 0.90%(3) 0.90% 0.90% 0.85% 0.93% 0.86%
Ratio of net income to
average net assets ............... 4.52%(3) 4.80% 5.01% 5.07% 5.31% 5.06%
Portfolio turnover rate ............ 2.55% 28.66% 3.99% 12.39% 14.70% 10.07%

<CAPTION>
FLORIDA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.07 $ 7.80 $ 7.67 $ 7.71 $ 7.34 $ 8.20
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.17 0.35 0.36 0.38 0.40 0.42
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.34 0.23 0.04 0.37 (0.74)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.69 0.59 0.42 0.77 (0.32)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.35) (0.36) (0.38) (0.40) (0.42)
Distributions (from capital gains).. (0.05) (0.07) (0.10) (0.08) -- (0.12)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.22) (0.42) (0.46) (0.46) (0.40) (0.54)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.91 $ 8.07 $ 7.80 $ 7.67 $ 7.71 $ 7.34
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.75% 9.16% 8.01% 5.54% 10.87% (3.99)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 43,231 $ 42,464 $ 42,024 $ 45,200 $ 49,030 $ 49,897
Ratio of expenses to average
net assets** ..................... 1.02%(3) 1.00% 1.04% 0.97% 0.72% 0.42%
Ratio of net income to
average net assets** ............. 4.27%(3) 4.45% 4.70% 4.90% 5.38% 5.49%
Portfolio turnover rate ............ 2.93% 6.73% 33.68% 18.53% 11.82% 6.17%

<CAPTION>
COLORADO FUND
CLASS D
--------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- --------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.63 $ 7.42 $ 7.27 $ 7.29 $ 7.09 $ 7.72
----------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income ............ 0.14 0.29 0.30 0.31 0.30 0.20
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.21 0.15 (0.02) 0.20 (0.63)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations ... 0.03 0.50 0.45 0.29 0.50 (0.43)
----------- ----------- ----------- ----------- ----------- ----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.30) (0.31) (0.30) (0.20)
Distributions (from capital gains).. -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------
Total distributions ................ (0.14) (0.29) (0.30) (0.31) (0.30) (0.20)
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period ..... $ 7.52 $ 7.63 $ 7.42 $ 7.27 $ 7.29 $ 7.09
=========== =========== =========== =========== =========== ==========
Total Return: ...................... 0.33% 6.90% 6.34% 3.95% 7.26% (5.73)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 884 $ 344 $ 238 $ 255 $ 193 $ 96
Ratio of expenses to average
net assets ....................... 1.80%(3) 1.80% 1.81% 1.75% 2.02% 1.78%(3)
Ratio of net income to
average net assets ............... 3.62%(3) 3.90% 4.10% 4.17% 4.23% 4.05%(3)
Portfolio turnover rate ............ 2.55% 28.66% 3.99% 12.39% 14.70% 10.07%(4)

<CAPTION>
FLORIDA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.08 $ 7.81 $ 7.68 $ 7.72 $ 7.34 $ 8.10
----------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income** .......... 0.14 0.29 0.30 0.32 0.34 0.24
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.34 0.23 0.04 0.38 (0.76)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations ... 0.04 0.63 0.53 0.36 0.72 (0.52)
----------- ----------- ----------- ----------- ----------- ----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.30) (0.32) (0.34) (0.24)
Distributions (from capital gains).. (0.05) (0.07) (0.10) (0.08) -- --
----------- ----------- ----------- ----------- ----------- ----------
Total distributions ................ (0.19) (0.36) (0.40) (0.40) (0.34) (0.24)
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period ..... $ 7.93 $ 8.08 $ 7.81 $ 7.68 $ 7.72 $ 7.34
=========== =========== =========== =========== =========== ==========
Total Return: ...................... 0.50% 8.32% 7.18% 4.74% 10.07% (6.64)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,244 $ 1,940 $ 1,678 $ 1,277 $ 603 $ 244
Ratio of expenses to average
net assets** ..................... 1.77%(3) 1.77% 1.81% 1.73% 1.66% 1.29%(3)
Ratio of net income to
average net assets** ............. 3.52%(3) 3.68% 3.93% 4.14% 4.53% 4.61%(3)
Portfolio turnover rate ............ 2.93% 6.73% 33.68% 18.53% 11.82% 6.17%(4)
</TABLE>

- ----------
See footnotes on page 60.

53
<PAGE>

<TABLE>
<CAPTION>
GEORGIA FUND
CLASS A
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.38 $ 8.12 $ 7.87 $ 7.81 $ 7.48 $ 8.43
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.18 0.38 0.38 0.39 0.39 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.29 0.28 0.11 0.43 (0.86)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.08 0.67 0.66 0.50 0.82 (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.18) (0.38) (0.38) (0.39) (0.39) (0.41)
Distributions (from capital gains).. (0.05) (0.03) (0.03) (0.05) (0.10) (0.09)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.23) (0.41) (0.41) (0.44) (0.49) (0.50)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.23 $ 8.38 $ 8.12 $ 7.87 $ 7.81 $ 7.48
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.94% 8.44% 8.65% 6.56% 11.66% (5.52)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 47,043 $ 48,424 $ 50,614 $ 50,995 $ 57,678 $ 61,466
Ratio of expenses to average
net assets** ..................... 0.89%(3) 0.89% 0.89% 0.83% 0.91% 0.73%
Ratio of net income to
average net assets** ............. 4.45%(3) 4.57% 4.82% 4.94% 5.26% 5.21%
Portfolio turnover rate ............ -- 2.92% 12.28% 16.24% 3.36% 19.34%

<CAPTION>
LOUISIANA FUND

Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.51 $ 8.28 $ 8.16 $ 8.14 $ 7.94 $ 8.79
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.41 0.41 0.42 0.43 0.44
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.24 0.23 0.08 0.34 (0.77)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.07 0.65 0.64 0.50 0.77 (0.33)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.41) (0.41) (0.42) (0.43) (0.44)
Distributions (from capital gains).. (0.11) (0.01) (0.11) (0.06) (0.14) (0.08)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.30) (0.42) (0.52) (0.48) (0.57) (0.52)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.28 $ 8.51 $ 8.28 $ 8.16 $ 8.14 $ 7.94
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.91% 8.08% 8.17% 6.32% 10.30% (3.83)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 54,587 $ 56,308 $ 56,199 $ 57,264 $ 61,988 $ 61,441
Ratio of expenses to average
net assets ....................... 0.87%(3) 0.88% 0.86% 0.82% 0.89% 0.87%
Ratio of net income to
average net assets ............... 4.67%(3) 4.86% 5.08% 5.15% 5.44% 5.31%
Portfolio turnover rate ............ 5.31% 15.72% 16.08% 10.08% 4.82% 17.16%

<CAPTION>
GEORGIA FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.40 $ 8.13 $ 7.88 $ 7.82 $ 7.49 $ 8.33
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.15 0.30 0.31 0.32 0.32 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.30 0.28 0.11 0.43 (0.84)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.05 0.60 0.59 0.43 0.75 (0.62)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.30) (0.31) (0.32) (0.32) (0.22)
Distributions (from capital gains).. (0.05) (0.03) (0.03) (0.05) (0.10) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.20) (0.33) (0.34) (0.37) (0.42) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.25 $ 8.40 $ 8.13 $ 7.88 $ 7.82 $ 7.49
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.50% 7.59% 7.67% 5.60% 10.58% (7.57)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,678 $ 2,809 $ 2,640 $ 2,327 $ 2,079 $ 849
Ratio of expenses to average
net assets** ..................... 1.79%(3) 1.80 1.79% 1.73% 1.90% 1.76%(3)
Ratio of net income to
average net assets** ............. 3.55%(3) 3.66 3.92% 4.03% 4.28% 4.28%(3)
Portfolio turnover rate ............ -- 2.92% 12.28% 16.24% 3.36% 19.34%(4)

<CAPTION>
LOUISIANA FUND

Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.50 $ 8.27 $ 8.16 $ 8.14 $ 7.94 $ 8.73
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.33 0.34 0.35 0.35 0.24
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.24 0.22 0.08 0.34 (0.79)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.05 0.57 0.56 0.43 0.69 (0.55)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.33) (0.34) (0.35) (0.35) (0.24)
Distributions (from capital gains).. (0.11) (0.01) (0.11) (0.06) (0.14) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.27) (0.34) (0.45) (0.41) (0.49) (0.24)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.28 $ 8.50 $ 8.27 $ 8.16 $ 8.14 $ 7.94
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.58% 7.11% 7.07% 5.37% 9.17% (6.45)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 762 $ 837 $ 509 $ 389 $ 465 $ 704
Ratio of expenses to average
net assets ....................... 1.78%(3) 1.78% 1.76% 1.72% 1.91% 1.78%(3)
Ratio of net income to
average net assets ............... 3.76%(3) 3.96% 4.18% 4.25% 4.41% 4.33%(3)
Portfolio turnover rate ............ 5.31% 15.72% 16.08% 10.08% 4.82% 17.16%(4)
</TABLE>

- ----------
See footnotes on page 60.

54
<PAGE>

<TABLE>
<CAPTION>
MARYLAND FUND
CLASS A
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.32 $ 8.14 $ 7.99 $ 7.96 $ 7.71 $ 8.64
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.40 0.40 0.40 0.41 0.42
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.23 0.19 0.06 0.38 (0.76)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.11 0.63 0.59 0.46 0.79 (0.34)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.40) (0.40) (0.40) (0.41) (0.42)
Distributions (from capital gains).. (0.03) (0.05) (0.04) (0.03) (0.13) (0.17)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.22) (0.45) (0.44) (0.43) (0.54) (0.59)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.21 $ 8.32 $ 8.14 $ 7.99 $ 7.96 $ 7.71
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 1.31% 7.89% 7.64% 6.00% 10.90% (4.08)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 53,490 $ 54,891 $ 52,549 $ 54,041 $ 56,290 $ 57,263
Ratio of expenses to average
net assets ....................... 0.89%(3) 0.89% 0.90% 0.84% 0.96% 0.92%
Ratio of net income to
average net assets ............... 4.64%(3) 4.82% 4.99% 5.05% 5.31% 5.17%
Portfolio turnover rate ............ 0.06% 7.59% 14.79% 5.56% 3.63% 17.68%

<CAPTION>
MASSACHUSETTS FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.27 $ 7.99 $ 7.85 $ 7.91 $ 7.66 $ 8.54
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.18 0.38 0.40 0.41 0.42 0.44
Net gains or losses on securities
(both realized and unrealized) . (0.14) 0.37 0.22 0.05 0.28 (0.67)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.04 0.75 0.62 0.46 0.70 (0.23)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.18) (0.38) (0.40) (0.41) (0.42) (0.44)
Distributions (from capital gains).. (0.05) (0.09) (0.08) (0.11) (0.03) (0.21)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.23) (0.47) (0.48) (0.52) (0.45) (0.65)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.08 $ 8.27 $ 7.99 $ 7.85 $ 7.91 $ 7.66
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.51% 9.80% 8.11% 5.97% 9.58% (2.94)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 103,400 $ 109,328 $ 110,011 $ 109,872 $ 115,711 $ 120,149
Ratio of expenses to average
net assets ....................... 0.83%(3) 0.80% 0.84% 0.80% 0.86% 0.85%
Ratio of net income to
average net assets ............... 4.47%(3) 4.72% 5.06% 5.24% 5.51% 5.46%
Portfolio turnover rate ............ 4.45% 13.41% 29.26% 26.30% 16.68% 12.44%

<CAPTION>
MARYLAND FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.33 $ 8.15 $ 7.99 $ 7.97 $ 7.72 $ 8.46
----------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income ............ 0.15 0.32 0.33 0.33 0.33 0.23
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.23 0.20 0.05 0.38 (0.74)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations ... 0.07 0.55 0.53 0.38 0.71 (0.51)
----------- ----------- ----------- ----------- ----------- ----------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.32) (0.33) (0.33) (0.33) (0.23)
Distributions (from capital gains). (0.03) (0.05) (0.04) (0.03) (0.13) --
----------- ----------- ----------- ----------- ----------- ----------
Total distributions ................ (0.18) (0.37) (0.37) (0.36) (0.46) (0.23)
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period ..... $ 8.22 $ 8.33 $ 8.15 $ 7.99 $ 7.97 $ 7.72
=========== =========== =========== =========== =========== ==========
Total Return: ...................... 0.86% 6.91% 6.80% 4.91% 9.75% (6.21)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 3,052 $ 3,128 $ 2,063 $ 2,047 $ 630 $ 424
Ratio of expenses to average
net assets ....................... 1.79%(3) 1.80% 1.81% 1.72% 2.02% 1.80%(3)
Ratio of net income to
average net assets ............... 3.74%(3) 3.91% 4.08% 4.14% 4.27% 4.26%(3)
Portfolio turnover rate ............ 0.06% 7.59% 14.79% 5.56% 3.63% 17.68%(4)

<CAPTION>
MASSACHUSETTS FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.26 $ 7.99 $ 7.84 $ 7.90 $ 7.66 $ 8.33
----------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income ............ 0.14 0.31 0.33 0.34 0.34 0.24
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.36 0.23 0.05 0.27 (0.67)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations ... 0.01 0.67 0.56 0.39 0.61 (0.43)
----------- ----------- ----------- ----------- ----------- ----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.31) (0.33) (0.34) (0.34) (0.24)
Distributions (from capital gains). (0.05) (0.09) (0.08) (0.11) (0.03) --
----------- ----------- ----------- ----------- ----------- ----------
Total distributions ................ (0.19) (0.40) (0.41) (0.45) (0.37) (0.24)
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period ..... $ 8.08 $ 8.26 $ 7.99 $ 7.84 $ 7.90 $ 7.66
=========== =========== =========== =========== =========== ==========
Total Return: ...................... 0.18% 8.68% 7.29% 5.01% 8.33% (5.34)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,374 $ 1,468 $ 1,245 $ 1,405 $ 809 $ 1,099
Ratio of expenses to average
net assets ....................... 1.73%(3) 1.71% 1.74% 1.70% 1.95% 1.78%(3)
Ratio of net income to
average net assets ............... 3.57%(3) 3.81% 4.16% 4.32% 4.47% 4.52%(3)
Portfolio turnover rate ............ 4.45% 13.41% 29.26% 26.30% 16.68% 12.44%(4)
</TABLE>

- ----------
See footnotes on page 60.

55
<PAGE>

<TABLE>
<CAPTION>
MICHIGAN FUND
CLASS A
-------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.83 $ 8.60 $ 8.46 $ 8.54 $ 8.28 $ 9.08
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.20 0.41 0.43 0.45 0.46 0.46
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.30 0.23 0.06 0.30 (0.71)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.08 0.71 0.66 0.51 0.76 (0.25)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.20) (0.41) (0.43) (0.45) (0.46) (0.46)
Distributions (from capital gains).. (0.16) (0.07) (0.09) (0.14) (0.04) (0.09)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.36) (0.48) (0.52) (0.59) (0.50) (0.55)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.55 $ 8.83 $ 8.60 $ 8.46 $ 8.54 $ 8.28
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.90% 8.63% 8.16% 6.16% 9.56% (2.90)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 138,558 $ 144,161 $ 143,370 $ 148,178 $ 151,589 $ 151,095
Ratio of expenses to average
net assets ....................... 0.81%(3) 0.79% 0.81% 0.78% 0.87% 0.84%
Ratio of net income to
average net assets ............... 4.65%(3) 4.78% 5.13% 5.29% 5.50% 5.32%
Portfolio turnover rate ............ 3.62% 23.60% 10.98% 19.62% 20.48% 10.06%

MINNESOTA FUND

Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.98 $ 7.79 $ 7.68 $ 7.82 $ 7.72 $ 8.28
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.18 0.38 0.40 0.42 0.45 0.45
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.20 0.11 (0.12) 0.11 (0.44)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.10 0.58 0.51 0.30 0.56 0.01
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.18) (0.38) (0.40) (0.42) (0.45) (0.45)
Distributions (from capital gains).. (0.10) (0.01) -- (0.02) (0.01) (0.12)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.28) (0.39) (0.40) (0.44) (0.46) (0.57)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.80 $ 7.98 $ 7.79 $ 7.68 $ 7.82 $ 7.72
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 1.27% 7.68% 6.85% 3.99% 7.61% 0.12%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 118,743 $ 121,374 $ 121,674 $ 126,173 $ 132,716 $ 134,990
Ratio of expenses to average
net assets ....................... 0.84%(3) 0.81% 0.85% 0.81% 0.87% 0.85%
Ratio of net income to
average net assets ............... 4.64%(3) 4.87% 5.21% 5.47% 5.89% 5.70%
Portfolio turnover rate ............ 4.65% 21.86% 6.88% 26.89% 5.57% 3.30%

<CAPTION>
MICHIGAN FUND
CLASS D
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ----------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.82 $ 8.59 $ 8.45 $ 8.54 $ 8.28 $ 9.01
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income ............ 0.16 0.33 0.36 0.37 0.37 0.25
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.30 0.23 0.05 0.30 (0.73)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.04 0.63 0.59 0.42 0.67 (0.48)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.33) (0.36) (0.37) (0.37) (0.25)
Distributions (from capital gains). (0.16) (0.07) (0.09) (0.14) (0.04) --
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.32) (0.40) (0.45) (0.51) (0.41) (0.25)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 8.54 $ 8.82 $ 8.59 $ 8.45 $ 8.54 $ 8.28
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.45% 7.66% 7.19% 5.09% 8.36% (5.47)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,642 $ 1,841 $ 1,845 $ 1,486 $ 1,172 $ 671
Ratio of expenses to average
net assets ....................... 1.71%(3) 1.70% 1.71% 1.68% 2.01% 1.75%(3)
Ratio of net income to
average net assets ............... 3.75%(3) 3.87% 4.23% 4.39% 4.40% 4.40%(3)
Portfolio turnover rate ............ 3.62% 23.60% 10.98% 19.62% 20.48% 10.06%(4)

MINNESOTA FUND

Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.98 $ 7.79 $ 7.68 $ 7.82 $ 7.73 $ 8.22
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income ............ 0.15 0.31 0.33 0.35 0.38 0.25
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.20 0.11 (0.12) 0.10 (0.49)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.07 0.51 0.44 0.23 0.48 (0.24)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.31) (0.33) (0.35) (0.38) (0.25)
Distributions (from capital gains). (0.10) (0.01) -- (0.02) (0.01) --
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.25) (0.32) (0.33) (0.37) (0.39) (0.25)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 7.80 $ 7.98 $ 7.79 $ 7.68 $ 7.82 $ 7.73
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.82% 6.71% 5.89% 3.06% 6.45% (3.08)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,113 $ 2,103 $ 1,799 $ 2,036 $ 2,237 $ 1,649
Ratio of expenses to average
net assets ....................... 1.74%(3) 1.72% 1.75% 1.71% 1.85% 1.74%(3)
Ratio of net income to
average net assets ............... 3.74%(3) 3.96% 4.31% 4.57% 4.92% 4.68%(3)
Portfolio turnover rate ............ 4.65% 21.86% 6.88% 26.89% 5.57% 3.30%(4)
</TABLE>

- ----------
See footnotes on page 60.

56
<PAGE>

<TABLE>
<CAPTION>
MISSOURI FUND
CLASS A
------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.03 $ 7.82 $ 7.71 $ 7.70 $ 7.41 $ 8.31
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.17 0.36 0.38 0.39 0.40 0.40
Net gains or losses on securities
(both realized and unrealized) . (0.14) 0.28 0.19 0.08 0.36 (0.79)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.03 0.64 0.57 0.47 0.76 (0.39)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.36) (0.38) (0.39) (0.40) (0.40)
Distributions (from capital gains).. (0.12) (0.07) (0.08) (0.07) (0.07) (0.11)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.29) (0.43) (0.46) (0.46) (0.47) (0.51)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.77 $ 8.03 $ 7.82 $ 7.71 $ 7.70 $ 7.41
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.38% 8.41% 7.70% 6.27% 10.67% (4.85)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 48,944 $ 49,949 $ 52,766 $ 49,941 $ 51,169 $ 52,621
Ratio of expenses to average
net assets** ..................... 0.90%(3) 0.89% 0.89% 0.86% 0.88% 0.74%
Ratio of net income to
average net assets** ............. 4.39%(3) 4.59% 4.93% 5.03% 5.31% 5.18%
Portfolio turnover rate ............ 1.49% 21.26% 6.47% 8.04% 3.88% 14.33%

<CAPTION>
NEW JERSEY FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.78 $ 7.56 $ 7.60 $ 7.59 $ 7.40 $ 8.24
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.16 0.35 0.36 0.39 0.39 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.10) 0.30 0.21 0.01 0.29 (0.74)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.65 0.57 0.40 0.68 (0.33)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.35) (0.36) (0.39) (0.39) (0.41)
Distributions (from capital gains).. (0.10) (0.08) (0.25) -- (0.10) (0.10)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.26) (0.43) (0.61) (0.39) (0.49) (0.51)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.58 $ 7.78 $ 7.56 $ 7.60 $ 7.59 $ 7.40
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.77% 8.87% 7.96% 5.37% 9.77% (4.25)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 57,861 $ 61,739 $ 62,597 $ 66,293 $ 73,561 $ 73,942
Ratio of expenses to average
net assets** ..................... 1.07%(3) 1.02% 1.06% 1.02% 1.01% 0.90%
Ratio of net income to
average net assets** ............. 4.27%(3) 4.54% 4.90% 5.06% 5.29% 5.24%
Portfolio turnover rate ............ -- 23.37% 20.22% 25.65% 4.66% 12.13%

<CAPTION>
MISSOURI FUND
CLASS D
----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ----------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.03 $ 7.82 $ 7.72 $ 7.70 $ 7.41 $ 8.20
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.14 0.29 0.31 0.32 0.32 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.14) 0.28 0.18 0.09 0.36 (0.79)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... -- 0.57 0.49 0.41 0.68 (0.57)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.31) (0.32) (0.32) (0.22)
Distributions (from capital gains).. (0.12) (0.07) (0.08) (0.07) (0.07) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.26) (0.36) (0.39) (0.39) (0.39) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.77 $ 8.03 $ 7.82 $ 7.72 $ 7.70 $ 7.41
=========== =========== =========== =========== =========== ===========
Total Return: ...................... (0.07)% 7.45% 6.60% 5.46% 9.49% (7.16)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 626 $ 418 $ 474 $ 565 $ 515 $ 350
Ratio of expenses to average
net assets** ..................... 1.80%(3) 1.79% 1.80% 1.76% 1.98% 1.70%(3)
Ratio of net income to
average net assets** ............. 3.49%(3) 3.69% 4.02% 4.13% 4.23% 4.27%(3)
Portfolio turnover rate ............ 1.49% 21.26% 6.47% 8.04% 3.88% 14.33%(4)

<CAPTION>
NEW JERSEY FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 7.86 $ 7.64 $ 7.68 $ 7.67 $ 7.48 $ 8.14
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.14 0.29 0.31 0.33 0.33 0.23
Net gains or losses on securities
(both realized and unrealized) . (0.09) 0.30 0.21 0.01 0.29 (0.66)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.05 0.59 0.52 0.34 0.62 (0.43)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.31) (0.33) (0.33) (0.23)
Distributions (from capital gains).. (0.10) (0.08) (0.25) -- (0.10) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.24) (0.37) (0.56) (0.33) (0.43) (0.23)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.67 $ 7.86 $ 7.64 $ 7.68 $ 7.67 $ 7.48
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.54% 7.97% 7.10% 4.56% 8.79% (5.47)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 1,795 $ 1,582 $ 1,282 $ 1,152 $ 1,190 $ 986
Ratio of expenses to average
net assets** ..................... 1.82%(3) 1.80% 1.83% 1.79% 1.89% 1.75%(3)
Ratio of net income to
average net assets** ............. 3.52%(3) 3.76% 4.13% 4.29% 4.45% 4.37%(3)
Portfolio turnover rate ............ -- 23.37% 20.22% 25.65% 4.66% 12.13%(4)
</TABLE>

- ----------
See footnotes on page 60.

57
<PAGE>

<TABLE>
<CAPTION>
NEW YORK FUND
CLASS A
------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- --------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.60 $ 8.28 $ 7.98 $ 7.86 $ 7.67 $ 8.75
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.40 0.41 0.42 0.42 0.43
Net gains or losses on securities
(both realized and unrealized) . (0.15) 0.40 0.32 0.12 0.36 (0.88)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.04 0.80 0.73 0.54 0.78 (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.40) (0.41) (0.42) (0.42) (0.43)
Distributions (from capital gains).. (0.21) (0.08) (0.02) -- (0.17) (0.20)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.40) (0.48) (0.43) (0.42) (0.59) (0.63)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.24 $ 8.60 $ 8.28 $ 7.98 $ 7.86 $ 7.67
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.42% 10.02% 9.45% 6.97% 10.93% (5.37)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 84,971 $ 84,822 $ 83,528 $ 82,719 $ 83,980 $ 90,914
Ratio of expenses to average
net assets ....................... 0.82%(3) 0.81% 0.82% 0.77% 0.88% 0.87%
Ratio of net income to
average net assets ............... 4.51%(3) 4.74% 5.09% 5.24% 5.52% 5.31%
Portfolio turnover rate ............ 4.57% 39.85% 23.83% 25.88% 34.05% 28.19%

<CAPTION>
NORTH CAROLINA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.30 $ 8.05 $ 7.84 $ 7.74 $ 7.30 $ 8.22
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.17 0.36 0.37 0.37 0.39 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.31 0.24 0.11 0.45 (0.87)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.67 0.61 0.48 0.84 (0.46)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.36) (0.37) (0.37) (0.39) (0.41)
Distributions (from capital gains).. (0.12) (0.06) (0.03) (0.01) (0.01) (0.05)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.29) (0.42) (0.40) (0.38) (0.40) (0.46)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.07 $ 8.30 $ 8.05 $ 7.84 $ 7.74 $ 7.30
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.74% 8.60% 8.01% 6.39% 11.92% (5.80)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 30,819 $ 32,358 $ 32,684 $ 35,934 $ 37,446 $ 38,920
Ratio of expenses to average
net assets** ..................... 1.08%(3) 1.05% 1.09% 1.05% 0.82% 0.44%
Ratio of net income to
average net assets** ............. 4.28%(3) 4.41% 4.66% 4.75% 5.21% 5.29%
Portfolio turnover rate ............ -- 20.37% 13.04% 15.12% 4.38% 15.61%

<CAPTION>
CLASS D
-----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- -----------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.60 $ 8.29 $ 7.98 $ 7.87 $ 7.67 $ 8.55
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income ............ 0.15 0.32 0.34 0.34 0.34 0.23
Net gains or losses on securities
(both realized and unrealized) . (0.14) 0.39 0.33 0.11 0.37 (0.88)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.01 0.71 0.67 0.45 0.71 (0.65)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.32) (0.34) (0.34) (0.34) (0.23)
Distributions (from capital gains).. (0.21) (0.08) (0.02) -- (0.17) --
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.36) (0.40) (0.36) (0.34) (0.51) (0.23)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 8.25 $ 8.60 $ 8.29 $ 7.98 $ 7.87 $ 7.67
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.09% 8.88% 8.60% 5.86% 9.87% (7.73)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 3.297 $ 2,182 $ 1,572 $ 1,152 $ 885 $ 476
Ratio of expenses to average
net assets ....................... 1.72%(3) 1.72% 1.73% 1.68% 1.96% 1.81%(3)
Ratio of net income to
average net assets ............... 3.61%(3) 3.83% 4.18% 4.33% 4.42% 4.39%(3)
Portfolio turnover rate ............ 4.57% 39.85% 23.83% 25.88% 34.05% 28.19%(4)

<CAPTION>
NORTH CAROLINA FUND

Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.30 $ 8.05 $ 7.83 $ 7.74 $ 7.29 $ 8.17
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income** .......... 0.14 0.30 0.31 0.31 0.33 0.23
Net gains or losses on securities
(both realized and unrealized) . (0.12) 0.31 0.25 0.10 0.46 (0.88)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.02 0.61 0.56 0.41 0.79 (0.65)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.30) (0.31) (0.31) (0.33) (0.23)
Distributions (from capital gains).. (0.12) (0.06) (0.03) (0.01) (0.01) --
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.26) (0.36) (0.34) (0.32) (0.34) (0.23)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 8.06 $ 8.30 $ 8.05 $ 7.83 $ 7.74 $ 7.29
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.24% 7.77% 7.33% 5.45% 11.19% (8.15)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 1,529 $ 1,456 $ 1,217 $ 1,232 $ 1,257 $ 1,282
Ratio of expenses to average
net assets** ..................... 1.83%(3) 1.82% 1.85% 1.81% 1.64% 1.27%(3)
Ratio of net income to
average net assets** ............. 3.53%(3) 3.64% 3.90% 3.99% 4.42% 4.49%(3)
Portfolio turnover rate ............ -- 20.37% 13.04% 15.12% 4.38% 15.61%(4)
</TABLE>

- ----------
See footnotes on page 60.

58
<PAGE>

<TABLE>
<CAPTION>
OHIO FUND
CLASS A
------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.37 $ 8.19 $ 8.09 $ 8.11 $ 7.90 $ 8.77
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income ............ 0.19 0.40 0.42 0.43 0.44 0.44
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.29 0.17 0.02 0.28 (0.70)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.06 0.69 0.59 0.45 0.72 (0.26)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.40) (0.42) (0.43) (0.44) (0.44)
Distributions (from capital gains).. (0.13) (0.11) (0.07) (0.04) (0.07) (0.17)
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.32) (0.51) (0.49) (0.47) (0.51) (0.61)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 8.11 $ 8.37 $ 8.19 $ 8.09 $ 8.11 $ 7.90
=========== =========== =========== =========== =========== =========
Total Return: ...................... 0.80% 8.77% 7.54% 5.68% 9.59% (3.08)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 149,197 $ 153,126 $ 154,419 $ 162,243 $ 170,191 $ 171,469
Ratio of expenses to average
net assets ....................... 0.81%(3) 0.78% 0.81% 0.77% 0.84% 0.84%
Ratio of net income to
average net assets ............... 4.73%(3) 4.92% 5.19% 5.32% 5.56% 5.34%
Portfolio turnover rate ............ 0.68% 24.74% 11.76% 12.90% 2.96% 9.37%

OREGON FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.05 $ 7.87 $ 7.65 $ 7.66 $ 7.43 $ 8.08
----------- ----------- ----------- ----------- ----------- ---------
Income from investment operations:
Net investment income** .......... 0.17 0.36 0.38 0.40 0.40 0.40
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.28 0.26 -- 0.25 (0.59)
----------- ----------- ----------- ----------- ----------- ---------
Total from investment operations ... 0.09 0.64 0.64 0.40 0.65 (0.19)
----------- ----------- ----------- ----------- ----------- ---------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.36) (0.38) (0.40) (0.40) (0.40)
Distributions (from capital gains).. (0.05) (0.10) (0.04) (0.01) (0.02) (0.06)
----------- ----------- ----------- ----------- ----------- ---------
Total distributions ................ (0.22) (0.46) (0.42) (0.41) (0.42) (0.46)
----------- ----------- ----------- ----------- ----------- ---------
Net asset value, end of period ..... $ 7.92 $ 8.05 $ 7.87 $ 7.65 $ 7.66 $ 7.43
=========== =========== =========== =========== =========== =========
Total Return: ...................... 1.18% 8.48% 8.60% 5.27% 9.05% (2.38)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 57,957 $ 57,601 $ 55,239 $ 57,345 $ 59,549 $ 59,884
Ratio of expenses to average
net assets** ..................... 0.88%(3) 0.88% 0.90% 0.86% 0.86% 0.78%
Ratio of net income to
average net assets** ............. 4.41%(3) 4.60% 4.88% 5.18% 5.40% 5.20%
Portfolio turnover rate ............ 6.76% 12.62% 19.46% 28.65% 2.47% 9.43%

<CAPTION>
OHIO FUND
CLASS D
---------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ---------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.41 $ 8.23 $ 8.13 $ 8.15 $ 7.92 $ 8.61
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.16 0.33 0.35 0.36 0.36 0.24
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.29 0.17 0.02 0.30 (0.69)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.03 0.62 0.52 0.38 0.66 (0.45)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.16) (0.33) (0.35) (0.36) (0.36) (0.24)
Distributions (from capital gains).. (0.13) (0.11) (0.07) (0.04) (0.07) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.29) (0.44) (0.42) (0.40) (0.43) (0.24)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.15 $ 8.41 $ 8.23 $ 8.13 $ 8.15 $ 7.92
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.36% 7.78% 6.57% 4.74% 8.67% (5.36)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 1,649 $ 1,103 $ 1,160 $ 1,011 $ 660 $ 324
Ratio of expenses to average
net assets ....................... 1.71%(3) 1.69% 1.71% 1.67% 1.93% 1.78%(3)
Ratio of net income to
average net assets ............... 3.83%(3) 4.01% 4.29% 4.42% 4.48% 4.41%(3)
Portfolio turnover rate ............ 0.68% 24.74% 11.76% 12.90% 2.96% 9.37%(4)

<CAPTION>
OREGON FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.04 $ 7.87 $ 7.64 $ 7.65 $ 7.43 $ 8.02
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income** .......... 0.14 0.29 0.31 0.33 0.33 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.08) 0.27 0.27 -- 0.24 (0.59)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.56 0.58 0.33 0.57 (0.37)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.31) (0.33) (0.33) (0.22)
Distributions (from capital gains).. (0.05) (0.10) (0.04) (0.01) (0.02) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.19) (0.39) (0.35) (0.34) (0.35) (0.22)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.91 $ 8.04 $ 7.87 $ 7.64 $ 7.65 $ 7.43
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.73% 7.37% 7.77% 4.33% 7.86% (4.76)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 2,778 $ 2,650 $ 1,678 $ 1,540 $ 1,495 $ 843
Ratio of expenses to average
net assets** ..................... 1.78%(3) 1.79% 1.80% 1.76% 1.83% 1.72%(3)
Ratio of net income to
average net assets** ............. 3.51%(3) 3.69% 3.98% 4.28% 4.41% 4.32%(3)
Portfolio turnover rate ............ 6.76% 12.62% 19.46% 28.65% 2.47% 9.43%(4)
</TABLE>

- ----------
See footnotes on page 60.

59
<PAGE>

<TABLE>
<CAPTION>
PENNSYLVANIA FUND
CLASS A
------------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- --------------------------------------------------------------------------
ended
-----
March 31,
---------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<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 $ 8.61
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.17 0.35 0.36 0.38 0.38 0.39
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.36 0.24 0.12 0.37 (0.80)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.71 0.60 0.50 0.75 (0.41)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.17) (0.35) (0.36) (0.38) (0.38) (0.39)
Distributions (from capital gains).. (0.15) (0.08) (0.10) (0.09) (0.13) (0.26)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.32) (0.43) (0.46) (0.47) (0.51) (0.65)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 7.98 $ 8.24 $ 7.96 $ 7.82 $ 7.79 $ 7.55
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.68% 9.20% 7.89% 6.57% 10.55% (5.00)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 28,151 $ 29,582 $ 30,092 $ 31,139 $ 33,251 $ 34,943
Ratio of expenses to average
net assets ....................... 1.23%(3) 1.19% 1.19% 1.11% 1.21% 1.16%
Ratio of net income to
average net assets ............... 4.14%(3) 4.34% 4.60% 4.82% 5.05% 4.91%
Portfolio turnover rate ............ 3.19% 13.05% 32.99% 4.56% 11.78% 7.71%

<CAPTION>
SOUTH CAROLINA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ $ 8.38 $ 8.16 $ 8.07 $ 7.97 $ 7.61 $ 8.52
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.19 0.39 0.40 0.41 0.41 0.41
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.29 0.22 0.12 0.37 (0.79)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.06 0.68 0.62 0.53 0.78 (0.38)
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.19) (0.39) (0.40) (0.41) (0.41) (0.41)
Distributions (from capital gains).. (0.07) (0.07) (0.13) (0.02) (0.01) (0.12)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.26) (0.46) (0.53) (0.43) (0.42) (0.53)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... $ 8.18 $ 8.38 $ 8.16 $ 8.07 $ 7.97 $ 7.61
=========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.63% 8.66% 7.99% 6.82% 10.69% (4.61)%

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... $ 104,543 $ 106,328 $ 101,018 $ 108,163 $ 112,421 $ 115,133
Ratio of expenses to average
net assets ....................... 0.83%(3) 0.80% 0.84% 0.80% 0.88% 0.83%
Ratio of net income to
average net assets ............... 4.53%(3) 4.74% 5.04% 5.15% 5.38% 5.12%
Portfolio turnover rate ............ 1.50% 16.63% -- 20.66% 4.13% 1.81%

<CAPTION>
PENNSYLVANIA FUND
CLASS D
----------------------------------------------------------------------------------------
Six Months Year ended September 30,
---------- ----------------------------------------------------------------------------
ended
-----
March 31,
--------- 2/1/94(1)
1999 1998 1997 1996 1995 to 9/30/94
---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ 8.23 $ 7.95 $ 7.81 $ 7.78 $ 7.54 $ 8.37
---------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.14 0.29 0.30 0.32 0.31 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.11) 0.36 0.24 0.12 0.37 (0.83)
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.03 0.65 0.54 0.44 0.68 (0.61)
---------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.14) (0.29) (0.30) (0.32) (0.31) (0.22)
Distributions (from capital gains).. (0.15) (0.08) (0.10) (0.09) (0.13) --
---------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.29) (0.37) (0.40) (0.41) (0.44) (0.22)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... 7.97 $ 8.23 $ 7.95 $ 7.81 $ 7.78 $ 7.54
========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.30% 8.36% 7.07% 5.76% 9.53% (7.50)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... 937 $ 607 $ 816 $ 876 $ 426 $ 43
Ratio of expenses to average
net assets ....................... 1.98%(3) 1.97% 1.96% 1.88% 2.23% 2.00%(3)
Ratio of net income to
average net assets ............... 3.39%(3) 3.56% 3.83% 4.05% 4.10% 4.20%(3)
Portfolio turnover rate ............ 3.19% 13.05% 32.99% 4.56% 11.78% 7.71%(4)

<CAPTION>
SOUTH CAROLINA FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning
of period ........................ 8.38 $ 8.16 $ 8.06 $ 7.97 $ 7.61 $ 8.42
---------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income ............ 0.15 0.31 0.33 0.34 0.34 0.22
Net gains or losses on securities
(both realized and unrealized) . (0.13) 0.29 0.23 0.11 0.37 (0.81)
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ... 0.02 0.60 0.56 0.45 0.71 (0.59)
---------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends (from net
investment income) ............. (0.15) (0.31) (0.33) (0.34) (0.34) (0.22)
Distributions (from capital gains).. (0.07) (0.07) (0.13) (0.02) (0.01) --
---------- ----------- ----------- ----------- ----------- -----------
Total distributions ................ (0.22) (0.38) (0.46) (0.36) (0.35) (0.22)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..... 8.18 $ 8.38 $ 8.16 $ 8.06 $ 7.97 $ 7.61
========== =========== =========== =========== =========== ===========
Total Return: ...................... 0.18% 7.68% 7.15% 5.73% 9.63% (7.14)%(2)

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................... 6,481 $ 5,594 $ 3,663 $ 2,714 $ 1,704 $ 1,478
Ratio of expenses to average
net assets ....................... 1.73%(3) 1.71% 1.75% 1.70% 1.85% 1.74%(3)
Ratio of net income to
average net assets ............... 3.63%(3) 3.83% 4.13% 4.25% 4.40% 4.29%(3)
Portfolio turnover rate ............ 1.50% 16.63% -- 20.66% 4.13% 1.81%(4)
</TABLE>

- ----------
* Per share amounts are based on average shares outstanding.

** For periods prior to 1996 (1997 for the Florida Fund and the North
Carolina Fund), Seligman voluntarily waived a portion of its management
fee. These amounts reflect the effect of the waivers.

(1) Commencement of offering of Class D shares.

(2) Not annualized.

(3) Annualized.

(4) For the year ended September 30, 1994.

60
<PAGE>

How to Contact Us

The Fund Write: Corporate Communications/
Investor Relations Department
J. & W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017

Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US

Website: http://www.seligman.com

Your Regular
(Non-Retirement)
Account Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017

Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US

Website: http://www.seligman.com

- --------------------------------------------------------------------------------
24-hour telephone access is available by dialing (800) 622-4597 on a touchtone
telephone. You will have instant access to price, yield, account balance, most
recent transaction, and other information.
- --------------------------------------------------------------------------------

<PAGE>

For More Information

- --------------------------------------------------------------------------------
The following information is available without charge upon request: Call
toll-free (800) 221-2450 in the US or (212) 682-7600 outside the US.

Statement of Additional Information (SAI) contains additional information about
the Fund. It is on file with the Securities and Exchange Commission (SEC) and is
incorporated by reference into (is legally part of) this prospectus.

Annual/Semi-Annual Reports contain additional information about the Fund's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
- --------------------------------------------------------------------------------

SELIGMAN ADVISORS, INC.
an affiliate of

[LOGO]

J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017

Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (800) SEC-0330. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the SEC's Internet site: http://www.sec.gov.

Copies of this information may be obtained, upon payment of a duplicating fee,
by writing: Public Reference Section of the SEC, Washington, DC 20549-6009.

SEC FILE NUMBERS: Seligman Municipal Fund Series, Inc.: 811-3828
Seligman Municipal Series Trust: 811-4250
Seligman New Jersey Municipal Fund, Inc.: 811-5126
Seligman Pennsylvania Municipal Fund Series: 811-4666

<PAGE>

SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES

Statement of Additional Information
June 1, 1999

100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777

This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus of Seligman Municipal Funds,
dated June 1, 1999. This SAI, although not in itself a prospectus, is
incorporated by reference into the Prospectus in its entirety. It should be read
in conjunction with the prospectus, which may be obtained by writing or calling
the Fund at the above address or telephone numbers.

The financial statements and notes included in the Fund's Annual Report and
Mid-Year Report, and the Independent Auditors' Reports thereon, are incorporated
herein by reference. The Annual Report and Mid-Year Report will be furnished to
you without charge if you request a copy of this SAI.

Table of Contents

Fund History ......................................................... 2
Description of the Fund and Its Investments and Risks ................ 2
Management of the Fund ............................................... 7
Control Persons and Principal Holders of Securities .................. 12
Investment Advisory and Other Services ............................... 12
Brokerage Allocation and Other Practices ............................. 17
Shares of Beneficial Interest and Other Securities ................... 18
Purchase, Redemption, and Pricing of Shares .......................... 18
Taxation of the Fund ................................................. 23
Underwriters ......................................................... 25
Calculation of Performance Data ...................................... 26
Financial Statements ................................................. 28
General Information .................................................. 29
Appendix A ........................................................... 31
Appendix B ........................................................... 34
Appendix C ........................................................... 37

<PAGE>

Fund History

The Fund was organized as an unincorporated trust under the laws of the
Commonwealth of Pennsylvania by a Declaration of Trust dated May 13, 1986.

Description of the Fund and Its Investments and Risks

Classification

The Fund is a non-diversified, open-end management investment company, or mutual
fund.

Investment Strategies and Risks

The Fund seeks to provide income exempt from regular federal income taxes and
Pennsylvania income taxes consistent with preservation of capital.

The Fund is expected to invest principally, without percentage limitations, in
municipal securities which on the date of purchase are rated within the four
highest rating categories of Moody's Investors Service (Moody's) or Standard &
Poor's Corporation (S&P). Municipal Securities rated in these categories are
commonly referred to as investment grade. The Fund may invest in municipal
securities that are not rated, or which do not fall into the credit ratings
noted above if, based upon credit analysis, it is believed that such securities
are of comparable quality. In determining suitability of investment in a lower
rated or unrated security, the Fund will take into consideration asset and debt
service coverage, the purpose of the financing, history of the issuer, existence
of other rated securities of the issuer and other considerations as may be
relevant, including comparability to other issuers.

Although securities rated in the fourth rating category are commonly referred to
as investment grade, investment in such securities could involve risks not
usually associated with bonds rated in the first three categories. Bonds rated
BBB by S&P are more likely as a result of adverse economic conditions or
changing circumstance to exhibit a weakened capacity to pay interest and re-pay
principal than bonds in higher rating categories and bonds rated Baa by Moody's
lack outstanding investment characteristics and in fact have speculative
characteristics according to Moody's. Municipal securities in the fourth rating
category of S&P or Moody's will generally provide a higher yield than do higher
rated municipal securities of similar maturities; however, they are subject to a
greater degree of fluctuation in value as a result of changing interest rates
and economic conditions. The market value of the municipal securities will also
be affected by the degree of interest of dealers to bid for them, and in certain
markets dealers may be more unwilling to trade municipal securities rated in the
fourth rating categories than in the higher rating categories.

A description of the credit rating categories is contained in Appendix A to this
Statement.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal securities and for providing state and local governments
with federal credit assistance. Reevaluation of the Fund's investment objectives
and structure might be necessary in the future due to market conditions that may
result from future changes in the tax laws.

Pennsylvania Municipal Securities. Pennsylvania Municipal Securities include
notes, bonds and commercial paper issued by or on behalf of the Commonwealth of
Pennsylvania, its political subdivisions, agencies, and instrumentalities, the
interest on which is, in the opinion of counsel of the issuers, exempt from
regular federal and Pennsylvania income taxes. Such securities are traded
primarily in an over-the-counter market. The Fund may invest, without percentage
limitations, in certain private activity bonds, the interest on which is treated
as a preference item for purposes of the alternative minimum tax.

Under the Investment Company Act of 1940, as amended (1940 Act), the
identification of the issuer of municipal bonds or notes depends on the terms
and conditions of the obligation. If the assets and

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<PAGE>

revenues of an agency, authority, instrumentality or other political subdivision
are separate from those of the government creating the subdivision and the
obligation is backed only by the assets and revenues of the subdivision, such
subdivision is regarded as the sole issuer. Similarly, in the case of an
industrial development revenue bond or pollution control revenue bond, if only
the assets and revenues of the non-governmental user back the bond, the
non-governmental user is regarded as the sole issuer. If in either case the
creating government or another entity guarantees an obligation, the security is
treated as an issue of such guarantor to the extent of the value of the
guarantee.

The Fund invests principally in long-term municipal bonds. Municipal bonds are
issued to obtain funds for various public purposes, including the construction
of a wide range of public facilities such as airports, bridges, highways,
housing, hospitals, mass transportation, schools, streets, water and sewer
works, and gas and electric utilities. Municipal bonds also may be issued in
connection with the refunding of outstanding obligations, obtaining funds to
lend to other public institutions, and for general operating expenses.
Industrial development bonds are issued by or on behalf of public authorities to
obtain funds to provide various privately-operated facilities for business and
manufacturing, housing, sports, pollution control, and for airport, mass
transit, port and parking facilities.

The two principal classifications of municipal bonds are "general obligation"
and "revenue." General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source. Although industrial
development bonds (IDBs) are issued by municipal authorities, they are generally
secured by the revenues derived from payments of the industrial user. The
payment of principal and interest on IDBs is dependent solely on the ability of
the user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment.

The Fund, with respect to 75% of its assets, will not purchase any revenue bonds
if as a result of such purchase more than 5% of the Fund's assets would be
invested in the revenue bonds of a single issuer.

The Fund may also invest in municipal notes. Municipal notes generally are used
to provide for short-term capital needs and generally have maturities of five
years or less. Municipal Notes include:

1. Tax Anticipation Notes and Revenue Anticipation Notes. Tax anticipation
notes and revenue anticipation notes are issued to finance short-term working
capital needs of political subdivisions. Generally, tax anticipation notes are
issued in anticipation of various tax revenues, such as income, sales and real
property taxes, and are payable from these specific future taxes. Revenue
anticipation notes are issued in expectation of receipt of other kinds of
revenue, such as grant or project revenues. Usually political subdivisions issue
notes combining the qualities of both tax and revenue anticipation notes.

2. Bond Anticipation Notes. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds then provide the money for the repayment of the notes.

Issues of municipal Commercial Paper typically represent short-term, unsecured,
negotiable promissory notes. In most cases, municipal commercial paper is backed
by letters of credit, lending agreements, note repurchase agreements or other
credit facility agreements offered by banks or other institutions.

Variable and Floating Rate Securities. The Fund may purchase floating or
variable rate securities, including participation interests therein. Investments
in floating or variable rate provide that the rate of interest is either pegged
to money market rates or set as a specific percentage of a designated base rate,
such as rates on Treasury Bonds or Treasury Bills or the prime rate of a major
commercial bank. A floating rate or variable rate security generally provides
that the Fund can demand payment of the obligation on short notice (daily or
weekly, depending on the terms of the obligation) at an amount equal to par
(face value) plus accrued interest. In unusual circumstances, the amount
received may be more or less than the amount the Fund paid for the securities.

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<PAGE>

Variable rate securities provide for a specified periodic adjustment in the
interest rate, while floating rate securities have an interest rate which
changes whenever there is a change in the designated base interest rate.
Frequently such securities are secured by letters of credit or other credit
support arrangements provided by banks. The quality of the underlying creditor
or of the bank or issuer, as the case may be, must be equivalent to the
standards set forth with respect to taxable investments below.

The maturity of variable or floating rate obligations (including participation
interests therein) is deemed to be the longer of (1) the notice period required
before the Fund is entitled to receive payment of the obligation upon demand, or
(2) the period remaining until the obligation's next interest rate adjustment.
If the Fund does not redeem the obligation through the demand feature, the
obligation will mature on a specific date, which may range up to thirty years
from the date of its issuance.

Participation Interests. From time to time, the Fund may purchase from banks,
participation interests in all or part of specific holdings of municipal
securities. A participation interest gives the Fund an undivided interest in the
municipal security in the proportion that the Fund's participation interest
bears to the total principal amount of the municipal security and provides the
demand repurchase feature described above. Participations are frequently backed
by an irrevocable letter of credit or guarantee of a bank that the Fund has
determined meets its prescribed quality standards. The Fund has the right to
sell the instrument back to the bank and draw on the letter of credit on demand,
on short notice, for all or any part of the Fund's participation interest in the
municipal security, plus accrued interest. The Fund intends to exercise the
demand under the letter of credit only (1) upon a default under the terms of the
documents of the municipal security, (2) as needed to provide liquidity in order
to meet redemptions, or (3) to maintain a high quality investment portfolio.
Banks will retain a service and letter of credit fee and a fee for issuing
repurchase commitments in an amount equal to the excess of the interest paid on
the municipal securities over the negotiated yield at which the instruments are
purchased by the Fund. Participation interests will be purchased only if, in the
opinion of counsel, interest income on such interests will be tax-exempt when
distributed as dividends to shareholders of the Fund. The Fund currently does
not purchase participation interests and has no current intention of doing so.

When-Issued Securities. The Fund may purchase municipal securities on a
"when-issued" basis, which means that delivery of and payment for securities
normally take place in less than 45 days after the date of the buyer's purchase
commitment. The payment obligation and the interest rate on when-issued
securities are each fixed at the time the purchase commitment is made, although
no interest accrues to a purchaser prior to the settlement of the purchase of
the securities. As a result, the yields obtained and the market value of such
securities may be higher or lower on the date the securities are actually
delivered to the buyer. The Fund will generally purchase a municipal security
sold on a when-issued basis with the intention of actually acquiring the
securities on the settlement date.

A separate account consisting of cash or high-grade liquid debt securities equal
to the amount of outstanding purchase commitments is established with the Fund's
custodian in connection with any purchase of when-issued securities. The account
is marked to market daily, with additional cash or liquid high-grade debt
securities added when necessary. The Fund meets its respective obligation to
purchase when-issued securities from outstanding cash balances, sale of other
securities or, although it would not normally expect to do so, from the sale of
the when-issued securities themselves (which may have a market value greater or
lesser than the Fund's payment obligations).

Municipal securities purchased on a when-issued basis and the other securities
held in the Fund are subject to changes in market value based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates (which will generally result in
similar changes in value, i.e., both experiencing appreciation when interest
rates decline and depreciation when interest rates rise). Therefore, to the
extent the Fund remains substantially fully invested at the same time that it
has purchased securities on a when-issued basis, there will be a greater
possibility that the market value of the Fund's assets will vary. Purchasing a
municipal security on a when-issued basis can involve a risk that the yields
available in the market when the delivery takes place may be higher than those
obtained on the security purchased on a when-issued basis.

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<PAGE>

Standby Commitments. The Fund is authorized to acquire standby commitments
issued by banks with respect to securities they hold, although the Fund has no
present intention of investing any assets in standby commitments. These
commitments would obligate the seller of the standby commitment to repurchase,
at the Fund's option, specified securities at a specified price.

The price which the Fund would pay for municipal securities with standby
commitments generally would be higher than the price which otherwise would be
paid for the municipal securities alone, and the Fund would use standby
commitments solely to facilitate portfolio liquidity. The standby commitment
generally is for a shorter term than the maturity of the security and does not
restrict in any way the Fund's right to dispose of or retain the security. There
is a risk that the seller of a standby commitment may not be able to repurchase
the security upon the exercise of the right to resell by the Fund. To minimize
such risks, the Fund is presently authorized to acquire standby commitments
solely from banks deemed creditworthy. The Board of Trustees may, in the future,
consider whether the Fund should be permitted to acquire standby commitments
from dealers. Prior to investing in standby commitments of dealers, the Fund, if
it deems necessary based upon the advice of counsel, will apply to the
Securities and Exchange Commission for an exemptive order relating to such
commitments and the valuation thereof. There can be no assurance that the
Securities and Exchange Commission will issue such an order.

Standby commitments with respect to portfolio securities of the Fund with
maturities of less than 60 days which are separate from the underlying portfolio
securities are not assigned a value. The cost of any such standby commitments is
carried as an unrealized loss from the time of purchase until it is exercised or
expires. Standby commitments with respect to portfolio securities of the Fund
with maturities of 60 days or more which are separate from the underlying
portfolio securities are valued at fair value as determined in accordance with
procedures established by the Board of Trustees. The Board of Trustees would, in
connection with the determination of value of such a standby commitment,
consider, among other factors, the creditworthiness of the writer of the standby
commitment, the duration of the standby commitment, the dates on which or the
periods during which the standby commitment may be exercised and the applicable
rules and regulations of the Securities and Exchange Commission.

Illiquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities, including restricted securities (i.e., securities not readily
marketable without registration under the Securities Act of 1933 (the "1933
Act")) and other securities that are not readily marketable. The Fund may
purchase restricted securities that can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and the Fund's Board of
Trustees, may determine, when appropriate, that specific Rule 144A securities
are liquid and not subject to the 15% limitation on illiquid securities. Should
the Board of Trustees make this determination, it will carefully monitor the
security (focusing on such factors, among others, as trading activity and
availability of information) to determine that the Rule 144A security continues
to be liquid. It is not possible to predict with assurance exactly how the
market for Rule 144A securities will further evolve. This investment practice
could have the effect of increasing the level of illiquidity in the Fund, if and
to the extent that qualified institutional buyers become for a time uninterested
in purchasing Rule 144A securities.

Borrowing. The Fund may borrow money only from banks and only for temporary or
emergency purposes (but not for the purchase of portfolio securities) in an
amount not in excess of 10% of the value of its total assets at the time the
borrowing is made (not including the amount borrowed). Permitted borrowings may
be secured or unsecured. The Fund will not purchase additional portfolio
securities if the Fund has outstanding borrowings in excess of 5% of the value
of its total assets.

Taxable Investments. Under normal market conditions, the Fund will attempt to
invest 100% and as a matter of fundamental policy will invest at least 80% of
the value of its net assets in securities the interest on which is exempt from
regular federal income tax and California personal income tax. Such interest,
however, may be subject to the federal alternative minimum tax.

Under normal market conditions, temporary investments in taxable securities will
be limited as a matter of fundamental policy to 20% of the value of the Fund's
net assets.

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<PAGE>

Except as otherwise specifically noted above, the Fund's investment strategies
are not fundamental and the Fund, with the approval of the Board of Trustees,
may change such strategies without the vote of shareholders.

Fund Policies

The Fund is subject to fundamental policies that place restrictions on certain
types of investments. These policies cannot be changed except by vote of a
majority of the outstanding voting securities of the Fund. Under these policies,
the Fund may not:

- - Borrow money, except from banks for temporary purposes (such as meeting
redemption requests or for extraordinary or emergency purposes but not for
the purchase of portfolio securities) in an amount not to exceed 10% of the
value of its total assets at the time the borrowing is made (not including
the amount borrowed). The Fund will not purchase additional portfolio
securities if the Fund has outstanding borrowings in excess of 5% of the
value of its total assets;

- - Mortgage or pledge any of its assets, except to secure permitted borrowings
noted above;

- - Invest more than 25% of total assets at market value in any one industry;
except that municipal securities and securities of the US Government, its
agencies and instrumentalities are not considered an industry for purposes
of this limitation.

- - As to 50% of the value of its total assets, purchase securities of any
issuer if immediately thereafter more than 5% of total assets at market
value would be invested in the securities of any issuer (except that this
limitation does not apply to obligations issued or guaranteed as to
principal and interest by the US Government or its agencies or
instrumentalities);

- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or
for the purpose of hedging the Fund's obligations under the Deferred
Compensation Plan for Trustees;

- - Purchase or hold any real estate, except that the Fund may invest in
securities secured by real estate or interests therein or issued by persons
(other than real estate investment trusts) which deal in real estate or
interests therein;

- - Purchase or hold the securities of any issuer, if to its knowledge,
trustees or officers of the Fund individually owning beneficially more than
0.5% of the securities of that issuer own in the aggregate more than 5% of
such securities;

- - Write or purchase put, call, straddle or spread options; purchase
securities on margin or sell "short"; or underwrite the securities of other
issuers, except that the Fund may be deemed an underwriter in connection
with the purchase and sale of portfolio securities;

- - Purchase or sell commodities or commodity contracts including futures
contracts; or

- - Make loans, except to the extent that the purchase of notes, bonds or other
evidences of indebtedness or deposits with banks may be considered loans.

The Fund also may not change its investment objective without shareholder
approval.

Under the 1940 Act, a "vote of a majority of the outstanding voting securities"
of the Fund means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund or (2) 67% or more of the shares of the Fund
present at a shareholders' meeting if more than 50% of the outstanding shares of
the Fund are represented at the meeting in person or by proxy.

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<PAGE>

Temporary Defensive Position

In abnormal market conditions, if, in the judgment of the Fund, municipal
securities satisfying the Fund's investment objectives may not be purchased, the
Fund may, for defensive purposes, temporarily invest in instruments the interest
on which is exempt from regular federal income taxes, but not state personal
income taxes. Such securities would include those described under "Pennsylvania
Municipal Securities" above that would otherwise meet the Fund's objectives.

Also, in abnormal market conditions, the Fund may invest on a temporary basis in
fixed-income securities, the interest on which is subject to federal, state, or
local income taxes, pending the investment or reinvestment in municipal
securities of the proceeds of sales of shares or sales of portfolio securities,
in order to avoid the necessity of liquidating portfolio investments to meet
redemptions of shares by investors or where market conditions due to rising
interest rates or other adverse factors warrant temporary investing for
defensive purposes. Investments in taxable securities will be substantially in
securities issued or guaranteed by the United States Government (such as bills,
notes and bonds), its agencies, instrumentalities or authorities; highly-rated
corporate debt securities (rated Aa3 or better by Moody's or AA- or better by
S&P); prime commercial paper (rated P-1 by Moody's or A-1+/A-1 by S&P); and
certificates of deposit of the 100 largest domestic banks in terms of assets
which are subject to regulatory supervision by the US Government or state
governments and the 50 largest foreign banks in terms of assets with branches or
agencies in the United States. Investments in certificates of deposit of foreign
banks and foreign branches of US banks may involve certain risks, including
different regulation, use of different accounting procedures, political or other
economic developments, exchange controls, or possible seizure or nationalization
of foreign deposits.

Portfolio Turnover

Portfolio transactions will be undertaken principally to accomplish the Fund's
objective in relation to anticipated movements in the general level of interest
rates but the Fund may also engage in short-term trading consistent with its
objective. Securities may be sold in anticipation of a market decline (a rise in
interest rates) or purchased in anticipation of a market rise (a decline in
interest rates) and later sold. In addition, a security may be sold and another
purchased at approximately the same time to take advantage of what the
investment manager believes to be a temporary disparity in the normal yield
relationship between the two securities.

The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned during the year.
Securities whose maturity or expiration date at the time of acquisition were one
year or less are excluded from the calculation. The Fund's portfolio turnover
rates for the fiscal years ended September 30, 1998 and 1997, were 13.05% and
32.99 %, respectively. The fluctuation in portfolio turnover rates of the Fund
resulted from conditions in the Pennsylvania municipal market. The Fund's
portfolio turnover rate will not be a limiting factor when the Fund deems it
desirable to sell or purchase securities.

Management of the Fund

Board of Trustees

The Board of Trustees provides broad supervision over the affairs of the Fund.

Management Information

Trustees and officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below. Each
Trustee who is an "interested person" of the Fund, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.

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<PAGE>

<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------

<S> <C> <C>
William C. Morris* Trustee, Chairman of the Chairman, J. & W. Seligman & Co. Incorporated,
(61) Board, Chief Executive Chairman and Chief Executive Officer, the Seligman
Officer and Chairman of the Group of investment companies; Chairman, Seligman
Executive Committee Advisors, Inc, Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas
industry; and Director, Seligman Data Corp.,
Kerr-McGee Corporation, diversified energy company.
Formerly, Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.

Brian T. Zino* Trustee, President and Member Director and President, J. & W. Seligman & Co.
(46) of the Executive Committee Incorporated; President (with the exception of
Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.) and Director or Trustee,
the Seligman Group of investment companies; Chairman,
Seligman Data Corp.; Member of the Board of Governors
of the Investment Company Institute and Director, ICI
Mutual Insurance Company, Seligman Advisors, Inc.,
and Seligman Services, Inc.

Richard R. Schmaltz* Trustee and Member of the Director and Managing Director, Director of
(58) Executive Committee Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of investment
companies (except Seligman Cash Management, Inc.);
Director, Seligman Henderson Co., and Trustee
Emeritus of Colby College. Formerly, Director,
Investment Research at Neuberger & Berman from May
1993 to September 1996.

John R. Galvin Trustee Dean, Fletcher School of Law and Diplomacy at Tufts
(69) University; Director or Trustee, the Seligman Group
Tufts University of investment companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; a Governor of the Center for
Medford, MA 02155 Creative Leadership; Director; Raytheon Co.,
electronics; National Defense University; and the
Institute for Defense Analysis. Formerly, Director,
USLIFE Corporation, life insurance; Ambassador, U.S.
State Department for negotiations in Bosnia;
Distinguished Policy Analyst at Ohio State University
and Olin Distinguished Professor of National Security
Studies at the United States Military Academy. From
June, 1987 to June, 1992, he was the Supreme Allied
Commander, Europe and the Commander-in-Chief, United
States European Command.
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Alice S. Ilchman Trustee Retired President, Sarah Lawrence College; Director
(64) or Trustee, the Seligman Group of investment
18 Highland Circle companies; Trustee, the Committee for Economic
Bronxville, NY 10708 Development; and Chairman, The Rockefeller
Foundation, charitable foundation. Formerly, Trustee,
The Markle Foundation, philanthropic organization;
and Director, New York Telephone Company and
International Research and Exchange Board,
intellectual exchanges.

Frank A. McPherson Trustee Retired Chairman and Chief Executive Officer of
(66) Kerr-McGee Corporation; Director or Trustee, the
2601 Northwest Expressway, Seligman Group of investment companies; Director,
Suite 805E Kimberly-Clark Corporation, consumer products; Bank
Oklahoma City, OK 73112 of Oklahoma Holding Company; Baptist Medical Center;
Oklahoma Chapter of the Nature Conservancy; Oklahoma
Medical Research Foundation; and National Boys and
Girls Clubs of America; and Member of the Business
Roundtable and National Petroleum Council. Formerly,
Chairman, Oklahoma City Public Schools Foundation;
and Director, Federal Reserve System's Kansas City
Reserve Bank and the Oklahoma City Chamber of
Commerce.

John E. Merow Trustee Retired Chairman and Senior Partner, Sullivan &
(69) Cromwell, law firm; Director or Trustee, the Seligman
125 Broad Street, Group of investment companies; Director, Commonwealth
New York, NY 10004 Industries, Inc., manufacturers of aluminum sheet
products; the Foreign Policy Association; Municipal
Art Society of New York; the U.S. Council for
International Business; and New York Presbyterian
Hospital; Chairman, American Australian Association;
and New York Presbyterian Healthcare Network, Inc.;
Vice-Chairman, the U.S.-New Zealand Council; and
Member of the American Law Institute and Council on
Foreign Relations.

Betsy S. Michel Trustee Attorney; Director or Trustee, the Seligman Group of
(56) investment companies; Trustee, The Geraldine R. Dodge
P.O. Box 449 Foundation, charitable foundation; and Chairman of
Gladstone, NJ 07934 the Board of Trustees of St. George's School
(Newport, RI). Formerly, Director, the National
Association of Independent Schools (Washington, DC).
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
James C. Pitney Trustee Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(72) firm; Director or Trustee, the Seligman Group of
Park Avenue at Morris County, investment companies. Formerly, Director, Public
P.O. Box 1945, Morristown, NJ Service Enterprise Group, public utility.
07962

James Q. Riordan Trustee Director or Trustee, the Seligman Group of investment
(71) companies; Director, The Houston Exploration Company;
675 Third Avenue, The Brooklyn Museum, KeySpan Energy Corporation; and
Suite 3004 Public Broadcasting Service; and Trustee, the
New York, NY 10017 Committee for Economic Development. Formerly,
Co-Chairman of the Policy Council of the Tax
Foundation; Director, Tesoro Petroleum Companies,
Inc. and Dow Jones & Company, Inc.; Director and
President, Bekaert Corporation; and Co-Chairman,
Mobil Corporation.

Robert L. Shafer Trustee Retired Vice President, Pfizer Inc.; Director or
(66) Trustee, the Seligman Group of investment companies.
96 Evergreen Avenue, Formerly, Director, USLIFE Corporation.
Rye, NY 10580

James N. Whitson Trustee Director and Consultant, Sammons Enterprises, Inc.;
(64) Director or Trustee, the Seligman Group of investment
6606 Forestshire Drive companies; Director, C-SPAN and CommScope, Inc.,
Dallas, TX 75230 manufacturer of coaxial cables. Formerly, Executive
Vice President, Chief Operating Officer, Sammons
Enterprises, Inc.; and Director, Red Man Pipe and
Supply Company, piping and other materials.

Thomas G. Moles Vice President and Senior Director and Managing Director, J. & W. Seligman &
(56) Portfolio Manager Co. Incorporated; Vice President and Senior Portfolio
Manager, three other open-end investment companies in
the Seligman Group of investment companies; President
and Senior Portfolio Manager, Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc., closed-end investment companies; and
Director, Seligman Advisors, Inc. and Seligman
Services, Inc.

Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman &
(42) Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman
Group of investment companies and Seligman Services,
Inc.; and Vice President and Treasurer, Seligman
International, Inc., and Treasurer, Seligman
Henderson Co.
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(34) Regulation and Corporate Secretary, J. & W. Seligman
& Co. Incorporated; Secretary, the Seligman Group of
investment companies, Seligman Advisors, Inc.,
Seligman Henderson Co., Seligman Services, Inc.,
Seligman International, Inc. and Seligman Data Corp.

Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies
(41) and Seligman Data Corp.
</TABLE>

The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Funds for
which no market valuation is available, and to elect or appoint officers of the
Funds to serve until the next meeting of the Board.

Trustees and officers of the Funds are also directors and officers of some or
all of the other investment companies in the Seligman Group.

Compensation

<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund from Fund (1) Fund Expenses to Trustees (1)(2)
------------------ ------------- ------------- ------------------
<S> <C> <C> <C>
William C. Morris, Trustee and Chairman N/A N/A N/A
Brian T. Zino, Trustee and President N/A N/A N/A
Richard R. Schmaltz, Trustee N/A N/A N/A
John R. Galvin, Trustee $576 N/A $77,000
Alice S. Ilchman, Trustee 504 N/A 70,000
Frank A. McPherson, Trustee 554 N/A 75,000
John E. Merow, Trustee 544 N/A 74,000
Betsy S. Michel, Trustee 576 N/A 77,000
James C. Pitney, Trustee 524 N/A 72,000
James Q. Riordan, Trustee 524 N/A 72,000
Robert L. Shafer, Trustee 524 N/A 72,000
James N. Whitson, Trustee 576(d) N/A 77,000(d)
</TABLE>

- ----------
(1) For the Fund's fiscal year ended September 30, 1998. Effective January 16,
1998, the per meeting fee for Trustees was increased by $1,000, which is
allocated among all funds in the Fund Complex.

(2) The Seligman Group of investment companies consists of eighteen investment
companies.

(d) Deferred.

The Fund has a compensation arrangement under which outside trustees may elect
to defer receiving their fees. The Fund has adopted a Deferred Compensation Plan
under which a trustee who has elected deferral of his or her fees may choose a
rate of return equal to either (1) the interest rate on short-term Treasury
Bills, or (2) the rate of return on the shares of any of the investment
companies advised by J. & W. Seligman & Co. Incorporated, as designated by the
trustee. The cost of such fees and earnings is included in trustees' fees and
expenses, and the accumulated balance thereof is included in other liabilities
in the Fund's financial statements. The total amount of deferred compensation
(including earnings) payable in respect of the Fund to Mr. Whitson as of
September 30, 1998 was $10,179.

Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation in the amounts of $19,629 and $11,628,
respectively, as of September 30, 1998.

11
<PAGE>

The Fund may, but is not obligated to, purchase shares of the Seligman Group of
investment companies to hedge its obligations in connection with the Fund's
Deferred Compensation Plan.

Sales Charges

Class A shares of the Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Fund, the other investment companies in the Seligman Group, and J. & W.
Seligman & Co. Incorporated and its affiliates. Family members are defined to
include lineal descendents and lineal ancestors, siblings (and their spouses and
children) and any company or organization controlled by any of the foregoing.
Such sales also may be made to employee benefit plans for such persons and to
any investment advisory, custodial, trust or other fiduciary account managed or
advised by J. & W. Seligman & Co. Incorporated or any affiliate. These sales may
be made for investment purposes only, and shares may be resold only to the Fund.

Class A shares may be sold at net asset value to these persons since such sales
require less sales effort and lower sales related expenses as compared with
sales to the general public.

Control Persons and Principal Holders of Securities

Control Persons

As of May 14, 1999, there was no person or persons who controlled the Fund,
either through significant ownership of Fund shares or any other means of
control.

Principal Holders

As of May 14, 1999, MLPF&S For the Sole Benefit if Its Customers, Attn Fund
Administration, 4800 Deer Lake Drive East 3rd Floor, Jacksonville, FL 32246
owned of record 16.03% of the outstanding Class A shares of the Fund. The
following entities owned the stated percentages of the Fund's Class D capital
stock then outstanding as of May 14, 1999:

o 18.1% Prudential Securities Inc FBO Mr. John J. Baldi & Mr. Frances T.
Baldi Jt Ten, 901 Richmont Street, Scranton, PA 18509-1721

o 12.98% PaineWebber for the Benefit of Dorothy Batava, 51 B Peace Circle,
New Oxford, PA 17350

o 47.1% MLPF&S for the Sole Benefit of its Customers, Attn Fund
Administration, 4800 Deer Lake Drive East, 3rd Floor,
Jacksonville, FL 32246

Management Ownership

Trustees and officers of the Fund as a group owned less than 1% of the Fund's
Class A shares of beneficial interest as of May 14, 1999. As of the same date,
no Trustees or officers owned shares of the Fund's Class D shares of beneficial
interest.

Investment Advisory and Other Services

Investment Manager

J. & W. Seligman & Co. Incorporated (Seligman) manages the Fund. Seligman is a
successor firm to an investment banking business founded in 1864 which has
thereafter provided investment services to individuals, families, institutions,
and corporations. On December 29, 1988, a majority of the outstanding voting
securities of Seligman was purchased by Mr. William C. Morris and a simultaneous
recapitalization of Seligman occurred. See Appendix C for further history of
Seligman.

All of the officers of the Fund listed above are officers or employees of
Seligman. Their affiliations with the Fund and with Seligman are provided under
their principal business occupations.

12
<PAGE>

The Fund pays Seligman a management fee for its services, calculated daily and
payable monthly. The management fee is equal to .50% per annum of the Fund's
average daily net assets. For the fiscal years ended September 30, 1998, 1997,
and 1996, the Fund paid Seligman management fees in the amount of $152,373,
$156,173, and $166,894, respectively.

The Fund pays all of its expenses other than those assumed by Seligman,
including brokerage commissions, if any, shareholder services and distribution
fees, fees and expenses of independent attorneys and auditors, taxes and
governmental fees, including fees and expenses of qualifying the Funds and their
shares under federal and state securities laws, cost of stock certificates and
expenses of repurchase or redemption of shares, expenses of printing and
distributing reports, notices and proxy materials to shareholders, expenses of
printing and filing reports and other documents with governmental agencies,
expenses of shareholders' meetings, expenses of corporate data processing and
related services, shareholder record keeping and shareholder account services,
fees and disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of the Trustees of the Fund not
employed by or serving as a director of Seligman or its affiliates, insurance
premiums and extraordinary expenses such as litigation expenses. These expenses
are allocated between the Funds in a manner determined by the Trustees to be
fair and equitable.

The Management Agreement also provides that Seligman will not be liable to the
Fund for any error of judgment or mistake of law, or for any loss arising out of
any investment, or for any act or omission in performing its duties under the
Management Agreement, except for willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations and duties under the
Management Agreement.

The Fund's Management Agreement was unanimously approved by the Trustees at a
meeting held on October 11, 1988 and was also approved by the shareholders at a
meeting held on December 16, 1988. The Management Agreement will continue in
effect until December 29 of each year if (1) such continuance is approved
annually in the manner required by the 1940 Act (i.e., by a vote of a majority
of the Trustees or of the outstanding voting securities of the Fund and by a
vote of a majority of the Trustees who are not parties to the Management
Agreement or interested persons of any such party) and (2) Seligman shall not
have notified the Fund at least 60 days prior to December 29 of any year that it
does not desire such continuance. The Agreement may be terminated by the Fund,
without penalty, on 60 days' written notice to Seligman and will terminate
automatically in the event of its assignment. The Fund has agreed to change its
name upon termination of its Management Agreement if continued use of the name
would cause confusion in the context of Seligman's business.

Officers, directors and employees of Seligman are permitted to engage in
personal securities transactions, subject to Seligman's Code of Ethics. The Code
of Ethics proscribes certain practices with regard to personal securities
transactions and personal dealings, provides a framework for the reporting and
monitoring of personal securities transactions by Seligman's Compliance Officer,
and sets forth a procedure of identifying, for disciplinary action, those
individuals who violate the Code of Ethics. The Code of Ethics prohibits each of
the officers, trustees and employees (including all portfolio managers) of
Seligman from purchasing or selling any security that the officer, director, or
employee knows or believes (1) was recommended by Seligman for purchase or sale
by any client, including the Fund, within the preceding two weeks, (2) has been
reviewed by Seligman for possible purchase or sale within the preceding two
weeks, (3) is being purchased or sold by any client, (4) is being considered by
a research analyst, (5) is being acquired in a private placement, unless prior
approval has been obtained from Seligman's Compliance Officer, or (6) is being
acquired during an initial or secondary public offering. The Code of Ethics also
imposes a strict standard of confidentiality and requires portfolio managers to
disclose any interest they may have in the securities or issuers that they
recommend for purchase by any client.

The Code of Ethics also prohibits (1) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages; and (2) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.

13
<PAGE>

Officers, directors, trustees and employees are required, except under very
limited circumstances, to engage in personal securities transactions through
Seligman's order desk. The order desk maintains a list of securities that may
not be purchased due to a possible conflict with clients. All officers,
directors and employees are also required to disclose all securities
beneficially owned by them on December 31 of each year.

Principal Underwriter

Seligman Advisors, Inc. (Seligman Advisors), an affiliate of Seligman, 100 Park
Avenue, New York, New York 10017, acts as general distributor of the shares of
the Fund and of the other mutual funds in the Seligman Group. Seligman Advisors
is an "affiliated person" (as defined in the 1940 Act) of Seligman, which is
itself an affiliated person of the Fund. Those individuals identified above
under "Management Information" as trustees or officers of both the Fund and
Seligman Advisors are affiliated persons of both entities.

Services Provided by the Investment Manager

Under the Management Agreement, dated December 29, 1988, subject to the control
of the Board of Trustees, Seligman manages the investment of the assets of the
Fund, including making purchases and sales of portfolio securities consistent
with the Fund's investment objectives and policies, and administers their
business and other affairs. Seligman provides the Fund with such office space,
administrative and other services and executive and other personnel as are
necessary for Fund operations. Seligman pays all of the compensation of trustees
of the Fund who are employees or consultants of Seligman and of the officers and
employees of the Fund. Seligman also provides senior management for Seligman
Data Corp., the Fund's shareholder service agent.

Service Agreements

There are no other management-related service contracts under which services are
provided to the Fund.

Other Investment Advice

No person or persons, other than directors, officers, or employees of Seligman,
regularly advise the Fund with respect to its investments.

Dealer Reallowances

Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares and Class C shares of the Fund, as set forth below:

Class A shares:

<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.25%
$50,000 - $ 99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0 0 0
</TABLE>

(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.

(2) You will not pay a sales charge on purchases of $1 million or more, but you
will be subject to a 1% CDSC if you sell your shares within 18 months.

14
<PAGE>

Class C shares:

<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0 0 0
</TABLE>

(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.

(2) Your purchase of Class C shares must be for less than $1,000,000 because if
you invest $1,000,000 or more, you will pay less in fees and charges if you
buy Class A shares.

Seligman Services, Inc. (Seligman Services), an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares. For the Fund's fiscal years ended
September 30, 1998, 1997, and 1996, Seligman Services received commissions of
$626, $752, and $337, respectively.

Rule 12b-1 Plan

The Fund has adopted an Administration, Shareholder Services and Distribution
Plan (12b-1 Plan) in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.

Under the 12b-1 Plan, the Fund may pay to Seligman Advisors an administration,
shareholder services and distribution fee in respect of the Fund's Class A,
Class C, and Class D shares. Payments under the 12b-1 Plan may include, but are
not limited to: (1) compensation to securities dealers and other organizations
(Service Organizations) for providing distribution assistance with respect to
assets invested in the Fund; (2) compensation to Service Organizations for
providing administration, accounting and other shareholder services with respect
to Fund shareholders; and (3) otherwise promoting the sale of shares of the
Fund, including paying for the preparation of advertising and sales literature
and the printing and distribution of such promotional materials and prospectuses
to prospective investors and defraying Seligman Advisors' costs incurred in
connection with its marketing efforts with respect to shares of the Fund.
Seligman, in its sole discretion, may also make similar payments to Seligman
Advisors from its own resources, which may include the management fee that
Seligman receives from the Fund. Payments made by the Fund under the 12b-1 Plan
are intended to be used to encourage sales of the Fund, as well as to discourage
redemptions.

Fees paid by the Fund under the 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class or
any other Seligman fund. Expenses attributable to more than one class of the
Fund are allocated between the classes in accordance with a methodology approved
by the Fund's Board of Trustees. The Fund may participate in joint distribution
activities with other Seligman funds, and the expenses of such activities will
be allocated among the applicable funds based on relative sales, in accordance
with a methodology approved by the Board.

Class A

Under the 12b-1 Plan, the Fund, with respect to Class A shares, pays quarterly
to Seligman Advisors a service fee at an annual rate of up to .25% of the
average daily net asset value of the Class A shares. These fees are used by
Seligman Advisors exclusively to make payments to Service Organizations which
have entered into agreements with Seligman Advisors. Such Service Organizations
receive from Seligman Advisors a continuing fee of up to .25% on an annual
basis, payable quarterly, of the average daily net assets of Class A shares
attributable to the particular Service Organization for providing personal
service and/or maintenance of shareholder accounts. The fee payable to Service
Organizations from time to time shall, within such limits, be determined by the
Trustees. The Fund is not obligated to pay Seligman Advisors for any such costs
it incurs in excess of the fee described above. No expense incurred in one
fiscal year by Seligman Advisors with respect to Class A shares of the Fund may
be paid

15
<PAGE>

from Class A 12b-1 fees received from the Fund in any other fiscal year. If the
Fund's 12b-1 Plan is terminated in respect of Class A shares, no amounts (other
than amounts accrued but not yet paid) would be owed by the Fund to Seligman
Advisors with respect to Class A shares. The total amount paid by the Fund to
Seligman Advisors in respect of Class A shares for the fiscal year ended
September 30, 1998 was $64,160, equivalent to .22% of the Class A shares'
average daily net assets.

Class C

Under the 12b-1 Plan, the Fund, with respect to Class C shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class C shares. The fee is used by Seligman Advisors as
follows: During the first year following the sale of Class C shares, a
distribution fee of .75% of the average daily net assets attributable to Class C
shares is used, along with any CDSC proceeds during the first eighteen months,
to (1) reimburse Seligman Advisors for its payment at the time of sale of Class
C shares of a 1.25% sales commission to Service Organizations, and (2) pay for
other distribution expenses, including paying for the preparation of advertising
and sales literature and the printing and distribution of such promotional
materials and prospectuses to prospective investors and other marketing costs of
Seligman Advisors. In addition, during the first year following the sale of
Class C shares, a service fee of up to .25% of the average daily net assets
attributable to such Class C shares is used to reimburse Seligman Advisors for
its prepayment to Service Organizations at the time of sale of Class C shares of
a service fee of .25% of the net asset value of the Class C shares sold (for
shareholder services to be provided to Class C shareholders over the course of
the one year immediately following the sale). The payment of service fees to
Seligman Advisors is limited to amounts Seligman Advisors actually paid to
Service Organizations at the time of sale as service fees. After the initial
one-year period following a sale of Class C shares, the entire 12b-1 fee
attributable to such Class C shares is paid to Service Organizations for
providing continuing shareholder services and distribution assistance in respect
of the Fund. The Fund do not pay any 12b-1 fees in respect of Class C shares for
the fiscal year ended September 30, 1998 because no Class C shares were issued
or outstanding during such period.

Class D

Under the 12b-1 Plan, the Fund, with respect to Class D shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class D shares. The fee is used by Seligman Advisors as
follows: During the first year following the sale of Class D shares, a
distribution fee of .75% of the average daily net assets attributable to such
Class D shares is used, along with any CDSC proceeds, to (1) reimburse Seligman
Advisors for its payment at the time of sale of Class D shares of a .75% sales
commission to Service Organizations, and (2) pay for other distribution
expenses, including paying for the preparation of advertising and sales
literature and the printing and distribution of such promotional materials and
prospectuses to prospective investors and other marketing costs of Seligman
Advisors. In addition, during the first year following the sale of Class D
shares, a service fee of up to .25% of the average daily net assets attributable
to such Class D shares is used to reimburse Seligman Advisors for its prepayment
to Service Organizations at the time of sale of Class D shares of a service fee
of .25% of the net asset value of the Class D shares sold (for shareholder
services to be provided to Class D shareholders over the course of the one year
immediately following the sale). The payment of service fees to Seligman
Advisors is limited to amounts Seligman Advisors actually paid to Service
Organizations at the time of sale as service fees. After the initial one-year
period following a sale of Class D shares, the entire 12b-1 fee attributable to
such Class D shares is paid to Service Organizations for providing continuing
shareholder services and distribution assistance in respect of the Fund. The
total amount paid by the Fund in respect of Class D shares for the fiscal year
ended September 30, 1998 was $7,758, equivalent to 1% per annum of the average
daily net assets of Class D shares.

The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year.
The Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect
of Class D shares in one fiscal year to be paid from Class D 12b-1 fees received
from the Fund in any other fiscal year; however, in any fiscal year the Fund is
not obligated to pay any 12b-1 fees in excess of the fees described above.

16
<PAGE>

As of September 30, 1998 Seligman Advisors has incurred no unreimbursed expenses
in respect of the Fund's Class D shares.

If the 12b-1 Plan is terminated in respect of Class D shares of the Fund, no
amounts (other than amounts accrued but not yet paid) would be owed by the Fund
to Seligman Advisors with respect to Class D shares.

Payments made by the Fund under the 12b-1 Plan for its fiscal year ended
September 30, 1998, were spent on the following activities in the following
amounts (no Class C shares were outstanding during such fiscal year):

Class A Class D
------- -------

Compensation to underwriters -- $1,012

Compensation to broker/dealers $64,160 $6,746

The 12b-1 Plan was approved on June 10, 1986 by the Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Fund and who have no direct or indirect financial interest in
the operation of the 12b-1 Plan or in any agreement related to the 12b-1 Plan
(the "Qualified Trustees") and was approved by shareholders of the Fund on April
23, 1987. Amendments to the Plan were approved in respect of the Class D shares
on November 18, 1993 by the Trustees, including a majority of the Qualified
Trustees, and became effective with respect to the Class D shares on February 1,
1994. The 12b-1 Plan was approved in respect of Class C shares on May 20, 1999
by the Trustees, including a majority of the Qualified Trustees, and became
effective in respect of the Class C shares on June 1, 1999. The 12b-1 Plan will
continue in effect until December 31 of each year so long as such continuance is
approved annually by a majority vote of both the Trustees and the Qualified
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The 12b-1 Plan may not be amended to increase materially the amounts
payable under the terms of the 12b-1 Plan without the approval of a majority of
the outstanding voting securities of the Fund and no material amendment to the
12b-1 Plan may be made except with the approval of a majority of both the
Trustees and the Qualified Trustees in accordance with the applicable provisions
of the 1940 Act and the rules thereunder.

The 12b-1 Plan requires that the Treasurer of the Fund shall provide to the
Trustees, and the Trustees shall review at least quarterly, a written report of
the amounts expended (and purposes therefor) made under the 12b-1 Plan. Rule
12b-1 also requires that the selection and nomination of Trustees who are not
"interested persons" of the Fund be made by such disinterested Trustees.

Seligman Services acts as a broker/dealer of record for shareholder accounts
that do not have a designated financial advisor and receives compensation from
the Fund pursuant to the 12b-1 Plan for providing personal services and account
maintenance to such accounts and other distribution services. For the fiscal
years ended September 30, 1998, 1997, and 1996, Seligman Services received
distribution and service fees of $3,759, $3,276 and $3,735, respectively,
pursuant to the 12b-1 Plan.

Brokerage Allocation and Other Practices

Brokerage Transactions

For the fiscal years ended September 30, 1998, 1997, and 1996, no brokerage
commissions were paid by the Fund. When two or more of the investment companies
in the Seligman Group or other investment advisory clients of Seligman desire to
buy or sell the same security at the same time, the securities purchased or sold
are allocated by Seligman in a manner believed to be equitable to each. There
may be possible advantages or disadvantages of such transactions with respect to
price or the size of positions readily obtainable or saleable.

17
<PAGE>

In over-the-counter markets, the Fund deals with responsible primary market
makers unless a more favorable execution or price is believed to be obtainable.
The Fund may buy securities from or sell securities to dealers acting as
principal, except dealers with which its trustees and/or officers are
affiliated.

Commissions

For the fiscal years ended September 30, 1998, 1997, and 1996, the Fund did not
execute any portfolio transactions with, and therefore did not pay any
commissions to, any broker affiliated with either the Fund, Seligman, or
Seligman Advisors.

Regular Broker-Dealers

During the Fund's fiscal year ended September 30, 1998, the Fund did not acquire
securities of its regular brokers or dealers (as defined in Rule 10b-1 under the
1940 Act) or of their parents.

Shares of Beneficial Interest and Other Securities

Shares of Beneficial Interest

The Fund is authorized to issue an unlimited number of full and fractional
shares of beneficial interest, par value $.001, in separate series. To date, one
series has been authorized, which shares constitute the interest in the Fund.
The Fund has three classes, designated Class A shares of beneficial interest,
Class C shares of beneficial interest, and Class D shares of beneficial
interest. Each share of the Fund's Class A, Class C, and Class D beneficial
interest is equal as to earnings, assets, and voting privileges, except that
each class bears its own separate distribution and, potentially, certain other
class expenses and has exclusive voting rights with respect to any matter to
which a separate vote of any class is required by the 1940 Act or Massachusetts
law. Seligman Municipal Series Trust has adopted a multiclass plan pursuant to
Rule 18f-3 under the 1940 Act permitting the issuance and sale of multiple
classes. In accordance with the Declaration of Trust, the Board of Trustees may
authorize the creation of additional classes of beneficial interest with such
characteristics as are permitted by the multiples plan and Rule 18f-3. The 1940
Act requires that where more than one class exists, each class must be preferred
over all other classes in respect of assets specifically allocated to such
class. All shares have noncumulative voting rights for the election of trustees.
Each outstanding share is fully paid and non-assessable, and each is freely
transferable. There are no liquidation, conversion, or preemptive rights.

Other Securities

The Fund has no authorized securities other than its shares of beneficial
interest.

Purchase, Redemption, and Pricing of Shares

Purchase of Shares

Class A

Class A shares may be purchased at a price equal to the next determined net
asset value per share, plus an initial sales charge.

Purchases of Class A shares by a "single person" (as defined below under
"Persons Entitled to Reductions") may be eligible for the following reductions
in initial sales charges:

Volume Discounts are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales charge, reaches
levels indicated in the sales charge schedule set forth in the Prospectus.

18
<PAGE>

The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of the other Seligman mutual
funds sold with an initial sales charge with the total net asset value of shares
of those mutual funds already owned that were sold with an initial sales charge
and the total net asset value of shares of Seligman Cash Management Fund which
were acquired through an exchange of shares of another Seligman mutual fund on
which there was an initial sales charge at the time of purchase to determine
reduced sales charges in accordance with the schedule in the prospectus. The
value of the shares owned, including the value of shares of Seligman Cash
Management Fund acquired in an exchange of shares of another Seligman mutual
fund on which there was an initial sales charge at the time of purchase will be
taken into account in orders placed through a dealer, however, only if Seligman
Advisors is notified by an investor or a dealer of the amount owned by the
investor at the time the purchase is made and is furnished sufficient
information to permit confirmation.

A Letter of Intent allows an investor to purchase Class A shares over a 13-month
period at reduced initial sales charges in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with an initial sales charge of the other Seligman mutual
funds already owned and the total net asset value of shares of Seligman Cash
Management Fund which were acquired through an exchange of shares of another
Seligman mutual fund on which there was an initial sales charge at the time of
purchase. Reduced sales charges also may apply to purchases made within a
13-month period starting up to 90 days before the date of execution of a letter
of intent.

Persons Entitled To Reductions. Reductions in initial sales charges apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code of 1986,
as amended, organizations tax exempt under Section 501(c)(3) or (13) of the
Internal Revenue Code, and non-qualified employee benefit plans that satisfy
uniform criteria are considered "single persons" for this purpose. The uniform
criteria are as follows:

1. Employees must authorize the employer, if requested by a Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
prospectus, reports, and other shareholder communications.

2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.

3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.

Eligible Employee Benefit Plans. The table of sales charges in the Prospectus
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans" which have
at least (1) $500,000 invested in the Seligman Group of mutual funds or (2) 50
eligible employees to whom such plan is made available. Such sales must be made
in connection with a payroll deduction system of plan funding or other systems
acceptable to Seligman Data Corp., the Fund's shareholder service agent.
"Eligible employee benefit plan" means any plan or arrangement, whether or not
tax qualified, which provides for the purchase of Fund shares. Sales of shares
to such plans must be made in connection with a payroll deduction system of plan
funding or other system acceptable to Seligman Data Corp. Section 403(b) Plans
sponsored by public educational institutions are not eligible for net asset
value purchases based on the aggregate investment made by the plan or member of
eligible employees.

Such sales are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted

19
<PAGE>

to Seligman Data Corp. by methods which it accepts. Additional information about
"eligible employee benefit plans" is available from financial advisors or
Seligman Advisors.

Further Types of Reductions. Class A shares may also be issued without an
initial sales charge in the following instances:

(1) to any registered unit investment trust which is the issuer of periodic
payment plan certificates, the net proceeds of which are invested in Fund
shares;

(2) to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;

(3) to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors;

(4) to financial institution trust departments;

(5) to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Fund shares;

(6) to accounts of financial institutions or broker/dealers that charge account
management fees, provided Seligman or one of its affiliates has entered
into an agreement with respect to such accounts;

(7) pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitations of, its employees,
members or participants in connection with the purchase of shares of the
Fund;

(8) to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside trustees;

(9) to certain "eligible employee benefit plans" as discussed above;

(10) to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by Seligman, or to their directors or
trustees; and

(11) in connection with sales pursuant to a 401(k) alliance program which has an
agreement with Seligman Advisors.

CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge in accordance with the sales charge schedule in the Fund's
Prospectus, or pursuant to a Volume Discount, Right of Accumulation, or Letter
of Intent are subject to a CDSC of 1% on redemptions of such shares within
eighteen months of purchase. Employee benefit plans eligible for net asset value
sales (as described below) may be subject to a CDSC of 1% for terminations at
the plan level only, on redemptions of shares purchased within eighteen months
prior to plan termination. The 1% CDSC will be waived on shares that were
purchased through Morgan Stanley Dean Witter & Co. by certain Chilean
institutional investors (i.e. pension plans, insurance companies, and mutual
funds). Upon redemption of such shares within an eighteen-month period, Morgan
Stanley Dean Witter will reimburse Seligman Advisors a pro rata portion of the
fee it received from Seligman Advisors at the time of sale of such shares.

See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.

<PAGE>

Class C

Class C shares may be purchased at a price equal to the next determined net
asset value, plus an initial sales charge. Purchases of Class C shares by a
"single person" may be eligible for the reductions in initial sales charges
described above for Class A shares. Class C shares are subject to a CDSC of 1%
if the shares are redeemed within eighteen months of purchase, charged as a
percentage of the current net asset value or the original purchase price,
whichever is less.

Class D

Class D shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class D shares are
subject to a CDSC of 1% if the shares are redeemed within one year of purchase,
charged as a percentage of the current net asset value or the original purchase
price, whichever is less. Unlike Class B shares, Class D shares do not
automatically convert to Class A shares after eight years.

Systematic Withdrawals. Class C and Class D shareholders who reinvest both their
dividends and capital gain distributions to purchase additional shares of the
Fund, may use the Systematic Withdrawal Plan to withdraw up to 10% and 10%,
respectively, of the value of their accounts per year without the imposition of
a CDSC. Account value is determined as of the date the systematic withdrawals
begin.

CDSC Waivers. The CDSC on Class C shares and Class D shares (and certain Class A
shares, as discussed above) will be waived or reduced in the following
instances:

(1) on redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder or beneficial
owner;

(2) in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue Code when such redemptions are
necessary to make distributions to plan participants (such payments
include, but are not limited to, death, disability, retirement, or
separation of service), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, minimum distribution requirements after attainment of age 70
1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;

(3) in whole or in part, in connection with shares sold to current and retired
Trustees of the Fund;

(4) in whole or in part, in connection with shares sold to any state, county,
or city or any instrumentality, department, authority, or agency thereof,
which is prohibited by applicable investment laws from paying a sales load
or commission in connection with the purchase of any registered investment
management company;

(5) in whole or in part, in connection with systematic withdrawals;

(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.

If, with respect to a redemption of any Class A, Class C or Class D shares sold
by a dealer, the CDSC is waived because the redemption qualifies for a waiver as
set forth above, the dealer shall remit to Seligman Advisors promptly upon
notice, an amount equal to the payment or a portion of the payment made by
Seligman Advisors at the time of sale of such shares.

Fund Reorganizations

Class A shares may be issued without an initial sales charge in connection with
the acquisition of cash and securities owned by other investment companies. Any
CDSC will be waived in connection with the

21
<PAGE>

redemption of shares of a Fund if the Fund is combined with another Seligman
mutual fund, or in connection with a similar reorganization transaction.

Payment in Securities. In addition to cash, the Funds may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales charge), although the Funds do not presently
intend to accept securities in payment for Fund shares. Generally, a Fund will
only consider accepting securities (l) to increase its holdings in a portfolio
security, or (2) if Seligman determines that the offered securities are a
suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that a Fund
would not accept securities with a value of less than $100,000 per issue in
payment for shares. A Fund may reject in whole or in part offers to pay for Fund
shares with securities, may require partial payment in cash for applicable sales
charges, and may discontinue accepting securities as payment for Fund shares at
any time without notice. The Funds will not accept restricted securities in
payment for shares. The Funds will value accepted securities in the manner
provided for valuing portfolio securities.

Offering Price

When you buy or sell Fund shares, you do so at the Class's net asset value (NAV)
next calculated after Seligman Advisors accepts your request. Any applicable
sales charge will be added to the purchase price for Class A shares and Class C
shares.

NAV per share of each class of the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time), on
each day that the NYSE is open for business. The NYSE is currently closed on New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. The Fund
will also determine NAV for each class on each day in which there is a
sufficient degree of trading in the Fund's portfolio securities that the NAV of
Fund shares might be materially affected. NAV per share for a class is computed
by dividing such class's share of the value of the net assets of the Fund (i.e.,
the value of its assets less liabilities) by the total number of outstanding
shares of such class. All expenses of the Fund, including the management fee,
are accrued daily and taken into account for the purpose of determining NAV. The
NAV of Class C shares and Class D shares will generally be lower than the NAV of
Class A shares as a result of the higher 12b-1 fees with respect to such shares.
It is expected, however, that the net asset value per share of the two classes
will tend to converge immediately after the recording of dividends, which will
differ by approximately the amount of the distribution and other class expenses
accrual differential between the classes.

The securities in which the Fund invests are traded primarily in the
over-the-counter market. Municipal securities and other short-term holdings
maturing in more than 60 days are valued on the basis of quotations provided by
an independent pricing service, approved by the Trustees, which uses information
with respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. In the absence of such quotations, fair value
will be determined in accordance with procedures approved by the Trustees.
Short-term holdings having remaining maturities of 60 days or less are generally
valued at amortized cost.

Generally, trading in certain securities such as municipal securities, corporate
bonds, US Government securities, and money market instruments is substantially
completed each day at various times prior to the close of the NYSE. The values
of such securities used in determining the net asset value of a Fund's shares
are computed as of such times.

22
<PAGE>

Specimen Price Make-Up

Under the current distribution arrangements between the Fund and Seligman
Advisors, Class A shares and Class C shares are sold with a maximum initial
sales charge of 4.75% and 1.00%(1), respectively, and Class D shares are sold at
NAV(2). Using each Class's NAV at March 31, 1999, (except Class C shares, which
commences operations effective June 1, 1999) the maximum offering price of the
Fund's shares is as follows:

Class A

Net asset value per share .................................... $7.98
-----

Maximum sales charge (4.75% of offering price) ............... .40
-----

Offering price to public ..................................... $8.38
=====

Class D

Net asset value and offering price per share(2) .............. $7.97
=====
- ----------
(1) In addition to the front-end sales charge of 1.00%, Class C shares are
subject to a 1% CDSC if you redeem your shares within eighteen months of
purchase.

(2) Class D shares are also subject to a 1% CDSC if you redeem your shares
within one year of purchase.

Redemption in Kind

The procedures for selling Fund shares under ordinary circumstances are set
forth in the Prospectus. In unusual circumstances, payment may be postponed, or
the right of redemption postponed for more than seven days, if the orderly
liquidation of portfolio securities is prevented by the closing of, or
restricted trading on, the NYSE during periods of emergency, or such other
periods as ordered by the Securities and Exchange Commission. Under these
circumstances, redemption proceeds may be made in securities. If payment is made
in securities, a shareholder may incur brokerage expenses in converting these
securities to cash.

Taxation of the Fund

The Fund is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. For each
year so qualified, the Fund will not be subject to federal income taxes on its
net investment income and capital gains, if any, realized during any taxable
year, which it distributes to its shareholders, provided that at least 90% of
its net investment income and net short-term capital gains are distributed to
shareholders each year.

Qualification as a regulated investment company under the Internal Revenue Code
requires among other things, that (1) at least 90% of the annual gross income of
the Fund be derived from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of stocks,
securities or currencies, or other income (including but not limited to gains
from options, futures, or forward contracts) derived with respect to its
business of investing in such stocks, securities or currencies; (2) and the Fund
diversify its holdings so that, at the end of each quarter of the taxable year,
(i) at least 50% of the market value of the Fund's assets is represented by
cash, US Government securities and other securities limited in respect of any
one issuer to an amount not greater than 5% of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
US Government securities).

Federal Income Taxes

If, at the end of each quarter of its taxable year, at least 50% of the Fund's
total assets is invested in obligations exempt from regular federal income tax,
the Fund will be eligible to pay dividends that are

23
<PAGE>

excludable by shareholders from gross income for regular federal income tax
purposes. The total amount of such exempt interest dividends paid by the Fund
cannot exceed the amount of federally tax-exempt interest received by the Fund
during the year less any expenses allocable to the Fund.

Distributions of net capital gains (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long the shares have been held by a shareholder, except that the portion of net
capital gains representing accrued market discount on tax-exempt obligations
acquired after April 30, 1993 will be taxable as ordinary income. Individual
shareholders will be subject to federal tax on distributions of net capital
gains at a maximum rate of 20% if designated as derived from the Fund's capital
gains from property held for more than one year. Net Capital gain of a corporate
shareholder is taxed at the same rate as ordinary income. Distributions from the
Fund's other investment income (other than exempt interest dividends) or from
net realized short-term gain will taxable to shareholders as ordinary income,
whether received in cash or invested in additional shares. Distributions
generally will not be eligible for the dividends received deduction allowed to
corporate shareholders. Shareholders receiving distributions in the form of
additional shares issued by the Fund will be treated for federal income tax
purposes as having received a distribution in an amount equal to the fair market
value on the date of distribution of the shares received.

Interest on indebtedness incurred or continued to purchase or carry shares of
the Fund will not be deductible for federal income tax purposes to the extent
that the Fund's distributions are exempt from federal income tax.

Any gain or loss realized upon a sale or redemption of shares in the Fund by a
shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. Individual shareholders
will be subject to federal income tax on net capital gains at a maximum rate of
20% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss realized will be treated as long-term capital loss to the extent
that it offsets the long-term capital gain distribution. In addition, no loss
will be allowed on the sale or other disposition of shares of the Fund if,
within a period beginning 30 days before the date of such sale or disposition
and ending 30 days after such date, the holder acquires (including shares
acquired through dividend reinvestment) securities that are substantially
identical to the shares of the Fund.

In determining gain or loss on shares of the Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales charge not taken into account in determining the tax basis
of shares sold or exchanged within 90 days after acquisition will be added to
the shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.

Shareholders are urged to consult their tax advisors concerning the effect of
federal income taxes in their individual circumstances. In particular, persons
who may be "substantial users" (or "related person" of substantial users) of
facilities financed by industrial development bonds or private activity bonds
should consult the tax advisors before purchasing shares of the Fund.

Pennsylvania Taxes

In the opinion of Ballard Spahr Andrews & Ingersoll, LLP, Pennsylvania tax
counsel to the Pennsylvania Fund, individual shareholders of the Pennsylvania
Fund who are subject to the Pennsylvania personal income tax will not be subject
to Pennsylvania personal income tax on distributions from the Pennsylvania Fund
to the extent that such distributions are attributable to interest paid on
Pennsylvania Municipal Securities or US Government obligations. Distributions
attributable to most other sources,

24
<PAGE>

including distributions attributable to gain on the sale of such instruments,
will not be exempt from Pennsylvania personal income tax.

The same rules apply under the tax imposed by the Philadelphia School District
on the unearned income of Philadelphia residents, except that all capital gain
distributions are exempt from the School District tax regardless of the source
from which they are paid.

Corporate shareholders who are subject to the Pennsylvania corporate net income
tax will not be subject to corporate net income tax on distributions from the
Pennsylvania Fund that qualify as exempt-interest dividends for federal income
tax purposes or are derived from interest on US Government obligations.

Individual shareholders of the Pennsylvania Fund who are subject to the
Pennsylvania personal property tax will be exempt from Pennsylvania personal
property tax on their shares of the Pennsylvania Fund to the extent that the
Pennsylvania Fund portfolio consists of Pennsylvania Municipal Securities and US
Government obligations on the annual assessment date. Corporations are not
subject to Pennsylvania personal property taxes.

Shareholders will receive an annual Statement of Account and information
regarding the federal and Pennsylvania income tax status of all distributions
made during the year. Information will also be provided to individual
Pennsylvania shareholders regarding the portion of the value of their shares, if
any, subject to Pennsylvania personal property tax.

Prospective investors should be aware that an investment in the Pennsylvania
Fund may not be suitable for persons who are not residents of the Commonwealth
of Pennsylvania or who do not receive income subject to income taxes of the
Commonwealth. Investors should also be aware that there is litigation in
progress in the Pennsylvania courts that may result in the personal property tax
being declared unconstitutional in whole or in part.

Underwriters

Distribution of Securities

The Fund and Seligman Advisors are parties to a Distributing Agreement dated
January 1, 1993 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of the Fund. Seligman Advisors accepts orders for the
purchase of Fund shares, which are offered continuously. As general distributor
of the Fund's shares of beneficial interest, Seligman Advisors allows
reallowances to all dealers on sales of Class A shares, as set forth above under
"Dealer Reallowances." Seligman Advisors retains the balance of sales charges
and any CDSCs paid by investors.

Total initial sales charges paid by shareholders of Class A shares of the Fund
for the fiscal years ended September 30, 1998, 1997, and 1996 are shown below.
Also shown are the amounts of the Class A sales charges that were retained by
Seligman Advisors. No Class C shares of the Fund were issued or outstanding
during such fiscal years:

Total Sales Charges Paid Amount of Class A Sales
by Shareholders Charges Retained by
Fiscal Year on Class A Shares Seligman Advisors
----------- ----------------- -----------------
1998 $24,839 $2,928
1997 28,924 3,421
1996 28,743 3,383

Compensation

Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliate person of the Fund, received the following commissions and other
compensation from the Fund during its fiscal year ended September 30, 1998:

25
<PAGE>

<TABLE>
<CAPTION>
Compensation on
Net Underwriting Redemptions and
Discounts and Repurchases
Commissions (CDSC on Class A
(Class A Sales and Class D Brokerage Other
Charge Retained Retained) Commissions Compensation
--------------- --------- ----------- ------------
<S> <C> <C> <C>
$2,928 $0 $0 $0
</TABLE>

Other Payments

Seligman Advisors shall pay broker/dealers, from its own resources, a fee on
purchases of Class A shares of $1,000,000 or more (NAV sales), calculated as
follows: 1.00% of NAV sales up to but not including $2 million; .80% of NAV
sales from $2 million up to but not including $3 million; .50% of NAV sales from
$3 million up to but not including $5 million; and .25% of NAV sales from $5
million and above. The calculation of the fee will be based on assets held by a
"single person," including an individual, members of a family unit comprising
husband, wife and minor children purchasing securities for their own account, or
a trustee or other fiduciary purchasing for a single fiduciary account or single
trust. Purchases made by a trustee or other fiduciary for a fiduciary account
may not be aggregated purchases made on behalf of any other fiduciary or
individual account.

Seligman Advisors shall also pay broker/dealers, from its own resources, a fee
on assets of certain investments in Class A shares of the Seligman mutual funds
participating in an "eligible employee benefit plan" that are attributable to
the particular broker/dealer. The shares eligible for the fee are those on which
an initial sales charge was not paid because either the participating eligible
employee benefit plan has at least (1) $500,000 invested in the Seligman mutual
funds or (2) 50 eligible employees to whom such plan is made available. Class A
shares representing only an initial purchase of Seligman Cash Management Fund
are not eligible for the fee. Such shares will become eligible for the fee once
they are exchanged for shares of another Seligman mutual fund. The payment is
based on cumulative sales for each Plan during a single calendar year, or
portion thereof. The payment schedule, for each calendar year, is as follows:
1.00% of sales up to but not including $2 million; .80% of sales from $2 million
up to but not including $3 million; .50% of sales from $3 million up to but not
including $5 million; and .25% of sales from $5 million and above.

Seligman Advisors may from time to time assist dealers by, among other things,
providing sales literature to, and holding informational programs for the
benefit of, dealers' registered representatives. Dealers may limit the
participation of registered representatives in such informational programs by
means of sales incentive programs which may require the sale of minimum dollar
amounts of shares of Seligman mutual funds. Seligman Advisors may from time to
time pay a bonus or other incentive to dealers that sell shares of the Seligman
mutual funds. In some instances, these bonuses or incentives may be offered only
to certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other mutual
funds managed by Seligman during a specified period of time. Such bonus or other
incentive may take the form of payment for travel expenses, including lodging,
incurred in connection with trips taken by qualifying registered representatives
and members of their families to places within or outside the United States. The
cost to Seligman Advisors of such promotional activities and payments shall be
consistent with the rules of the National Association of Securities Dealers,
Inc., as then in effect.

Calculation of Performance Data

Class A

The annualized yield for the 30-day period ended September 30, 1998 for the
Fund's Class A shares was 3.39%. The annualized yield was computed by dividing
the Fund's net investment income per share earned during this 30-day period by
the maximum offering price per share (i.e., the net asset value plus the maximum
sales load of 4.75% of the net amount invested) on September 30, 1998, which was
the last day of this period. The average number of Class A shares of the Fund
was 3,588,702, which was the

26
<PAGE>

average daily number of shares outstanding during the 30-day period that were
eligible to receive dividends. Income was computed by totaling the interest
earned on all debt obligations during the 30-day period and subtracting from
that amount the total of all recurring expenses incurred during the period. The
30-day yield was then annualized on a bond-equivalent basis assuming semi-annual
reinvestment and compounding of net investment income.

The tax equivalent annualized yield for the 30-day period ended September 30,
1998 for the Fund's Class A shares was 5.77%. The tax equivalent annualized
yield was computed by first computing the annualized yield as discussed above.
Then the portion of the yield attributable to securities the income of which was
exempt for federal and state income tax purposes was determined. This portion of
the yield was then divided by one minus 41.29% (which assumes the maximum
combined federal and state income tax rate for individual taxpayers that are
subject to Pennsylvania income tax. Then the small portion of the yield
attributable to securities the income of which was exempt only for federal
income tax purposes was determined. This portion of the yield was then divided
by one minus 39.6% (39.6% being the assumed maximum federal income tax rate for
individual taxpayers). These two calculations were then added to the portion of
the Class A shares' yield, if any, that was attributable to securities the
income of which was not tax-exempt.

The average annual total return for the Fund's Class A shares for the one-year
period ended September 30, 1998 was 3.98%. The average annual total return for
the Fund's Class A shares for the five-year period ended September 30, 1998 was
4.66%. The average annual total return for the Fund's Class A shares for the
ten-year period ended September 30, 1998 was 7.45%. These returns were computed
by assuming a hypothetical initial payment of $1,000 in Class A shares of the
Fund. From this $1,000, the maximum sales load of $47.50 (4.75% of public
offering price) was deducted. It was then assumed that all of the dividends and
distributions by the Fund's Class A shares over the relevant time period were
reinvested. It was then assumed that at the end of the one-year period, the
five-year period, and the ten-year period of the Fund, the entire amount was
redeemed. The average annual total return was then calculated by determining the
annual rate required for the initial payment to grow to the amount which would
have been received upon redemption (i.e., the average annual compound rate of
return).

Class D

The annualized yield for the 30-day period ended September 30, 1998 for the
Fund's Class D shares was 2.82%. The annualized yield was computed as for Class
A shares by dividing the Fund's net investment income per share earned during
this 30-day period by the maximum offering price per share (i.e., the net asset
value) on September 30, 1998 which was the last day of this period. The average
number of Class D shares of the Fund was 67,767, which was the average daily
number of shares outstanding during the 30-day period that were eligible to
receive dividends. Income was computed by totaling the interest earned on all
debt obligations during the 30-day period and subtracting from that amount the
total of all recurring expenses incurred during the period. The 30-day yield was
then annualized on a bond-equivalent basis assuming semi-annual reinvestment and
compounding of net investment income.

The tax equivalent annualized yield for the 30-day period ended September 30,
1998 for the Fund's Class D shares was 4.80%. The tax equivalent annualized
yield was computed as discussed above for Class A shares.

The average annual total return for the Fund's Class D shares for the one-year
period ended September 30, 1998 was 7.36%. The average annual total return for
the Fund's Class D shares for the period February 1, 1994 (inception) through
September 30, 1998 was 4.78%. These returns were computed by assuming a
hypothetical initial payment of $1,000 in Class D shares of the Fund and that
all of the dividends and distributions by the Fund's Class D shares over the
relevant time period were reinvested. It was then assumed that at the end of the
one-year period and the period since inception of the Fund, the entire amount
was redeemed, subtracting the 1% CDSC, if applicable.

Class C shares are a new class, effective June 1, 1999, so no performance data
is presented.

27
<PAGE>

The tables below illustrate the total returns on a $1,000 investment in the
Fund's Class A and Class D shares for the ten years ended September 30, 1998 or
from the Class's inception through September 30, 1998, assuming investment of
all dividends and capital gain distributions.

<TABLE>
<CAPTION>
Class A

Value of Value of Total Value
Year Initial Capital Gain Value of Of Total
Ended Investment(2) Distributions Dividends Investment(2) Return(1)(3)
----- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
9/30/89 $ 978 $ -- $66 $1,044
9/30/90 957 -- 130 1,087
9/30/91 1,009 13 211 1,233
9/30/92 1,045 16 295 1,356
9/30/93 1,123 39 394 1,556
9/30/94 984 78 416 1,478
9/30/95 1,016 109 509 1,634
9/30/96 1,019 129 593 1,741
9/30/97 1,038 153 688 1,879
9/30/98 1,074 179 799 2,052 105.19%
</TABLE>

<TABLE>
<CAPTION>
Class D

Value of Value of Total Value
Year/Period Initial Capital Gain Value of of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
9/30/94 $901 $ -- $ 24 $ 925
9/30/95 930 18 65 1,013
9/30/96 933 30 108 1,071
9/30/97 950 44 153 1,147
9/30/98 983 58 202 1,243 24.31%
</TABLE>

- ----------
(1) For the ten year period ended September 30, 1998 for Class A shares; and
from commencement of operations for Class D shares on February 1, 1994.

(2) The "Value of Initial Investment" as of the date indicated reflects the
effect of the maximum sales charge and CDSC, if applicable, assumes that
all dividends and capital gain distributions were taken in cash, and
reflects changes in the net asset value of the shares purchased with the
hypothetical initial investment. "Total Value of Investment" reflects the
effect of the CDSC, if applicable, and assumes investment of all dividends
and capital gain distributions.

(3) Total return for each Class of the Fund is calculated by assuming a
hypothetical initial investment of $1,000 at the beginning of the period
specified, subtracting the maximum sales load or CDSC, if applicable;
determining total value of all dividends and distributions that would have
been paid during the period on such shares assuming that each dividend or
distribution was invested in additional shares at net asset value;
calculating the total value of the investment at the end of the period; and
finally, by dividing the difference between the amount of the hypothetical
initial investment at the beginning of the period and its value at the end
of the period by the amount of the hypothetical initial investment.

Seligman waived its fees and reimbursed certain expenses during some of the
periods above, which positively affected the performance results presented.

Financial Statements

The Fund's Annual Report to Shareholders for the fiscal year ended September 30,
1998 and the Mid-Year Report to Shareholders for the fiscal six-month period
ended March 31, 1999, contain a schedule of the investments of the Fund as of
September 30, 1998 and March 31, 1999, respectively, as well as certain other
financial information. The financial statements and notes included in the Annual
Report, the Mid-Year Report and the Independent Auditors' Reports thereon, are
incorporated herein by reference. The Annual Report and Mid-Year Report will be
furnished, without charge, to investors who request copies of this SAI.

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General Information

The Trustees are authorized to classify or reclassify and issue any shares of
beneficial interest of the Trust into any number of other classes without
further action by shareholders. The 1940 Act requires that where more than one
class exists, each class must be preferred over all other classes in respect of
assets specifically allocated to such class.

As a general matter, the Fund will not hold annual or other meetings of the
shareholders. This is because the Declaration of Trust provides for shareholder
voting only (a) for the election or removal of one or more Trustees if a meeting
is called for that purpose, (b) with respect to any matter as to which
shareholder approval is required by the 1940 Act, (c) with respect to any
termination or reorganization of the Fund or any series, (d) with respect to any
amendment of the Declaration of Trust (other than amendments establishing and
designating new series or classes of shares, abolishing series or classes of
shares when there are no units thereof outstanding, changing the name of the
Fund, supplying any omission, curing any ambiguity or curing, correcting or
supplementing any provision thereof which is internally inconsistent with any
other provision thereof or which is defective or inconsistent with the 1940 Act
or with the requirements of the Internal Revenue Code or applicable regulations
for the Fund's obtaining the most favorable treatment thereunder available to
regulated investment companies, (e) to the same extent as the stockholders of a
Pennsylvania business corporation as to whether or not a court action,
proceeding, or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Fund or the shareholders, and (f) with
respect to such additional matters relating to the Fund as may be required by
the 1940 Act, the Declaration of Trust, the By-laws of the Fund, any
registration of the Fund with the Securities and Exchange Commission (the
"Commission") or any state, or as the Trustees may consider necessary or
desirable. Each Trustee serves until the next meeting of shareholders, if any,
called for the purpose of considering the election or reelection of such Trustee
or of a successor to such Trustee, and until the election and qualification of
his successor, if any, elected at such meeting, or until such Trustee sooner
dies, resigns, retires or is removed by the shareholders or two-thirds of the
Trustees.

The shareholders of the Fund have the right, upon the declaration in writing or
vote of more than two-thirds of the Fund's outstanding shares, to remove a
Trustee. The Trustees will call a meeting of shareholders to vote on the removal
of a Trustee upon the written request of the record holders of ten percent of
its shares. In addition, whenever ten or more shareholders of record who have
been such for at least six months preceding the date of application, and who
hold in the aggregate either shares having a net asset value of at least $25,000
or at least 1 per centum of the outstanding shares, whichever is less, shall
apply to the Trustees in writing, stating that they wish to communicate with
other shareholders with a view to obtaining signatures to a request for a
meeting for the purpose of voting upon the question of removal of any Trustee or
Trustees and accompanied by a form of communication and request which they wish
to transmit, the Trustee shall within five business days after receipt of such
application either: (1) afford to such applicants access to a list of the names
and addresses of all shareholders as recorded on the books of the Fund; or (2)
inform such applicants as to the approximate number of shareholders of record,
and the approximate cost of mailing to them the proposed communication and form
of requests. If the Trustees elect to follow the latter course, the Trustees,
upon the written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all shareholders of record at their
addresses as recorded on the books, unless within five business days after such
tender the Trustees shall mail to such applicants and file with the Commission,
together with a copy of the material to be mailed, a written statement signed by
at least a majority of the Trustees to the effect that in their opinion either
such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such opinion. After
opportunity for hearing upon the objections specified in the written statement
so filed, the Commission may, and if demanded by the Trustees or by such
applicants shall, enter an order either sustaining one or more of such
objections or refusing to sustain any of them. If the Commission shall enter an
order refusing to sustain any of such objections, or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all objections so sustained have
been met, and shall enter an order so declaring, the Trustees shall mail

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copies of such material to all shareholders with reasonable promptness after the
entry of such order and the renewal of such tender.

The shareholders of a Pennsylvania trust could, under certain circumstances, be
held personally liable as partners for its obligations. However, the Declaration
of Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust. The Declaration of Trust also provides for
indemnification and reimbursement of expenses out of the Fund's assets for any
shareholder held personally liable for obligations of the Fund.

Custodian. Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105, serves as custodian for the Fund. It also maintains, under the
general supervision of Seligman, the accounting records and determines the net
asset value for the Fund.

Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, NY
10281.

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Appendix A

Moody's Investors Service, Inc. ("Moody's")
Municipal Bonds

Aaa: Municipal bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa: Municipal bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than Aaa bonds because margins
of protection may not be as large or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.

A: Municipal bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Baa: Municipal bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be characteristically lacking or may be
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact may have speculative characteristics as well.

Ba: Municipal bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and thereby
not well safeguarded during other good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

B: Municipal bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa: Municipal bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.

Ca: Municipal bonds which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or have other
marked shortcomings.

C: Municipal bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.

Municipal Notes

Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG 1 are of the best quality, enjoying strong protection by
established cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing. Loans bearing the designation
MIG 2 are of high quality, with margins of protection

31
<PAGE>

ample although not so large as in the preceding group. Loans bearing the
designation MIG 3 are of favorable quality, with all security elements accounted
for but lacking the undeniable strength of the preceding grades. Market access
for refinancing in particular, is likely to be less well established. Notes
bearing the designation MIG 4 are judged to be of adequate quality, carrying
specific risk but having protection commonly regarded as required of an
investment security and not distinctly or predominantly speculative.

Commercial Paper

Moody's Commercial Paper Ratings are opinions of the ability of issuers to
repay punctually promissory senior debt obligations not having an original
maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the
highest quality repayment capacity of the rated issue.

The designation "Prime-2" or "P-2" indicates that the issuer has a strong
capacity for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.

The designation "Prime-3" or "P-3" indicates that the issuer has an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.

Issues rated "Not Prime" do not fall within any of the Prime rating
categories.

Standard & Poor's Corporation ("S&P")
Municipal Bonds

AAA: Municipal bonds rated AAA are highest grade obligations. Capacity to
pay interest and repay principal is extremely strong.

AA: Municipal bonds rated AA have a very high degree of safety and very
strong capacity to pay interest and repay principal and differ from the highest
rated issues only in small degree.

A: Municipal bonds rated A are regarded as upper medium grade. They have a
strong degree of safety and capacity to pay interest and repay principal
although they are somewhat more susceptible in the long term to the adverse
effects of changes in circumstances and economic conditions than debt in higher
rated categories.

BBB: Municipal bonds rated BBB are regarded as having a satisfactory degree
of safety and capacity to pay interest and re-pay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and re-pay principal for bonds in this category than for bonds in
higher rated categories.

BB, B, CCC, CC: Municipal bonds rated BB, B, CCC and CC are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and pre-pay principal in accordance with the terms of the bond. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposure to adverse
conditions.

C: The rating C is reserved for income bonds on which no interest is being
paid.

D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.

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<PAGE>

Municipal Notes

SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.

SP-2: Satisfactory capacity to pay principal and interest.

Commercial Paper

S&P Commercial Paper ratings are current assessments of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.

A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.

B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.

D: Debt rated "D" is in payment default.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.

The ratings assigned by S&P may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within its major rating categories.

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<PAGE>

Appendix B

RISK FACTORS REGARDING INVESTMENTS IN
PENNSYLVANIA MUNICIPAL SECURITIES

The following information as to certain Pennsylvania considerations is given to
investors in view of the Fund's policy of investing primarily in securities of
Pennsylvania issuers. Such information is derived from sources that are
generally available to investors and is believed to be accurate. Such
information constitutes only a brief summary, does not purport to be a complete
description and is based on information from official statements relating to
securities offerings of Pennsylvania issuers.

Employment. The industries traditionally strong in Pennsylvania, such as coal,
steel and railway, have declined and account for a decreasing share of total
employment. Service industries (including trade, health care, education and
finance) have grown, however, contributing increasing shares to the
Commonwealth's gross product and exceeding the manufacturing sector in each year
since 1985 as the largest single source of employment.

While the level of Pennsylvania's population basically remained constant from
1988 through 1997, nonagricultural employment increased by 7.0% from 1988 to
1997, after declining during the early 1980's. In contrast, increases in U.S.
nonagricultural employment have been greater and declines smaller for the same
periods, with U.S. employment increasing by 16% from 1988 to 1997. Trends in the
unemployment rates of Pennsylvania and the U.S. have been similar from 1988 to
1997. From 1986 to 1990, Pennsylvania's unemployment rate was lower than the
U.S. rate. For example, Pennsylvania's unemployment rate for 1989 and 1990 was
4.5% and 5.4%, respectively, while the unemployment rate for the U.S. was 5.3%
and 5.6% for the same years. In 1996 and 1997, Pennsylvania's unemployment rate
was 5.3% and 5.2%, respectively, compared with the U.S. unemployment rate of
5.4% and 4.9% for the same years.

Commonwealth Debt. Debt service on general obligation bonds of Pennsylvania,
except those issued for highway purposes or the benefit of other special revenue
funds, is payable from Pennsylvania's general fund, the recipient of all
Commonwealth revenues that are not required to be deposited in other funds.

As of June 30, 1998, the Commonwealth had $4,724.5 million of long-term bonds
outstanding, with debt for capital projects constituting the largest dollar
amount. Although Pennsylvania's Constitution permits the issuance of an
aggregate amount of capital project debt equal to 1.75 times the average annual
tax revenues of the preceding five fiscal years, the General Assembly may
authorize and historically has authorized a smaller amount. This constitutional
limit does not apply to other types of Pennsylvania debt such as electorate
approved debt or debt issued to rehabilitate areas affected by disaster.
However, the former may be incurred only after the enactment of legislation
calling for a referendum and usually specifying the purpose and amount of such
debt, followed by electoral approval. Similarly, debt issued to rehabilitate a
disaster area must be authorized by legislation which sets the debt limits.
These statutory and constitutional limitations imposed on bonds are also
applicable to bond anticipation notes.

Pennsylvania cannot use tax anticipation notes or any other form of debt to fund
budget deficits between fiscal years. All year-end deficits must be funded
within the succeeding fiscal year's budget. Moreover, the principal amount of
tax anticipation notes issued and outstanding for the account of a fund during a
fiscal year may not exceed 20% of that fund's estimated revenues for that fiscal
year.

Moral Obligations. The debt of the Pennsylvania Housing Finance Agency ("PHFA"),
a state agency which provides housing for lower and moderate income families,
and certain obligations of The Hospitals and Higher Education Facilities
Authority of Philadelphia (the "Hospitals Authority") is the only debt bearing
Pennsylvania's moral obligation. PHFA's bonds, but not its notes, are partially
secured by a capital reserve fund required to be maintained by PHFA in an amount
equal to the maximum annual debt service on its outstanding bonds in any
succeeding calendar year. If there is a potential deficiency in the capital
reserve fund or if funds are necessary to avoid default on interest, principal
or sinking fund payments on bonds or notes of PHFA, the Governor must place in
Pennsylvania's budget for the next

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<PAGE>

succeeding year an amount sufficient to make up any such deficiency or to avoid
any such default. The budget which the General Assembly adopts may or may not
include such amount. PHFA is not permitted to borrow additional funds as long as
any deficiency exists in the capital reserve fund. As of June 30, 1998, PHFA had
$2,716.4 million of bonds outstanding.

The Hospitals Authority is a municipal authority organized by the City of
Philadelphia (the "City") to, inter alia, acquire and prepare various sites for
use as intermediate care facilities for the mentally retarded. In 1986 the
Hospitals Authority issued $20.4 million of bonds, which were refunded in 1993
by a $21.1 million bond issue of the Hospitals Authority (the "Hospitals
Authority Bonds") for such facilities for the City. The Hospitals Authority
Bonds are secured by leases with the City and a debt service reserve fund for
which the Pennsylvania Department of Public Welfare (the "Department") has
agreed with the Hospitals Authority to request in the Department's annual budget
submission to the Governor, an amount of funds sufficient to alleviate any
deficiency in the debt service reserve fund that may arise. The budget as
finally adopted may or may not include the amount requested. If funds are paid
to the Hospitals Authority, the Department will obtain certain rights in the
property financed with the Hospitals Authority Bonds in return for such payment.

In response to a delay in the availability of billable beds and the revenues
from these beds to pay debt service on the Hospitals Authority Bonds, PHFA
agreed in June 1989 to provide a $2.2 million low-interest loan to the Hospitals
Authority. The loan enabled the Hospitals Authority to make all debt service
payments on the Hospitals Authority Bonds during 1990. Enough beds were
completed in 1991 to provide sufficient revenues to the Hospitals Authority to
meet its debt service payments and to begin repaying the loan from PHFA. As of
June 30, 1998, $1.1 million of the loan was outstanding.

Other Commonwealth Obligations; Pensions. Other obligations of Pennsylvania
include long-term agreements with public authorities to make lease payments that
are in some cases pledged as security for those authorities' revenue bonds, and
two pension plans covering state public school and other employees. These
pension plans had no unfunded actuarial accrued liability for their fiscal year
ended in 1997.

Pennsylvania Agencies. Certain Pennsylvania-created agencies have statutory
authorization to incur debt for which legislation providing for state
appropriations to pay debt service thereon is not required. The debt of these
agencies is supported solely by assets of, or revenues derived from the various
projects financed and is not an obligation of Pennsylvania. Some of these
agencies, however, are indirectly dependent on Pennsylvania funds through
various state-assisted programs. There can be no assurance that in the future
assistance of the Commonwealth will be available to these agencies. These
entities are as follows: The Delaware River Joint Toll Bridge Commission,
Delaware River Port Authority, Pennsylvania Energy Development Authority,
Pennsylvania Higher Education Assistance Agency, Pennsylvania Higher Educational
Facilities Authority, Pennsylvania Industrial Development Authority,
Pennsylvania Infrastructure Investment Authority, the Pennsylvania State Public
School Building Authority, the Pennsylvania Turnpike Commission, the
Pennsylvania Economic Development Financing Authority and the Philadelphia
Regional Port Authority.

Debt of Political Subdivisions and their Authorities. The ability of
Pennsylvania's political subdivisions, such as counties, cities and school
districts, to engage in general obligation borrowing without electorate approval
is generally limited by their recent revenue collection experience, although
generally such subdivisions can levy real property taxes unlimited as to rate or
amount to repay general obligation borrowings. Recent legislation authorizes
these subdivisions to engage in general obligation borrowings without limit as
to principal amount to fund unfunded accrued pension liabilities.

Political subdivisions can issue revenue obligations which will not affect their
general obligation borrowing capacity, but only if such revenue obligations are
either limited as to repayment from a certain type of revenue other than tax
revenues or projected to be repaid solely from project revenues.

Industrial development and municipal authorities, although created by political
subdivisions, can only issue obligations payable solely from the revenues
derived from the financed project. If the user of the project is a political
subdivision, that subdivision's full faith and credit may back the repayment of
the

35
<PAGE>

obligations of the industrial development or municipal authority. Often the user
of the project is a nongovernmental entity, such as a not-for-profit hospital or
university, a public utility or an industrial corporation, and there can be no
assurance that it will meet its financial obligations or that the pledge, if
any, of property financed will be adequate. Factors affecting the business of
the user of the project, such as managed care, increased competition and
governmental efforts to control health care costs (in the case of hospitals),
declining enrollment and reductions in governmental financial assistance (in the
case of universities), increasing capital and operating costs (in the case of
public utilities) and economic slowdowns (in the case of industrial
corporations) may adversely affect the ability of the project user to pay the
debt service on revenue bonds issued on its behalf.

Many factors affect the financial condition of the Commonwealth and its
counties, cities, school districts and other political subdivisions, such as
social, environmental and economic conditions, many of which are not within the
control of such entities. As is the case with many states and cities, many of
the programs of the Commonwealth and its political subdivisions, particularly
human services programs, depend in part upon federal reimbursements which have
been steadily declining. From time to time, the Commonwealth and various of its
political subdivisions (including particularly the Cities of Philadelphia,
Pittsburgh and Scranton) have encountered financial difficulty due to slowdowns
in the pace of economic activity in the Commonwealth and to other factors. The
Fund is unable to predict what effect, if any, such factors would have on the
Fund's investments.

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<PAGE>

Appendix C

HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED

Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest
of eight brothers, arrived in the United States from Germany. He earned his
living as a pack peddler in Pennsylvania, and began sending for his brothers.
The Seligmans became successful merchants, establishing businesses in the South
and East.

Backed by nearly thirty years of business success - culminating in the sale
of government securities to help finance the Civil War - Joseph Seligman, with
his brothers, established the international banking and investment firm of J. &
W. Seligman & Co. In the years that followed, the Seligman Complex played a
major role in the geographical expansion and industrial development of the
United States.

The Seligman Complex:

...Prior to 1900

o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.

...1900-1910

o Helps Congress finance the building of the Panama Canal.

...1910s

o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.

...1920s

o Participates in hundreds of successful underwritings including those for
some of the Country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company, United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets and one of its oldest.

...1930s

o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.

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<PAGE>

...1940s

o Helps shape the Investment Company Act of 1940.

o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.

o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.

o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.

...1950-1989

o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.

o Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific municipal funds.

o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.

o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.

...1990s

o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc., two closed-end funds that invest in high quality
municipal bonds.

o In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global investment products.

o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.

o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.

o Launches Seligman Value Fund Series, which currently offers two separate
series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value Fund.

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<PAGE>

To the Shareholders

During Seligman Pennsylvania Municipal Fund's six-month reporting period ended
March 31, 1999, the US economy remained strong. In fact, the economy grew faster
than almost anyone had predicted. The Pennsylvania economy participated in this
growth, and the financial condition of the state and its municipalities
benefited from the ongoing expansion.

At the Fund's fiscal year-end in September 1998, the consensus was that the US
economy would slow, possibly to recessionary levels, in the face of worldwide
financial disorder brought on by the Asian economic crisis. However, US consumer
strength was widely underestimated, and consumer confidence and the strong
consumer demand that accompanied it remained a powerful economic force. Not only
did the economy continue to surprise on the upside, it did so without signs of
rising inflation, a common side effect of prolonged and robust growth.

Despite evidence that inflation remained under control, the unexpected
acceleration in economic activity earlier this year caused bond market
participants to worry that inflation posed a possible threat. This concern
pushed Treasury yields significantly higher. During these six months, Treasury
bond yields fluctuated within a wide range of 98 basis points. In contrast, the
Pennsylvania municipal market remained relatively stable, with yields
fluctuating within a much narrower range of 16 basis points.

At the Fund's fiscal year-end in September 1998, the yield spread between
municipal bonds and Treasuries was unprecedentedly narrow. Recently, however, a
slowdown in the supply of new municipal bond issues and rising Treasury yields
caused the yield spread between municipal bonds and Treasury bonds to widen to a
more historically normal range. We believe that this trend will continue and, as
it does, the performance of the municipal market should improve relative to the
Treasury market.

The ongoing economic expansion in the US continued to benefit the municipal bond
market. Municipal bond issuers have been able to improve their financial
situations and, for the fourth year in a row, there were more credit-rating
upgrades than downgrades. We expect that this positive trend will continue.

The Fund's manager, J. & W. Seligman & Co. Incorporated, continues to work to
ensure that all of its operations are prepared for the challenges posed by the
Year 2000 (Y2K) computer issue. We are confident that there will be no
disruption in the investment and shareholder services provided by the Fund as a
result of Y2K. In addition, your portfolio management team considers the
potential ramifications of Y2K when making decisions on which securities should
be held by the Fund.

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 and the Fund's portfolio of investments follow this
letter.

By order of the Trustees,

/s/ William C. Morris
William C. Morris
Chairman

/s/ Brian T. Zino
Brian T. Zino
President

April 30, 1999

<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: During the past six months, the outlook for the US and global economies has
improved dramatically. At fiscal year-end in September 1998, economies
around the world were struggling with financial crises that threatened to
drag the US into recession. In response, the Federal Reserve Board took
immediate defensive action by lowering the federal funds rate three times
last fall.

However, the outlook for the US economy brightened as economies around the
world began to show signs of recovery and as strong US consumer demand
continued to drive economic growth.

While ending on a positive note, the last six months were nonetheless
volatile for equity markets, and thus for the US Treasury market, as
investors rushed to buy Treasury bonds during periods of market uncertainty.
This "flight to quality" was the primary cause of the sharp swings in
Treasury yields that were experienced during the period. The yield on the
30-year US Treasury bond fluctuated by more than 98 basis points during this
time.

In contrast to the volatility of the Treasury market, the municipal market
remained relatively stable throughout the period. Long-term municipal
interest rates fluctuated within a much narrower trading range of
approximately 32 basis points.

The historically low interest-rate environment led to a surge in municipal
new issue volume during 1998. The increase in municipal supply caused the
yield spread between municipal bonds and Treasury bonds to narrow, making
municipals particularly attractive. For a brief period in October, long-term
municipal yields actually exceeded long-term Treasury yields, an unusual
occurrence given the tax advantages of municipal ownership.

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: (standing from left) Audrey Kuchtyak, Theresa Barion,
Debra McGuinness, (seated) Eileen Comerford, Thomas G. Moles (Portfolio
Manager)

<PAGE>
Interview With Your Portfolio Manager,
Thomas G. Moles

This situation has now begun to reverse itself. Year-to-date, new issue
volume has slowed from its robust pace, causing the yield spread between
municipal bonds and Treasury bonds to widen to a historically normal range.

The continued strength of the US economy, which is now in its ninth year of
economic expansion, has allowed the financial condition of the nation's
states, cities, and municipalities to steadily improve. For the fourth year
in a row, credit-rating upgrades exceeded downgrades. We expect that this
positive trend will continue with the possible exception of healthcare
bonds, whose issuers have been experiencing increased financial and
operating pressures.

Q: What was your investment strategy?

A: The relative lack of volatility in the municipal market limited our
opportunities to enhance total return through trading activity. Therefore,
we focused on improving the relative value of Seligman Pennsylvania
Municipal Fund's portfolio. Through in-depth credit analysis and market
research, we have been able to identify municipal credits that we believe
have been undervalued by the market, and we have used this information in
our security selection process.

During the period, our investment strategy was consistent with our
positive outlook for the economy and long-term interest rates. We reduced
portfolio holdings with short durations, replacing them with longer-term
bonds because they offer the greatest opportunity for price appreciation
during periods of declining interest rates. (Conversely, during periods of
rising interest rates, long-term bonds will depreciate more than
shorter-term bonds.) Long-term bonds have also provided the highest yields
historically. During the past six months, long-term municipal yields rose
slightly, resulting in a decline in Seligman Pennsylvania Municipal Fund's
net asset value.

We have concentrated new purchases in triple "A" rated insured bonds because
of the prevailing narrow yield spread between high-quality and lower-quality
bonds. At this time, lower-quality bonds do not offer enough additional
yield to compensate for the increased credit risk. For the six-month period,
high-quality insured bonds outperformed lower-quality bonds.

Q: What is your outlook?

A: Recent economic reports have suggested that the economy may be
strengthening further, raising concerns about an acceleration in the rate
of inflation. In response, long-term municipal yields have increased
modestly. However, we believe that any increase in long-term yields will
be temporary and our outlook for interest rates remains positive. We will
continually monitor market conditions and will adjust our investment
strategy accordingly.

There are currently a number of factors that bode well for the municipal
market going forward. First, new issue supply has slowed, widening the yield
spread between municipals and Treasuries to a historically normal range. If
this trend continues, and we believe that it will, the performance of the
municipal market should improve relative to the Treasury market. In
addition, the municipal bond market has been the beneficiary of a healthy
economy and a stable rate of inflation, and we anticipate that these
favorable market conditions will continue for the balance of the year.

<PAGE>
Performance Overview and Portfolio Summary

Investment Results Per Share

TOTAL RETURNS
For Periods Ended March 31, 1999

<TABLE>
<CAPTION>
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 (4.09)% 0.42% 6.05% 7.11% n/a
Without Sales Charge 0.68 5.41 7.08 7.64 n/a
Class D**
With 1% CDSC (0.67) 3.62 n/a n/a n/a
Without CDSC 0.30 4.61 6.17 n/a 4.37%
Lehman Brothers
Municipal Bond Index*** 1.49 6.20 7.62 8.24 5.97+

</TABLE>

<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
FOR PERIODS ENDED MARCH 31, 1999

3/31/99 9/30/98 3/31/98 DIVIDENDS0 CAPITAL GAIN0 SEC YIELD00
------- ------- ------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $7.98 $8.24 $8.04 Class A $0.166 $0.148 3.46%
Class D 7.97 8.23 8.03 Class D 0.136 0.148 2.89

</TABLE>

HOLDINGS BY MARKET SECTOR++ MOODY'S/S&P RATINGS++
<S> <C> <C> <C>
Revenue Bonds 81% Aaa/AAA 76%
General Obligation Bonds 19 Aa/AA 22
Baa/BBB 2
WEIGHTED AVERAGE MATURITY 22.0 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 charge ("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 Brothers Municipal Bond 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 1/31/94.
0Represents per share amount paid or declared for the six months ended March 31, 1999.
00Current yield, representing the annualized yield for the 30-day period ended
March 31, 1999, has been computed in accordance with SEC regulations and will vary.
++Percentages based on market values of long-term holdings at March 31, 1999.
</FN>
</TABLE>

<PAGE>
Portfolio of Investments
March 31, 1999

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 $ 1,090,040

1,000,000 Berks County Municipal Authority, PA Hospital Rev. (The Reading
Hospital & Medical Center Project), 6.10% due 10/1/2023 ............. Aaa/AAA 1,094,750

1,000,000 Bucks County, PA GOs, 5% due 5/1/2017 ................................... Aa2/AA 1,001,400

1,000,000 Delaware County Authority, PA (Haverford College Rev.),
5 1/2% due 11/15/2023 ................................................ Aaa/AAA 1,031,240

1,000,000 Delaware County Industrial Development Authority, PA (Philadelphia
Suburban Water Company), 6.35% due 8/15/2025* ........................ Aaa/AAA 1,108,850

1,000,000 Delaware Valley, PA Regional Finance Authority Local Government Rev.,
7 3/4% due 7/1/2027 .................................................. Aaa/AAA 1,411,640

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 1,438,866

1,500,000 Montgomery County, PA GOs, 5.45% due 9/15/2022 .......................... Aaa/NR 1,546,800

500,000 Montgomery County, PA Industrial Development Authority Pollution
Control Rev. (Philadelphia Electric Co.), 7.60% due 4/1/2021* ........ Baa2/BBB+ 536,535

2,000,000 Pennsylvania Higher Education Assistance Agency Student Loan Rev.,
6.40% due 3/1/2022* .................................................. Aaa/AAA 2,146,900

1,000,000 Pennsylvania Higher Educational Facilities Authority College & University
Rev. (University of Pennsylvania), 5.90% due 9/1/2014 ................ Aa3/AA 1,083,600

1,500,000 Pennsylvania Higher Educational Facilities Authority Rev. (Temple University),
5% due 4/1/2029 ...................................................... Aaa/AAA 1,463,580

1,350,000 Pennsylvania Higher Educational Facilities Authority Rev. (Drexel University),
5 3/4% due 5/1/2022 .................................................. Aaa/AAA 1,440,598

1,500,000 Pennsylvania Housing Finance Agency (Single Family Mortgage Rev.),
5.85% due 4/1/2017* .................................................. Aa2/AA+ 1,569,330

1,350,000 Pennsylvania Housing Finance Agency (Rental Housing Rev.),
6 1/2% due 7/1/2023 .................................................. Aaa/AAA 1,440,059

1,500,000 Pennsylvania Intergovernmental Co-Op Authority Special Tax Rev.
(Philadelphia Funding Program), 5 1/2% due 6/15/2016 ................. Aaa/AAA 1,553,970

1,250,000 Pennsylvania Intergovernmental Co-Op Authority Special Tax Rev.
(Philadelphia Funding Program), 5% due 6/15/2021 ..................... Aaa/AAA 1,228,513

<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>

<PAGE>
Portfolio of Investments (continued)
March 31, 1999

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 $ 1,499,940

1,000,000 Pennsylvania State Turnpike Commission Rev., 6% due 12/1/2017 ........... Aaa/AAA 1,079,460

1,300,000 Philadelphia, PA Airport Rev., 6.10% due 6/15/2025* ..................... Aaa/AAA 1,404,650

1,000,000 Philadelphia, PA Parking Authority Airport Parking Rev., 5 1/2% due 9/1/2018 Aaa/AAA 1,038,520

450,000 Philadelphia Redevelopment Authority, PA (Home Mortgage Rev.),
9% due 6/1/2017 ...................................................... NR/AA 489,901

1,000,000 Pittsburgh, PA Water & Sewer Authority Rev., 5.65% due 9/1/2025 ......... Aaa/AAA 1,091,350

1,000,000 Schuylkill County, PA Industrial Development Authority Rev. (Charity
Obligated Group), 5% due 11/1/2028 ................................... Aa2/AA+ 948,250
-----------
TOTAL MUNICIPAL BONDS (COST $27,904,272) -- 102.2% ..................................................... 29,738,742

VARIABLE RATE DEMAND NOTES (COST $200,000) -- 0.7% ..................................................... 200,000

OTHER ASSETS LESS LIABILITIES -- (2.9)% ................................................................ (850,629)
-----------
NET ASSETS -- 100.0% ................................................................................... $29,088,113
===========
<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>

<PAGE>
Statement of Assets and Liabilities
March 31, 1999

<TABLE>

<S> <C> <C>
ASSETS:
Investments, at value:
Long-term holdings (Cost $27,904,272).................... $29,738,742
Short-term holdings (Cost $200,000)...................... 200,000 $29,938,742
------------
Cash................................................................................. 127,142
Interest receivable.................................................................. 425,050
Expenses prepaid to shareholder service agent........................................ 4,231
Other................................................................................ 318
-----------
TOTAL ASSETS......................................................................... 30,495,483
-----------
LIABILITIES:
Payable for securities purchased..................................................... 1,233,746
Dividends payable.................................................................... 46,676
Payable for Shares of Beneficial Interest repurchased................................ 30,317
Accrued expenses and other........................................................... 96,631
-----------
TOTAL LIABILITIES.................................................................... 1,407,370
-----------
NET ASSETS........................................................................... $29,088,113
===========
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par ($.001 par value; unlimited shares
authorized; 3,646,914 shares outstanding):
Class A........................................................................... $ 3,529
Class D........................................................................... 118
Additional paid-in capital........................................................... 27,164,684
Undistributed net realized gain...................................................... 85,312
Net unrealized appreciation of investments........................................... 1,834,470
-----------
NET ASSETS........................................................................... $29,088,113
===========
NET ASSET VALUE PER SHARE:
CLASS A ($28,150,594 / 3,529,269 shares)............................................. $7.98
=====
CLASS D ($937,519 / 117,645 shares).................................................. $7.97
=====
</TABLE>

- ------------------
See notes to financial statements.

<PAGE>
Statement of Operations
For the Six Months Ended March 31, 1999

<TABLE>

INVESTMENT INCOME:
<S> <C> <C>
INTEREST...................................................................................... $795,379

EXPENSES:
Management fee................................................................. $ 74,096
Distribution and service fees.................................................. 40,635
Shareholder account services................................................... 23,432
Auditing and legal fees........................................................ 19,501
Trustees' fees and expenses.................................................... 8,599
Shareholder reports and communications......................................... 8,593
Registration................................................................... 6,677
Custody and related services................................................... 2,745
Miscellaneous.................................................................. 1,100
--------
Total Expenses................................................................................ 185,378
--------
Net Investment Income......................................................................... 610,001

NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments............................................... 91,365
Net change in unrealized appreciation of investments........................... (496,912)
--------
Net Loss on Investments....................................................................... (405,547)
--------
Increase in Net Assets from Operations........................................................ $204,454
========
</TABLE>

- ------------------
See notes to financial statements.

<PAGE>
Statements of Changes in Net Assets

SIX MONTHS YEAR
ENDED ENDED
3/31/99 9/30/98
OPERATIONS: ------------- -------------
<S> <C> <C>
Net investment income......................................................... $ 610,001 $ 1,316,340
Net realized gain on investments.............................................. 91,365 544,834
Net change in unrealized appreciation of investments.......................... (496,912) 806,321
----------- ------------
Increase in Net Assets from Operations........................................ 204,454 2,667,495
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A.................................................................... (596,333) (1,288,647)
Class D.................................................................... (13,668) (27,693)
Net realized gain on investments:
Class A.................................................................... (531,302) (305,259)
Class D.................................................................... (13,843) (8,304)
----------- ------------
Decrease in Net Assets from Distributions..................................... (1,155,146) (1,629,903)
----------- ------------
</TABLE>

SHARES
----------------------------------
SIX MONTHS YEAR
TRANSACTIONS IN SHARES OF ENDED ENDED
BENEFICIAL INTEREST: 3/31/99 9/30/98
-------------- --------------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A................................. 29,147 79,757 235,253 640,708
Class D................................. 31,165 13,895 251,273 112,854
Shares issued in payment of dividends:
Class A................................. 39,021 83,374 314,197 669,895
Class D................................. 945 2,463 7,590 19,744
Exchanged from associated Funds:
Class A................................. 12,406 26,798 100,372 216,297
Class D................................. 25,844 629 209,285 5,046
Shares issued in payment of gain distributions:
Class A................................. 46,128 26,265 369,025 207,232
Class D................................. 1,200 1,015 9,588 8,002
-------- -------- ----------- -----------
Total...................................... 185,856 234,196 1,496,583 1,879,778
------- -------- ----------- -----------
Cost of shares repurchased:
Class A................................. (180,619) (346,731) (1,453,465) (2,789,014)
Class D................................. (15,231) (44,446) (122,736) (358,480)
Exchanged into associated Funds:
Class A................................. (8,736) (59,074) (70,091) (469,552)
Class D................................. -- (2,476) -- (19,989)
------- -------- ----------- -----------
Total...................................... (204,586) (452,727) (1,646,292) (3,637,035)
------- -------- ----------- -----------
Decrease in Net Assets from Transactions
in Shares of Beneficial Interest........ (18,730) (218,531) (149,709) (1,757,257)
======= ======== ----------- -----------
Decrease in Net Assets....................................................... (1,100,401) (719,665)

NET ASSETS:
Beginning of period.......................................................... 30,188,514 30,908,179
----------- -----------
End of Period................................................................ $29,088,113 $30,188,514
=========== ===========
</TABLE>

- ------------------
See notes to financial statements.

<PAGE>
NOTES TO FINANCIAL STATEMENTS

1. Multiple Classes of Shares -- Seligman Pennsylvania Municipal Fund (the
"Fund") offers two 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. 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 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, 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 recog nition of certain components of
income, expense, or realized capital gain for federal income tax purposes.
Where such differ ences are permanent in nature, they are reclassified in
the components of net assets based on their ultimate characterization for
federal income tax purposes. Any such reclassifications will have no effect
on net assets, results of operations or net asset value per share of the
Fund.

<PAGE>
NOTES TO FINANCIAL STATEMENTS

3. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding short-term investments, for the six months ended March 31,
1999, amounted to $2,183,788 and $926,234, respectively.

At March 31, 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 $1,841,495 and $7,025, 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
$1,209 for sales of Class A shares, after commissions of $9,236 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,
1999, fees incurred aggregated $36,606, or 0.25% 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, 1999, fees incurred under the
Plan amounted to $4,029, or 1% per annum of the average daily net assets of
Class D shares.

The Distributor is entitled to retain any CDSC 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, 1999, 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, 1999,
Seligman Services, Inc. received commissions of $149 from the sale of shares of
the Fund. Seligman Services, Inc. also received distribution and service fees of
$1,957, pursuant to the Plan.

Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost $23,432 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.

<PAGE>
NOTES TO FINANCIAL STATEMENTS

such fees and earnings accrued thereon is included in trustees' fees and
expenses, and the accumulated balance thereof at March 31, 1999, of $44,694 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 -- Effective July 1, 1998, the Fund entered into a
joint $800 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%. 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 one year from the date of
the agreement but is renewable with the consent of the participating banks. To
date, the Fund has not borrowed from the credit facility.

<PAGE>
FINANCIAL HIGHLIGHTS

The tables below are intended to help you understand each Class's financial
performance for the past five and one-half years or from its inception if less
than five and one-half 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. "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.

CLASS A
----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
------------ -------- -------- -------- -------- --------
<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 $8.61
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income.............................. 0.17 0.35 0.36 0.38 0.38 0.39
Net realized and unrealized gain (loss)
on investments................................... (0.11) 0.36 0.24 0.12 0.37 (0.80)
----- ----- ----- ----- ----- -----
Total from Investment Operations................... 0.06 0.71 0.60 0.50 0.75 (0.41)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income............... (0.17) (0.35) (0.36) (0.38) (0.38) (0.39)
Distributions from net realized capital gain....... (0.15) (0.08) (0.10) (0.09) (0.13) (0.26)
----- ----- ----- ----- ----- -----
Total Distributions................................ (0.32) (0.43) (0.46) (0.47) (0.51) (0.65)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period..................... $7.98 $8.24 $7.96 $7.82 $7.79 $7.55
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.68% 9.20% 7.89% 6.57% 10.55% (5.00)%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)........... $28,151 $29,582 $30,092 $31,139 $33,251 $34,943
Ratio of expenses to average net assets............ 1.23%+ 1.19% 1.19% 1.11% 1.21% 1.16%
Ratio of net income to average net assets.......... 4.14%+ 4.34% 4.60% 4.82% 5.05% 4.91%
Portfolio turnover rate............................ 3.19% 13.05% 32.99% 4.56% 11.78% 7.71%

</TABLE>

- ------------------
See footnotes on page 14.

<PAGE>
FINANCIAL HIGHLIGHTS

CLASS D
----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, 2/1/94*
---------------------------------------- TO
3/31/99 1998 1997 1996 1995 9/30/94
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period........... $8.23 $7.95 $7.81 $7.78 $7.54 $8.37
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income.......................... 0.14 0.29 0.30 0.32 0.31 0.22
Net realized and unrealized gain (loss)
on investments............................... (0.11) 0.36 0.24 0.12 0.37 (0.83)
----- ----- ----- ----- ----- -----
Total from Investment Operations............... 0.03 0.65 0.54 0.44 0.68 (0.61)
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income........... (0.14) (0.29) (0.30) (0.32) (0.31) (0.22)
Distributions from net realized capital gain... (0.15) (0.08) (0.10) (0.09) (0.13) --
----- ----- ----- ----- ----- -----
Total Distributions............................ (0.29) (0.37) (0.40) (0.41) (0.44) (0.22)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period................. $7.97 $8.23 $7.95 $7.81 $7.78 $7.54
===== ===== ===== ===== ===== =====
TOTAL RETURN: 0.30% 8.36% 7.07% 5.76% 9.53% (7.50)%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000s omitted)....... $937 $607 $816 $876 $426 $43
Ratio of expenses to average net assets........ 1.98%+ 1.97% 1.96% 1.88% 2.23% 2.00%+
Ratio of net income to average net assets...... 3.39%+ 3.56% 3.83% 4.05% 4.10% 4.20%+
Portfolio turnover rate........................ 3.19% 13.05% 32.99% 4.56% 11.78% 7.71%++

<FN>
- ------------------
* Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended September 30, 1994.
See notes to financial statements.
</FN>
</TABLE>

<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, 1999, 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, 1998, 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, 1999 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 referred to
above present fairly, in all material respects, the financial position of
Seligman Pennsylvania Municipal Fund as of March 31, 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.

DELOITTE & TOUCHE LLP
New York, New York
April 30, 1999

<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

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
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, 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

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

<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

<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 1998 Mutual Fund Fact Book.

<PAGE>

SELIGMAN

PENNSYLVANIA
MUNICIPAL FUND

Mid-Year Report
March 31, 1999

Providing Income
Exempt From Regular
Income Tax

SELIGMAN ADVISORS, 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 3/99

<PAGE>

TO THE SHAREHOLDERS

Seligman Pennsylvania Municipal Fund posted strong results for its fiscal
year ended September 30, 1998. Although the growth of the US economy slowed from
its record pace, the expansion continued. Inflation and interest rates reached
their lowest levels in a quarter century, and unemployment was at its lowest
level since 1970.

Despite ongoing strength in the US, economic turmoil spread throughout the
rest of the world. The Asian financial crisis worsened, Japan failed to resolve
its banking problems, Russia's economy became chaotic, and economic crises
loomed throughout much of Latin America, particularly in Brazil. Fears of risk
in nearly all types of financial assets drove investors out of the equity
markets and into the relative safety and quality of investments such as US
Treasury bonds, often a haven from a turbulent stock market. This "flight to
quality" helped create an attractive environment for municipal bonds.

Major factors influencing the market for municipal bonds over the year were
the prolonged Treasury bond rally and heavy issuance of municipal securities.
Municipal bond holders fared well as interest rates generally declined over this
time period. Nonetheless, the performance of the municipal market lagged that of
the Treasury bond market, as investors focused on quality in view of financial
instability. Treasury bond prices rose sharply over the 12-month period, sending
yields significantly lower. At one point in the period, selected municipal
obligations traded at the same yield as Treasuries, even though municipals
offered more favorable tax treatment.

Looking ahead, we see the favorable climate for municipal bonds continuing.
Low inflation and a growing economy should serve to protect the value of
municipal investments. Fewer new issues may be entering the market, which could
tighten the supply/demand balance. This could improve overall total
rate-of-return prospects. Also, although the US economy continues to grow, this
growth is slowing, and the global situation is forcing the Federal Reserve into
a more benign strategy on interest rates. The Fed has already cut short-term
rates twice, and we expect more cuts until a semblance of international
stability emerges. Finally, the municipal market's record of safety and
stability offers further appeal to investors in these more troubled times,
especially as equity market volatility continues.

All in all, we feel the investment attractiveness of municipals remains
compelling. In this period of global economic uncertainty and low interest
rates, municipals are an appropriate alternative for those investors with
suitable investment requirements.

As you may know, companies are modifying their computer systems to recognize
dates of January 1, 2000, and beyond. This is often referred to as the "Y2K"
problem. Unless systems are updated, many applications may interpret the last
two digits of the year to mean 1900 instead of 2000. J. & W. Seligman & Co.
Incorporated, the Seligman Investment Companies, and Seligman Data Corp., your
shareholder service agent, have jointly established a team to ensure that your
investment and shareholder services are not disrupted. This team is supported by
consulting firms specializing in Y2K solutions. Substantial work has been
performed to date, and we are confident that when our plans are finalized and
all systems are tested, there will be no disruption in the services provided by
your Fund.

Thank you for your continued support of Seligman Pennsylvania Municipal Fund. We
look forward to serving your investment needs in the many years to come. A
discussion with your Portfolio Manager, performance overview, portfolio
holdings, and financial statements follow this letter.

By order of the Trustees,

/s/ William C. Morris
- ---------------------
William C. Morris
Chairman

/s/ Brian T. Zino
-----------------
Brian T. Zino
President

October 30, 1998
1
<PAGE>

Interview With Your Portfolio Manager,
Thomas G. Moles

Q. What economic factors influenced Seligman Pennsylvania Municipal Fund in
the last 12 months?

A. The continuing combination of low inflation, low unemployment, and steady
economic growth throughout the past 12 months sustained what became one of
the nation's longest peacetime economic expansions. This contributed to
the overall improvement of the financial condition of America's states,
cities, and municipalities. Over the past year, credit rating upgrades
significantly outnumbered rating downgrades. These upgrades enhanced the
overall creditworthiness of the municipal marketplace.

But, by the end of your Fund's fiscal year, there was widespread
expectation that the US may be unable to avoid the economic slowdown that
has already gripped much of the world. While many economists were calling
a recession unlikely, the fact that they were including its potential in
their forecasts implied that the ongoing domestic economic expansion would
not continue. In the final months of the fiscal year, turmoil in world
markets began to contribute to a modest slowdown in the pace of US
economic growth, and prevented an acceleration in the rate of inflation.
In September, the Federal Reserve Board lowered the federal funds rate by
one-quarter of one percent. With a warning that growing fear among
investors and lenders was threatening the nation's economic expansion, the
Fed unexpectedly cut interest rates again in October, the first time in
four and a half years that the central bank had changed interest-rate
policy outside one of its normally scheduled meetings. This unusual timing
suggested that the Fed believed that the domestic economy is beginning to
deteriorate as the worldwide financial crisis gains momentum, and that a
credit shortage may be developing that could further curb growth. Fed
officials have hinted that more interest-rate reductions will ensue if the
global financial turmoil escalates. Declining US equity markets reflected
these fears, as investors sold stocks in favor of the relative safety and
quality of US Treasury bonds, which are often considered a haven from a
volatile stock market.

A TEAM APPROACH

[PHOTO]
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

Q. What market factors influenced Seligman Pennsylvania Municipal Fund in the
last 12 months?

A. Overall, Seligman Pennsylvania Municipal Fund ended its fiscal year on a
positive note. During the period, long-term municipal yields fluctuated
within a narrow range, decreasing by almost one-half of a point. The
declining interest-rate environment led to rising prices for the majority
of holdings and competitive performance results for the Fund's net asset
value.

However, the municipal market underperformed the US Treasury market during
the 12-month period. The ongoing strength in the economy over the year
caused the supply of Treasury bonds to shrink, as the federal government
needed to borrow less after running its first budget surplus in 29 years.
But, the solid economy and low interest rates caused the supply of
municipal bonds to grow. The net reduction in Treasury financing and the
increasing municipal bond issuance was compounded by the increased
investor demand for Treasuries. These factors caused the decline in
Treasury yields to significantly outpace the drop in municipal yields.
Because of these factors, long-term municipal bonds have not been as
attractive, relative to long-term Treasuries, since 1986, when proposed
tax legislation threatened the tax-exempt status of municipal securities.

Q. What was your investment strategy?

A. Throughout the 12-month period, the long-term interest-rate outlook was
positive, and Seligman Pennsylvania Municipal Fund was positioned to
benefit from the declining interest-rate environment. The Seligman
Municipals Team engaged in duration-extension trades, selling shorter-term
holdings and replacing them with long-term, current-coupon bonds.
Current-coupon bonds have coupon rates that are at or near current market
rates. Generally, when long-term bond yields decline, the prices
appreciate more than those of shorter-term bonds.

During the past 12 months, we also improved the call protection of the
portfolios. As the bonds within the portfolio mature, older holdings
approach their optional call dates (a callable bond can be redeemed by the
issuer, prior to maturity, on specified dates and at predetermined
prices). Declining interest rates increase the risk that these bonds will
be called by the issuer. The lower interest-rate environment over the
12-month period prompted many municipal issuers to retire outstanding,
higher-coupon debt. Additionally, as a direct result of the significant
increase in refunding volume, many of the portfolio's holdings were
advance-refunded, which had a positive impact on performance. In general,
when a municipal bond is refunded, total return performance is improved,
and the bond's rating is often upgraded.

Q. What is your outlook?

A. Long-term municipal yields have fallen to levels not seen in many years.
Municipal securities continue to offer a significant yield advantage
compared to the after-tax returns of other fixed-income investments.
Further, as the yield spread between municipal and Treasury bonds
normalizes, municipal market performance should improve, relative to the
Treasury market. Finally, the municipal market's record of safety and
stability may become more appealing as volatility persists in the US
equity markets. Consequently, we remain optimistic about the long-term
prospects for the municipal bond market, and for Seligman Pennsylvania
Municipal Fund.

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, for the 10-year period ended September 30, 1998, to a
$10,000 hypothetical investment made in the Lehman Brothers Municipal Bond Index
(Lehman Index) for the same period. The performance of Seligman Pennsylvania
Municipal Fund Class D shares is not shown in this chart but is included in the
table on page 5. It is important to keep in mind that the Lehman Index does not
include any fees or sales charges and does not reflect state-specific bond
market performance. The table on page 5 also includes relevant portfolio
characteristics.

With Sales Charge Without Sales Charge Lehman Index
9/30/88 9,531 10,000 10,000
12/31/88 9,825 10,309 10,185
3/31/89 9,893 10,380 10,252
6/30/89 10,468 10,984 10,859
9/30/89 10,439 10,953 10,867
12/31/89 10,831 11,365 11,284
3/31/90 10,798 11,330 11,335
6/30/90 11,037 11,581 11,600
9/30/90 10,870 11,406 11,607
12/31/90 11,410 11,972 12,107
3/31/91 11584 12,154 12,381
6/30/91 11,859 12,443 12,645
9/30/91 12,327 12,934 13,136
12/31/91 12,699 13,324 13,578
3/31/92 12,739 13,366 13,619
6/30/92 13,240 13,892 14,136
9/30/92 13,564 14,232 14,511
12/31/92 13,882 14,566 14,775
3/31/93 14,413 15,123 15,323
6/30/93 14,956 15,692 15,824
9/30/93 15,559 16,325 16,359
12/31/93 15,674 16,446 16,588
3/31/94 14,672 15,394 15,677
6/30/94 14,749 15,476 15,851
9/30/94 14781 15,508 15,959
12/31/94 14,573 15,291 15,729
3/31/95 15,679 16,452 16,841
6/30/95 16,018 16,807 17,247
9/30/95 16,341 17,146 17,744
12/31/95 17,198 18,045 18,475
3/31/96 16,815 17,643 18,251
6/30/96 16,916 17,749 18,392
9/30/96 17,415 18,272 18,815
12/31/96 17,789 18,665 19,295
3/31/97 17,649 18,518 19,250
6/30/97 18,254 19,153 19,914
9/30/97 18,789 19,714 20,516
12/31/97 19336 20288 21072
3/31/98 19597 20562 21314
6/30/98 19888 20868 21638
9/30/98 20518 21528 22302

The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.

Performance data quoted represent changes in prices and assume that all
distributions within the 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, 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 (0.26)% 3.98% 4.66% 7.45% n/a
Without Sales Charge 4.70 9.20 5.69 7.97 n/a
Class D**
With 1% CDSC 3.30 7.36 n/a n/a n/a
Without CDSC 4.30 8.36 n/a n/a 4.78%
Lehman Index*** 4.64 8.71 6.40 8.35 6.29+
</TABLE>

<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND, CAPITAL GAIN, AND YIELD INFORMATION
For Periods Ended September 30, 1998

9/30/98 3/31/98 9/30/97 DIVIDENDS0 CAPITAL GAIN0 SEC YIELD00
-------- -------- -------- ------------ ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Class A $8.24 $8.04 $7.96 Class A $0.349 $0.081 3.39%
Class D 8.23 8.03 7.95 Class D 0.286 0.081 2.82
</TABLE>

<TABLE>
<S> <C> <C> <C>
HOLDINGS BY MARKET SECTOR++ MOODY'S/S&P RATINGS++
Revenue Bonds 78% Aaa/AAA 77%
General Obligation Bonds 22 Aa/AA 21
Baa/BBB 2
</TABLE>

WEIGHTED AVERAGE MATURITY 21.9 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 D shares are calculated with and
without the effect of the 1% contingent deferred sales charge ("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 and does not reflect state-specific bond market performance.
Investors cannot invest directly in an index.

+From 1/31/94.

0 Represents per share amount paid or declared for the year ended September
30, 1998.

00 Current yield, representing the annualized yield for the 30-day period ended
September 30, 1998, has been computed in accordance with SEC regulations and
will vary.

++Percentages based on market values of long-term holdings at September 30,
1998.

5
<PAGE>

Portfolio Of Investments
September 30, 1998

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 $ 1,124,850
1,000,000 Berks County Municipal Authority, PA Hospital Rev. (The Reading
Hospital & Medical Center Project), 6.10% due 10/1/2023.............. Aaa/AAA 1,109,670
1,000,000 Bucks County, PA GOs, 5% due 5/1/2017 ................................... Aa2/AA 1,018,260
1,000,000 Delaware County Authority, PA (Haverford College Rev.),
5 1/2% due 11/15/2023 ................................................ Aaa/AAA 1,048,520
1,000,000 Delaware County Industrial Development Authority, PA (Philadelphia
Suburban Water Company), 6.35% due 8/15/2025*......................... Aaa/AAA 1,123,020
1,000,000 Delaware Valley, PA Regional Finance Authority Local Government Rev.,
7 3/4% due 7/1/2027................................................... Aaa/AAA 1,469,790
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 1,451,450
1,500,000 Montgomery County, PA GOs, 5.45% due 9/15/2022 .......................... Aaa/NR 1,566,030
500,000 Montgomery County, PA Industrial Development Authority Pollution
Control Rev. (Philadelphia Electric Co.), 7.60% due 4/1/2021*......... Baa2/BBB 541,345
2,000,000 Pennsylvania Higher Education Assistance Agency Student Loan Rev.,
6.40% due 3/1/2022*................................................... Aaa/AAA 2,102,140
1,350,000 Pennsylvania Higher Educational Facilities Authority College & University
Rev. (University of Pennsylvania), 5.90% due 9/1/2014 ................ Aa2/AA 1,469,286
1,500,000 Pennsylvania Higher Educational Facilities Authority Rev.
(Temple University), 5% due 4/1/2029.................................. Aaa/AAA 1,500,000
1,350,000 Pennsylvania Higher Educational Facilities Authority Rev.
(Drexel University), 5 3/4% due 5/1/2022.............................. Aaa/AAA 1,488,672
1,500,000 Pennsylvania Housing Finance Agency (Single Family Mortgage Rev.),
5.85% due 4/1/2017*................................................... Aa2/AA+ 1,584,360
1,350,000 Pennsylvania Housing Finance Agency (Rental Housing Rev.),
6 1/2% due 7/1/2023................................................... Aaa/AAA 1,448,024
1,500,000 Pennsylvania Intergovernmental Co-Op Authority Special Tax Rev.
(Philadelphia Funding Program), 5 1/2% due 6/15/2016.................. Aaa/AAA 1,591,665
</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
September 30, 1998

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- $ 1,528,725
1,000,000 Pennsylvania State Turnpike Commission Rev., 6% due 12/1/2017............ Aaa/AAA 1,086,550
1,300,000 Philadelphia, PA Airport Rev., 6.10% due 6/15/2025*...................... Aaa/AAA 1,427,348
1,000,000 Philadelphia, PA Parking Authority Airport Parking Rev.,
5 1/2% due 9/1/2018................................................... Aaa/AAA 1,062,050
450,000 Philadelphia Redevelopment Authority, PA (Home Mortgage Rev.),
9% due 6/1/2017....................................................... NR/AA 495,013
1,500,000 Pittsburgh, PA Water & Sewer Authority Rev., 5.65% due 9/1/2025.......... Aaa/AAA 1,656,840
-----------
TOTAL MUNICIPAL BONDS (Cost $26,562,226)-- 95.7%....................................................... 28,893,608

VARIABLE RATE DEMAND NOTES (Cost $900,000)-- 3.0%...................................................... 900,000

OTHER ASSETS LESS LIABILITIES-- 1.3%................................................................... 394,906
-----------
NET ASSETS-- 100.0%.................................................................................... $30,188,514
===========
</TABLE>
- ------------------
+ Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject to the federal
alternative minimum tax.
See Notes to Financial Statements.

7
<PAGE>

Statement Of Assets And Liabilities
September 30, 1998

<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value:
Long-term holdings (Cost $26,562,226)............................... $28,893,608
Short-term holdings (Cost $900,000)................................. 900,000 $29,793,608
----------
Cash................................................................................. 122,019
Interest receivable.................................................................. 410,149
Receivable for Shares of Beneficial Interest sold.................................... 19,204
Expenses prepaid to shareholder service agent........................................ 5,895
Other................................................................................ 5,689
-----------
Total Assets......................................................................... 30,356,564
-----------
LIABILITIES:

Dividends payable ................................................................... 45,106
Payable for Shares of Beneficial Interest repurchased................................ 23,755
Accrued expenses, taxes, and other................................................... 99,189
-----------
Total Liabilities.................................................................... 168,050

-----------
Net Assets........................................................................... $30,188,514
===========
COMPOSITION OF NET ASSETS:

Shares of Beneficial Interest, at par ($.001 par value; unlimited shares
authorized; 3,665,644 shares outstanding):
Class A .......................................................................... $ 3,592
Class D .......................................................................... 74
Additional paid-in capital .......................................................... 27,314,374
Undistributed net realized gain ..................................................... 539,092
Net unrealized appreciation of investments .......................................... 2,331,382
-----------
Net Assets........................................................................... $30,188,514
===========
NET ASSET VALUE PER SHARE:

Class A ($29,581,946 / 3,591,922 shares)............................................. $8.24
=====
Class D ($606,568 / 73,722 shares)................................................... $8.23
=====
</TABLE>

- ------------------
See Notes to Financial Statements.

8
<PAGE>

Statement Of Operations
For the Year Ended September 30, 1998

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ............................................................................... $1,687,637

EXPENSES:
Management fee................................................................ $152,373
Distribution and service fees ................................................ 71,918
Shareholder account services ................................................. 54,772
Auditing and legal fees ...................................................... 46,803
Shareholder reports and communications ....................................... 21,750
Registration ................................................................. 15,114
Custody and related services ................................................. 4,630
Trustees' fees and expenses .................................................. 1,384
Miscellaneous ................................................................ 2,553
--------
Total Expenses ......................................................................... 371,297
----------
Net Investment Income .................................................................. 6,340

NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments ............................................. 544,834
Net change in unrealized appreciation of investments.......................... 806,321
--------
Net Gain on Investments................................................................. 1,351,155
----------
Increase in Net Assets from Operations ................................................. $2,667,495
==========
</TABLE>
- ------------------
See Notes to Financial Statements.

9
<PAGE>

Statements Of Changes In Net Assets

YEAR ENDED SEPTEMBER 30,
---------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net investment income........................................................ $ 1,316,340 $1,430,840
Net realized gain on investments............................................. 544,834 311,880
Net change in unrealized appreciation of investments......................... 806,321 619,185
---------- ----------
Increase in Net Assets from Operations....................................... 2,667,495 2,361,905
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A................................................................... (1,288,647) (1,399,949)
Class D................................................................... (27,693) (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.................................... (1,629,903) (1,820,249)
---------- ----------
</TABLE>

<TABLE>
<CAPTION>
SHARES
-------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------
<S> <C> <C> <C> <C>
1998 1997
-------- ------
Net proceeds from sale of shares:
Class A.................................... 79,757 144,416 640,708 1,125,297
Class D.................................... 13,895 9,028 112,854 70,043
Shares issued in payment of dividends:
Class A.................................... 83,374 91,536 669,895 715,104
Class D.................................... 2,463 2,977 19,744 23,276
Exchanged from associated Funds:
Class A.................................... 26,798 54,868 216,297 427,336
Class D.................................... 629 3,180 5,046 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 ........................................ 234,196 339,814 1,879,778 2,649,072
-------- -------- ----------- -----------
Cost of shares repurchased:
Class A ................................... (346,731) (502,058) (2,789,014) (3,917,233)
Class D ................................... (44,446) (25,434) (358,480) (197,052)
Exchanged into associated Funds:
Class A ................................... (59,074) (23,491) (469,552) (183,635)
Class D ................................... (2,476) -- (19,989) --
-------- -------- ----------- -----------
Total ........................................ (452,727) (550,983) (3,637,035) (4,297,920)
-------- -------- ----------- -----------
Decrease in Net Assets from Transactions
in Shares of Beneficial Interest........... (218,531) (211,169) (1,757,257) (1,648,848)
======== ======== ----------- -----------
Decrease in Net Assets....................................................... (719,665) (1,107,192)
NET ASSETS:

Beginning of year............................................................ 30,908,179 32,015,371
----------- -----------
End of Year ................................................................. $30,188,514 $30,908,179
=========== ===========
</TABLE>
- ------------------
See Notes to Financial Statements.

10
<PAGE>

Notes To Financial Statement

a. Security Valuation -- All municipal securities and other short-term
holding s maturing in more than 60 days are valued based upon quotations
provided by an independent pricing service or, in their absence, at fair
value determined in accordance with procedures adopted by the Trustees.
Short-term holdings maturing in 60 days or less are generally valued at
amortized cost.

b. Federal Taxes -- There is no provision for federal income tax. The Fund
has elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.

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, 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 recog nition of certain components of
income, expense, or realized capital gain for federal income tax purposes.
Where such differ ences are permanent in nature, they are reclassified in
the components of net assets based on their ultimate characterization for
federal income tax purposes. Any such reclassifications will have no
effect on net assets, results of operations or net asset value per share
of the Fund.

3. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding short-term investments, for the year ended September 30,
1998, amounted to $3,879,305 and $5,783,557, respectively.

At September 30, 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 $2,331,382.

11
<PAGE>

Notes To Financial Statements

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") (formerly Seligman Financial
Services, Inc.), agent for the distribution of the Fund's shares and an
affiliate of the Manager, received concessions of $2,928 for sales of Class A
shares, after commissions of $21,911 paid to dealers.

The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the year ended September 30,
1998, fees incurred aggregated $64,160,or 0.22% per annum of the average daily
net assets of Class A shares.

Under the Plan, with respect to Class D shares, service organizations can
enter into agreements with the Distributor and receive a continuing fee for
providing personal services and/or the maintenance of shareholder accounts of up
to 0.25% on an annual basis of the average daily net assets of the Class D
shares for which the organizations are responsible; and fees for providing other
distribution assistance of up to 0.75% on an annual basis of such average daily
net assets. Such fees are paid monthly by the Fund to the Distributor pursuant
to the Plan. For the year ended September 30, 1998, fees incurred under the Plan
amounted to $7,758, or 1% per annum of the average daily net assets of Class D
shares.

The Distributor is entitled to retain any CDSC imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the year ended
September 30, 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 year ended September
30, 1998, Seligman Services, Inc. received commissions of $626 from the sale of
shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $3,759, pursuant to the Plan.

Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost $54,772 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 September 30, 1998, of $41,436
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 -- Effective July 1, 1998, the Fund entered
into a joint $800 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 one year from the date of the agreement but is
renewable with the consent of the participating banks. To date, the Fund has not
borrowed from the credit facility.

12
<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
---------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year....................... $7.96 $7.82 $7.79 $7.55 $8.61
----- ----- ----- ----- -----
Net investment income ................................... 0.35 0.36 0.38 0.38 0.39
Net realized and unrealized investment gain (loss)....... 0.36 0.24 0.12 0.37 (0.80)
----- ----- ----- ----- -----
Increase (Decrease) from Investment Operations .......... 0.71 0.60 0.50 0.75 (0.41)
Dividends paid or declared............................... (0.35) (0.36) (0.38) (0.38) (0.39)
Distributions from net gain realized..................... (0.08) (0.10) (0.09) (0.13) (0.26)
----- ----- ----- ----- -----
Net Increase (Decrease) in Net Asset Value............... 0.28 0.14 0.03 0.24 (1.06)
----- ----- ----- ----- -----
Net Asset Value, End of Year ............................ $8.24 $7.96 $7.82 $7.79 $7.55
===== ===== ===== ===== =====

TOTAL RETURN BASED ON NET ASSET VALUE: 9.20% 7.89% 6.57% 10.55% (5.00)%

RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .......................... 1.19% 1.19% 1.11% 1.21% 1.16%
Net investment income to average net assets.............. 4.34% 4.60% 4.82% 5.05% 4.91%
Portfolio turnover....................................... 13.05% 32.99% 4.56% 11.78% 7.71%
Net Assets, End of Year (000s omitted)................... $29,582 $30,092 $31,139 $33,251 $34,943
</TABLE>

- ------------------
See footnotes on page 14.
13
<PAGE>

Financial Highlights

<TABLE>
<CAPTION>
Class D
-------------------------------------------
YEAR ENDED SEPTEMBER 30, 2/1/94*
--------------------------------- TO
1998 1997 1996 1995 9/30/94
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
PER Share Operating Performance:
Net Asset Value, Beginning of Period ........................... $7.95 $7.81 $7.78 $7.54 $8.37
----- ----- ----- ----- -----
Net investment income........................................... 0.29 0.30 0.32 0.31 0.22
Net realized and unrealized investment gain (loss).............. 0.36 0.24 0.12 0.37 (0.83)
----- ----- ----- ----- -----
Increase (Decrease) from Investment Operations.................. 0.65 0.54 0.44 0.68 (0.61)
Dividends paid or declared ..................................... (0.29) (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 ..................... 0.28 0.14 0.03 0.24 (0.83)
----- ----- ----- ----- -----
Net Asset Value, End of Period.................................. $8.23 $7.95 $7.81 $7.78 $7.54
===== ===== ===== ===== =====
Total return based on net asset value: 8.36% 7.07% 5.76% 9.53% (7.50)%

Ratios/Supplemental Data:
Expenses to average net assets.................................. 1.97% 1.96% 1.88% 2.23% 2.00%
Net investment income to average net assets..................... 3.56% 3.83% 4.05% 4.10% 4.20%
Portfolio turnover ............................................. 13.05% 32.99% 4.56% 11.78% 7.71%
Net Assets, End of Period (000s omitted)........................ $607 $816 $876 $426 $43
</TABLE>

- ------------------
* Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended September 30, 1994.
See notes to financial statements.
14
<PAGE>

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, 1998, 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\rquote 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 confir\- mation of securities owned as of
September 30, 1998 by correspondence with the Fund\rquote 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\line a reasonable basis for our
opinion.\par\pard\s1\sl-260\ql\sa100\tx360

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, 1998, the results of its
operations, the changes in\line its net assets, and the financial highlights for
the respective stated periods, in conformity with generally accepted accounting
principles.

DELOITTE & TOUCHE
New York, New York
October 30, 1998

15
<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

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
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, 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

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

<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

17
<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 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.

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.

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 an investment company and that supplements the
prospectus. It is available at no charge upon request.

Total Return -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.

- -----------------
Adapted from the Investment Company Institute's 1998 Mutual Fund Fact Book.

18
<PAGE>

SELIGMAN ADVISORS, INC.
an affiliate of

[LOGO]

J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864

TEDPA2 9/98

SELIGMAN

Pennsylvania
Municipal Fund

Annual Report
September 30, 1998

Providing Income
Exempt From Regular
Income Tax

<PAGE>

File No. 33-5793
811-4666

PART C. OTHER INFORMATION

Item 23. Exhibits

All Exhibits have been previously filed and are incorporated by reference
herein, except Exhibits marked with an (*) which are filed herewith.

(a) *Instruments of Establishment and Designation dated May 24, 1999.

(a)(1) Form of Amended and Restated Declaration of Trust of Registrant.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
15, filed on January 29, 1997.)

(b) Amended and Restated Bylaws of Registrant. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 15, filed on January 29,
1997.)

(c) Copy of Specimen of Stock Certificate for Class D Shares. (Incorporated
by reference to Registrant's Post-Effective Amendment No. 12 filed on
January 31, 1994.)

(d) Copy of Management Agreement between each Series of the Registrant and
J. & W. Seligman & Co. Incorporated. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 15, filed on January 29,
1997.)

(e) *Addendum to Sales/Bank Agreement. (Incorporated by reference to
Post-Effective Amendment No. 57 to the Registration Statement of
Seligman Capital Fund, Inc. (File #811-1886) filed on May 28, 1999.)

(e)(1) *Form of Bank Agreement between Seligman Advisors, Inc. and Banks.
(Incorporated by reference to Post-Effective Amendment No. 57 to the
Registration Statement of Seligman Capital Fund, Inc. (File #811-1886)
filed on May 28, 1999.)

(e)(3) Distributing Agreement between Registrant and Seligman Advisors, Inc.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
15, filed on January 29, 1997.)

(e)(4) Sales Agreement between Dealers and Seligman Advisors, Inc.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
15, filed on January 29, 1997.)

(f) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
15, filed on January 29, 1997.)

(f)(1) Deferred Compensation Plan for Directors of Seligman Pennsylvania
Municipal Fund Series. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 19 filed on January 25, 1999.)

(g) Custodian Agreement between Registrant and Investors Fiduciary Trust
Company. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 15, filed on January 29, 1997.)

(h) Not applicable.

(i) *Opinion and Consent of Counsel in respect of Class C shares.

(i)(1) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 15, filed on January 29,
1997.)

(j) *Consent of Independent Auditors.

(j)(1) *Consent of Pennsylvania Counsel.

C-2
<PAGE>

File No. 33-5793
811-4666

PART C. OTHER INFORMATION (continued)

(k) Not applicable.

(l) *Form of Purchase Agreement for Initial Capital for Class C shares.

(l)(1) Purchase Agreement for Initial Capital for Class D shares. (Incorporated
by reference to Registrant's Post-Effective Amendment No. 15, filed on
January 29, 1997.)

(m) *Amended Administration, Shareholder Services and Distribution Plan of
Registrant.

(m)(1) *Amended Administration, Shareholder Services and Distribution Agreement
between Seligman Advisors, Inc. and Dealers. (Incorporated by reference
to Post-Effective Amendment No. 57 to the Registration Statement of
Seligman Capital Fund, Inc. (File No. 811-1886) filed on May 28, 1999.)

(n) *Financial Data Schedules.

(o) *Plan of Multiple Classes of Shares (three Classes) pursuant to Rule
18f-3 under the Investment Company Act of 1940.

Other Exhibits: Powers of Attorney. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 16, filed on January 27, 1998.)

Item 24. Persons Controlled by or Under Common Control with Registrant - None.

Item 25. Indemnification - Reference is made to the provisions of Article V of
Registrant's Amended and Restated Declaration of Trust filed as Exhibit
24(b)(1) and Article VII of Registrant's Amended and Restated By-Laws
filed as Exhibit 24(b)(2) to Registrant's Post-Effective Amendment No.
15 to the Registration Statement.

Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised by the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
trustee, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

Item 26. Business and Other Connections of Investment Adviser - J. & W. Seligman
& Co. Incorporated, a Delaware corporation ("Manager"), is the
Registrant's investment manager. The Manager also serves as investment
manager to eighteen associated investment companies. They are Seligman
Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc.,
Seligman Henderson Global Fund Series, Inc., Seligman High Income Fund
Series, Seligman Income Fund, Inc., Seligman Municipal Fund Series,
Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal
Fund, Inc., Seligman Portfolios, Inc., Seligman Quality Municipal Fund,
Inc., Seligman Select Municipal Fund, Inc., Seligman Value Fund Series,
Inc. and Tri-Continental Corporation.

C-3
<PAGE>

File No. 33-5793
811-4666

PART C. OTHER INFORMATION (continued)

The Manager has an investment advisory service division which provides
investment management or advice to private clients. The list required
by this Item 28 of officers and directors of the Manager, together with
information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to
Schedules A and D or Form ADV, filed by the Manager pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-15798) on March 31,
1999.

Item 27. Principal Underwriters.

(a) The names of each investment company (other than the
Registrant) for which each principal underwriter currently
distributing securities of the Registrant also acts as a
principal underwriter, depositor or investment adviser are:

Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman Municipal Fund Series, Inc.
Seligman Municipal Series Trust.
Seligman New Jersey Municipal Fund, Inc.
Seligman Portfolios, Inc.
Seligman Value Fund Series, Inc.

C-4
<PAGE>

File No. 33-5793
811-4666

PART C. OTHER INFORMATION (continued)

(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 20:

Seligman Advisors, Inc.
As of April 30, 1999

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board and Chief
Executive Officer
Brian T. Zino* Director President and Director
Ronald T. Schroeder* Director None
Fred E. Brown* Director Director Emeritus
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
Stephen J. Hodgdon* President and Director None
Charles W. Kadlec* Chief Investment Strategist None
Lawrence P. Vogel* Senior Vice President, Finance Vice President
Edward F. Lynch* Senior Vice President, National None
Sales Director
James R. Besher Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
Gerald I. Cetrulo, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444

Matthew A. Digan* Senior Vice President, None
Domestic Funds

Jonathan G. Evans Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
Robert T. Hausler* Senior Vice President, International None
Funds
T. Wayne Knowles Senior Vice President, None
104 Morninghills Court Division Sales Director
Cary, NC 27511
Joseph Lam Senior Vice President, Regional None
Seligman International Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
Bradley W. Larson Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526

Michelle L. McCann-Rappa* Senior Vice President, None
Retirement Plans

Scott H. Novak* Senior Vice President, Insurance None
Richard M. Potocki Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
</TABLE>

C-5
<PAGE>

File No. 33-5793
811-4666

PART C. OTHER INFORMATION (continued)

Seligman Advisors, Inc.
-----------------------
As of April 30, 1999
--------------------

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Bruce M. Tuckey Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
Andrew S. Veasey Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
Charles L. von Breitenbach, II* Senior Vice President, None
Managed Money

J. Brereton Young* Senior Vice President, Director None
of Sales Development
Jeffrey S. Dean* Vice President, Business Analysis None
Mason S. Flinn Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
Marsha E. Jacoby* Vice President, Offshore Business None
Manager
William W. Johnson* Vice President, Order Desk None
Joan M. O'Connell Vice President, Regional Retirement None
3707 Fifth Avenue #136 Plans Manager
San Diego, CA 92103
Ronald W. Pond* Vice President, Portfolio Advisor None
Jeffery C. Pleet* Vice President, Regional Retirement None
Plans Manager
Tracy A. Salomon* Vice President, Retirement Marketing None
Helen Simon* Vice President, Sales Administration None
Gary A. Terpening* Vice President, Director of Business None
Development
Charles E. Wenzel Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
Jeff Botwinick Regional Vice President None
11508 Foster Road
Overland Park, KS 66210
Kevin Casey Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
Richard B. Callaghan Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
</TABLE>

C-6
<PAGE>

File No. 33-5793
811-4666

PART C. OTHER INFORMATION (continued)

Seligman Advisors, Inc.
-----------------------
As of April 30, 1999
--------------------

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Bradford C. Davis Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
Christopher J. Derry Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
Kenneth Dougherty Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
Kelli A. Wirth Dumser Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
Edward S. Finocchiaro Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
Michael C. Forgea Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
Carla A. Goehring Regional Vice President None
11426 Long Pine
Houston, TX 77077

Cathy Des Jardins Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302

Michael K. Lewallen Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
Judith L. Lyon Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
Tim O'Connell Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
George M. Palmer, Jr. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
Thomas Parnell Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
Craig Prichard Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
</TABLE>

C-7
<PAGE>

File No. 33-5793
811-4666

PART C. OTHER INFORMATION (continued)

Seligman Advisors, Inc.
-----------------------
As of April 30, 1999
--------------------

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------

<S> <C> <C>
Nicholas Roberts Regional Vice President None
200 Broad Street, Apt. 2225
Stamford, CT 06901
Diane H. Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003

Eugene P. Sullivan Regional Vice President None
4858 Battery Lane Bethesda, MD 21814

James Taylor Regional Vice President None
1145 Kenilworth Circle
Naperville, IL 60540
Steve Wilson Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
Gail S. Cushing* Assistant Vice President, National None
Accounts Manager
Sandra G. Floris* Assistant Vice President, Order Desk None
Keith Landry* Assistant Vice President, Order Desk None
Albert A. Pisano* Assistant Vice President and None
Compliance Officer
Joyce Peress* Assistant Secretary Assistant Secretary
</TABLE>

* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York, NY 10017.

Item 28. Location of Accounts and Records

Custodian: Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105 and
Seligman Pennsylvania Municipal Fund Series
100 Park Avenue
New York, NY 10017

Item 29. Management Services - Not Applicable.

Item 30. Undertakings - The Registrant undertakes: (1) if requested to do so by
the holders of at least ten percent of its outstanding shares, to call
a meeting of shareholders for the purpose of voting upon the removal of
a director or directors and to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company Act
of 1940, as amended; and (2) to furnish to each person to whom a
prospectus is delivered, a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

C-8
<PAGE>

File No. 33-5793
811-4666

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 20
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment No. 20 to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 28th day of May, 1999.

SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES

By: /s/ William C. Morris
---------------------------------------
William C. Morris, Chairman

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 20 has been signed below by the following persons
in the capacities indicated on May 28, 1999.

Signature Title

/s/ Brian T. Zino Chairman of the Trustees (Principal
- --------------------------- executive officer) and Trustee
William C. Morris*

/s/ Brian T. Zino President and Trustee
- ---------------------------
Brian T. Zino

/s/ Thomas G. Rose Treasurer (Principal financial
- --------------------------- and accounting officer)
Thomas G. Rose

John R. Galvin, Trustee )
Alice S. Ilchman, Trustee )
Frank A. McPherson, Trustee )
John E. Merow, Trustee ) /s/ Brian T. Zino
------------------------------------
Betsy S. Michel, Trustee ) *By: Brian T. Zino, Attorney-in-fact
James C. Pitney, Trustee )
James Q. Riordan, Trustee )
Richard R. Schmaltz, Trustee )
Robert L. Shafer, Trustee )
James N. Whitson, Trustee )

C-10

<PAGE>

File No. 33-5793
811-4666

SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES
Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A

EXHIBIT INDEX

Form N-1A Item No. Description

Item 23(a) Instruments of Establishment and Designation

Item 23(i) Opinion and Consent of Counsel

Item 23(j) Consent of Independent Auditors

Item 23(j)(1) Opinion and Consent of Pennsylvania Counsel

Item 23(l) Form of Purchase Agreement for Initial Capital

Item 23(m) Amended Administration, Shareholder Services
And Distribution Plan

Item 23(n) Financial Data Schedules

Item 23(o) Plan of Multiple Classes of Shares (three Classes)

SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES

INSTRUMENT OF ESTABLISHMENT
AND DESIGNATION
(Pursuant to Section 6.9(j) of the
Declaration of Trust)

May 24, 1999

The undersigned, being at least a majority of the Trustees of Seligman
Pennsylvania Municipal Fund Series (the "Trust"), established pursuant to a
Declaration of Trust, dated May 13, 1986 and amended thereafter from time to
time (the "Declaration"), do hereby establish an additional class of Shares of
Beneficial Interest ("Shares") of the Trust as follows:

(a) The additional class of Shares is to be designated "Class C Shares of
Beneficial Interest of the Trust" (for purposes of this instrument
such shares being referred to as the "Class C Shares").

(b) Class C Shares are to enjoy all of the rights and preferences of a
Class of Shares as are contemplated by the Declaration, and otherwise
to be entitled to all of the rights and privileges of Shares.

(d) All Shares that are currently issued and outstanding shall henceforth
be designated "Class A Shares of Beneficial Interest of the Trust"
(for purposes of this instrument such Shares being referred to as the
"Class A Shares") or "Class D Shares of Beneficial Interest of the
Trust" (for purposes of this instrument such Shares being referred to
as the "Class D Shares").

(e) The assets belonging to each of the Class A Shares, the Class C shares
and the Class D Shares shall be charged with the liabilities of Shares
in respect of such Class, and all expenses, costs, charges, and
reserves attributable to such Class, as determined by the Trustees.
Any general liabilities, expenses, costs, charges or reserves of
Shares that are not readily identifiable as belonging to any Class in
particular shall be allocated and charged by the Trustees to each
Class in such manner and on such basis as the Trustees in their sole
discretion may deem fair and equitable.

(f) Upon liquidation or termination of the Trust, the Shareholders of each
Class shall be entitled to a pro rata share of the net assets of the
Trust attributable to such Class.

(g) At such time as shall be permitted under the Investment Company Act,
any applicable rules and regulations thereunder and the provisions of
any exemptive order applicable to Shares, as may be determined by the
Trustees and disclosed in the then current prospectus of the Trust,
Shares of a particular Class may be automatically converted into
Shares of another Class of the Trust; provided, however, that such
conversion shall be subject to the continuing availability of an
opinion of counsel to the effect that such conversion does not
constitute a taxable event under federal income tax law. The Trustees,
in their sole discretion, may suspend any conversion feature if such
opinion is no longer available.

<PAGE>

(h) The Class C Shares shall vote together with all other Shares from time
to time outstanding, except that the Trustees may provide that any
Class of Shares shall vote separately as a Class, or together with one
or more other Class of Shares, including any future Class as to any
matter when (i) required by law, rule or exemptive order, (ii) they
determine that such matter affects only the interest of Shares of such
Class or Classes or affects the interests of Shares of such Class or
Classes in a manner different from that of the other Class or Classes
or (iii) they otherwise determine that to do so is necessary or
desirable and in the best interests of the Shareholders of such Class
or Classes under the circumstances.

(i) The net asset value of each Class of Shares shall be determined on
such days and at such time or times as the Trustees shall determine.
The method of determination of the net asset value of a Class shall be
determined by the Trustees and shall be as set forth in the then
current prospectus.

(j) The Trustees may from time to time distribute ratably among the
Shareholders of a Class of Shares such proportionate share of the
profits, surplus (including paid-in surplus) capital or assets held by
the Trustees and attributable to such Class as they may deem proper.

This instrument shall be effective upon its execution by the majority of
Trustees referred to above and shall have the status of, and shall be, an
amendment to the Declaration.

Capitalized terms not defined herein shall have the meanings attributed to
them in the Declaration.

IN WITNESS WHEREOF, each of the undersigned Trustees has set his/her
signature as of the date first above written.

- ----------------------------- -------------------------------

SULLIVAN & CROMWELL

May 27, 1999

Seligman Pennsylvania Municipal Fund Series
100 Park Avenue,
New York, N.Y. 10017.

Dear Sirs:

In connection with Post-Effective Amendment No.20 to the Registration
Statement on Form N-1A (File No. 33-5793) of Seligman Pennsylvania Municipal
Fund Series, a Pennsylvania trust (the "Fund"), which you expect to file under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
an indefinite number of shares of beneficial interest, par value $0.001 per
share, of the class designated as Class C shares (the "Shares")of the sole
series of the Fund (the "Series"), we, as your counsel, have examined such trust
records, certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.

Upon the basis of such examination, we advise you that, in our opinion, the
Fund is authorized to issue an unlimited number of Shares of the Series and,
when the Post-Effective Amendment referred to above has become effective under
the Securities Act and the Shares have been issued (a) for at least the par
value thereof in accordance with the Registration Statement referred to above,
and (b) in accordance with the authorization of the Board of Trustees, the
Shares will be duly and validly issued, fully paid and non-assessable.

The foregoing opinion is limited to the Federal laws of the United States
and the laws of the Commonwealth of Pennsylvania, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction. With respect to
all matters of Pennsylvania law, we have relied upon the opinion, dated May 26,
1999 of Ballard, Spahr, Andrews & Ingersoll,LLP and our opinion is subject to
the same qualifications and limitations with respect to such matters as are
contained in such opinion of Ballard, Spahr, Andrews & Ingersoll, LLP.

<PAGE>

We hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment referred to above. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act.

Very truly yours,

SULLIVAN & CROMWELL

-2-

CONSENT OF INDEPENDENT AUDITORS

Seligman Pennsylvania Municipal Fund Series:

We consent to the use in Post-Effective Amendment No. 20 to Registration
Statement No. 33-5793 of our reports dated October 30, 1998, and April 30, 1999,
appearing in the Annual Report to Shareholders for the year ended September 30,
1998, and the Mid-Year Report to Shareholders for the six months ended March 31,
1999, respectively, incorporated by reference in the Statement of Additional
Information, and to the reference to us under the caption "Financial Highlights"
in the Prospectus, which is also part of such Registration Statement.

DELOITTE & TOUCHE LLP
New York, New York
May 26, 1999

[Letterhead of Ballard, Spahr, Andrews & Ingersoll, LLP]

May 26, 1999

Sullivan & Cromwell
125 Broad Street
New York, NY 10004

Re: Seligman Pennsylvania Municipal Fund Series

Ladies and Gentlemen:

We have acted as Pennsylvania counsel to Seligman Pennsylvania Municipal
Fund Series, a Pennsylvania common law trust (the "Trust") in connection with
the filing of Post-Effective Amendment No. 20 to its Registration Statement on
Form N-1A to register the offering and sale of Class C shares of beneficial
interest in the Trust (the "Class C Shares"). This opinion is furnished to you,
as counsel to the Trust, to enable you to provide the Securities and Exchange
Commission ("SEC") with your opinion regarding the validity of the issuance of
the Class C Shares.

In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Declaration of Trust, as amended (the
"Declaration of Trust"), the By-Laws, drafts of the prospectus (the
"Prospectus") and statement of additional information of the Trust to be dated
June 1, 1999 and in the forms proposed to be filed with the SEC, certificates
dated May 25, 1999 signed by officers of the Trust, and such other documents,
resolutions and certificates of the Trust and have made such examinations of law
as we have deemed necessary in connection with the opinions set forth below.

We have assumed (i) the legal capacity and competence of natural persons,
(ii) the genuineness of all signatures, (iii) the authenticity of all documents
submitted to us as originals, (iv) the conformity to original documents of
documents submitted to us as certified, conformed, photostatic or facsimile
copies and (v) that the forms of the Prospectus and statement of additional
information as filed with the SEC do not differ in any material respects
relevant to this opinion from the drafts we reviewed.

We have also assumed, with regard to the Trust's continued valid existence
as a trust, that a trust "res" consisting of specific, identifiable assets has
continued to exist at all times since the creation of the Trust and has been
under the control of the Trustees of the Trust and that the Trust has at all
times since its creation had holders of beneficial interest ("Shareholders") in
the Trust who have been and continue to be the beneficiaries of the Trust.

Based upon the foregoing and subject to the assumptions, exceptions,
limitations and qualifications set forth herein, we are of the opinion that:

<PAGE>

1. The Trust has been validly formed pursuant to the Declaration of Trust
and is validly existing as a trust under the laws of the Commonwealth of
Pennsylvania. The Trustees of the Trust have control over the property of the
Trust, and the power to conduct the business of the Trust under the Declaration
of Trust and Pennsylvania law, as described in the Prospectus.

2. The Class C Shares, when issued for payment described in the Trust's
Prospectus, will have been legally issued, and will be fully paid and
non-assessable.

We express no opinion as to the law of any jurisdiction other than the law
of the Commonwealth of Pennsylvania.

The Trust's Declaration of Trust provides that Shareholders of the Trust
shall not be liable to any person in connection with the Trust or the acts,
obligations or affairs of the Trust. There is a remote possibility, however,
that, under certain circumstances, holders of beneficial interest in a
Pennsylvania trust may be held personally liable for the obligations of the
trust estate. The Declaration of Trust also provides for indemnification out of
Trust property for all loss and expense of any Shareholder held personally
liable for the obligations of the Trust estate. Therefore, the risk of any
Shareholder incurring financial loss beyond his investment due to Shareholder
liability is limited to circumstances in which the Trust estate itself is unable
to meet its obligations and the express disclaimer of Shareholder liabilities is
determined not to be effective.

This opinion may be relied upon by you only in connection with your
delivery of your opinion to the Securities and Exchange Commission and may not
be used or relied upon by you for any other purpose, without in each instance
our prior written consent.

This opinion is limited to the matters expressly stated herein. No implied
opinion may be inferred to extend this opinion beyond the matters expressly
stated herein. We do not undertake to advise you or anyone else of any changes
in the opinions expressed herein resulting from changes in law, changes in facts
or any other matters that hereafter might occur or be brought to our attention.

<PAGE>

We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 20 to the Trust's Registration Statement on Form
N-1A.

Very truly yours,

/s/ Ballard, Spahr, Andrews & Ingersoll, LLP

<PAGE>

LAW OFFICES

Ballard Spahr Andrews & Ingersoll, llp

1735 MARKET STREET, 51ST FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-7599
215-665-8500
FAX: 215-864-8999
[email protected]

May 26, 1999

Seligman Pennsylvania Municipal Fund Series
100 Park Avenue
New York, New York 10017

Ladies and Gentlemen:

With respect to Post-Effective Amendment No. 20 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Pennsylvania Municipal Fund Series, we have reviewed the material relative to
Pennsylvania Taxes in the Registration Statement. Subject to such review, our
opinion as delivered to you and as filed with the Securities and Exchange
Commission as an exhibit to Post-Effective Amendment No. 14 to the Registration
Statement remains unchanged.

We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "Pennsylvania Taxes". In
giving such consent, we do not thereby admit that we are in the category of
persons who consent is required under Section 7 of the Securities Act of 1933,
as amended.

Very truly yours,

/s/ Ballard Spahr Andrews & Ingersoll, LLP
Ballard Spahr Andrews & Ingersoll, LLP

INVESTMENT LETTER

SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES

Seligman Pennsylvania Municipal Fund Series (the "Fund"), an open-end,
non-diversified management investment company, and the undersigned
("Purchaser"), intending to be legally bound, hereby agree as follows:

1. The Fund hereby sells to Purchaser and Purchaser purchases 1 Class C share
(the "Share") of beneficial interest (par value $.001) of the Fund at a
price equivalent to the net asset value of one Class D share of the Fund as
of the close of business on May 27, 1999. The Fund hereby acknowledges
receipt from Purchaser of funds in such amount in full payment for the
Share.

2. Purchaser represents and warrants to the Fund that the Share is being
acquired for investment and not with a view to distribution thereof, and
that Purchaser has no present intention to redeem or dispose of the Share.

IN WITNESS WHEREOF, the parties have executed this agreement as of the 28th
day of May, 1999.

SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES

By:
-------------------------------------
Name: Lawrence P. Vogel
Title: Vice President

J. & W. SELIGMAN & CO. INCORPORATED

By:
-------------------------------------
Name: Brian T. Zino
Title: President

ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN

As amended and restated through June 1, 1999

Section 1. Seligman Pennsylvania Municipal Fund Series (the "Fund") will
pay fees to Seligman Advisors, Inc., the principal underwriter of its shares
(the "Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class C and Class D shares of the Fund. As a result,
the Fund is adopting this Administration, Shareholder Services and Distribution
Plan (the "Plan") pursuant to Section 12(b) of the Investment Company Act of
1940, as amended (the "Act") and Rule 12b-1 thereunder.

Section 2. Pursuant to this Plan, the Fund may pay to the Distributor a
shareholder servicing fee of up to .25% on an annual basis of the average daily
net assets of the Fund (payable quarterly with respect to Class A and monthly
with respect to Class C and Class D) and a distribution fee of up to .75% on an
annual basis, payable monthly, of the average daily net assets of the Fund
attributable to Class C and Class D shares. Such fees will be used in their
entirety by the Distributor to make payments for administration, shareholder
services and distribution assistance, including, but not limited to (i)
compensation to securities dealers and other organizations (each, a "Service
Organization" and collectively, the "Service Organizations"), for providing
distribution assistance with respect to assets invested in the Fund, (ii)
compensation to Service Organizations for providing administration, accounting
and other shareholder services with respect to the Fund' shareholders, and (iii)
otherwise promoting the sale of shares of the Fund, including paying for the
preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and defraying the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Fund shall be
deemed to include compensation for such services. The fees received from the
Fund hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of the Fund may not be used to subsidize the
sale of shares of any other class. The fees payable to Service Organizations
from time to time shall, within such limits, be determined by the Trustees of
the Trust.

Section 3. J. & W. Seligman & Co. Incorporated, investment manager to the
Fund (the "Manager"), in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Fund.

Section 4. This Plan shall continue in effect through December 31 of each
year so long as such continuance is specifically approved at least annually by
vote of a majority of both (a) the Trustees of the Trust and (b) the Qualified
Trustees, cast in person at a meeting called for the purpose of voting on such
approval.

1
<PAGE>

Section 5. The Distributor shall provide to the Trust's Trustees, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended by the Fund and the purposes for which such expenditures were made.

Section 6. This Plan may be terminated with respect to any class at any
time by vote of a majority of the Qualified Trustees, or by vote of a majority
of the outstanding voting securities of such class. If this Plan is terminated
in respect of a class, no amounts (other than amounts accrued but not yet paid)
would be owed by the Fund to the Distributor with respect to such class.

Section 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Trustees of the Trust
and (b) the Qualified Trustees, cast in person at a meeting called for the
purpose of voting on such approval, provided, however, that the identity of a
particular Service Organization executing any such agreement may be ratified by
such a vote within 90 days of such execution. Any agreement related to this Plan
shall provide:

A. That such agreement may be terminated in respect of any class of the
Fund at any time, without payment of any penalty, by vote of a
majority of the Qualified Trustees or by vote of a majority of the
outstanding voting securities of the class, on not more than 60 days'
written notice to any other party to the agreement; and

B. That such agreement shall terminate automatically in the event of its
assignment.

Section 8. This Plan may not be amended to increase materially the amount
of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Trustees of the Trust and (b) the Qualified Trustees,
cast in person at a meeting called for the purpose of voting on such approval.
This Plan shall not be amended to reduce the distribution fee payable to the
Distributor pursuant to Section 2 hereof in respect of Class B shares, unless
the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated, provided, however that the
distribution fee in respect of Class B shares may be reduced without change to
the shareholder servicing fee, if and to the extent required in order to comply
with any applicable laws or regulations, including applicable rules of the
National Association of Securities Dealers, Inc. regulating maximum sales
charges.

Section 9. The Fund is not obligated to pay any administration, shareholder
services or distribution expense in excess of the fee described in Section 2
hereof, and, in the case of Class A shares, any expenses of administration,
shareholder services and distribution of Class A shares of the Fund accrued in
one fiscal year of the Fund may not be paid from administration, shareholder
services and distribution fees received from the Fund in respect of Class A
shares in any other fiscal year.

2
<PAGE>

Section 10. As used in this Plan, (a) the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission and (b) the term "Qualified Trustees" shall mean the
Trustees of the Trust who are not "interested persons" of the Trust and have no
direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan.

SELIGMAN GROUP OF MUTUAL FUNDS

Plan for Multiple Classes of Shares (three classes)

THIS PLAN, as it may be amended from time to time, sets forth the separate
arrangement and expense allocation of each class of shares (a "Class") of each
registered open-end management investment company, or series thereof, in the
Seligman Group of Mutual Funds that offers three classes of shares (each, a
"Fund"). The Plan has been adopted pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940, as amended (the "Act"), by a majority of the
Board of Directors or Trustees, as applicable ("Directors"), of each Fund listed
on Schedule I hereto, including a majority of the Directors who are not
interested persons of such Fund within the meaning of Section 2(a)(19) of the
Act ("Disinterested Directors"). Any material amendment to this Plan is subject
to the prior approval of the Board of Directors of each Fund to which it
relates, including a majority of the Disinterested Directors.

1. General

A. Any Fund may issue more than one Class of voting stock, provided that
each Class:

i. Shall have a different arrangement for shareholder services or
the distribution of securities or both, and shall pay all of the
expenses of that arrangement;

ii. May pay a different share of other expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are actually
incurred in a different amount by that Class, or if the Class
receives services of a different kind or to a different degree
than other Classes of the same Fund ("Class Level Expenses");

iii. May pay a different advisory fee to the extent that any
difference in amount paid is the result of the application of the
same performance fee provisions in the advisory contract of the
Fund to the different investment performance of each Class;

iv. Shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement;

v. Shall have separate voting rights on any matter submitted to
shareholders in which the interests of one Class differ from the
interests of any other Class; and

vi. Shall have in all other respects the same rights and obligations
as each other Class of the Fund.

-1-
<PAGE>

B. i. Except as expressly contemplated by this paragraph B., no types
or categories of expenses shall be designated Class Level
Expenses.

ii. The Directors recognize that certain expenses arising in certain
sorts of unusual situations are properly attributable solely to
one Class and therefore should be borne by that Class. These
expenses ("Special Expenses") may include, for example: (i) the
costs of preparing a proxy statement for, and holding, a special
meeting of shareholders to vote on a matter affecting only one
Class; (ii) the costs of holding a special meeting of Directors
to consider such a matter; (iii) the costs of preparing a special
report relating exclusively to shareholders of one Class; and
(iv) the costs of litigation affecting one Class exclusively. J.
& W. Seligman & Co. Incorporated (the "Manager") shall be
responsible for identifying expenses that are potential Special
Expenses.

iii. Subject to clause iv. below, any Special Expense identified by
the Manager shall be treated as a Class Level Expense.

iv. Any Special Expense identified by the Manager that is material to
the Class in respect of which it is incurred shall be submitted
by the Manager to the Directors of the relevant Fund on a case by
case basis with a recommendation by the Manager as to whether it
should be treated as a Class Level Expense. If approved by the
Directors, such Special Expense shall be treated as a Class Level
Expense of the affected class.

C. i. Realized and unrealized capital gains and losses of a Fund shall
be allocated to each class of that Fund on the basis of the
aggregate net asset value of all outstanding shares ("Record
Shares") of the Class in relation to the aggregate net asset
value of Record Shares of the Fund.

-2-
<PAGE>

ii. Income and expenses of a Fund not charged directly to a
particular Class shall be allocated to each Class of that Fund on
the following basis:

a. For periodic dividend funds, on the basis of the aggregate
net asset value of Record Shares of each Class in relation
to the aggregate net asset value of Record Shares of the
Fund.

b. For daily dividend funds, on the basis of the aggregate net
asset value of Settled Shares of each Class in relation to
the aggregate net asset value of Settled Shares of the Fund.
"Settled Shares" means Record Shares minus the number of
shares of that Class or Fund that have been issued but for
which payment has not cleared and plus the number of shares
of that Class or Fund which have been redeemed but for which
payment has not yet been issued.

D. On an ongoing basis, the Directors, pursuant to their fiduciary
responsibilities under the Act and otherwise, will monitor each Fund
for the existence of any material conflicts among the interests of its
several Classes. The Directors, including a majority of the
Disinterested Directors, shall take such action as is reasonably
necessary to eliminate any such conflicts that may develop. The
Manager and Seligman Financial Services, Inc. (the "Distributor") will
be responsible for reporting any potential or existing conflicts to
the Directors. If a conflict arises, the Manager and the Distributor
will be responsible at their own expense for remedying such conflict
by appropriate steps up to and including separating the classes in
conflict by establishing a new registered management company to
operate one of the classes.

E. The plan of each Fund adopted pursuant to Rule 12b-1 under the Act
(the "Rule 12b-1 Plan") provides that the Directors will receive
quarterly and annual statements complying with paragraph (b)(3)(ii) of
Rule 12b-1, as it may be amended from time to time. To the extent that
the Rule 12b-1 Plan in respect of a specific Class is a reimbursement
plan, then only distribution expenditures properly attributable to the
sale of shares of that Class will be used in the statements to support
the Rule 12b-1 fee charged to shareholders of such Class. In such
cases expenditures not related to the sale of a specific Class will
not be presented to the Directors to support Rule 12b-1 fees charged
to shareholders of such Class. The statements, including the
allocations

-3-
<PAGE>

upon which they are based, will be subject to the review of the
Disinterested Directors.

F. Dividends paid by a Fund with respect to each Class, to the extent any
dividends are paid, will be calculated in the same manner, at the same
time and on the same day and will be in the same amount, except that
fee payments made under the Rule 12b-1 Plan relating to the Classes
will be borne exclusively by each Class and except that any Class
Level Expenses shall be borne by the applicable Class.

G. The Directors of each Fund hereby instruct such Fund's independent
auditors to review expense allocations each year as part of their
regular audit process, to inform the Directors and the Manager of any
irregularities detected and, if specifically requested by the
Directors, to prepare a written report thereon. In addition, if any
Special Expense is incurred by a Fund and is classified as a Class
Level Expense in the manner contemplated by paragraph B. above, the
independent auditors for such Fund, in addition to reviewing such
allocation, are hereby instructed to report thereon to the Audit
Committee of the relevant Fund and to the Manager. The Manager will be
responsible for taking such steps as are necessary to remedy any
irregularities so detected, and will do so at its own expense to the
extent such irregularities should reasonably have been detected and
prevented by the Manager in the performance of its services to the
Fund.

2. Specific Arrangements for Each Class

The following arrangements regarding shareholder services, expense
allocation and other indicated matters shall be in effect with respect to the
Class A shares, Class C shares and Class D shares of each Fund. The following
descriptions are qualified by reference to the more detailed description of such
arrangements set forth in the prospectus statement of additional information
relating to each Fund, as the same may from time to time be amended or
supplemented (collectively for each Fund, the "Relevant Prospectus"), provided
that no Relevant Prospectus may modify the provisions of this Plan applicable to
Rule 12b-1 fees or Class Level Expenses.

(a) Class A Shares

i. Class A shares are subject to an initial sales load which varies with
the size of the purchase, to a maximum of 4.75% of the public offering
price. Reduced sales loads shall apply in certain

-4-
<PAGE>

circumstances. Class A shares of Seligman Cash Management Fund, Inc.
shall not be subject to an initial sales load.

ii. Class A shares shall be subject to a Rule 12b-1 service fee of up to
0.25% of average daily net assets.

iii. Special Expenses attributable to the Class A shares, except those
determined by the Directors not to be Class Level Expenses of the
Class A shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class A shares. No other
expenses shall be treated as Class Level Expenses of the Class A
shares.

iv. The Class A shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.

(b) Class C Shares

i. Class C shares are subject to an initial sales load which varies with
the size of the purchase, to a maximum of 1.00% of the public offering
price, and a CDSL of 1% of the lesser of the current net asset value
or the original purchase price in certain cases if the shares are
redeemed within eighteen months of purchase. Reduced sales loads shall
apply in certain circumstances.

ii. Class C shares shall be subject to a Rule 12b-1 fee of up to 1.00% of
average daily net assets, consisting of an asset-based distribution
fee of up to 0.75% and a service fee of up to 0.25%.

iii. Special Expenses attributable to the Class C shares, except those
determined by the Directors not to be Class Level Expenses of the
Class C shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class C shares. No other
expenses shall be treated as Class Level Expenses of the Class C
shares.

iv. The Class C shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.

-5-
<PAGE>

i. Class D shares are sold without an initial sales load but are subject
to a CDSL of 1% of the lesser of the current net asset value or the
original purchase price in certain cases if the shares are redeemed
within one year.

ii. Class D shares shall be subject to a Rule 12b-1 fee of up to 1.00% of
average daily net assets, consisting of an asset-based distribution
fee of up to 0.75% and a service fee of up to 0.25%.

iii. Special Expenses attributable to the Class D shares, except those
determined by the Directors not to be Class Level Expenses of the
Class D shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class D shares. No other
expenses shall be treated as Class Level Expenses of the Class D
shares.

iv. The Class D shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.

-6-
<PAGE>

Schedule I

Seligman National Municipal Fund
Seligman California Quality Municipal Fund
Seligman California High-Yield Municipal Fund
Seligman Colorado Municipal Fund
Seligman Florida Municipal Fund
Seligman Georgia Municipal Fund
Seligman Louisiana Municipal Fund
Seligman Maryland Municipal Fund
Seligman Massachusetts Municipal Fund
Seligman Michigan Municipal Fund
Seligman Minnesota Municipal Fund
Seligman Missouri Municipal Fund
Seligman New Jersey Municipal Fund, Inc.
Seligman New York Municipal Fund
Seligman North Carolina Municipal Fund
Seligman Ohio Municipal Fund
Seligman Oregon Municipal Fund
Seligman Pennsylvania Municipal Fund Series
Seligman South Carolina Municipal Fund

-7-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<SERIES>
<NUMBER>004
<NAME> SELIGMAN PENNSYLVANIA MUNICIPAL FUND CL D
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 28104
<INVESTMENTS-AT-VALUE> 29939
<RECEIVABLES> 429
<ASSETS-OTHER> 127
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30495
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1407
<TOTAL-LIABILITIES> 1407
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27168
<SHARES-COMMON-STOCK> 118<F1>
<SHARES-COMMON-PRIOR> 74<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 85
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1835
<NET-ASSETS> 937<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (8)<F1>
<NET-INVESTMENT-INCOME> 13<F1>
<REALIZED-GAINS-CURRENT> 91
<APPREC-INCREASE-CURRENT> (497)
<NET-CHANGE-FROM-OPS> 204
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (14)<F1>
<DISTRIBUTIONS-OF-GAINS> (14)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 57<F1>
<NUMBER-OF-SHARES-REDEEMED> (15)<F1>
<SHARES-REINVESTED> 2<F1>
<NET-CHANGE-IN-ASSETS> (1101)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 85
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8<F1>
<AVERAGE-NET-ASSETS> 810<F1>
<PER-SHARE-NAV-BEGIN> 8.23<F1>
<PER-SHARE-NII> .14<F1>
<PER-SHARE-GAIN-APPREC> (.11)<F1>
<PER-SHARE-DIVIDEND> (.14)<F1>
<PER-SHARE-DISTRIBUTIONS> (.15)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.97<F1>
<EXPENSE-RATIO> 1.98<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<SERIES>
<NUMBER>001
<NAME> SELIGMAN PENNSYLVANIA MUNICIPAL FUND CL A
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 28104
<INVESTMENTS-AT-VALUE> 29939
<RECEIVABLES> 429
<ASSETS-OTHER> 127
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30495
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1407
<TOTAL-LIABILITIES> 1407
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27168
<SHARES-COMMON-STOCK> 3529<F1>
<SHARES-COMMON-PRIOR> 3592<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 85
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1835
<NET-ASSETS> 28151<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 774<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (177)<F1>
<NET-INVESTMENT-INCOME> 597<F1>
<REALIZED-GAINS-CURRENT> 91
<APPREC-INCREASE-CURRENT> (497)
<NET-CHANGE-FROM-OPS> 204
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (596)<F1>
<DISTRIBUTIONS-OF-GAINS> (531)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41<F1>
<NUMBER-OF-SHARES-REDEEMED> (189)<F1>
<SHARES-REINVESTED> 85<F1>
<NET-CHANGE-IN-ASSETS> (1101)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 85
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 72<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 177<F1>
<AVERAGE-NET-ASSETS> 28924<F1>
<PER-SHARE-NAV-BEGIN> 8.24<F1>
<PER-SHARE-NII> .17<F1>
<PER-SHARE-GAIN-APPREC> (.11)<F1>
<PER-SHARE-DIVIDEND> (.17)<F1>
<PER-SHARE-DISTRIBUTIONS> (.15)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.98<F1>
<EXPENSE-RATIO> 1.23<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>

</TABLE>