SELIGMAN NEW JERSEY TAX EXEMPT FUND INC, N-30D, 1996-11-27

SELIGMAN NEW JERSEY TAX EXEMPT FUND INC
N-30D, 1996-11-27

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9th ANNUAL REPORT

SELIGMAN
NEW JERSEY
MUNICIPAL
FUND, INC.

September 30, 1996

[Logo]
- -----------------------------
Providing Income
Free From Regular Income Tax
Since 1988
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TO THE SHAREHOLDERS
- -------------------------------------------------------------------------------
We are pleased to update you on Seligman New Jersey Municipal Fund, Inc. at
its fiscal year-end, September 30, 1996.
After reducing interest rates twice in 1995, and again in January 1996, the
Federal Reserve Board left rates unchanged for the next eight months. The
economy's rate of growth, which slowed in the fourth quarter of 1995, bounced
back in the second quarter of 1996. It continued to grow at a healthy pace
all year with virtually no inflationary repercussions. Reports issued in
September supported this view, showing continued increases in production, new
home sales, wages, and spending.
With the lowest unemployment rate since June 1990, strong personal
incomes, interest rates far below their 1980s levels, and few signs of
inflationary pressure, consumer confidence as measured by The Conference
Board rose 25% above its January 1996 level.
In the municipal bond market, interest rates began to decline in the
third quarter of 1995 and continued to do so until February 1996. However, as
the economy picked up steam late in the first quarter of this year, and
continued to grow in the second quarter, municipal market sentiment turned
from enthusiasm to concern regarding inflation. For the last six months,
every Fed meeting was under intense scrutiny by market participants. The
inability of municipal bond investors to gauge the future direction of rates
exaggerated their response to each economic report, with municipal bond
yields drifting up or down in response to the latest data.
On September 24, the Fed decided to maintain the current fed funds
rate. Once the decision was announced, long-term municipal bond yields, as
measured by the Bond Buyer 20-Bond General Obligation Index, declined
slightly and ended the quarter at 5.76%. The unchanged monetary policy
somewhat stabilized the municipal bond market by the end of the Fund's fourth
quarter.
Going forward, we foresee continued, albeit moderate, economic growth
and a benign level of inflation. This environment of modest growth, combined
with relatively stable interest rates, should be beneficial for financial
markets in the months ahead. As always, there could be short-term volatility,
but we remain confident in the long-term outlook.
As we near the end of the year, we encourage you to review your
overall investment portfolio. When doing so, you may wish to consult your
financial advisor to discuss financial issues such as tax planning, and to
ensure that you are following the best investment strategy to help you seek
your financial goals.
At the Special Meeting of Shareholders, held on September 30, 1996, a
proposal was passed permitting the Fund to invest any portion of its net
assets in securities subject to the federal alternative minimum tax.
Consequently, your Fund's name was changed to Seligman New Jersey Municipal
Fund, Inc. For specific results of the Special Meeting of Shareholders,
please refer to page 16.
A discussion with your Portfolio Manager about your Fund, along with
highlights of performance, long-term investment results, portfolio holdings,
and financial statements, follows this letter.
We thank you for your continued interest in Seligman New Jersey
Municipal Fund, Inc., and look forward to serving your investment needs in
the many years to come.
By order of the Board of Directors,

/s/ William Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President

October 30, 1996

1
<PAGE>
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SELIGMAN NEW JERSEY MUNICIPAL FUND, INC.
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<TABLE>
<CAPTION>
HIGHLIGHTS September 30, 1996 Class A Class D
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<S> <C> <C>
NET ASSETS (in millions) $66.3 $1.1
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YIELD* 4.36% 3.81%
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DIVIDENDS** $0.385 $0.329
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CAPITAL GAIN DISTRIBUTION** $0.004 $0.004
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NET ASSET VALUE PER SHARE
September 30, 1996 $7.60 $7.68
September 30, 1995 7.59 7.67
- -----------------------------------------------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
September 30, 1996 $7.98 $7.68
September 30, 1995 7.97 7.67
- -----------------------------------------------------------------------------------------------------------------------
MOODY'S /S&P RATINGS+
Aaa/AAA 57%
Aa/AA 21
A/A 15
Baa/BBB 7
- -----------------------------------------------------------------------------------------------------------------------
HOLDINGS BY MARKET SECTOR+
Revenue Bonds 81%
General Obligation Bonds 19
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WEIGHTED AVERAGE MATURITY (Years) 21.7
- -----------------------------------------------------------------------------------------------------------------------

<FN>
* Current yield representing the annualized yield for the 30-day period ended September 30, 1996.
** Represents per share amount paid or declared for the year ended September 30, 1996.
+ Percentages based on current market values of long-term holdings.

Note: The yields have been computed in accordance with current SEC
regulations and will vary, and the principal value of an
investment will fluctuate. Shares, if redeemed, may be worth more or less than
their original cost. A small portion of the Fund's income dividends may be
subject to applicable state and local taxes, and any amount may be subject to
the federal alternative minimum tax. Past performance is not indicative of
future investment results.
</FN>
</TABLE>

The following is a discussion with your Portfolio Manager regarding
Seligman New Jersey Municipal Fund, Inc., and a chart and
table comparing your Fund's performance to the performance of the Lehman
Brothers Municipal Bond Index.

YOUR PORTFOLIO MANAGER

[PICTURE OF THOMAS G. MOLES]

Thomas G. Moles is a Managing Director of J. & W. Seligman & Co.
Incorporated, Vice President and Portfolio Manager of Seligman New Jersey
Municipal Fund, Inc. and the other Seligman municipal mutual funds which
include 19 separate portfolios, and President and Portfolio Manager of
Seligman Select Municipal Fund and Seligman Quality Municipal Fund. He is
responsible for more than $2 billion in municipal securities. Mr. Moles, with
more than 25 years of experience, has spearheaded Seligman's municipal
investment efforts since joining the firm in 1983.

What economic factors affected Seligman New Jersey Municipal Fund over the
past 12 months?

Throughout the fourth quarter of 1995, the majority of market participants
believed that the economy was growing at a moderate pace and that inflation
remained under control. This bullish outlook caused long-term interest rates
to decline steadily during the fourth quarter of 1995 and into the new year.
By February 1996, however, the economy began to exhibit signs of unexpected
strength and interest rates rose sharply on renewed inflation concerns. Since
then, economic data has been mixed, suggesting weakness in some areas and
vigor in others. Given these conflicting economic reports, market
participants have been unable to form a consensus with respect to the
economy. As a result, each new economic release has led to an amplified shift
in interest rates.

On September 24, the Federal Reserve Board stated that it had not
seen sufficient evidence of an acceleration in inflation to warrant an
increase in the fed funds rate. The Fed's decision to hold monetary policy
steady helped stabilize the bond market and prompted a modest decline in
long-term yields. Further, by September 30, 1996, long-term municipal yields,
as measured by the Bond Buyer 20-Bond General Obligation Index, stood at
5.76%, down from 6.00% a year ago.

What market factors influenced the Fund over the past 12 months?

In the municipal bond market, year-to-date new issue supply has increased
only marginally over 1995 levels. However, demand, in particular retail
demand, has been strong, resulting in shortages of certain types of municipal
bonds. The supply imbalance pushed buyers to bid up prices to obtain the
specific bonds they required, which caused a compression of yield spreads, or
a narrowing of yield differentials, within the various sectors of the
municipal market. For example, hospital bonds typically trade at higher
yields than similarly rated general obligation bonds, due to their
complexity. This year, many typically higher-yielding issues such as hospital
bonds have been trading at or near general obligation levels. This market
aberration provided us an opportunity to improve the relative value of the
portfolio.

What was your investment strategy in the past 12 months?

We believe that the economy is expanding at an acceptable rate of growth
and that inflation remains in check. Therefore, we have been
comfortable purchasing long-term municipal bonds in spite of the
market's frequent ups and downs. Yields on long-term municipal bonds are
significantly higher than yields on short-term municipal securities. For that
reason, short-term positions were kept to a minimum.

Further, to better protect the net asset value of the Fund during
periods of rising interest rates, we concentrated new acquisitions in current
coupon bonds rather than in discount or zero coupon bonds as the prices of
discount and zero coupon bonds are more vulnerable to rising interest rates.
Though we primarily focus on our long-term goals rather than short-term
gains, we continuously search for ways to improve the relative value of the
Fund by taking advantage of aberrations and inefficiencies within the
municipal marketplace.

What is your outlook for the Fund?

Thus far, 1996 has been a challenging year for fixed-income investors. The
debate within the municipal markets over the strength of the economy most
likely will continue to influence the direction of interest rates in the
short term. Our team, however, takes a long-term, conservative approach to
managing your Fund. We believe municipal bond funds will continue to play an
important role in helping investors meet their long-term financial goals, and
we remain committed to maintaining a diversified portfolio of quality
municipal bonds while providing our Shareholders with competitive yields.
4

This chart compares a $10,000 hypothetical investment made in Seligman
New Jersey Municipal Fund Class A shares with and without
the maximum initial sales charge of 4.75%, since inception on February 16,
1988, through September 30, 1996, to a $10,000 hypothetical investment made
in the Lehman Brothers Municipal Bond Index (Lehman Index) for the same
period. The performance of Seligman New Jersey Municipal Fund Class D shares
is not shown in this chart but is included in the table below. It is
important to keep in mind that the Lehman Index does not include any fees or
sales charges, and does not reflect state-specific bond market performance.

With Without
sales charge sales charge Lehman Index
2/29/88 $9,520.00 $10,000.00 $10,000.00
3/31/88 $9,093.33 $9,551.82 $9,884.00
6/30/88 $9,401.82 $9,875.86 $10,074.76
9/30/88 $9,706.93 $10,196.36 $10,332.68
12/31/88 $10,012.71 $10,517.57 $10,523.83
3/31/89 $10,110.22 $10,619.98 $10,593.29
6/30/89 $10,746.93 $11,288.80 $11,220.41
9/30/89 $10,668.39 $11,206.29 $11,228.26
12/31/89 $11,070.30 $11,628.45 $11,659.43
3/31/90 $11,045.86 $11,602.78 $11,711.90
6/30/90 $11,315.31 $11,885.82 $11,985.95
9/30/90 $11,206.40 $11,771.41 $11,993.15
12/31/90 $11,820.43 $12,416.40 $12,510.05
3/31/91 $12,064.78 $12,673.07 $12,792.78
6/30/91 $12,316.20 $12,937.18 $13,065.26
9/30/91 $12,772.22 $13,416.19 $13,573.50
12/31/91 $13,125.05 $13,786.81 $14,029.57
3/31/92 $13,106.48 $13,767.31 $14,071.66
6/30/92 $13,690.70 $14,380.99 $14,606.38
9/30/92 $14,010.69 $14,717.12 $14,993.45
12/31/92 $14,304.31 $15,025.54 $15,266.33
3/31/93 $14,856.09 $15,605.15 $15,832.72
6/30/93 $15,437.96 $16,216.35 $16,350.45
9/30/93 $15,975.12 $16,780.60 $16,903.09
12/31/88 $16,074.28 $16,884.76 $17,139.73
3/31/94 $15,169.10 $15,933.94 $16,198.76
6/30/94 $15,257.67 $16,026.98 $16,378.57
9/30/94 $15,296.61 $16,067.88 $16,489.94
12/31/94 $15,085.14 $15,845.75 $16,252.49
3/31/95 $16,107.66 $16,919.82 $17,401.54
6/30/95 $16,425.61 $17,253.80 $17,820.92
9/30/95 $16,790.94 $17,637.54 $18,334.16
12/31/95 $17,433.47 $18,312.49 $19,089.53
3/31/96 $17,131.43 $17,995.23 $18,858.54
6/30/96 $17,307.32 $18,179.99 $19,003.75
9/30/96 $17,692.06 $18,584.12 $19,440.84

The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1996, for
Seligman New Jersey Municipal Fund Class A shares, with and without the
maximum initial sales charge of 4.75%, and the Lehman Index. Also included in
the table are the average annual total returns for the one-year and
since-inception periods through September 30, 1996, for Seligman New Jersey
Municipal Fund Class D shares, with and without the effect of the 1% contingen
t deferred sales load ("CDSL") imposed on shares redeemed within one year of
purchase, and the Lehman Index.

AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
SINCE SINCE
ONE FIVE INCEPTION ONE INCEPTION
YEAR YEARS 2/16/88 YEAR 2/1/94
-------- -------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Seligman New Jersey Seligman New Jersey
Municipal Fund Municipal Fund
Class A with Sales Charge 0.34% 5.71% 6.84% Class D with CDSL 3.56% n/a
Class A without Sales Charge 5.37 6.73 7.45 Class D without CDSL 4.56 2.76%
Lehman Index 6.04 7.45 8.06* Lehman Index 6.04 4.40
* From 2/29/88.
</TABLE>

THE PERFORMANCE OF CLASS D SHARES WILL BE GREATER THAN OR LESS THAN THE
PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON THE DIFFERENCES IN SALES
CHARGES AND FEES PAID BY SHAREHOLDERS. Performance data quoted represent
changes in prices and assume that all distributions within the periods are
invested in additional shares. The investment return and principal value of
an investment will fluctuate so that shares, if redeemed, may be worth more
or less than their original cost. Past performance is not indicative of
future investment results.

<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- ---------------- ----------- -----------
<S> <C> <C> <C>
$2,500,000 Brick Township Municipal Utilities Authority, NJ Rev., 6-1/2% due 12/1/2012... Aaa/AAA $ 2,705,850
1,000,000 Delran Sewerage Authority, NJ Subordinated Sewer Rev., 7-1/2% due 3/1/2013.... Aaa/AAA 1,075,330
1,000,000 Hamilton Township Municipal Utilities Authority, NJ Rev., 6% due 8/15/2017.... Aaa/AAA 1,020,010
3,000,000 Howell Township, NJ GOs, 6.80% due 1/1/2014................................... Aaa/AAA 3,294,210
1,500,000 Marlboro Township Municipal Utilities Authority Monmouth County, NJ Water Rev.,
6% due 12/1/2018.......................................................... Aaa/AAA 1,527,810
3,000,000 Mercer County, NJ Improvement Authority Rev. (Resource Recovery Project),
6.70% due 4/1/2013*....................................................... Aaa/AAA 3,090,600
1,000,000 New Jersey Building Authority State Building Rev., 7.20% due 6/15/2013........ Aa/AA- 1,060,720
2,750,000 New Jersey Building Authority State Building Rev., 5% due 6/15/2018 Aa/AA- 2,514,930
2,000,000 New Jersey Economic Development Authority Rev. (The Trustees of the
Lawrenceville School Project), 5-3/4% due 7/1/2016........................ Aa/NR 2,003,180
2,900,000 New Jersey Economic Development Authority Sewage Facilities Rev.
(Anheuser-Busch Project), 5.85% due 12/1/2030*............................ A1/AA- 2,800,153
1,000,000 New Jersey Economic Development Authority Water Facilities Rev.
(Hackensack Water Co. Project), 7% due 10/1/2017*......................... NR/A 1,021,290
1,000,000 New Jersey Economic Development Authority Water Facilities Rev.
(Hackensack Water Co. Project), 7% due 1/1/2019........................... Aaa/AAA 1,027,470
1,000,000 New Jersey Economic Development Authority Water Facilities Rev.
(Middlesex Water Co. Project), 5.20% due 10/1/2022........................ Aaa/AAA 931,340
3,500,000 New Jersey Economic Development Authority Water Facilities Rev.
(New Jersey-American Water Co., Inc. Project), 5-1/2% due 6/1/2023*....... Aaa/AAA 3,326,225
2,500,000 New Jersey Educational Facilities Financing Authority Rev.
(Princeton University), 6% due 7/1/2024................................... Aaa/AAA 2,536,200
1,495,000 New Jersey Health Care Facilities Financing Authority Rev.
(Chilton Memorial Hospital), 5% due 7/1/2013.............................. A/A 1,345,545
1,000,000 New Jersey Health Care Facilities Financing Authority Rev.
(St. Clare's Riverside Medical Center), 7% due 7/1/2014................... Aaa/AAA 1,048,070
2,000,000 New Jersey Health Care Facilities Financing Authority Rev.
(St. Clare's Riverside Medical Center), 5% due 7/1/2014................... Aaa/AAA 1,967,060
2,000,000 New Jersey Health Care Facilities Financing Authority Rev.
(Hackensack Medical Center), 6% due 7/1/2017.............................. Aaa/AAA 2,135,820
1,000,000 New Jersey Health Care Facilities Financing Authority Rev.
(Holy Name Hospital), 6% due 7/1/2020..................................... Aaa/AAA 1,069,680
2,500,000 New Jersey Health Care Facilities Financing Authority Rev.
(The Medical Center at Princeton), 7% due 7/1/2022........................ Aaa/AAA 2,718,525
2,500,000 New Jersey Health Care Facilities Financing Authority Rev.
(Englewood Hospital & Medical Center), 6% due 7/1/2024.................... Baa/BBB 2,543,200
965,000 New Jersey Housing & Mortgage Finance Agency (Home Mortgage Purchase Rev.),
7% due 10/1/2016.......................................................... Aaa/AAA 995,378
220,000 New Jersey Housing & Mortgage Finance Agency (Home Buyer Rev.),
7.65% due 10/1/2016....................................................... Aaa/AAA 229,156
<FN>
- -------------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
</FN>
</TABLE>

See notes to financial Statements.

<PAGE>
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September 30, 1996
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<TABLE>
<CAPTION>
FACE RATINGS MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
---------- ---------------- ----------- -----------
<S> <C> <C> <C>
$1,000,000 New Jersey Housing & Mortgage Finance Agency (Home Buyer Rev.),
5-3/8% due 4/1/2025*...................................................... Aaa/AAA $ 911,350
455,000 New Jersey Housing & Mortgage Finance Agency (Home Buyer Rev.),
7.70% due 10/1/2029*...................................................... Aaa/AAA 474,151
3,000,000 New Jersey State GOs, 5-5/8% due 7/15/2015 ................................... Aa1/AA+ 3,016,890
985,000 New Jersey Wastewater Treatment Trust Loan Rev., 7-1/4% due 5/15/2006......... Aa/AA 1,050,768
340,000 New Jersey Wastewater Treatment Trust Loan Rev., 7-1/4% due 5/15/2006......... Aa/AA 361,682
990,000 New Jersey Wastewater Treatment Trust Loan Rev., 7-3/8% due 5/15/2007......... Aaa/AAA 1,058,033
10,000 New Jersey Wastewater Treatment Trust Loan Rev., 7-3/8% due 5/15/2007......... Aaa/AAA 10,613
1,205,000 New Jersey Wastewater Treatment Trust Loan Rev., 7-1/4% due 5/15/2007......... Aa/AA 1,285,458
420,000 New Jersey Wastewater Treatment Trust Loan Rev., 7-1/4% due 5/15/2007......... Aa/AA 446,783
1,000,000 Paterson, NJ Water System GOs, 7-1/8% due 7/1/2015 ........................... Aaa/AAA 1,042,200
3,000,000 Port Authority of New York & New Jersey Consolidated Rev., 5% due 6/15/2030... A1/AA- 2,955,750
2,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5-1/2% due 7/1/2036....................................................... Baa1/A 1,892,240
3,500,000 Salem County, NJ Improvement Authority Rev. (Correctional Facility
& Courthouse Annex), 5.70% due 5/1/2017................................... Aaa/AAA 3,504,515
2,500,000 Salem County, NJ Pollution Control Financing Authority Waste Disposal Rev.
(E. I. duPont de Nemours & Co.), 6-1/8% due 7/15/2022*.................... Aa3/AA- 2,535,550
1,750,000 South Jersey Port Corporation, NJ Marine Terminal Rev., 6% due 1/1/2020....... NR/A+ 1,790,163
-----------
Total Municipal Bonds (Cost $64,394,830) -- 98.3%............................................... 66,323,898
Variable Rate Demand Notes (Cost $200,000) -- 0.3%.............................................. 200,000
Other Assets Less Liabilities -- 1.4%........................................................... 920,979
NET ASSETS -- 100.0%............................................................................ $67,444,877
-----------
-----------
<FN>
* Interest income earned from this security is subject to the federal alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
</FN>
</TABLE>

See notes to financial statements.

7
<PAGE>
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STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value:
Long-term holdings (cost $64,394,830)............................ $66,323,898
Short-term holdings (cost $200,000) ............................. 200,000 $ 66,523,898
-----------
Cash..................................................................... 53,969
Interest receivable...................................................... 1,266,362
Expenses prepaid to shareholder service agent ........................... 8,034
Receivable for Capital Stock sold ....................................... 960
Other.................................................................... 2,881
-----------
Total Assets............................................................. 67,856,104
-----------
LIABILITIES:
Payable for Capital Stock repurchased ................................... 166,899
Dividends payable ....................................................... 121,072
Accrued expenses, taxes, and other....................................... 123,256
-----------
Total Liabilities ....................................................... 411,227
-----------
Net Assets............................................................... $67,444,877
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($.001 par value; 100,000,000 shares authorized;
8,869,639 shares outstanding):
Class A ............................................................. $ 8,720
Class D ............................................................. 150
Additional paid-in capital............................................... 63,319,463
Undistributed net realized gain.......................................... 2,187,476
Net unrealized appreciation of investments............................... 1,929,068
-----------
Net Assets............................................................... $67,444,877
-----------
-----------
NET ASSET VALUE PER SHARE:
Class A ($66,293,360 / 8,719,795 shares)................................. $7.60
-----
-----
Class D ($1,151,517 / 149,844 shares) ................................... $7.68
-----
-----
</TABLE>
- ------------------
See notes to financial statements.

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ................................................................ $4,328,288

EXPENSES:
Management fee........................................................... $ 356,576
Distribution and service fees............................................ 172,817
Shareholder account services ............................................ 93,420
Auditing and legal fees.................................................. 37,122
Directors' fees and expenses............................................. 23,627
Custody and related services ............................................ 17,887
Registration............................................................. 11,742
Shareholder reports and communications................................... 10,339
Miscellaneous ........................................................... 10,643
---------
Total expenses........................................................... 734,173
----------
Net investment income ................................................... 3,594,115

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments......................................... 2,195,899
Net change in unrealized appreciation of investments .................... (2,021,726)
---------
Net gain on investments ................................................. 174,173
----------
Increase in Net Assets from Operations................................... $3,768,288
----------
----------
</TABLE>
- --------------------
See notes to financial statements.

<TABLE>
<CAPTION>
CAPITAL SHARE TRANSACTIONS:
SHARES
---------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995
-------- -------
<S> <C> <C> <C> <C>
Net proceeds from sales of shares:
Class A ........................................ 402,194 548,270 3,064,342 4,058,926
Class D......................................... 45,794 63,760 351,548 466,899
Shares issued in payment of dividends:
Class A ........................................ 265,124 305,485 2,018,408 2,251,536
Class D......................................... 4,538 4,801 34,928 35,924
Exchanged from associated Funds:
Class A ....................................... 103,792 512,716 787,281 3,727,736
Class D........................................ 7,301 1,613 56,910 12,373
Shares issued in payment of gain distributions:
Class A ....................................... 3,678 109,013 28,281 742,377
Class D........................................ 61 1,519 471 10,467
--------- ---------- ---------- ----------
Total.............................................. 832,482 1,547,177 6,342,169 11,306,238
--------- ---------- ---------- ----------
Cost of shares repurchased:
Class A ........................................ (1,609,005) (1,428,147) (12,267,718) (10,436,724)
Class D......................................... (52,478) (48,118) (400,063) (359,695)
Exchanged into associated Funds:
Class A ........................................ (136,194) (345,862) (1,033,975) (2,493,426)
Class D......................................... (10,420) (316) (80,905) (2,400)
--------- ---------- ---------- ----------
Total............................................... (1,808,097) (1,822,443) (13,782,661) (13,292,245)
--------- ---------- ---------- ----------
Decrease in net assets from capital share transactions (975,615) (275,266) (7,440,492) (1,986,007)
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Decrease in net assets.................................................................. (7,305,726) (177,285)
NET ASSETS:
Beginning of year....................................................................... 74,750,603 74,927,888
----------- -----------
End of year ............................................................................ $67,444,877 $74,750,603
----------- -----------
----------- -----------
</TABLE>
- -------------------
See notes to financial statements.
10

1. Seligman New Jersey Municipal Fund, Inc., formerly Seligman New Jersey
Tax-Exempt Fund, Inc. (the "Fund") offers two classes of shares.
All shares existing prior to February 1, 1994, were classified as
Class A shares. Class A shares are sold with an initial sales charge of up to
4.75% and a continuing service fee of up to 0.25% on an annual basis. Class A
shares purchased in an amount of $1,000,000 or more are sold without an
initial sales charge but are subject to a contingent deferred sales load
("CDSL") of 1% on redemptions within 18 months of purchase. Class D shares are
sold without an initial sales charge but are subject to a distribution fee of
up to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSL of
1% imposed on certain redemptions made within one year of purchase. The two
classes of shares represent interests in the same portfolio of investments,
have the same rights and are generally identical in all respects except that
each class bears its separate distribution and certain other class expenses,
and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required.

2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:

a. All tax-exempt securities and other short-term holdings maturing in
more than 60 days are valued based upon quotations provided by an
independent pricing service or, in their absence, at fair value
determined in accordance with procedures approved by the Board of
Directors. Short-term holdings maturing in 60 days or less are generally
valued at amortized cost.

b. There is no provision for federal income or excise tax. The Fund
has elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
Dividends are declared daily and paid monthly.

c. Investment transactions are recorded on trade dates. Identified
cost of investments sold is used for both financial statement and federal
income tax purposes. Interest income is recorded on the accrual basis.
The Fund amortizes original issue discounts and premiums paid on
purchases of portfolio securities. Discounts other than original issue
discounts are not amortized.

d. All income, expenses (other than class-specific expenses), and
realized and unrealized gains or losses are allocated daily to each class
of shares based upon the relative value of the shares of each class.
Class-specific expenses, which include distribution and service fees and
any other items that are specifically attributed to a particular class,
are charged directly to such class. For the year ended September 30,
1996, distribution and service fees were the only class-specific
expenses.

e. The treatment for financial statement purposes of distributions
made during the year from net investment income or net realized gains may
differ from their ultimate treatment for federal income tax purposes.
These differences are caused primarily by differences in the timing of
the recognition of certain components of income, expense, and capital
gain for federal income tax purposes. Where such differences are
permanent in nature, they are reclassified in the components of net
assets based on their ultimate characterization for federal income tax
purposes. Any such reclassifications will have no effect on net assets,
results of operations or net asset value per share of the Fund.

3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended September 30, 1996, amounted to $17,840,290
and $23,700,495, respectively.

At September 30, 1996, the cost of investments for
federal income tax purposes was substantially the same as the cost for
financial reporting purposes, and the tax basis gross unrealized appreciation
and depreciation of investments amounted to $2,602,496 and $673,428,
respectively.

4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs
of the Fund and provides the necessary personnel and facilities. Compensation
of all officers of the Fund, all directors 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,

11
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- -----------------------------------------------------------------------------

calculated daily and payable monthly, is equal to 0.50% per annum of the
Fund's average daily net assets.

Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $12,922 from the sale of Class A shares, after commissions of
$97,644 paid to dealers.

The Fund has an Administration, Shareholder Services and Distribution
Plan (the "Plan") with respect to Class A shares under which service
organizations can enter into agreements with the Distributor and receive a
continuing fee of up to 0.25% on an annual basis, payable quarterly, of the
average daily net assets of the Class A shares attributable to the particular
service organizations for providing personal services and/or the maintenance
of shareholder accounts. The Distributor charges such fees to the Fund
pursuant to the Plan. For the year ended September 30, 1996, fees paid
aggregated $160,567, or 0.23% per annum of the average daily net assets of
Class A shares.

The Fund has a Plan with respect to Class D shares under which service
organizations can enter into agreements with the Distributor and receive a
continuing fee for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on an annual basis of the average daily
net assets of the Class D shares for which the organizations are responsible,
and fees for providing other distribution assistance of up to 0.75% on an
annual basis of such average daily net assets. Such fees are paid monthly by
the Fund to the Distributor pursuant to the Plan. For the year ended
September 30, 1996, fees paid amounted to $12,250, or 1% per annum of the
average daily net assets of Class D shares.

The Distributor is entitled to retain any CDSL imposed on certain
redemptions of Class D shares occurring within one year of purchase. For the
year ended September 30, 1996, such charges amounted to $91.

Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of Fund shares, as well as
distribution and service fees pursuant to the Plan. For the year ended
September 30, 1996, Seligman Services, Inc. received commissions of $611 from
sales of shares of the Fund. Seligman Services, Inc. also received
distribution and service fees of $8,659, pursuant to the Plan.

Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost $93,420 for shareholder account services.

Certain officers and directors of the Fund are officers or directors
of the Manager, the Distributor, Seligman Services, Inc., and/or Seligman
Data Corp.

Fees of $8,000 were incurred by the Fund for the legal services of
Sullivan & Cromwell, a member of which firm is a director of the Fund.

The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the
deferred balances. The annual cost of such fees and interest is included in
directors' fees and expenses, and the accumulated balance thereof at
September 30, 1996, of $37,085 is included in other liabilities. Deferred
fees and related accrued interest are not deductible for federal income tax
purposes until such amounts are paid.

The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from each Class' beginning net asset value
to the ending net asset value so that they can understand what effect the
individual items have on their investment, assuming it was held throughout
the period. Generally, the per share amounts are derived by converting the
actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per share amounts, using average shares
outstanding.

The total return based on net asset value measures each Class'
performance assuming investors purchased Fund shares at net asset value as of
the beginning of the period, reinvested dividends and capital gains paid at
net asset value, and then sold their shares at the net asset value per share
on the last day of the period. The total return computations do not reflect
any sales charges investors may incur in purchasing or selling shares of the
Fund. The total returns for periods of less than one year are not annualized.

<TABLE>
<CAPTION>
Class A Class D
--------------------------------------------------- -------------------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, 2/1/94*
--------------------------------------------------- ----------------- to
1996 1995 1994 1993 1992 1996 1995 9/30/94
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of period.................. $7.59 $7.40 $8.24 $7.74 $7.49 $7.67 $7.48 $8.14
------ ------ ------ ------ ------ ------ ------ ------
Net investment income**.......... .39 .39 .41 .42 .44 .33 .33 .23
Net realized and unrealized
investment gain (loss)....... .01 .29 (.74) .61 .27 .01 .29 (.66)
------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations........ .40 .68 (.33) 1.03 .71 .34 .62 (.43)
Dividends paid or declared (.39) (.39) (.41) (.42) (.44) (.33) (.33) (.23)
Distributions from
net gain realized............ -- (.10) (.10) (.11) (.02) -- (.10) --
------ ------ ------ ------ ------ ------ ------ ------

Net increase (decrease) in
net asset value.............. .01 .19 (.84) .50 .25 .01 .19 (.66)
------ ------ ------ ------ ------ ------ ------ ------

Net asset value, end of period... $7.60 $7.59 $7.40 $8.24 $7.74 $7.68 $7.67 $7.48
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------

TOTAL RETURN BASED ON
NET ASSET VALUE: 5.37% 9.77% (4.25)% 14.02% 9.70% 4.56% 8.79% (5.47)%
RATIOS/SUPPLEMENTAL
DATA:**
Expenses to average net assets... 1.02% 1.01% .90% .86% .85% 1.79% 1.89% 1.75%
Net investment income to
average net assets........... 5.06% 5.29% 5.24% 5.37% 5.74% 4.29% 4.45% 4.37%
Portfolio turnover............... 25.65% 4.66% 12.13% 15.90% 27.13% 25.65% 4.66% 12.13%
Net assets, end of period
(000s omitted)............... $66,293 $73,561 $73,942 $82,447 $74,256 $1,152 $1,190 $986

<FN>
- ------------------------
See footnotes on page 14.
</FN>
</TABLE>
13
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Class A Class D
--------------------------------------------------- -------------------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, 2/1/94*
--------------------------------------------------- ----------------- to
1996 1995 1994 1993 1992 1996 1995 9/30/94
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data (Cont'd):
Without management fee waiver:**
Net investment income per share..... $.39 $.40 $.40 $.42 $.33 $.22
Expenses to average net assets...... 1.06% 1.07% 1.11% 1.10% 1.94% 1.87%
Net investment income to
average net assets.............. 5.24% 5.07% 5.12% 5.49% 4.40% 4.25%
<FN>
- --------------------
* Commencement of offering of Class D shares.
** The Manager, at its discretion, waived a portion of its fees for the
periods presented.
+ Annualized.
++ For the year ended September 30, 1994.
</FN>
</TABLE>

See notes to financial statements.
14

The Board of Directors and Shareholders,
Seligman New Jersey Municipal Fund, Inc.:

We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Seligman New Jersey Municipal
Fund, Inc. (formerly Seligman New Jersey Tax-Exempt Fund,Inc.) as of
September 30, 1996, the related statements of operations for the year then
ended and of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 1996 by correspondence with the Fund's
custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman New
Jersey Municipal Fund, Inc. as of September 30, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for
the respective stated periods, in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP
New York, New York
October 30, 1996

15
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
PROXY RESULTS
- -----------------------------------------------------------------------------

Seligman New Jersey Municipal Fund, Inc. Shareholders voted on the following
proposals at the Special Meeting of Shareholders held on September 30, 1996,
in New York, NY. Each Director was elected, and all other proposals were
approved. The description of each proposal and number of shares voted are as
follows:

ELECTION OF TRUSTEES:
FOR WITHHELD
--------- --------
Fred E. Brown 4,851,421 62,874
John R. Galvin 4,852,417 61,878
Alice S. Ilchman 4,847,823 66,472
Frank A. McPherson 4,850,998 63,297
John E. Merow 4,850,002 64,293
Betsy S. Michel 4,857,021 57,274
William C. Morris 4,856,924 57,371
James C. Pitney 4,857,021 57,274
James Q. Riordan 4,858,489 55,806
Ronald T. Schroeder 4,858,489 55,806
Robert L. Shafer 4,849,530 64,765
James N. Whitson 4,856,782 57,513
Brian T. Zino 4,858,489 55,806

RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS:

For Against Abstain Non-Vote
--------- ------- ------- --------
4,692,056 31,148 191,091 n/a

APPROVAL TO PERMIT ANY PORTION OF INVESTMENTS IN SECURITIES SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX:

For Against Abstain Non-Vote
--------- ------- ------- --------
4,068,257 268,628 394,885 182,525

Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated

John R. Galvin 2
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, USLIFE Corporation

Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Chairman, The Rockefeller Foundation

Frank A. McPherson 2
Chairman and CEO, Kerr-McGee Corporation
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center

John E. Merow
Partner, Sullivan & Cromwell, Law Firm
Director, Commonwealth Aluminum Corporation

Betsy S. Michel 2
Director or Trustee,
Various Organizations

William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation

James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
Director, Public Service Enterprise Group

James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service

Ronald T. Schroeder 1
Managing Director,
J. & W. Seligman & Co. Incorporated

Robert L. Shafer 3
Director or Trustee,
Various Organizations

James N. Whitson 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-Span
Director, Red Man Pipe and Supply Company

Brian T. Zino 1
President
Managing Director,
J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.

- -----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
17
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
EXECUTIVE OFFICERS
- -----------------------------------------------------------------------------

William C. Morris
Chairman

Brian T. Zino
President

Thomas G. Moles
Vice President

Lawrence P. Vogel
Vice President

Thomas G. Rose
Treasurer

Frank J. Nasta
Secretary

- -----------------------------------------------------------------------------
Manager
J. & W. Seligman & Co.
Incorporated
100 Park Avenue
New York, NY 10017

General Counsel
Sullivan & Cromwell

Independent Auditors
Deloitte & Touche LLP

General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017

Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017

Important Telephone Numbers
(800) 221-2450 Shareholder
Services

(800) 622-4597 24-Hour Automated
Telephone Access
Service

18
<PAGE>

SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF

[Logo]

J. & W. SELIGMAN & CO.
INCORPORATED

ESTABLISHED 1864

100 Park Avenue, New York, NY 10017

This report is intended only for the
information of shareholders or those who
have received the offering prospectus
covering shares of Capital Stock of
Seligman New Jersey Municipal Fund, Inc.,
which contains information about
the sales charges, management fee,
and other costs. Please read the
prospectus carefully before
investing or sending money.

TECNJ2 9/96