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To the Stockholders
We are pleased to update you on Seligman Select Municipal Fund with this
Third Quarter Report. During the three months ended September 30, 1995, your
Fund paid Common Stockholders federally tax-free monthly dividends of $0.07 per
share on July 26, August 23, and September 25, a total of $0.21 per share. The
annualized distribution rate based on current net asset value was 6.82% at
September 30, which is equivalent to a taxable yield of 11.29% based on the
maximum federal tax rate of 39.6%. Preferred Stockholders were paid dividends
atannual rates ranging from 3.769% to 4.05%. Earnings on your Fund|s assets in
excess of the preferred dividend requirements constituted dividend income for
Common Stockholders.
At September 30, your Fund's net asset value was $12.31 per share, compared
to $11.54 at December 31, 1994, and your Fund's market price was $12.00 per
share, compared to $10.50 at December 31, 1994. Total return based on net asset
value for the nine-month period was 12.41%, and based on market price was
20.43%, for the same period. (Total return reflects change in price, net asset
or market value, as applicable, and assumes that any distributions paid within
the period are reinvested in additional shares.)
Encouraged by second quarter economic reports that suggested the U.S.
economy had begun to moderate, the Federal Reserve Board voted on July 6 to
lower the federal funds rate. Initially, the bond market reacted positively to
this news. However, it wasn't long before the next round of economic reports
proved surprisingly robust, prompting speculation that the economy was not as
weak as believed. Consequently, long-term yields reversed their decline and
spiked sharply. However, the municipal market began to improve in late August
as signs of economic strength abated. By September 30, long-term yields were
essentially unchanged from the previous quarter end.
The municipal market has been underperforming the U.S. Treasury market
since the second quarter due mainly to fears about tax reform legislation.
Investors are concerned about the impact the legislation may have on municipal
securities and they have been demanding higher yields as compensation.
Currently, however, long-term municipal bonds, compared to U.S. Treasuries, are
the most attractive they have been all year.
Seligman Select Municipal Fund continues to offer competitive yields. The
Fund remains invested in high-quality, long-term municipal bonds. Long-term
municipals offer significantly higher yields than short-term municipals. New
purchases have been concentrated in current coupon bonds, which allow the Fund
to maintain its high yield but which still have the potential to appreciate in
price as yields decline.
By order of the Board of Directors,
/s/ William C. Morris
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William C. Morris
Chairman
/s/ Thomas G. Moles
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Thomas G. Moles
President
October 27, 1995
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PORTFOLIO OF INVESTMENTS (unaudited)
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FACE RATINGS
STATE AMOUNT MUNICIPAL BONDS MOODY'S/S&P MARKET VALUE
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<S> <C> <C> <C> <C>
Alaska -- 4.6% $10,000,000 Alaska Housing Finance Corp. (Collateralized
Home Mortgage Rev.), 7.65% due 6/1/2024 .............. Aaa/AAA $ 10,731,500
Arizona -- 0.9% 2,000,000 Phoenix Street and Highway User Rev., 6 1/2% due
7/1/2009 ............................................. NR/AA 2,075,400
California -- 2.6% 6,000,000 San Joaquin Hills Transportation Corridor Agency
Senior Lien Toll Road Rev. (Orange County),
6 3/4% due 1/1/2032 .................................. NR/NR 6,081,480
Delaware -- 3.1% 6,500,000 Delaware Economic Development Authority
Exempt Facilities Rev. (Delmarva Power and
Light Co. Project), 7.60% due 3/1/2020* .............. Aaa/AAA 7,253,415
District of 9,000,000 Metropolitan Washington, D.C. Airports Authority
Columbia -- 7.8% Airport System Rev., 7.60% due 10/1/2014* ........... A1/AA- 9,883,800
7,500,000 District of Columbia G.O.'s, 7 3/8% due 6/1/2009 Aaa/AAA 8,421,225
Florida -- 8.1% 5,700,000 Brevard County 7 3/8% due 3/1/2014 Aaa/AAA 6,223,716
1,105,000 Brevard County 7 3/8% due 3/1/2014 Aaa/AAA 1,201,433
3,015,000 Florida Housing Finance Agency (Home Ownership
Rev.), 7.90% due 3/1/2022* ........................... Aaa/NR 3,217,035
3,000,000 Florida Municipal Power Agency Rev. (St. Lucie
Project), 5 1/2% due 10/1/2012 ....................... Aaa/AAA 2,916,090
5,150,000 Orange County Housing Finance Authority
(Mortgage Rev.), 7.80% due 10/1/2022* ................ Aaa/NR 5,483,463
Illinois -- 2.3% 5,000,000 Chicago O'Hare International Airport International
Terminal Special Rev., 7 5/8% due 1/1/2010* .......... Aaa/AAA 5,519,100
Indiana -- 2.3% 5,000,000 Indiana Employment Development Commission
Environmental Rev. (Public Service Company of
Indiana Inc.), 7 1/2% due 3/15/2015* ................ Aaa/AAA 5,494,200
Louisiana -- 5.1% 10,000,000 Louisiana Public Facilities Authority Hospital Rev
(Southern Baptist Hospitals, Inc. Project), 8%
due 5/15/2012 ........................................ NR/AAA 12,037,300
Massachusetts -- 3.4% 5,370,000 Massachusetts Housing Finance Agency (Multi-
Family Residential Development Rev.), 7.65%
due 2/1/2028* ........................................ Aaa/AAA 5,617,718
2,125,000 Massachusetts State G.O.'s Consolidated Loan, 7 3/8%
due 2/1/2008* ........................................ Aaa/AAA 2,359,132
Michigan -- 2.7% 6,000,000 Royal Oak, MI Hospital Finance Authority Rev.
(William Beaumont Hospital), 6 3/4% due 1/1/2020 .. Aa/AA 6,246,480
Nebraska -- 1.7% 3,835,000 Nebraska Investment Finance Authority (Single
Family Mortgage Rev.), 8 1/8% due 8/15/2038* ........ Aaa/AAA 4,060,575
Nevada -- 5.6% 7,000,000 Clark County Industrial Development Rev.(Nevada
Power Company Project), 7.80% due 6/1/2020* .......... Aaa/AAA 7,801,570
5,000,000 Washoe County Water Facility Rev. (Sierra Pacific
Power Company Project), 6.65% due 6/1/2017* .......... Aaa/AAA 5,306,250
New Hampshire -- 6.1% 6,300,000 New Hampshire Housing Finance Authority (Single
Family Residential Mortgage Rev.), 7.90% due
7/1/2022* ............................................ Aa/A+ 6,683,481
6,950,000 New Hampshire State Industrial Development
Authority Pollution Control Rev. (The
Connecticut Light and Power Company
Project), 7 3/8% due 12/1/2019* ...................... Aaa/AAA 7,605,385
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September 30, 1995
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FACE RATINGS
STATE AMOUNT MUNICIPAL BONDS MOODY'S/S&P MARKET VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Jersey -- 1.8% $ 4,060,000 New Jersey Housing & Mortgage Finance Agency
(Home Buyer Rev.), 7.70% due 10/1/2029* ............... Aaa/AAA $ 4,276,073
New York -- 7.9% 10,000,000 New York State Energy Research & Development
Authority Electric Facilities Rev. (Consolidated
Edison Co. NY Inc. Project), 7 1/2% due 1/1/2026* .... Aaa/AAA 10,987,300
7,500,000 New York State Thruway Authority Rev., 6% due
1/1/2025 ............................................. Aaa/AAA 7,511,325
New York and 6,000,000 Port Authority of New York and New Jersey, 8%
New Jersey -- 2.6% due 12/1/2023* ....................................... Aaa/AAA 6,210,960
Ohio -- 2.9% 6,570,000 Ohio Housing Finance Agency (Single Family
Mortgage Rev.), 7.65% due 3/1/2029* ................ NR/AAA 6,847,714
Pennsylvania -- 6.7% 2,500,000 Allegheny County Airport Rev. (Greater Pittsburgh
International Airport), 6.80% due 1/1/2010* .......... Aaa/AAA 2,713,700
3,000,000 Lehigh County Industrial Development Authority
Pollution Control Rev. (Pennsylvania Power &
Light Company Project), 6.40% due 11/1/2021 .......... Aaa/AAA 3,078,690
10,000,000 Philadelphia, PA Airport Rev., 6.10% due
6/15/2025* ........................................... Aaa/AAA 9,917,500
South Dakota -- 3.9% 8,315,000 South Dakota Student Loan Corporation Student
Loan Rev., 7 5/8% due 8/1/2006* ...................... Aaa/AAA 9,125,796
Tennessee -- 2.6% 6,000,000 Humphreys County Industrial Development Board
Solid Waste Disposal Rev. (E.I. du Pont de
Nemours & Co. Project), 6.70% due 5/1/2024* .......... Aa3/AA- 6,225,180
Texas -- 8.7% 10,000,000 Lower Colorado River Authority Rev., 6% due
1/1/2017 ............................................. Aaa/AAA 9,986,900
5,000,000 Matagorda County Navigation District No. 1
Pollution Control Rev. (Houston Lighting and
Power Company Project), 7 7/8% due 11/1/2016* ......... Aaa/AAA 5,287,750
5,000,000 Matagorda County Navigation District No. 1
Pollution Control Rev. (Central Power and Light
Co. Project), 7 7/8% due 12/1/2016* ................... Aaa/AAA 5,298,650
Washington -- 3.9% 2,000,000 Grant County Public Utility District No. 002 (Priest
Rapids Hydroelectric Development Rev.), 7.70%
due 1/1/2018* ......................................... A1/A+ 2,200,400
6,000,000 Snohomish County Public Utility District Rev., 6%
due 1/1/2018 .......................................... Aaa/AAA 5,919,600
1,000,000 Spokane Regional Solid Waste Management System
Rev., 7 3/4% due 1/1/2011* ............................ Aaa/AAA 1,103,990
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TOTAL MUNICIPAL BONDS (COST $214,552,163) -- 97.3% .................................................... 228,911,276
SHORT-TERM HOLDINGS (COST $1,600,000) -- 0.7% ......................................................... 1,600,000
OTHER ASSETS LESS LIABILITIES -- 2.0% ................................................................. 4,717,980
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NET INVESTMENT ASSETS -- 100.0% ....................................................................... $235,229,256
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* Interest income earned from this security is subject to the federal
alternative minimum tax. Note: Investments in 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.
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MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
STOCKHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 874-1092 STOCKHOLDER SERVICES
(800) 622-4597 24-HOUR AUTOMATED
TELEPHONE ACCESS SERVICE
Seligman Select Municipal Fund, Inc.
Managed by
J. & W. Seligman & Co.
incorporated
Investment Managers and Advisors
established 1864
100 Park Avenue, New York, NY 10017
Photo: Courtesy Michigan Travel Bureau
CESEL3c 9/95
SELIGMAN
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SELECT
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MUNICIPAL
FUND, INC.
[photo]
[logo]
THIRD QUARTER REPORT
SEPTEMBER 30, 1995
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