SELIGMAN
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SELECT
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MUNICIPAL
FUND, INC.
[PHOTO]
[LOGO]
FIRST QUARTER REPORT
MARCH 31, 1996
Seligman Select Municipal Fund, Inc.
Managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
INVESTMENT MANAGERS AND ADVISORS
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
Photo: Courtesy Michigan Travel Bureau
CESEL3a 3/96
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TO THE STOCKHOLDERS
We are pleased to provide you with Seligman Select Municipal Fund's First
Quarter Report.
During each of the past three months, your Fund paid Common Stockholders
federally tax-free monthly dividends of $0.07 per share, for a total of $0.21.
The annualized distribution rate based on current market price was 6.72% at
March 31, which is equivalent to a taxable yield of 11.13% based on the maximum
federal tax rate of 39.6%. Preferred Stockholders were paid dividends at annual
rates ranging from 3.43% to 4.05%. Earnings on your Fund's assets in excess of
the preferred dividend requirements constituted dividend income for Common
Stockholders. For performance information, please refer to the table on page 4.
The Federal Reserve Board began lowering the federal funds rate -- the
interest rate charged for interbank loans -- in July 1995 in response to a
slowdown in the rate of economic growth and a stable rate of inflation. This
less restrictive monetary policy encouraged the continuation of the decline in
long-term interest rates through 1995 and into 1996. During the middle of the
first quarter of 1996, however, the economy began to exhibit signs of strength.
Up to this point, the municipal bond market was rallying in anticipation of an
additional Fed easing of short-term interest rates. The realization that a
continued lowering of the federal funds rate was no longer imminent caused
long-term interest rates to spike sharply.
Overall, municipal market psychology has been improving since the end of
1995. Tax reform legislation appears to have faded as an issue in the
presidential race, thereby easing the concerns that overshadowed the municipal
market in 1995. This, together with the higher yields available, has stimulated
demand. While new issue supply has slowed recently due to market conditions,
total first-quarter volume was 35% higher compared to last year's first quarter.
In your Fund, your Manager views the current interest rate environment as
an opportunity to purchase long-term municipal bonds at levels not seen since
September 1995. While we believe that the increase in municipal yields is
temporary, the market may remain unsettled until participants are convinced that
the economy is not re-accelerating. Therefore, new purchases have been
concentrated in current coupon bonds, which are generally less volatile than
discount or zero coupon bonds during periods of uncertainty.
Going forward, we believe the most likely outcome for 1996 is continued
moderate economic growth. However, in the event that the economy exceeds its
non-inflationary potential, we are confident that the Fed will act swiftly to
prevent the economy from growing at an unsustainable rate.
Seligman Select Municipal Fund's Sixth Annual Meeting of Stockholders will
be held on May 16, 1996, at 9:00 am in the Twin Peaks Conference Room of the
Sheraton Palace Hotel, 2 New Montgomery Street, San Francisco, CA. We encourage
those Stockholders who are able to attend to do so.
For more information about your Fund, or your investment in its shares,
please write or call Stockholder Services using the toll-free telephone numbers
listed on page 5.
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
April 26, 1996
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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 -- 4.5% $10,000,000 Alaska Housing Finance Corp. (Collateralized
Home Mortgage Rev.), 7.65% due 6/1/2024 ......... Aaa/AAA $ 10,515,400
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 6,154,500
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 7,123,870
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- 9,874,800
7,500,000 District of Columbia G.O.'s, 7 1/2% due 6/1/2009 Aaa/AAA 8,335,050
Florida -- 8.0% 5,700,000 Brevard County Utility Rev., 7 3/8% due 3/1/2014 Aaa/AAA 6,164,550
975,000 Brevard County Utility Rev., 7 3/8% due 3/1/2014 Aaa/AAA 1,041,485
2,890,000 Florida Housing Finance Agency (Home Ownership
Rev.), 7.90% due 3/1/2022* ....................... Aaa/NR 3,036,147
3,000,000 Florida Municipal Power Agency Rev. (St. Lucie
Project), 5 1/2% due 10/1/2012 ................... Aaa/AAA 2,939,490
5,150,000 Orange County Housing Finance Authority
(Mortgage Rev.), 7.80% due 10/1/2022* ............ Aaa/NR 5,432,014
Illinois -- 2.3% 5,000,000 Chicago O'Hare International Airport International
Terminal Special Rev., 7 5/8% due 1/1/2010* ...... Aaa/AAA 5,444,150
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 5,447,050
Louisiana -- 5 1% 10,000,000 Louisiana Public Facilities Authority Hospital Rev.
(Southern Baptist Hospitals, Inc. Project), 8%
due 5/15/2012 .................................... NR/AAA 1,756,600
Massachusetts -- 3.4% 5,370,000 Massachusetts Housing Finance Agency (Multi-
Family Residential Development Rev.), 7.65%
due 2/1/2028* .................................... Aaa/AAA 5,665,243
2,125,000 Massachusetts State G.O.'s Consolidated Loan, 7 3/8%
due 12/1/2008 .................................;.. Aaa/AAA 2,336,268
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 6,314,160
Nebraska -- 1.6% 3,530,000 Nebraska Investment Finance Authority
(Single Family Mortgage Rev.), 8 1/8% due 8/15/2038* Aaa/AAA 3,688,426
Nevada -- 5.6% 7,000,000 Clark County Industrial Development Rev. (Nevada
Power Company Project), 7.80% due 6/1/2020* ...... Aaa/AAA 7,731,430
5,000,000 Washoe County Water Facility Rev. (Sierra Pacific
Power Company Project), 6.65% due 6/1/2017* ...... Aaa/AAA 5,331,650
New Hampshire -- 6.0% 5,895,000 New Hampshire Housing Finance Authority (Single
Family Residential Mortgage Rev.), 7.90% due
7/1/2022* ........................................ Aa/A+ 6,232,783
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 7,627,556
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March 31, 1996)
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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>
New Jersey-- 2 6% $2,000,000 New Jersey Educational Facilities Authority Rev.
(Princeton University), 6% due 7/1/2024 .......... Aaa/AAA $ 2,020,520
3,970,000 New Jersey Housing & Mortgage Finance Agency
(Home Buyer Rev.), 7.70% due 10/1/2029* .......... Aaa/AAA 4,122,607
New York -- 7.6% 10,000,000 New York State Energy Research & Development
Authority Electric Facilities Rev. (Consolidated
Edison Co. NY Inc. Project), 6.10% due 8/15/2020 . Aaa/AAA 10,169,900
7,500,000 New York State Thruway Authority Rev., 6% due Aaa/AAA5 7,516,875
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 6,137,400
Ohio -- 2.9% 6,465,000 Ohio Housing Finance Agency (Single
Family Mortgage Rev.), 7.65% due 3/1/2029* ....... NR/AAA 6,801,374
Pennsylvania -- 6.8% 2,500,000 Allegheny County Airport Rev. (Greater Pittsburgh
International Airport), 6.80% due 1/1/2010* ...... Aaa/AAA 2,684,525
3,000,000 Lehigh County Industrial Development Authority
Pollution Control Rev. (Pennsylvania Power &
Light Company Project), 6.40% due 11/1/2021 ...... Aaa/AAA 3,120,210
10,000,000 Philadelphia Airport Rev., 6.10% due
6/15/2025* ....................................... Aaa/AAA 10,006,900
South Dakota -- 3.8% 8,315,000 South Dakota Student Loan Corporation Student
Loan Rev., 7 5/8% due 8/1/2006* .................. Aaa/AAA 8,725,511
Tennessee -- 2.8% 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- 6,400,560
Texas -- 8.8% 10,000,000 Lower Colorado River Authority Rev., 6% due
1/1/2017 ......................................... Aaa/AAA 10,095,600
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 5,200,950
5,000,000 Matagorda County Navigation District No. 1
Co. Project), 7 7/8% due 12/1/2016* .............. Aaa/AAA 5,214,950
Washington -- 4.0% 2,000,000 Grant County Public Utility District No. 002 (Priest
Rapids Hydroelectric Development Rev.) 7.70%
due 1/1/2018* .................................... A1/A+ 2,148,080
6,000,000 Snohomish County Public Utility District Rev., 6%
due 1/1/2018 ..................................... Aaa/AAA 5,949,000
1,000,000 Spokane Regional Solid Waste Management System
Rev., 7 3/4% due 1/1/2011* ....................... Aaa/AAA 1,086,500
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TOTAL MUNICIPAL BONDS (COST $213,511,140) -- 96.9% ..................................................... 225,594,084
SHORT-TERM HOLDINGS (COST $2,500,000) -- 1.1% .......................................................... 2,500,000
OTHER ASSETS LESS LIABILITIES -- 2.0% .................................................................. 4,567,391
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NET INVESTMENT ASSETS-- 100.0% ......................................................................... $232,661,475
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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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INVESTMENT RESULTS
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TOTAL RETURNS
For Periods Ended March 31, 1996
Average Annual
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Three One Five Since
Months Year Years Inception
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Net Asset Value (1.70)% 7.77% 8.96% 9.13%
Market Price 1.72 11.29 9.32 8.33
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PRICE PER SHARE
March 31, 1996 December 31, 1995
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Net Asset Value $12.09 $12.51
Market Price $12.50 $12.50
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These rates of return reflect changes in price, net asset value or
market price, as applicable, and assume that all distributions within the
period are reinvested 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.
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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
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