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SEL
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LISTED
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NYSE
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Xxxxxxxx
Select Municipal Fund March 31, 2006
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FUND OBJECTIVE AND STRATEGY
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Xxxxxxxx Select Municipal Fund seeks to provide a high level of current income
exempt from federal income taxes, consistent with preservation of capital and
with consideration given to opportunities for capital gain. The Fund invests
only in investment-grade tax-exempt municipal bonds.
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PORTFOLIO MANAGEMENT
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Portfolio Managers:
Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxxx
Investment Team:
Xxxxxxxx Municipal Team
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TOP FIVE HOLDINGS(1)
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Jefferson County Sewer Rev. (Capital
Improvement Warrants) ................................................... 4.6%
California Pollution Control
Financing Authority Sewage and
Solid Waste Disposal Facilities Rev.
(Anheuser-Xxxxx Project) ................................................ 4.1
New York City, NY Municipal Water Finance
Authority Water & Sewer System Rev. ..................................... 3.7
New Jersey Economic Development
Authority Water Facilities Rev.
(American Water Co., Inc.) .............................................. 3.7
Matagorda County Navigation District
No. 1 Pollution Control Rev. (Central
Power and Light Co. Project) ............................................ 3.4
Total ................................................................... 19.5
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FUND SNAPSHOT
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Inception 1991
Net Investment Assets $226.5 million
NYSE Symbol SEL
NAV Symbol XSELX
Average Weighted Maturity 18.6 years
AMT Exposure(2) 29.7%
Leverage-Adjusted Duration(3) 6.6 years
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QUALITY COMPOSITION(1)
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[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
AAA 89%
AA 1%
A 8%
BBB 2%
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BOND CALLS(1)
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[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
8.6% 8.4% 10.3% 14.8% 9.7%
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2006 2007 2008 2009 2010
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PRICE-PER-SHARE
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Current 52 Week High 52 Week Low
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Market Price $10.00 $10.53 $ 9.70
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Corresponding Net Asset Value $11.41 $11.87 $11.42
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Corresponding Premium/(Discount) (12.36)% (11.29)% (15.06)%
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AVERAGE ANNUAL TOTAL RETURNS
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1 Year 5 Years 10 Years
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Net Asset Value 3.88% 5.69% 6.30%
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Market Value 3.93 5.80 4.56
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IMPORTANT PERFORMANCE INFORMATION
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Performance data quoted herein represents past performance. Past performance
does not guarantee or indicate future results. Investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be higher or lower than the performance data quoted. Total
returns of the Fund as of the most recent month-end will be made available at
xxx.xxxxxxxx.xxx by the seventh business day following that month-end.
Performance data quoted does not reflect the deduction of taxes that investors
may pay on Fund distributions or on the sale of fund shares. Rates reflect
changes in the market price or net asset value, and assume reinvestment of all
distributions.
(1) Top holdings exclude short-term holdings, and are shown as a percentage of
net investment assets. Credit ratings are primarily those issued by
Xxxxx'x Investors Service, Inc. ("Moody's"). Where Moody's ratings have
not been assigned, ratings from Standard & Poor's Corporation ("S&P") were
used. Pre-refunded and escrowed-to-maturity securities that have been
rerated as AAA by S&P but have not been rerated by Moody's have been
reported as AAA. The Fund is actively managed and holdings are subject to
change. Quality composition excludes short-term holdings and is shown as a
percentage of total long-term securities. Bond Calls shows the percentage
of bonds in the Fund's portfolio that are callable during that year. There
can be no assurance that the securities listed above have remained or will
remain in the Fund's portfolio. Holdings should not be construed as a
recommendation to buy or sell any security, an indication that any
security is suitable for a particular investor or that any of the
securities listed were or will be profitable. Portfolio holdings
information is available at xxx.xxxxxxxx.xxx.
(2) Long-term securities as of March 31, 2006 with investment income subject
to the federal alternative minimum tax. A portion of income may be subject
to state taxes. Capital gain distributions, if any, are subject to
federal, state, and local taxes.
(3) Bond duration is the average amount of time that it takes to receive the
interest and principal of a bond or portfolio of bonds. The duration
formula is based on a formula that calculates the weighted average of the
cash flows (interest and principal payments) of the bond, discounted to
the present time. Leverage-adjusted duration takes into account the
leveraging process for a Fund and therefore is generally longer than the
duration of the actual portfolio of individual bonds that make up the
Fund. A Fund is considered "leveraged" when it borrows money or otherwise
issues senior securities to make additional investments. The Fund's assets
were leveraged by issuing shares of Preferred Stock shortly after the
issuance of Common Stock. The proceeds of the Preferred offering were used
to purchase additional municipal securities for the portfolio.
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NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
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SEL
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LISTED
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NYSE
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Xxxxxxxx
Select Municipal Fund March 31, 2006
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FOR MORE INFORMATION
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A prospectus containing information about the Fund (including its investment
objectives, risks, charges, expenses, and other information about the Fund) may
be obtained by calling 000-000-0000. The prospectus should be read carefully
before investing in the Fund. The Fund is a closed-end investment company and
its common stock is listed on the New York Stock Exchange.
For more information, please visit our website at xxx.xxxxxxxx.xxx
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PER COMMON SHARE DATA
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Quarter Ending 3/31/06
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Gross Income $ 0.204
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Expenses $ 0.038
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Common Dividends $ 0.130
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Preferred Dividends $ 0.049
Month Ending 3/31/06
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Current Monthly Dividends $0.0400
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SEC Yield 3.22%
Current SEC yield, representing the annualized yield (after dividends on
Preferred Stock) for the 30-day period ended March 31, 2006, has been computed
in accordance with SEC regulations, and will vary.
Of the monthly distributions paid to common shareholders in 2006, 2.8% was in
excess of the Fund's net investment income (i.e., a return of capital), but
under applicable federal law, will be taxable as ordinary income.
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ASSETS
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Common $151,480,813
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Preferred $ 75,000,000
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Net Investment $226,480,813
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Leverage % of Common Assets 50%
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Leverage % of Net Investment Assets 33%
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A fund is considered "leveraged" when it borrows money or otherwise issues
senior securities to make additional investments. Closed-end funds may issue
senior securities (preferred stock or debentures) or borrow money to "leverage"
their investment positions. The Fund's assets were leveraged by issuing shares
of Preferred Stock shortly after the issuance of Common Stock. The proceeds of
the Preferred offering were used to purchase additional municipal securities for
the portfolios.
The use of leverage increases risks for holders of Common Stock, including
increasing the volatility of both the net asset value and market price of the
Common Stock. Fluctuations in the dividend rates on the Preferred Stock, or
interest paid on borrowings, will affect the rate of return to holders of Common
Stock. There can be no assurance that the Fund will be able to realize a higher
rate of return on its investment portfolio than the then-current dividend rate
on the Preferred Stock or interest on borrowed money.
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A WORD ABOUT RISK
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The net asset value of shares may not always correspond to the market price of
such shares. Shares of many closed-end funds frequently trade at a discount from
their net asset value. The Fund is subject to stock market risk, which is the
risk that stock prices overall will decline over short or long periods,
adversely affecting the value of an investment in the Fund.
Fixed-income securities owned by the Fund are subject to interest-rate risk,
credit risk, prepayment risk, and market risk. US government bonds that are
guaranteed by the US government, if held to maturity, offer both a fixed rate of
return and fixed principal value. An investment in the Fund is not insured or
guaranteed by the US government.
To the extent that the Fund concentrates its investments 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.
There is no guarantee that the Fund's investment goals/objectives will be met,
and you could lose money.
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NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
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CESEL 3/06 XXXXXXXX ADVISORS, INC.
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