Seligman
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Quality
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Municipal
Fund, Inc.
[Photo]
[JWS Logo]
First Quarter Report
January 31, 1995
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To the Stockholders
We are pleased to present this first quarter report for Seligman Quality
Municipal Fund, reflecting the three-month period ending January 31, 1995.
For the three months, federally tax-free dividends of $0.2346 per share
were paid to Common Stock-holders; $0.0782 per share was paid on November 23,
December 21, and January 30. These payments translate to an annualized
distribution rate of 7.43% based on the market price of $12.625 on January 31.
This rate is equal to a taxable yield of 12.30%, based on the maximum federal
income tax rate of 39.6%. During the period, Preferred Stockholders were paid
annualized dividends ranging from 3.33% to 6.41%.
In addition, a long-term capital gain distribution of $0.067 per share was
paid on December 21 to Common Stockholders of record December 15.
On January 31, your Fund's net asset value was $14.18 per share, compared
to $13.76 per share on October 31. Your Fund's market price was $12.625 per
share on January 31, compared to $11.50 per share on October 31. For the three
months ended January 31, total return based on net asset value was 5.56%, and
was 12.46% based on market price. The higher total return of the market price
reflects the narrowing of the discount of the market price to the net asset
value, from 16.42% on November 1 to 10.97% at January 31. (Total return reflects
change in price, net asset value or market as applicable, and assumes any
distributions paid within the period are reinvested in additional shares.)
In Seligman Quality Fund's first quarter, yields on long-term municipal
bonds, as measured by the Bond Buyer 20-Bond General Obligation Index, continued
to rise, and hit a high for 1994 of 7.06% on November 17. These levels, the
highest available since 1991, began to attract both institutional and retail
investors. The increase in demand for municipal bonds led to an improvement in
the municipal market: Yields began to decline steadily, ending the year at
6.71%.
Going into 1995, the rally of the municipal market intensified as a direct
result of the increase in demand and the dramatic decline in new-issue volume.
Although issuance volume typically picks up after January, this year the volume
is not expected to rebound. Therefore, the lack of supply going forward in 1995
is very positive for the performance of the municipal market.
On February 1, 1995, the Federal Reserve Board (FRB) voted once again to
tighten credit, raising the federal funds rate and the discount rate by fifty
basis points each. While inflation indicators have not registered any meaningful
increase in the rate of inflation, the recent economic statistics have yet to
confirm that a slowdown in the economy's growth is imminent. Consequently, the
risk of an acceleration of inflation remains. However, the FRB has demonstrated
its commitment to staying "ahead of the curve" where inflation is concerned.
This has had a positive effect on investor psychology by reinforcing
expectations that the FRB ultimately will achieve its goal of stable inflation
and moderate economic growth.
Your portfolio continues to consist mostly of long-term securities that
offer higher yields than those of short- or intermediate-term securities. The
average weighted maturity of your Fund's bonds is 22.8 years. Furthermore, your
portfolio is concentrated primarily in higher-coupon, premium bonds in order to
lessen the impact of rising interest rates on the portfolio. The average coupon
rate of your Fund's bonds is 7.35%. Premium municipal bonds are generally less
sensitive to changes in interest rates than current and discount coupon
municipal bonds. In addition, a portion of your portfolio remains invested in
prerefunded bonds because they offer higher current yields, react with less
volatility to changes in interest rates, and provide increased liquidity.
For additional information about your Fund, or your investment in its
shares, please write, or call using the toll-free telephone numbers listed on
page 3.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Thomas G. Moles
Thomas G. Moles
President
February 24, 1995
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Portfolio of Investments (unaudited)
<CAPTION>
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Percent of Net
Investment Face Ratings
State Assets Amount Municipal Bonds Moody's/S&P Market Value
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<S> <C> <C> <C> <C> <C>
Alaska 3.6 $1,425,000 Alaska Housing Finance Corporation (Collateralized
Mortgage Obligation), 7.05% due 6/1/2025 ............... Aaa/AAA $ 1,441,772
2,280,000 Alaska Housing Finance Corporation (Collateralized
Veterans' Mortgage Program), 61/2% due 6/1/2034 ........ Aaa/AAA 2,164,039
California 7.5 2,750,000 San Joaquin Hills Transportation Corridor Agency Rev.
(Senior Lien Toll Road), 63/4% due 1/1/2032 ............ NR/NR 2,467,905
5,000,000 University of California Regents Rev., Multiple
Purpose Project, 63/8% due 9/1/2024 .................... Aaa/AAA 5,008,450
Florida 3.3 3,000,000 Miami Health Facilities Authority Rev. (Mercy
Hospital Project), 63/4% due 8/1/2020 .................. Aaa/AAA 3,244,740
Georgia 2.9 3,000,000 Atlanta Airport Facilities Rev., 61/4% due 1/1/2021* ..... Aaa/AAA 2,891,850
Hawaii 1.8 1,750,000 Hawaii State Airports System Rev., 7% due 7/1/2020* ...... Aaa/AAA 1,799,035
Illinois 6.4 3,000,000 Cook County G.O.'s, 63/4% due 11/1/2018 .................. Aaa/AAA 3,237,960
3,000,000 Regional Transportation Authority G.O.'s,
6.70% due 11/1/2011 .................................... Aaa/AAA 3,087,510
Kansas 3.1 3,000,000 Burlington Pollution Control Rev. (Kansas Gas and
Electric Company Project), 7% due 6/1/2031 ............. Aaa/AAA 3,104,370
Louisiana 3.1 1,000,000 Louisiana Public Facilities Authority Hospital Rev.
(Southern Baptist Hospitals Inc. Project),
8% due 5/15/2012 ....................................... NR/AAA 1,137,330
2,000,000 Louisiana Public Facilities Authority Hospital Rev.
(Our Lady of Lourdes Regional Medical Center
Project), 6.45% due 2/1/2022 ........................... Aaa/AAA 1,987,340
Massachusetts 8.9 1,750,000 Massachusetts Health & Educational Facilities
Authority Rev. (New England Deaconess Hospital),
7.20% due 4/1/2022 ..................................... A/A 1,763,668
4,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (New England Medical Center),
6 5/8% due 7/1/2025 .................................... Aaa/AAA 4,040,040
3,000,000 Massachusetts Housing Finance Agency Rev.
(Residential Development), 6 7/8% due 11/15/2021 ....... Aaa/AAA 3,029,250
Montana 5.5 2,220,000 Forsyth Pollution Control Rev. (Puget Sound
Power & Light Co.), 7 1/4% due 8/1/2021* ............... Aaa/AAA 2,325,938
3,000,000 Montana State Board of Investments Payroll Tax
Rev. (Workers' Compensation Program),
6 7/8% due 6/1/2020 .................................... Aaa/AAA 3,084,720
New Hampshire 4.3 5,000,000 New Hampshire Higher Educational &Health
Facilities Authority Rev. (Dartmouth College),
5 3/8% due 6/1/2023 .................................... Aaa/AA+ 4,235,700
New York 11.6 5,000,000 Metropolitan Transportation Authority Rev.
(Commuter Facilities), 6 1/4% due 7/1/2017 ............. Aaa/AAA 4,946,150
3,500,000 New York State Dormitory Authority Rev. (Leake
and Watts Services Inc.), 6% due 7/1/2023 .............. Aaa/AAA 3,335,045
</TABLE>
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<TABLE>
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January 31, 1995
<CAPTION>
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Percent of Net
Investment Face Ratings
State Assets Amount Municipal Bonds Moody's/S&P Market Value
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<S> <C> <C> <C> <C> <C>
$3,000,000 New York State Local Government Assistance
Corporation, 7% due 4/1/2021 ........................... Aaa/AAA $ 3,283,590
Pennsylvania 4.6 2,500,000 Allegheny County Airport Rev. (Greater Pittsburgh
International Airport), 6.80% due 1/1/2010* ............ Aaa/AAA 2,575,500
2,000,000 Allegheny County Airport Rev. (Greater Pittsburgh
International Airport), 65/8% due 1/1/2022* ............ Aaa/AAA 2,009,840
Rhode Island 3.2 3,000,000 Convention Center Authority of Rhode Island Rev.,
6.70% due 5/15/2020 .................................... Aaa/AAA 3,226,560
South Carolina 8.9 4,000,000 South Carolina Public Service Authority (Santee
Cooper), 61/2% due 7/1/2024 ............................ Aaa/AAA 4,276,480
4,500,000 South Carolina State Ports Authority Rev., 63/4% due
7/1/2021* .............................................. Aaa/AAA 4,551,345
Texas 5.0 3,000,000 Houston Water and Sewer System Rev., 61/2% due
12/1/2021 .............................................. Aaa/AAA 3,015,600
1,930,000 Texas State Veterans' Housing Assistance G.O.'s,
6.80% due 12/1/2023* ................................... Aa/AA 1,920,061
Virginia 3.6 3,500,000 Virginia Housing Development Authority (Multi-
family Housing), 7% due 11/1/2012 ...................... Aa/AA+ 3,597,720
Washington 5.1 860,000 Douglas County Public Utilities District #1
Hydroelectric Rev., 7.80% due 9/1/2018* ................ A/A+ 929,488
1,000,000 Municipality of Metropolitan Seattle Sewer Rev.,
6.60% due 1/1/2032 ..................................... Aaa/AAA 1,001,130
3,000,000 Washington Public Power Supply System Rev.
Nuclear Project #1, 7% due 7/1/2011 .................... Aaa/AAA 3,117,240
Wisconsin 4.1 4,000,000 Wisconsin Housing & Economic Development
Authority Housing Rev., 6.85% due 11/1/2012 ............ Aaa/AAA 4,095,960
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Total Municipal Bonds (Cost $93,944,163)-- 96.5%................................................................... 95,933,326
Short-Term Holdings (Cost $2,200,000)-- 2.2%....................................................................... 2,200,000
Other Assets Less Liabilities-- 1.3%............................................................................... 1,307,695
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Net Investment Assets-- 100.0%..................................................................................... $99,441,021
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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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Important Telephone Numbers
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(800) 874-1092 Stockholder Services o (800) 622-4597 24-Hour Automated Telephone Access Service
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Seligman Quality Municipal Fund, Inc.
Managed by
[JWS Logo]
J. & W. SELIGMAN & CO.
INCORPORATED
Investment Managers and Advisors
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
CESQF3a 1/95
