SELIGMAN
----------------
QUALITY
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MUNICIPAL
FUND, INC.
[Photo]
[Logo]
MID-YEAR REPORT
APRIL 30, 1996
SELIGMAN QUALITY MUNICIPAL FUND, INC.
MANAGED BY
[Logo]
J. & W. SELIGMAN & CO.
INCORPORATED
INVESTMENT MANAGERS AND ADVISORS
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
CESQF3b 4/96
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TO THE STOCKHOLDERS
We are pleased to update you on Seligman Quality Municipal Fund with this
Mid-Year Report.
INVESTMENT RESULTS
Since we last reported to you, your Fund has continued to pay Common
Stockholders monthly dividends of $0.0782 per share, for a quarterly total of
$0.2346. The annualized distribution rate based on current market price was
7.08% at April 30. Preferred Stockholders were paid dividends at annual rates
ranging from 3.30% to 4.10%. Earnings on your Fund's assets in excess of the
preferred dividend requirements constitute dividend income for Common
Stockholders. As was mentioned in previous reports, although the majority of the
monthly dividends will be exempt from federal income taxes, a small portion of
these dividends may be taxable as ordinary income. The amount, if any, of
federally taxable dividends will be determined after the end of your Fund's
current fiscal year--October 31, 1996. For performance information, please refer
to the table on page 2.
ECONOMIC COMMENT
Seligman Quality Municipal Fund benefited from the enduring municipal bond
market rally that began in November of 1995 and continued into February of this
year. The decline in long-term yields was due to a moderating economy and a
stable rate of inflation. Municipal market psychology improved as well; concerns
regarding tax reform, which overshadowed the municipal market for much of 1995,
gave way to the view that the enactment of sweeping tax law changes was
increasingly unlikely. By mid-February, however, the economy began to exhibit
signs of unexpected strength, fueling fears of an increase in the rate of
inflation. Yields on long-term municipals began to rise, abruptly ending the
bond market rally. Seligman Quality Municipal Fund experienced a negative return
in its second quarter as a result of the sharp increase in long-term interest
rates which affected the value of your Fund's long-term holdings.
For the past six months, your Fund's Manager has reduced the portfolio's
short-term positions and replaced them with long-term, current coupon bonds. In
spite of the recent volatility, we view the current interest rate environment as
an opportunity to purchase long-term municipal bonds at prices not seen since
the third quarter of 1995. Additionally, we remain committed to our objective of
seeking a high level of current tax-exempt income.
The bond market may remain unsettled in the near term until a clearer
picture of the economy emerges. Tax reform may also come into focus once again
as the election year progresses. Despite evidence that the economy rebounded
during your Fund's second quarter, it is anticipated that the level of growth
will slow during the months to come. However, in the event that the economy
expands at an unacceptable rate, we anticipate that the Federal Reserve Board
will act swiftly to prevent an acceleration in inflation.
Seligman Quality Municipal Fund's Annual Meeting of Stockholders was held
on May 16 in San Francisco, California. All the proposals outlined in the proxy,
which was mailed to Stockholders in early April, were passed.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Thomas G. Moles
Thomas G. Moles
President
May 31, 1996
1
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INVESTMENT RESULTS
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TOTAL RETURNS
FOR PERIODS ENDED APRIL 30, 1996
AVERAGE ANNUAL
-----------------------
THREE SIX ONE SINCE
MONTHS MONTHS YEAR INCEPTION
------ ------ ---- ---------
Market Price (6.28)% 1.25% 14.25% 4.40%
Net Asset Value (3.66) 0.65 8.89 8.62
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PRICE PER SHARE
APRIL 30, 1996 JANUARY 31, 1996 OCTOBER 31, 1995
-------------- ---------------- ----------------
Market Price $13.25 $14.375 $13.625
Net Asset Value 14.80 15.62 15.31
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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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2
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PORTFOLIO OF INVESTMENTS April 30, 1996
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<TABLE>
<CAPTION>
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 3.4 $1,425,000 Alaska Housing Finance Corporation (Collateralized
Mortgage Obligation), 7.05% due 6/1/2025 .............. Aaa/AAA $1,469,973
1,980,000 Alaska Housing Finance Corporation (Collateralized
Veterans' Mortgage Program), 6 1/2% due 6/1/2034 ...... Aaa/AAA 1,992,791
CALIFORNIA 7.8 2,750,000 San Joaquin Hills Transportation Corridor Agency Rev.
(Senior Lien Toll Road), 6 3/4% due 1/1/2032 .......... NR/NR 2,794,688
5,000,000 University of California Regents Rev. (Multiple
Purpose Project), 6 3/8% due 9/1/2024 ................. Aaa/AAA 5,170,750
FLORIDA 3.3 3,000,000 Miami Health Facilities Authority Rev. (Mercy
Hospital Project), 6 3/4% due 8/1/2020 ................ Aaa/AAA 3,341,940
GEORGIA 3.0 3,000,000 Atlanta Airport Facilities Rev., 6 1/4% due 1/1/2021* ... Aaa/AAA 3,020,790
HAWAII 1.8 1,750,000 Hawaii State Airports System Rev., 7% due 7/1/2020* ..... Aaa/AAA 1,860,425
ILLINOIS 6.4 3,000,000 Cook County G.O.'s, 6 3/4% due 11/1/2018 ................ Aaa/AAA 3,343,170
3,000,000 Regional Transportation Authority G.O.'s,
6.70% due 11/1/2011 ................................... Aaa/AAA 3,237,210
KANSAS 3.2 3,000,000 Burlington Pollution Control Rev. (Kansas Gas and
Electric Company Project), 7% due 6/1/2031 ............ Aaa/AAA 3,283,230
LOUISIANA 3.2 1,000,000 Louisiana Public Facilities Authority Hospital Rev.
(Southern Baptist Hospitals Inc. Project),
8% due 5/15/2012 ...................................... NR/AAA 1,159,280
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 2,072,740
MASSACHUSETTS 7.1 4,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (New England Medical Center),
6 5/8% due 7/1/2025 ................................... Aaa/AAA 4,182,800
3,000,000 Massachusetts Housing Finance Agency Rev.
(Residential Development), 6 7/8% due 11/15/2021 ...... Aaa/AAA 3,103,590
MICHIGAN 4.9 5,000,000 Michigan State Strategic Fund Pollution
Control Rev. (General Motors Corp.),
6.20% due 9/1/2020 .................................... A3/A- 4,973,350
MONTANA 5.5 2,220,000 Forsyth Pollution Control Rev. (Puget Sound
Power & Light Co.), 7 1/4% due 8/1/2021* .............. Aaa/AAA 2,417,669
1,620,000 Montana State Board of Investments Payroll Tax
Rev. (Workers' Compensation Program),
6 7/8% due 6/1/2020 ................................... Aaa/AAA 1,711,724
845,000 Montana State Board of Investments Payroll Tax
Rev. (Workers' Compensation Program),
6 7/8% due 6/1/2020 ................................... Aaa/AAA 917,019
` 535,000 Montana State Board of Investments Payroll Tax
Rev. (Workers' Compensation Program),
6 7/8% due 6/1/2020 ................................... Aaa/AAA 581,732
</TABLE>
3
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PORTFOLIO OF INVESTMENTS (continued) April 30, 1996
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<TABLE>
<CAPTION>
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>
NEW YORK 11.7 $5,000,000 Metropolitan Transportation Authority Rev.
(Commuter Facilities), 6 1/4% due 7/1/2017 ............ Aaa/AAA $ 5,141,000
3,500,000 New York State Thruway Authority Rev.,
6% due 1/1/2025 ....................................... Aaa/AAA 3,485,405
3,000,000 New York State Local Government Assistance
Corporation, 7% due 4/1/2021 .......................... Aaa/AAA 3,360,180
PENNSYLVANIA 9.4 2,500,000 Allegheny County Airport Rev. (Greater Pittsburgh
International Airport), 6.80% due 1/1/2010* ........... Aaa/AAA 2,659,100
2,000,000 Allegheny County Airport Rev. (Greater Pittsburgh
International Airport), 6 5/8% due 1/1/2022* .......... Aaa/AAA 2,054,720
5,000,000 Philadelphia Airport Rev., 6.10% due 6/15/2025* ......... Aaa/AAA 4,945,850
SOUTH CAROLINA 8.5 4,000,000 South Carolina Public Service Authority Rev. (Santee
Cooper), 6.10% due 7/1/2027 ........................... Aaa/AAA 4,050,880
4,500,000 South Carolina State Ports Authority Rev.,
6 3/4% due 7/1/2021* .................................. Aaa/AAA 4,669,965
TEXAS 5.0 3,000,000 Houston Water and Sewer System Rev.,
6 1/2% due 12/1/2021 .................................. Aaa/AAA 3,170,520
1,890,000 Texas State Veterans' Housing Assistance G.O.'s,
6.80% due 12/1/2023* .................................. Aa/AA 1,928,480
VIRGINIA 3.6 3,500,000 Virginia Housing Development Authority (Multi-
family Housing), 7% due 11/1/2012 ..................... Aa/AA+ 3,676,820
WASHINGTON 5.1 860,000 Douglas County Public Utilities District #1
Hydroelectric Rev., 7.80% due 9/1/2018* ............... A/A+ 946,783
1,000,000 Municipality of Metropolitan Seattle Sewer Rev.,
6.60% due 1/1/2032 .................................... Aaa/AAA 1,056,630
3,000,000 Washington Public Power Supply System Rev.
(Nuclear Project #1), 7% due 7/1/2011 ................. Aaa/AAA 3,260,010
WISCONSIN 4.1 4,000,000 Wisconsin Housing & Economic Development
Authority Housing Rev., 6.85% due 11/1/2012 ........... Aaa/AAA 4,183,640
------------
TOTAL MUNICIPAL BONDS (COST $94,362,547) -- 97.0% ............................................................ 99,224,854
SHORT-TERM HOLDINGS (COST $1,000,000) -- 1.0% ................................................................ 1,000,000
OTHER ASSETS LESS LIABILITIES -- 2.0% ........................................................................ 2,101,111
------------
NET INVESTMENT ASSETS -- 100.0% .............................................................................. $102,325,965
============
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* Interest income earned from this security is subject to the federal alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
</TABLE>
4
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STATEMENT OF ASSETS AND LIABILITIES April 30, 1996
<TABLE>
ASSETS:
<S> <C> <C>
Investments at value:
Long-term holdings (cost $94,362,547) $99,224,854
Short-term holdings (cost $1,000,000) 1,000,000 $100,224,854
-----------
Cash ...................................................................... 20,074
Interest receivable ....................................................... 2,168,999
Expenses prepaid to stockholder service agent ............................. 18,372
Deferred organizational expenses .......................................... 10,429
Other ..................................................................... 31,889
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TOTAL ASSETS .............................................................. 102,474,617
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LIABILITIES:
Accrued expenses, taxes, and other ........................................ 148,652
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NET INVESTMENT ASSETS ..................................................... 102,325,965
Preferred Stock ........................................................... 33,600,000
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NET ASSETS FOR COMMON STOCK ............................................... $ 68,725,965
=============
NET ASSETS PER SHARE OF COMMON STOCK (Market value $13.25) ................ $14.80
=====
COMPOSITION OF NET INVESTMENT ASSETS:
Preferred Stock Series TH, $.01 par value, liquidation preference and asset
coverage per share--$50,000 and $152,271, respectively; Shares
authorized and outstanding--1,000 and 672, respectively ........... $ 33,600,000
Common Stock, $.01 par value: Shares authorized--49,999,000; issued
and outstanding--4,642,911 ........................................ 46,429
Additional paid-in capital ................................................ 63,255,963
Distribution in excess of net investment income ........................... (66,934)
Undistributed net realized gain ........................................... 628,200
Net unrealized appreciation of investments ................................ 4,862,307
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NET INVESTMENT ASSETS ..................................................... $ 102,325,965
=============
</TABLE>
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See notes to financial statements.
5
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STATEMENT OF OPERATIONS For the six months ended April 30, 1996
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ...................................................... $3,153,716
EXPENSES:
Management fee ................................................ $ 339,035
Stockholder account and registrar services .................... 58,767
Auction agent fee ............................................. 41,933
Auditing and legal fees ....................................... 40,401
Stockholders' meeting ......................................... 21,886
Stockholder reports and communications ........................ 18,363
Custody and related services .................................. 17,333
Amortization of organizational expenses ....................... 8,910
Directors' fees and expenses .................................. 5,877
Miscellaneous ................................................. 15,887
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TOTAL EXPENSES ................................................ 568,392
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NET INVESTMENT INCOME ......................................... 2,585,324*
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments .............................. 634,335
Net change in unrealized appreciation of investments .......... (2,288,123)
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NET LOSS ON INVESTMENTS ....................................... (1,653,788)
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INCREASE IN NET INVESTMENT ASSETS FROM OPERATIONS ............. $ 931,536
==========
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* Net investment income available for Common Stock is $1,963,368, which is net
of Preferred Stock dividends.
See notes to financial statements.
</TABLE>
6
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STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
---------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................................... $ 2,585,324 $ 5,249,073
Net realized gain on investments ........................................... 634,335 477,370
Net change in unrealized appreciation/depreciation of investments .......... (2,288,123) 7,461,108
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Increase in net investment assets from operations .......................... 931,536 13,187,551
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DISTRIBUTIONS TO STOCKHOLDERS:
Net investment income:
Preferred Stock, Series TH (per share: $925.53 and $2,011.51) ........... (621,956) (1,351,735)
Common Stock (per share: $.4573 and $.9384) ............................. (2,120,251) (4,352,107)
------------- -------------
Total ................................................................... (2,742,207) (5,703,842)
Distribution in excess of net investment income (per share: $.0119) ........ (55,246) --
Net realized gain on investments:
Common Stock (per share: $.103 and $.067) ............................... (477,034) (310,666)
------------- -------------
Decrease in net investment assets from distributions ....................... (3,274,487) (6,014,508)
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CAPITAL SHARE TRANSACTIONS:
Value of shares of Common Stock issued for investment plan
(37,761 and 83,797 shares) .............................................. 531,995 1,105,465
Value of shares of Common Stock issued in payment of gain
distribution (6,982 and 3,774 shares) ................................... 99,912 46,458
Cost of shares purchased for investment plan
(45,200 and 87,900 shares) .............................................. (646,562) (1,147,174)
------------- -------------
Increase (decrease) in net investment assets from capital share transactions (14,655) 4,749
------------- -------------
Increase (decrease) in net investment assets ............................... (2,357,606) 7,177,792
NET INVESTMENT ASSETS:
Beginning of period ........................................................ 104,683,571 97,505,779
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End of period (including distribution in excess of net investment
income and undistributed net investment income of $(66,934)
and $145,195, respectively) ............................................. $102,325,965 $104,683,571
============= =============
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See notes to financial statements.
</TABLE>
7
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NOTES TO FINANCIAL STATEMENTS
1. 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. 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.
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. Deferred organizational expenses incurred by the Fund in connection with its
initial offering are being amortized on a straight-line basis over a
five-year period beginning with the commencement of operations of the Fund.
e. Dividends and distributions paid by the Fund are recorded on the ex-dividend
date.
f. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gain may differ from
their ultimate treatment for federal income tax purposes. These differences
primarily are caused by differences in the timing of the recognition of
certain components of income, expense, or capital gain. 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 reclassification will have no effect on net assets,
results of operations, or net asset value per share of the Fund.
2. Purchases and sales of portfolio securities, excluding short-term
investments, for the six months ended April 30, 1996, amounted to $9,214,430 and
$9,560,990, respectively.
At April 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 portfolio securities
amounted to $5,054,479 and $192,172, respectively.
3. Under the Fund's Charter, dividends or other distributions on the Common
Stock cannot be declared unless the Fund can satisfy the requirements of two
separate asset maintenance tests after giving effect to such distributions.
The Fund, in connection with its Dividend Investment Plan (the "Plan"),
acquires and issues shares of its own Common Stock, as needed, to satisfy Plan
requirements. For the six months ended April 30, 1996, 45,200 shares were
purchased in the open market at a cost of $646,562, which represented a weighted
average discount of 7.29% from the net asset value of those acquired shares. A
total of 44,743 shares were issued to Plan participants during this period for
proceeds of $631,907, a discount of 7.94% from the net asset value of those
shares.
The Fund may make additional purchases of its Common Stock in the open
market and elsewhere at such prices and in such amounts as the Board of
Directors may deem advisable. No such additional purchases were made during the
six months ended April 30, 1996.
4. The Fund is authorized to issue 50,000,000 shares of Capital Stock, par
value $.01 per share, all of which were initially classified as Common Stock.
The Board of Directors is authorized to classify and reclassify any unissued
shares of Capital Stock, and has reclassified 1,000 shares of unissued Common
Stock as Preferred Stock.
8
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NOTES TO FINANCIAL STATEMENTS (continued)
The Preferred Stock is redeemable at the option of the Fund, in whole or in
part, on any dividend payment date at $50,000 per share plus any accumulated but
unpaid dividends. The Preferred Stock is also subject to mandatory redemption at
$50,000 per share plus any accumulated but unpaid dividends if certain
requirements relating to the composition of the assets and liabilities of the
Fund as set forth in its Charter are not satisfied. Liquidation preference of
the Preferred Stock is $50,000 per share plus accumulated and unpaid dividends.
Dividends on Preferred Shares are cumulative at a rate established at the
initial public offering and are typically reset every 7 days based on the rate
per annum or such other period as determined by the Fund that results from an
auction.
The holders of Preferred Stock have voting rights equal to the holders of
Common Stock (one vote per share) and generally will vote together with holders
of shares of Common Stock as a single class. Voting as a separate class, holders
of Preferred Stock are entitled to elect two of the Fund's directors.
5. 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, calculated daily and payable monthly, is
equal to 0.65% per annum of the Fund's average daily net assets.
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost, $44,487 for stockholder account services.
Certain officers and directors of the Fund are officers or directors of the
Manager and/or Seligman Data Corp.
Fees of $10,000 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
de-ferred balances. The cost of such fees and interest is included in directors'
fees and expenses, and the accumulated balance thereof at April 30, 1996, of
$13,162 is included in other liabilities. Deferred fees and related accrued
interest are not deductible for federal income tax purposes until such amounts
are paid.
9
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FINANCIAL HIGHLIGHTS
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 Common share basis, from the Fund's 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 Common share amount.
The total investment return based on market value measures the Fund's
performance assuming investors purchased Fund shares at market value as of the
beginning of the period, reinvested dividends and capital gains paid as provided
for in the Fund's dividend investment plan, and then sold their shares at the
closing market value per share on the last day of the period. The computations
do not reflect any sales commissions investors may incur in purchasing or
selling Fund shares. The total investment return based on net asset value is
similarly computed except that the Fund's net asset value is substituted for the
corresponding market value. The total returns for the period ended April 30 are
not annualized.
The ratios of expenses to average net assets and net investment income to
average net assets for all periods presented do not reflect the effect of
dividends paid to Preferred Stockholders.
<TABLE>
<CAPTION>
SIX
MONTHS YEAR ENDED OCTOBER 31, 11/29/91*
ENDED ---------------------------- TO
PER SHARE OPERATING PERFORMANCE: 4/30/96 1995 1994 1993 10/31/92
------- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $15.31 $13.76 $16.49 $14.05 $14.06
------ ------ ------ ------ -------
Net investment income** ................ 0.56 1.13 1.13 1.13 0.96
Net realized and unrealized investment
gain (loss) .......................... (0.36) 1.72 (2.45) 2.46 0.29
------ ------ ------ ------ -------
Increase (decrease) from investment
operations ........................... 0.20 2.85 (1.32) 3.59 1.25
Dividends paid from net investment
income on Preferred Stock ............ (0.14) (0.29) (0.20) (0.19) (0.14)
Dividends paid from net investment
income on Common Stock ............... (0.46) (0.94) (0.94) (0.94) (0.70)
Distribution in excess of net investment
income paid on Common Stock .......... (0.01) -- -- -- --
Distribution from net realized gain .... (0.10) (0.07) (0.27) (0.02) --
Offering costs of Common Stock ......... -- -- -- -- (0.21)
Offering costs of Preferred Stock ...... -- -- -- -- (0.08)
Preferred Stock underwriting discount .. -- -- -- -- (0.13)
------ ------ ------ ------ -------
Net increase (decrease) in net asset
value ............................... (0.51) 1.55 (2.73) 2.44 (0.01)
------ ------ ------ ------ -------
Net asset value, end of period ......... $14.80 $15.31 $13.76 $16.49 $14.05
====== ======= ====== ====== =======
Market value, end of period ............ $13.25 $13.625 $11.50 $15.75 $14.125
====== ======= ====== ====== =======
</TABLE>
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See page 11 for footnotes.
10
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FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED OCTOBER 31, 11/29/91*
ENDED ----------------------------------- TO
TOTAL INVESTMENT RETURN FOR PERIOD: 4/30/96 1995 1994 1993 10/31/92
------- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Based upon market value ............ 1.25% 27.87% (20.50)% 18.79% (1.90)%
Based upon net asset value ......... 0.65% 20.09% (9.15)% 25.03% 5.01%
RATIOS/SUPPLEMENTAL DATA:**
Expenses to average net assets ..... 1.09%+ 1.08% 1.11% 1.17% 0.94%+
Net investment income to
average net assets ............... 4.96%+ 5.19% 5.06% 4.96% 6.17%+
Portfolio turnover rate ............ 9.02% 8.63% 12.36% 10.69% 9.33%
Net investment assets, end of period
(000's omitted):
For Common Stock ................. $ 68,726 $ 71,084 $63,906 $ 76,588 $65,262
For Preferred Stock .............. 33,600 33,600 33,600 33,600 33,600
-------- -------- ------- -------- -------
Total net investment assets ........ $102,326 $104,684 $97,506 $110,188 $98,862
======== ======== ======= ======== =======
- ----------
* Commencement of operations.
** During the period November 29, 1991, to October 31, 1992, had the Manager,
at its discretion, not waived a portion of its fee, the per share net
investment income would have been $0.94. The annualized ratios of expenses
to average net assets and net investment income to average net assets would
have been 1.11% and 6.00%, respectively.
+ Annualized.
See notes to financial statements.
11
</TABLE>
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REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND STOCKHOLDERS,
SELIGMAN QUALITY MUNICIPAL FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Quality Municipal Fund, Inc. as of
April 30, 1996, the related statements of operations for the six months then
ended and of changes in net investment assets for the six months then ended and
for the year ended October 31, 1995, and the financial highlights for each of
the 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 at April
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 Quality
Municipal Fund, Inc. as of April 30, 1996, the results of its operations, the
changes in its net investment assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, New York
May 31, 1996
12
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BOARD OF DIRECTORS
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, USLIFE Corporation
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
Managing Director,
J. & W. Seligman & Co. Incorporated
- ----------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
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EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
THOMAS G. MOLES
PRESIDENT
EILEEN A. COMERFORD
VICE PRESIDENT
AUDREY G. KUCHTYAK
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
STOCKHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 622-4597 24-HOUR AUTOMATED
TELEPHONE ACCESS
SERVICE
(800) 874-1092 STOCKHOLDER SERVICES
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