UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-6100
Seligman Quality Municipal Fund, Inc.
(Exact name of Registrant as specified in charter)
100 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip code)
Lawrence P. Vogel
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant’s telephone number, including area code: | (212) 850-1864 |
Date of fiscal year end: | 10/31 |
Date of reporting period: | 10/31/05 |
FORM N-CSR
ITEM 1. | REPORTS TO STOCKHOLDERS. |
By order of the Board of Directors, | |||
William C. Morris Chairman | Brian T. Zino President |
Manager J. & W. Seligman & Co. Incorporated 100 Park Avenue New York, NY 10017 General Counsel Sullivan & Cromwell LLP | Stockholder Service Agent Seligman Data Corp. 100 Park Avenue New York, NY 10017 Independent Registered Public Accounting Firm Deloitte & Touche LLP | Important Telephone Numbers | |||
(800) 874-1092 (212) 682-7600 (800) 622-4597 | Stockholder Services Outside the United States 24-Hour Automated Telephone Access Service |
Thomas G. Moles and Eileen A. Comerford
Q: | What market conditions and events materially affected the Fund’s performance during the fiscal year ended October 31, 2005? |
A: | In June 2004, the Federal Open Market Committee voted to raise the federal funds rate for the first time in five years in response to improving economic activity and growing inflationary pressures. By the close of the Fund’s fiscal year, the federal funds rate had increased to 3.75% from 1.00% in a series of 25 basis point increments. On November 1, 2005, the federal funds rate was increased an additional 0.25%. Recent statements made by Federal Reserve Board members suggest that the Fed may be nearing the end of its tightening cycle. Over the past 12 months, yields on short-term municipal bonds rose sharply, primarily in response to increases in the federal funds rate, while yields on long-term municipal bonds remained relatively stable, resulting in a flattening of the municipal yield curve. The rise in short-term yields did provide a boost to income earned on the Fund’s variable rate positions. Variable rate demand notes — the preferred investment vehicle for managing the Fund’s cash flows — have rates that are reset periodically and can be redeemed at par. During the past year, the Fund has maintained larger positions of variable rate demand notes than it has historically. Year-to-date, the favorable interest rate environment continued to support the issuance of refunding bonds. In general, refunding bonds are issued to retire outstanding, higher-cost debt. Refunding activity in the municipal market has had a significant impact on the Fund. Over the past year, a number of the Fund’s holdings were refunded to future call dates. The principal and interest payments of these refunded bonds are now secured by escrow accounts comprised of US government securities, making them safe and highly liquid securities. In addition, Fund holdings that were refunded to future call dates experienced price appreciation at the time of the refunding as a result of their shortened maturity dates and enhanced credit quality, contributing positively to investment results. Currently, refunded bonds (pre-refunded bonds and escrowed-to-maturity bonds) represent the Fund’s largest sector. Attractive interest rates provided an incentive for municipal issuers to retire outstanding bonds with current call dates. As a result, a large percentage of the Fund’s bonds with 2005 and earlier call dates were redeemed during the past fiscal year. Most called bonds had been purchased at yields significantly above current levels. The loss of these holdings had a negative impact on investment income. The US economy continued to expand over the past 12 months, leading to considerable improvement in state and local government finances. The Rockefeller Institute of Government reports that state tax revenues for the second quarter of 2005 rose 13.3% compared with the same period last year. Notably, most increases in tax receipts were achieved without meaningful hikes in tax rates. Further, tax receipts rose for personal, corporate, and sales taxes, with corporate taxes experiencing the strongest growth. States and municipalities have made significant progress in restoring fiscal balance, leading to an overall strengthening in credit trends. Substantial challenges still remain, however; in particular, the escalating costs of Medicaid programs, public pension liabilities and education funding. Further, the failure of many states to adequately address structural imbalances poses a risk to future financial stability. |
A TEAM APPROACH Seligman Quality Municipal Fund, Inc. is managed by the Seligman Municipals Team, headed by Co-Portfolio Manager Thomas G. Moles. Mr. Moles and Co-Portfolio Manager Eileen A. Comerford are assisted in the management of the Fund by a group of seasoned professionals who are responsible for research and trading consistent with the Fund’s investment objective. Team members include Senior Credit Analyst Audrey Kuchtyak, Michelle Lowery, and Debra McGuinness. |
Interview With Your Portfolio Managers (continued)
Thomas G. Moles and Eileen A. Comerford
Q. | What investment strategies or techniques materially affected the Fund’s performance during the period? | |
A: | While the Fund delivered positive investment results for the fiscal year ended October 31, 2005, performance for the Fund lagged that of its benchmark, the Lehman Brothers Municipal Bond Index (the “Lehman Index”). We believe this is due primarily to the defensive investment strategy we have undertaken to mitigate the negative impact of anticipated higher municipal yields. Over the past fiscal year, our primary objective has been to position the Fund for a modest increase in long-term municipal yields and significantly higher short-term yields (further yield curve flattening). Given our forecast for higher municipal bond yields, we lowered the duration target for Fund acquisitions, concentrating new purchases in the 20-year maturity range rather than the 25–30 year sector typically owned by the Fund. (Duration is a measure of a bond’s price sensitivity to changes in interest rates. A bond with a longer duration will experience a greater change in price for a given change in interest rates than a bond with a shorter duration.) Long-term municipal yields did not rise as expected over the past 12 months, however, and the longest maturity sector experienced the highest returns while municipal bonds in the 20-year sector ranked second. Portfolio holdings that were pre-refunded prior to the start of the current fiscal year were maintained given their attractive coupon interest and inherently defensive nature. Investment income benefited from our decision to retain these higher-yielding securities. However, given the shorter maturity dates of the Fund’s pre-refunded bonds, the increase in short-term yields over the past year caused performance results to lag that of longer-term securities. On a more positive note, the Fund held the majority of portfolio holdings that were pre-refunded during its fiscal year. The shortened maturity date and enhanced credit quality often resulted in price appreciation for the newly pre-refunded bonds, contributing to positive investment results. The Fund’s portfolio is comprised of premium-coupon bonds (market price above par), which are generally less sensitive to interest rate changes than par or discount bonds (market price below par). The decline in long-term municipal yields over the past fiscal year, however, favored par and discount-coupon bonds. A significant percentage of the premium coupon bonds held in the Fund were purchased at yields substantially above current levels, which has helped to support the Fund’s investment income in the current lower yield environment. All purchases made during the year were of premium coupon bonds. Over the past year, strong demand for higher-yielding securities led to a narrowing of credit spreads. As a result, lower-quality bonds outperformed higher-quality bonds by a wide margin over the reporting period. Seligman Quality Municipal Fund, however, is required to maintain a minimum of 80% of net assets in AAA-rated securities; the remaining 20% must be rated at least investment-grade. Many of the Fund’s AAA-rated holdings are secured by the municipal bond insurance. While the claims paying ability of the major municipal insurers is strong, in an effort to limit event risk, we continued to avoid overweighting any one municipal insurer and sought to diversify among all the AAA insurers. It should be noted that the Lehman Index is an unmanaged index comprised of a wide range of investment-grade municipal bonds, and that its components may differ significantly from that of the Fund. Further, the Lehman Index does not reflect the impact of fees or expenses as do the Fund’s returns. The views and opinions expressed are those of the Portfolio Manager(s), are provided for general information only, and do not constitute specific tax, legal, or investment advice to, or recommendations for, any person. There can be no guarantee as to the accuracy of market forecasts. Opinions, estimates, and forecasts may be changed without notice. |
This section of the report is intended to help you understand the performance of Seligman Quality Municipal Fund Common Stock and to provide a summary of the Fund’s portfolio characteristics.
Performance data quoted in this report represents past performance and does not guarantee or indicate future investment results. The rates of return will vary and the principal value of an investment will fluctuate. Shares, if sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Total returns of the Fund as of the most recent month-end will be available at www.seligman.com1 by the seventh business day following that month-end.
Returns reflect changes in the market price or net asset value, as applicable, and assume reinvestment of distributions. Performance data quoted does not reflect the deduction of taxes that investors may pay on distributions or the sale of shares. A portion of the Fund’s income may be subject to applicable state and local taxes, and any amount may be subject to the federal alternative minimum tax. Capital gain distributions are subject to federal, state and local taxes.
The Lehman Brothers Municipal Bond Index (the “Lehman Index”) returns do not include the effect of taxes, fees or sales charges. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Investment Results for Common Stock
Total Returns*
For Periods Ended October 31, 2005
Average Annual | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Market Price | 2.47 | % | 5.12 | % | 4.22 | % | 7.76 | % | 6.20 | % | ||||||||||||
Net Asset Value | (1.06 | ) | (0.12 | ) | 1.88 | 6.50 | 6.14 | |||||||||||||||
Lehman Index** | (0.28 | ) | 0.59 | 2.54 | 5.85 | 5.98 |
Price Per Share
Market Price | Net Asset Value | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
October 31, 2005 | $ | 12.43 | $ | 13.88 | ||||||
July 31, 2005 | 12.27 | 14.19 | ||||||||
April 30, 2005 | 12.10 | 14.22 | ||||||||
January 31, 2005 | 12.44 | 14.35 | ||||||||
October 31, 2004 | 12.51 | 14.29 |
and Yield Information
For Periods Ended October 31, 2005
Dividend Paid† | Capital Gain†† | SEC 30-Day Yield‡ | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Realized | Unrealized | |||||||||||
$0.5865 | $0.002 | $0.604ø | 4.06% |
Holding by Market Sector#
Revenue Bonds | 66 | % | ||||
General Obligation Bondsøø | 34 | |||||
Weighted Average Maturity3 | 15.8 years |
Holdings by Credit Quality2#
AAA | 89 | % | ||||
AA | 6 | |||||
BBB | 5 |
1 | The reference to Seligman’s website is an inactive textual reference and information contained in or otherwise accessible through Seligman’s website does not form a part of this report or the Fund’s prospectus. | |
2 | Credit ratings are primarily those issued by Moody’s Investors Service, Inc. (“Moody’s”). Where Moody’s ratings have not been assigned, ratings from Standard & Poor’s Corporation (“S&P”) were used. A generic rating designation has been utilized, and therefore, it cannot be inferred solely from the rating category whether ratings reflect those assigned by Moody’s or S&P. Pre- refunded and escrowed-to-maturity securities that have been rerated as AAA or its equivalent by either Moody’s or S&P have been included in the AAA category. Holdings and credit ratings are subject to change. | |
3 | Excludes variable rate demand notes. | |
* | Returns for periods of less than one year are not annualized. | |
** | The Lehman Brothers Municipal Bond Index is an unmanaged index of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market. The index does not include any taxes, fees or sales charges and is composed of approximately 60% revenue bonds and 40% state government obligations. Investors cannot invest directly in an unmanaged index. | |
† | For the year ended October 31, 2005, Preferred Stockholders were paid dividends at annual rates ranging from 1.25% to 3.15%. Earnings on the Fund’s assets in excess of the preferred dividend requirements constituted income available for dividends to Common Stockholders. | |
†† | Information does not reflect the effect of capital loss carryforwards that are available to offset these and future net realized capital gains. | |
ø | Represents the per share amount of unrealized appreciation of portfolio securities as of October 31, 2005. | |
øø | Includes pre-refunded and escrowed-to-maturity securities. | |
‡ | Current yield, representing the annualized yield (after dividends on Preferred Stock) for the 30-day period ended October 31, 2005, has been computed in accordance with Securities and Exchange Commission regulations and will vary. | |
# | Percentages based on current market values of long-term holdings at October 31, 2005. |
Additional Fund Information
Quarterly Schedule of Investments
A complete schedule of portfolio holdings owned by the Fund will be filed with the Securities and Exchange Commission (“SEC”) as of the end of the first and third quarters of each fiscal year on Form N-Q, and will be available to stockholders (i) without charge, upon request, by calling toll-free (800) 874-1092 in the US or collect (212) 682-7600 outside the US or (ii) on the SEC’s website at www.sec.gov.1 In addition, the Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. Certain of the information contained on the Fund’s Form N-Q is also made available to stockholders on Seligman’s website at www.seligman.com.1
Proxy Voting
A description of the policies and procedures used by the Fund to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities during the 12-month period ended June 30 of each year will be available (i) without charge, upon request, by calling toll-free (800) 874-1092 in the US or collect (212) 682-7600 outside the US and (ii) on the SEC’s website at www.sec.gov.2
Annual Certifications
As required, the Fund has submitted to the New York Stock Exchange (“NYSE”) the annual certification of the Fund’s Chief Executive Officer that he is not aware of any violation of the NYSE’s Corporate Governance listing standards. The Fund also has included the certifications of the Fund’s Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to the Fund’s Form N-CSR for the year ended October 31, 2005 filed with the SEC.
1 | The reference to the SEC’s website and Seligman’s website are inactive textual references and information contained in or otherwise accessible through these websites do not form a part of this report or the Fund’s prospectus. | |
2 | Information for each new 12-month period ending June 30 will be made available by no later than August 31 of that year. |
5
Portfolio of Investments | October 31, 2005 |
State# | Face Amount | | Municipal Bonds | | Rating† | | Value | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Alabama — 8.1% | $ | 5,000,000 | Jefferson County Sewer Rev. (Capital Improvement Warrants), 5.125% due 2/1/2039ø | Aaa | $ | 5,305,100 | ||||||||||||
Alaska — 3.6% | 2,000,000 | Alaska Energy Authority Power Rev. (Bradley Lake Hydroelectric Project), 6% due 7/1/2021 | Aaa | 2,344,420 | ||||||||||||||
Arizona — 6.5% | 4,000,000 | Arizona Agricultural Improvement and Power District Rev. (Salt River Project), 5% due 12/1/2014 | Aaa | 4,266,120 | ||||||||||||||
California — 24.2% | 4,000,000 | Foothill/Eastern Transportation Corridor Agency Toll Road Rev., 5.75% due 1/15/2040 | Baa3 | 4,074,720 | ||||||||||||||
1,500,000 | Los Angeles Regional Airports Improvement Corporation Facilities Rev. (LAXFUEL Corporation), 5.50% due 1/1/2032* | Aaa | 1,544,880 | |||||||||||||||
5,000,000 | San Diego Public Facilities Financing Authority Sewer Rev., 5% due 5/15/2029 | Aaa | 5,113,900 | |||||||||||||||
5,000,000 | San Francisco City and County Airports Commission Rev. (International Airport), 5.80% due 5/1/2021* | Aaa | 5,103,900 | |||||||||||||||
Colorado — 4.0% | 2,500,000 | Regional Transportation District Sales Tax Rev., 5% due 11/1/2024 | Aaa | 2,596,750 | ||||||||||||||
Florida — 14.0% | 3,000,000 | Orange County Health Facilities Authority Rev. (The Nemours Foundation Project), 5% due 1/1/2029 | AAA‡ | 3,097,800 | ||||||||||||||
3,345,000 | Orange County Solid Waste Facility Refunding Rev., 5% due 10/1/2016 | Aaa | 3,505,158 | |||||||||||||||
2,500,000 | Orange County Sales Tax Rev., 5.125% due 1/1/2023 | Aaa | 2,636,175 | |||||||||||||||
Illinois — 7.2% | 4,500,000 | Chicago GOs, 5% due 1/1/2023 | Aaa | 4,692,465 | ||||||||||||||
Louisiana — 1.0% | 585,000 | Louisiana Public Facilities Authority Hospital Rev. (Southern Baptist Hospitals, Inc. Project), 8% due 5/15/2012†† | AAA‡ | 669,954 | ||||||||||||||
Massachusetts — 14.4% | 750,000 | Massachusetts Port Authority Rev., 5% due 7/1/2025 | Aaa | 779,085 | ||||||||||||||
3,000,000 | Massachusetts School Building Authority Dedicated Sales Tax Rev., 5% due 8/15/2023 | Aaa | 3,141,720 | |||||||||||||||
3,000,000 | Massachusetts State Special Obligation Dedicated Tax Rev., 5.25% due 1/1/2025ø | Aaa | 3,252,390 | |||||||||||||||
2,000,000 | Massachusetts State Water Resources Authority Rev., 5.25% due 8/1/2024 | Aaa | 2,173,700 | |||||||||||||||
Michigan — 3.9% | 2,500,000 | Harper Creek Community School District GOs, 5.125% due 5/1/2031 | Aa2 | 2,568,650 | ||||||||||||||
Minnesota — 0.8% | 500,000 | Minneapolis & Saint Paul Metropolitan Airports Commission Rev., 5.75% due 1/1/2032ø | Aaa | 548,585 | ||||||||||||||
Missouri — 0.5% | 340,000 | Missouri State Housing Development Commission Rev. (Single Family Mortgage), 6.375% due 9/1/2031* | AAA‡ | 344,818 | ||||||||||||||
__________________ See footnotes on page 8. |
Portfolio of Investments (continued) | October 31, 2005 |
State# | | Face Amount | | Municipal Bonds | | Rating† | | Value | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
New York — 18.4% | $ | 3,000,000 | New York City GOs, 5% due 8/1/2017 | Aaa | $ | 3,185,280 | |||||||||||||
2,105,000 | New York City GOs, 6.25% due 4/15/2027ø | Aaa | 2,220,459 | ||||||||||||||||
5,000,000 | New York City Municipal Water Finance Authority (Water & Sewer System Rev.), 5.75% due 6/15/2026ø | Aaa | 5,258,300 | ||||||||||||||||
1,295,000 | New York State Environmental Facilities Corporation (Clean Water and Drinking Water Rev.), 5% due 7/15/2020 | Aaa | 1,365,448 | ||||||||||||||||
Pennsylvania — 6.4% | 3,000,000 | Pennsylvania State University Rev., 5% due 9/1/2024 | Aa2 | 3,134,940 | |||||||||||||||
1,000,000 | Pennsylvania Turnpike Commission Rev. (Oil Franchise Tax), 5.25% due 12/1/2023 | Aaa | 1,076,620 | ||||||||||||||||
Puerto Rico — 5.1% | 3,000,000 | Puerto Rico Electric Power Authority Rev., 5.25% due 7/1/2021 | Aaa | 3,325,890 | |||||||||||||||
Texas — 13.1% | 3,000,000 | Dallas Area Rapid Transit Sales Tax Rev., 5% due 12/1/2031 | Aaa | 3,059,730 | |||||||||||||||
2,000,000 | Matagorda County Navigation District No. 1 Pollution Control Rev. (Central Power and Light Co. Project), 6.125% due 5/1/2030* | Aaa | 2,064,100 | ||||||||||||||||
3,000,000 | San Antonio Electric & Gas System Rev., 5.65% due 2/1/2019†† | AAA‡ | 3,448,290 | ||||||||||||||||
Washington — 6.3% | 2,000,000 | Chelan County Public Utility District No. 1 (Chelan Hydro Consolidated System Rev.), 5.25% due 7/1/2033* | Aaa | 2,027,920 | |||||||||||||||
2,000,000 | Chelan County Public Utility District No. 1 (Chelan Hydro Consolidated System Rev.), 5.60% due 1/1/2036* | Aaa | 2,118,460 | ||||||||||||||||
Wisconsin — 0.5% | 325,000 | Wisconsin Housing & Economic Development Authority Housing Rev., 6.85% due 11/1/2012 | Aaa | 325,543 | |||||||||||||||
Total Municipal Bonds (Cost $87,639,956) — 138.0% | 90,371,270 | ||||||||||||||||||
Short-Term Holdings | |||||||||||||||||||
Colorado — 1.8% | 1,200,000 | Moffat County Pollution Control Rev. (Pacificorp Projects), VRDN, due 5/1/2013 | VMIG 1 | 1,200,000 | |||||||||||||||
Massachusetts — 4.1% | 2,700,000 | Massachusetts Health & Educational Facilities Authority Rev. (Capital Assets Program), VRDN, due 1/1/2035 | VMIG 1 | 2,700,000 | |||||||||||||||
New York — 4.8% | 3,000,000 | Metropolitan Transportation Authority Rev. (Commuter Facilities), 6.10% due 7/1/2026ø | Aaa | 3,119,370 | |||||||||||||||
Total Short-Term Holdings (Cost $6,900,000) — 10.7% | 7,019,370 | ||||||||||||||||||
Total Investments (Cost $94,539,956) — 148.7% | 97,390,640 | ||||||||||||||||||
Other Assets Less Liabilities — 2.6% | 1,705,913 | ||||||||||||||||||
Preferred Stock — (51.3)% | (33,600,000 | ) | |||||||||||||||||
Net Assets for Common Stock — 100.0% | $ | 65,496,553 | |||||||||||||||||
__________________ See footnotes on page 8. |
Portfolio of Investments (continued) | October 31, 2005 |
# | The percentage shown for each state represents the total market value of bonds held of issuers in that state, measured as a percent of net assets for Common Stock, which does not include the net assets attributable to Preferred Stock of the Fund. | |
† | Credit ratings are primarily those issued by Moody’s Investors Service, Inc. (“Moody’s”). Where Moody’s ratings have not been assigned, ratings from Standard & Poor’s Corporation (“S&P”) were used (indicated by the symbol ‡). 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. Ratings have not been audited by Deloitte & Touche LLP. | |
†† | Escrowed-to-maturity security. | |
ø | Pre-refunded security. Such securities that will be paid within one year are classified as short-term holdings. | |
* | Interest income earned from this security is subject to the federal alternative minimum tax. | |
VRDN — Variable rate demand notes. | ||
See Notes to Financial Statements. |
Statement of Assets and Liabilities | October 31, 2005 |
Assets: | ||||||
Investments, at value: | ||||||
Long-term holdings (cost $87,639,956) | $ | 90,371,270 | ||||
Short-term holdings (cost $6,900,000) | 7,019,370 | |||||
Total investments (cost $94,539,956) | 97,390,640 | |||||
Cash | 50,529 | |||||
Interest receivable | 1,572,672 | |||||
Receivable for securities sold | �� | 260,425 | ||||
Expenses prepaid to stockholder service agent | 15,239 | |||||
Other | 16,198 | |||||
Total Assets | 99,305,703 | |||||
Liabilities: | ||||||
Management fee payable | 54,979 | |||||
Payable for Common Stock repurchased | 22,410 | |||||
Accrued expenses and other | 131,761 | |||||
Total Liabilities | 209,150 | |||||
Preferred Stock: | ||||||
Preferred Stock Series TH, $0.01 par value, liquidation preference and asset coverage per share — $50,000 and $147,465, respectively; shares authorized — 1,000; issued and outstanding — 672 | 33,600,000 | |||||
Net Assets for Common Stock | $ | 65,496,553 | ||||
Composition of Net Assets: | ||||||
Common Stock, $0.01 par value; Shares authorized — 49,999,000; issued and outstanding — 4,717,985 | $ | 47,180 | ||||
Additional paid-in capital | 62,532,591 | |||||
Undistributed net investment income | 210,690 | |||||
Accumulated net realized loss | (144,592 | ) | ||||
Net unrealized appreciation of investments | 2,850,684 | |||||
Net Assets for Common Stock | $ | 65,496,553 | ||||
Net Asset Value Per Share of Common Stock (Market value $12.43) | $13.88 |
See Notes to Financial Statements.
Statement of Operations | For the Year Ended October 31, 2005 |
Investment Income: | |||||||||
Interest | $ | 4,656,055 | |||||||
Expenses: | |||||||||
Management fee | $ | 653,886 | |||||||
Preferred stock auction, remarketing and rating agent fees | 112,618 | ||||||||
Stockholder account and registrar services | 87,343 | ||||||||
Auditing and legal fees | 68,788 | ||||||||
Stockholder reports and communications | 55,146 | ||||||||
Custody and related services | 29,621 | ||||||||
Stockholders’ meeting | 24,130 | ||||||||
Exchange listing fees | �� | 23,750 | |||||||
Directors’ fees and expenses | 15,622 | ||||||||
Miscellaneous | 9,736 | ||||||||
Total Expenses | 1,080,640 | ||||||||
Net Investment Income | 3,575,415 | * | |||||||
Net Realized and Unrealized Gain (Loss) on Investments: | |||||||||
Net realized gain on investments | 8,535 | ||||||||
Net change in unrealized appreciation of investments | (1,984,075 | ) | |||||||
Net Loss on Investments | (1,975,540 | ) | |||||||
Dividends Paid to Preferred Stockholders | (770,649 | ) | |||||||
Increase in Net Assets from Operations | $ | 829,226 |
* Net investment income available for Common Stock is $2,804,766, which is net of Preferred Stock dividends of $770,649.
See Notes to Financial Statements.
Year Ended October 31, | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
2005 | 2004 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 3,575,415 | $ | 3,601,356 | ||||||
Net realized gain on investments | 8,535 | 290,516 | ||||||||
Net change in unrealized appreciation of investments | (1,984,075 | ) | (214,396 | ) | ||||||
Dividends paid to Preferred Stockholders (per share: $1,146.80 and $544.16) | (770,649 | ) | (365,676 | ) | ||||||
Increase in Net Assets from Operations | 829,226 | 3,311,800 | ||||||||
Distributions to Common Stockholders: | ||||||||||
Dividends from net investment income (per share: $0.587 and $0.702) | (2,767,258 | ) | (3,311,588 | ) | ||||||
Decrease in Net Assets from Distributions to Common Stockholders | (2,767,258 | ) | (3,311,588 | ) | ||||||
Capital Share Transactions: | ||||||||||
Value of shares of Common Stock issued in payment of dividends (22,581 and 28,931 shares) | 276,912 | 366,035 | ||||||||
Cost of shares purchased for investment plan (22,900 and 30,800 shares) | (282,650 | ) | (391,339 | ) | ||||||
Decrease in Net Assets from Capital Share Transactions | (5,738 | ) | (25,304 | ) | ||||||
Decrease in Net Assets | (1,943,770 | ) | (25,092 | ) | ||||||
Net Assets for Common Stock: | ||||||||||
Beginning of year | 67,440,323 | 67,465,415 | ||||||||
End of Year (including undistributed net investment income of $210,690 and $174,923, respectively) | $ | 65,496,553 | $ | 67,440,323 |
See Notes to Financial Statements.
a. | Security Valuation — Traded securities are valued at the last sales price on the primary market on which they are traded. Securities for which there is no last sales price are valued by independent pricing services based on bid prices which consider such factors as transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities, or are valued by J. & W. Seligman & Co. Incorporated (the “Manager”) based on quotations provided by primary market makers in such securities. Securities for which market quotations are not readily available (or are otherwise no longer valid or reliable) are valued at fair value determined in accordance with procedures approved by the Board of Directors. This can occur in the event of, among other things, natural disasters, acts of terrorism, market disruptions, intra-day trading halts, and extreme market volatility. Short-term holdings maturing in 60 days or less are generally valued at amortized cost. |
b. | Federal Taxes — The Fund has elected to be taxed as a regulated investment company and intends to distribute substantially all net income and net gain realized. |
c. | Security Transactions and Related Investment Income — Investment transactions are recorded on trade dates. Identified cost of investments sold is used for both financial reporting and federal income tax purposes. Interest income is recorded on the accrual basis. The Fund amortizes all discounts and premiums paid on purchases of portfolio securities for financial reporting purposes. Short-term holdings include securities with stated or effective maturity dates of less than one year. Variable rate demand notes purchased by the Fund may be put back to the designated remarketing agent for the issue at par on any day, for settlement within seven days, and, accordingly, are treated as short-term holdings. These notes bear interest at a rate that resets daily or weekly. At October 31, 2005, the interest rates paid on these notes ranged from 2.65% to 2.70%. |
d. | Distributions to Stockholders — Dividends and distributions paid by the Fund are recorded on the ex-dividend date. |
Gross unrealized appreciation of portfolio securities | $ | 3,519,358 | ||||
Gross unrealized depreciation of portfolio securities | (445,756 | ) | ||||
Net unrealized appreciation of portfolio securities | 3,073,602 | |||||
Capital loss carryforward | (144,592 | ) | ||||
Undistributed tax-exempt income | — | |||||
Total accumulated earnings | $ | 2,929,010 |
Year Ended October 31, | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
2005 | 2004 | |||||||||
Tax-exempt income | $ | 3,471,736 | $ | 3,588,605 | ||||||
Ordinary income | 66,171 | 88,659 | ||||||||
Total distributions | $ | 3,537,907 | $ | 3,677,264 |
Seligman believes that any action would be both inappropriate and unnecessary, especially in light of the fact that Seligman previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds.
Year Ended October 31, | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | 2004 | 2003 | 2002† | 2001 | ||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||
Net Asset Value, Beginning of Year | $ | 14.29 | $ | 14.29 | $ | 14.44 | $ | 14.40 | $ | 13.62 | ||||||||||||
Income from Investment Operations: | ||||||||||||||||||||||
Net investment income | 0.76 | 0.76 | 0.77 | 0.95 | 0.99 | |||||||||||||||||
Net realized and unrealized investment gain (loss) on investments | (0.42 | ) | 0.02 | (0.02 | ) | 0.03 | 0.79 | |||||||||||||||
Dividends paid from net investment income to Preferred Stockholders | (0.16 | ) | (0.08 | ) | (0.08 | ) | (0.11 | ) | (0.24 | ) | ||||||||||||
Total from Investment Operations | 0.18 | 0.70 | 0.67 | 0.87 | 1.54 | |||||||||||||||||
Less Distributions to Common Stockholders: | ||||||||||||||||||||||
Dividends paid from net investment income | (0.59 | ) | (0.70 | ) | (0.79 | ) | (0.71 | ) | (0.69 | ) | ||||||||||||
Distributions from net realized gain | — | — | (0.03 | ) | (0.12 | ) | (0.07 | ) | ||||||||||||||
Total Distributions to Common Stockholders | (0.59 | ) | (0.70 | ) | (0.82 | ) | (0.83 | ) | (0.76 | ) | ||||||||||||
Net Asset Value, End of Year | $ | 13.88 | $ | 14.29 | $ | 14.29 | $ | 14.44 | $ | 14.40 | ||||||||||||
Market Value, End of Year | $ | 12.43 | $ | 12.51 | $ | 12.58 | $ | 12.57 | $ | 12.59 |
See footnotes on page 17.
Year Ended October 31, | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | 2004 | 2003 | 2002† | 2001 | ||||||||||||||||||
Total Investment Return: | ||||||||||||||||||||||
Based upon market value | 4.22% | 5.11% | 6.69% | 6.69% | 16.52% | |||||||||||||||||
Based upon net asset value | 1.88% | 5.70% | 5.50% | 7.16% | 12.52% | |||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||
Ratio of expenses to average net assetsø | 1.07% | 1.09% | 1.10% | 1.08% | 1.05% | |||||||||||||||||
Ratio of expenses to average net assets for Common Stock | 1.61% | 1.64% | 1.65% | 1.62% | 1.58% | |||||||||||||||||
Ratio of net investment income to average net assetsø | 3.55% | 3.57% | 3.57% | 4.49% | 4.66% | |||||||||||||||||
Ratio of net investment income to average net assets for Common Stock | 5.34% | 5.36% | 5.33% | 6.76% | 7.03% | |||||||||||||||||
Portfolio turnover rate | 17.43% | 17.25% | 15.92% | 6.01% | 11.72% | |||||||||||||||||
Net assets for Common Stock, end of year (000s omitted) | $ | 65,497 | $ | 67,440 | $ | 67,465 | $ | 68,134 | $ | 67,981 |
† | As required, effective November 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing market discounts on portfolio securities for financial reporting purposes. The effects of this accounting change for the year ended October 31, 2002, were to increase net investment income per share and decrease net realized and unrealized gain per share by $0.01; and to increase the ratios of net investment income to average net assets and to average net assets for Common Stock from 4.42% to 4.49%, and from 6.65% to 6.76%, respectively. The per share operating performance and ratios for periods prior to November 1, 2001, have not been restated. | |
ø | Average net assets includes the value of Preferred Stock. | |
See Notes to Financial Statements. |
Seligman Quality Municipal Fund, Inc.:
New York, New York
December 14, 2005
total amount registered in the nominee’s name and held for the account of beneficial owners who are participating in such Plan, by delivering shares on behalf of such holder to such nominee’s account at Depository Trust Company (“DTC”). Stockholders holding shares that participate in the Plan in a brokerage account may not be able to transfer the shares to another broker and continue to participate in the Plan.
Information pertaining to the Directors and Officers of Seligman Quality Municipal Fund, Inc. is set forth below.
Name, (Age), Position(s) held with Fundø | | Principal Occupation(s) During Past Five Years, Directorships and Other Information | ||
---|---|---|---|---|
John R. Galvin (76)1,3 • Director: 1995 to Date • Oversees 58 Portfolios in Fund Complex | Dean Emeritus, Fletcher School of Law and Diplomacy at Tufts University; Director or Trustee of each of the investment companies of the Seligman Group of Funds†; and Chairman Emeritus, American Council on Germany. Formerly, Governor of the Center for Creative Leadership; and Director, Raytheon Co. (defense and commercial electronics) and USLIFE Corporation (life insurance). From June 1987 to June 1992, Mr. Galvin was the Supreme Allied Commander, NATO, and the Commander-in-Chief, United States European Command. | |||
Alice S. Ilchman (70)2,3 • Director: 1991 to Date • Oversees 58 Portfolios in Fund Complex | President Emerita, Sarah Lawrence College; Director or Trustee of each of the investment companies of the Seligman Group of Funds†; Director, Jeannette K. Watson Summer Fellowship (summer internships for college students); Trustee, Committee for Economic Development; Governor, Court of Governors, London School of Economics; and Director, Public Broadcasting Service (PBS). Formerly, Chairman, The Rockefeller Foundation (charitable foundation); Trustee, Save the Children (nonprofit child assistance organization); and Director, New York Telephone Company. | |||
Frank A. McPherson (72)2,3 • Director: 1995 to Date • Oversees 58 Portfolios in Fund Complex | Retired Chairman of the Board and Chief Executive Officer of Kerr-McGee Corporation (diversified energy and chemical company); Director or Trustee of each of the investment companies of the Seligman Group of Funds†; and Director, ConocoPhillips (integrated international oil corporation), Integris Health (owner of various hospitals), Oklahoma Chapter of the Nature Conservancy, Oklahoma Medical Research Foundation, Boys and Girls Clubs of Oklahoma, Oklahoma City Public Schools Foundation, and Oklahoma Foundation for Excellence in Education. Formerly, Director, Kimberly-Clark Corporation (consumer products), BOK Financial (bank holding company), and the Federal Reserve System’s Kansas City Reserve Bank. | |||
Betsy S. Michel (63)1,3 • Director: 1991 to Date • Oversees 58 Portfolios in Fund Complex | Attorney; Director or Trustee of each of the investment companies of the Seligman Group of Funds†; and Trustee, The Geraldine R. Dodge Foundation (charitable foundation). Formerly, Chairman of the Board of Trustees of St. George’s School (Newport, RI) and Trustee, World Learning, Inc. (international educational training). | |||
Leroy C. Richie (64)1,3 • Director: 2000 to Date • Oversees 57 Portfolios in Fund Complex | Chairman and Chief Executive Officer, Q Standards Worldwide, Inc. (library of technical standards); Director or Trustee of each of the investment companies of the Seligman Group of Funds† (with the exception of Seligman Cash Management Fund, Inc.); Director, Kerr-McGee Corporation (diversified energy and chemical company) and Infinity, Inc. (oil and gas services and exploration); and Director and Chairman, Highland Park Michigan Economic Development Corp. Formerly, Trustee, New York University Law Center Foundation; Vice Chairman, Detroit Medical Center; Chairman and Chief Executive Officer, Capital Coating Technologies, Inc. (applied coating technologies); and Vice President and General Counsel, Automotive Legal Affairs, Chrysler Corporation. |
See footnotes on page 23.
Name, (Age), Position(s) held with Fundø | Principal Occupation(s) During Past Five Years, Directorships and Other Information | |||
---|---|---|---|---|
Robert L. Shafer (73)2,3 • Director: 1991 to Date • Oversees 58 Portfolios in Fund Complex | Ambassador and Permanent Observer of the Sovereign Military Order of Malta to the United Nations; and Director or Trustee of each of the investment companies of the Seligman Group of Funds†. Formerly, Director, USLIFE Corporation (life insurance); and Vice President, Pfizer Inc. (pharmaceuticals). | |||
James N. Whitson (70)1,3 • Director: 1993 to Date • Oversees 58 Portfolios in Fund Complex | Director or Trustee of each of the investment companies of the Seligman Group of Funds†; and Director, CommScope, Inc. (manufacturer of coaxial cable). Retired Executive Vice President and Chief Operating Officer, Sammons Enterprises, Inc. (a diversified holding company). Formerly, Director and Consultant, Sammons Enterprises, Inc.; and Director, C-SPAN (cable television network). |
Name, (Age), Position(s) held with Fundø | Principal Occupation(s) During Past Five Years, Directorships and Other Information | |||
---|---|---|---|---|
William C. Morris (67)* • Director and Chairman of the Board: 1991 to Date • Oversees 58 Portfolios in Fund Complex | Chairman, J. & W. Seligman & Co. Incorporated; Chairman of the Board, and Director or Trustee of each of the investment companies of the Seligman Group of Funds†; Chairman, Seligman Advisors, Inc., Seligman Services, Inc. and Carbo Ceramics Inc. (manufacturer of ceramic proppants for oil and gas industry); Director, Seligman Data Corp.; and President and Chief Executive Officer of The Metropolitan Opera Association. Formerly, Director, Kerr-McGee Corporation (diversified energy and chemical company) and Chief Executive Officer of each of the investment companies of the Seligman Group of Funds. | |||
Brian T. Zino (53)* • Director: 1993 to Date • President and Chief Executive Officer: 2002 to Date • Oversees 58 Portfolios in Fund Complex | Director and President, J. & W. Seligman & Co. Incorporated; President, Chief Executive Officer and Director or Trustee of each of the investment companies of the Seligman Group of Funds†; Director, Seligman Advisors, Inc. and Seligman Services, Inc.; Chairman, Seligman Data Corp.; Member of the Board of Governors of the Investment Company Institute; and Director (formerly Vice Chairman), ICI Mutual Insurance Company. | |||
Thomas G. Moles (63) • Executive Vice President: 2002 to Date • Portfolio Manager: 1991 to Date | Director and Managing Director, J. & W. Seligman & Co. Incorporated; Vice President and Co-Portfolio Manager, Seligman Municipal Fund Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal Fund, Inc., and Seligman Pennsylvania Municipal Fund Series; Executive Vice President and Co-Portfolio Manager, Seligman Select Municipal Fund, Inc. (closed-end investment company); and Director, Seligman Advisors, Inc. and Seligman Services, Inc. | |||
Eileen A. Comerford (47) | Senior Vice President and Investment Officer, J. & W. Seligman & Co. Incorporated; Vice President and Co-Portfolio Manager, Seligman Municipal Fund Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal Fund, Inc., Seligman Pennsylvania Municipal Fund Series and Seligman Select Municipal Fund, Inc. |
See footnotes on page 23.
Name, (Age), Position(s) held with Fundø | Principal Occupation(s) During Past Five Years, Directorships and Other Information | |||
---|---|---|---|---|
Eleanor T.M. Hoagland (54) • Vice President and Chief Compliance Officer: 2004 to Date | Managing Director, J. & W. Seligman & Co. Incorporated; and Vice President and Chief Compliance Officer of each of the investment companies of the Seligman Group of Funds†. Formerly, Managing Director, Partner and Chief Portfolio Strategist, AMT Capital Management. | |||
Audrey G. Kuchtyak (45) • Vice President: 1991 to Date | Senior Vice President, J. & W. Seligman & Co. Incorporated; Vice President, Seligman Select Municipal Fund, Inc. | |||
Thomas G. Rose (47) • Vice President: 2000 to Date | Chief Financial Officer, Senior Vice President, Finance, and Treasurer, J. & W. Seligman & Co. Incorporated; Senior Vice President, Finance, Seligman Advisors, Inc. and Seligman Data Corp.; and Vice President of each of the investment companies of the Seligman Group of Funds†, Seligman Services, Inc. and Seligman International, Inc. Formerly, Treasurer of each of the investment companies of the Seligman Group of Funds and Seligman Data Corp. | |||
Lawrence P. Vogel (49) • Vice President: 1992 to Date • Treasurer: 2000 to Date | Senior Vice President and Treasurer, Investment Companies, J. & W. Seligman & Co. Incorporated; Vice President and Treasurer of each of the investment companies of the Seligman Group of Funds†; and Treasurer of Seligman Data Corp. Formerly, Senior Vice President, Finance, J. & W. Seligman & Co. Incorporated, Seligman Advisors, Inc., Seligman International, Inc. and Seligman Data Corp.; Vice President, Seligman Services, Inc.; and Treasurer, Seligman International, Inc. | |||
Frank J. Nasta (41) • Secretary: 1994 to Date | Director, Managing Director, General Counsel and Corporate Secretary, J. & W. Seligman & Co. Incorporated; Secretary of each of the investment companies of the Seligman Group of Funds†; and Corporate Secretary, Seligman Advisors, Inc., Seligman Services, Inc., Seligman International, Inc., and Seligman Data Corp. |
ø | The address for each of the directors and officers is 100 Park Avenue, 8th floor, New York, NY 10017. Each Director serves for an indefinite term, until the election and qualification of a successor or until his or her earlier death, resignation or removal. Each officer is elected annually by the Board of Directors. |
† | The Seligman Group of Funds consists of 24 registered investment companies. |
* | Mr. Morris and Mr. Zino are considered “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended, by virtue of their positions with J. & W. Seligman & Co. Incorporated and its affiliates. |
Member: | 1 Audit Committee 2 Director Nominating Committee 3 Board Operations Committee |
ITEM 2. | CODE OF ETHICS. |
As of October 31, 2005, the registrant has adopted a code of ethics that applies to its principal executive and principal financial officers.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The registrant’s board of directors has determined that Mr. James N. Whitson, a member of its audit committee, is an audit committee financial expert. Mr. Whitson is “independent” as such term is defined in Form N-CSR.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
(a) – (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows:
| 2005 |
| 2004 |
Audit Fees | $27,420 |
| $26,177 |
Audit-Related Fees | 6,765 |
| 42,805 |
Tax Fees | 2,350 |
| 2,200 |
All Other Fees | 1,931 |
| – |
Audit fees include amounts related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include the performance of certain agreed-upon procedures with respect to the registrant’s preferred stock. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other fees include the registrant's pro-rata share of amounts for services related to the assessment of procedures for compliance with anti-money laundering regulations by the registrant and certain other associated investment companies.
Aggregate fees billed by the registrant’s principal accountant for the last two fiscal years for non-audit services provided to the registrant’s investment adviser (not including a sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registered investment company, where the engagement relates directly to the operations and financial reporting of the registrant, were as follows:
| 2005 |
| 2004 |
Audit-Related Fees | $76,630 |
| $72,980 |
Tax Fees | 13,903 |
| 7,800 |
All Other Fees | – |
| 43,000 |
Audit-related fees include amounts for attestation services for the registrant’s stockholder service agent. Tax fees include amounts related to tax compliance, tax
planning, and tax advice for and an evaluation of certain tax reporting procedures of the registrant’s stockholder service agent. Other fees relates to electronic communication processing services performed on behalf of outside counsel of the investment adviser.
(e) (1) The Audit Committee is required to preapprove audit and non-audit services performed for the registrant by the principal accountant in order to assure that the provision of such services does not impair the principal accountant’s independence. The Audit Committee also is required to preapprove certain non-audit services performed by the registrant’s principal accountant for the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and certain of the adviser’s affiliates that provide services directly related to the operations and financial reporting of the registrant. Unless a type of service to be provided by the principal accountant has received preapproval, it will require specific preapproval by the Audit Committee.
The Audit Committee may delegate preapproval authority to one or more of its members. The member or members to whom such authority is delegated shall report any preapproval decisions to the Audit Committee at its next scheduled meeting.
Notwithstanding the foregoing, under certain circumstances, preapproval of non-audit services of a de minimis amount is not required.
(2) No services included in (b) – (d) above were approved pursuant to the waiver provisions of paragraphs (c)(7)(i)(C) or (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant’s principal accountant for non-audit services rendered to the registrant, its investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $101,579 and $168,785, respectively.
(h) All non-audit services rendered in (g) above were pre-approved by the registrant’s audit committee. Accordingly, the audit committee considered whether these services were compatible with maintaining the principal accountant’s independence.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. | ||
| James N. Whitson, Chairman | Betsy S. Michel |
|
| John R. Galvin | Leroy C. Richie |
|
ITEM 6. | SCHEDULE OF INVESTMENTS. |
Included in Item 1 above.
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR | |
| CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
|
Not applicable, as registrant does not invest in voting securities.
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
PORTFOLIO MANAGERS
Information pertaining to the Co-Portfolio Managers of Seligman Quality Municipal Fund, Inc., as of January 6, 2006 , is set forth below.
Thomas G. Moles (63) • Executive Vice President: 2002 to Date • Portfolio Manager: 1991 to 2002 • Co-Portfolio Manager: 2003 to Date
| Director and Managing Director, J. & W. Seligman & Co. Incorporated; Vice President and Co-Portfolio Manager, Seligman Municipal Fund Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal Fund, Inc., and Seligman Pennsylvania Municipal Fund Series; Executive Vice President and Co-Portfolio Manager, Seligman Select Municipal Fund, Inc. (closed-end investment company); and Director, Seligman Advisors, Inc. and Seligman Services, Inc.
|
Eileen A. Comerford (47) • Vice President: 1991 to Date • Co-Portfolio Manager: 2003 to Date
| Senior Vice President and Investment Officer, J. & W. Seligman & Co. Incorporated; Vice President and Co-Portfolio Manager, Seligman Municipal Fund Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal Fund, Inc., Seligman Pennsylvania Municipal Fund Series and Seligman Select Municipal Fund, Inc. (closed-end investment company).
|
For purposes of this discussion, each of the registrant’s Co-Portfolio Managers is referred to herein as a “Portfolio Manager” and collectively as the “Portfolio Managers.” The following table sets forth certain additional information with respect to the Portfolio Managers of the registrant. Unless noted otherwise, the information is provided as of October 31, 2005.
Other Accounts Managed by Portfolio Managers. The table below identifies, for each Portfolio Manager, the number of accounts managed (other than the registrant) and the total assets in such accounts, within each of the following categories: registered investment companies, other pooled investment vehicles, and other accounts. None of the accounts noted below has an advisory fee based on performance of the account.
Portfolio Manager | Registered Investment Companies | Other Pooled Investment Vehicles |
Other Accounts |
Thomas G. Moles | 5 Registered Investment Companies, (one of which includes 13 portfolios, and a second which includes four portfolios) with approximately $1.4 billion in total assets under management.
| 0 Pooled Investment Vehicles with $0 in assets under management. | 5 Other Accounts with $ 686,000 in assets under management. |
Eileen A. Comerford | 5 Registered Investment Companies, (one of which includes 13 portfolios, and a second which includes four portfolios) with approximately $1.4 billion in total assets under management.
| 0 Pooled Investment Vehicles with $0 in assets under management. | 3 Other Accounts with $ 558,000 in assets under management. |
Compensation/Material Conflicts of Interest. Set forth below is an explanation of the structure of, and method(s) used to determine, Portfolio Manager compensation. Also set forth below is an explanation of material conflicts of interest that may arise between a Portfolio Manager’s management of the registrant’s investments and investments in other accounts.
Compensation:
As compensation for their responsibilities, each of Mr. Moles and Ms. Comerford received a base salary and discretionary bonus for the calendar year ended December 31, 2005.
Discretionary bonuses for investment professionals are subjective and based on numerous qualitative and quantitative factors. The factors, which have no pre-determined weightings and may apply differently from person to person may include, among other things, the Portfolio Manager’s relative investment performance versus one or more competitive universes or benchmarks; the Manager’s overall profitability and profitability attributable to the assets under management for the Portfolio Manager’s investment team; and the Portfolio Manager’s support of marketing efforts.
The structure of a Portfolio Manager’s compensation may be modified from time to time reflect, among other things, changes in responsibilities or the competitive environment.
Conflicts of Interest:
Actual or potential conflicts of interest may arise from the fact that the Manager, and the Portfolio Managers of the registrant have day-to-day management responsibilities with respect to accounts of clients of the Manager other than the registrant (“Other Accounts”). The Manager has policies and procedures intended to maintain or manage the conflicts of interest described below. There is no guarantee that any such policies or procedures will detect each and every situation in which a conflict of interest arises.
The Manager may receive higher compensation with respect to Other Accounts (including accounts which are private investment funds or have performance or higher fees paid to the Manager, or in which one or more Portfolio Managers have direct or indirect personal interest in the receipt of such fees) than that received with respect to the registrant. This may create a potential conflict of interest for the Manager or its Portfolio Managers by providing an incentive to favor these Other Accounts when, for example, placing securities transactions. In addition, the Manager could be viewed as having a conflict of interest to the extent that the Manager or an affiliate has a proprietary investment in one or more Other Accounts, the Portfolio Managers have personal investments, directly or indirectly, in one or more Other Accounts or the Other Accounts are investment options in the Manager’s employee benefit plans. Potential conflicts of interest may arise with both the aggregation and allocation of securities transactions and allocation of limited investment opportunities. Allocations of aggregated trades, particularly trade orders that were only partially completed due to limited availability, and allocation of investment opportunities generally, could raise a potential conflict of interest, as the Manager may have an incentive to allocate securities that are expected to increase in value to favored accounts. Initial public offerings, in particular, are frequently of very limited availability. The Manager may be perceived as causing accounts it manages to participate in an offering to increase the Manager’s overall allocation of securities in that offering. A potential conflict of interest also may be perceived to arise if transactions in one account closely follow related transactions in a different account, such as when a purchase increases the value of securities previously purchased by another account or when a sale in one account lowers the sale price received in a sale by a second account. Because the Manager manages accounts that engage in short sales of securities of the type in which many clients may invest, the Manager could be seen as harming the performance of certain client accounts (i.e., those not engaging in short sale transactions) for the benefit of the accounts engaging in short sales if the short sales cause the market value of the securities to fall. Conversely, the Manager
could be seen as benefiting those accounts that may engage in short sales through the sale of securities held by other clients to the extent the such sales reduce the cost to cover the short positions. However, the Manager does not currently engage in short sales of securities of municipal issuers.
The Manager and its affiliates may at times give advice or take action with respect to accounts that differs from the advice given other accounts. A particular security may be bought or sold only for certain clients even though it could have been bought or sold for other clients at the same time. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling the security. Simultaneous portfolio transactions in the same security by multiple clients may tend to decrease the prices received by clients for sales of such securities and increase the prices paid by clients for purchases of such securities.
Employees of the Manager, including Portfolio Managers, may engage in personal trading, subject to the Manager’s Code of Ethics. In addition to the general conflicts noted above, personal trading by employees may create apparent or actual conflicts to the extent that one or more employees personally benefit or appear to benefit from subsequent trading by clients in similar securities.
Because Portfolio Managers of the Manager manage multiple client accounts, Portfolio Managers may devote unequal time and attention to the portfolio management of client accounts.
Securities Ownership. As of October 31, 2005, Mr. Moles owned between $10,001 and $50,000 of the shares of the registrant, and Ms. Comerford owned between $1 and $10,000 of the shares of the registrant.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Period | Total Number of Shares (or Units) Purchased | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) |
5-01-05 to 5-31-05 | 1,900 | 12.23 | 1,900 | N/A |
6-01-05 to 6-30-05 | 1,900 | 12.31 | 1,900 | N/A |
7-01-05 to 7-31-05 | 1,900 | 12.34 | 1,900 | N/A |
8-01-05 to 8-31-05 | 3,600 | 12.40 | 3,600 | N/A |
9-01-05 to 9-30-05 | 1,800 | 12.65 | 1,800 | N/A |
10-01-05 to 10-31-05 | 1,800 | 12.45 | 1,800 | N/A |
(1) | As announced on November 22, 1991, the Registrant may purchase its shares in the open market equal to the number of shares purchased by participants in the Registrant’s dividend investment plan. |
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
Not applicable.
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) The registrant's principal executive officer and principal financial officer have concluded, based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures provide reasonable assurance that material information required to be disclosed by the registrant in the report it files or submits on Form N-CSR is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and that such material information is accumulated and communicated to the registrant's management, including its principal executive officer and principal financial officer, as appropriate, in order to allow timely decisions regarding required disclosure.
(b) The registrant’s principal executive officer and principal financial officer are aware of no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 12. | EXHIBITS. |
| ||
| (a)(1) | Code of Ethics for Principal Executive and Principal Financial Officers. | ||
(a)(2) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. |
(a)(3) | Not applicable. |
(b) | Certifications of chief executive officer and chief financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SELIGMAN QUALITY MUNICIPAL FUND, INC.
By: |
/S/ BRIAN T. ZINO |
Brian T. Zino |
|
President and Chief Executive Officer |
Date: | January 6, 2006 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: |
/S/ BRIAN T. ZINO |
Brian T. Zino |
|
President and Chief Executive Officer |
Date: | January 6, 2006 |
By: |
/S/ LAWRENCE P.VOGEL |
Lawrence P. Vogel |
|
Vice President, Treasurer and Chief Financial Officer |
Date: | January 6, 2006 |
SELIGMAN QUALITY MUNICIPAL FUND, INC.
EXHIBIT INDEX
(a)(1) | Code of Ethics for Principal Executive and Principal Financial Officers. |
(a)(2) | Certifications of principal executive officer and principal financial officer as |
required by Rule 30a-2(a) under the Investment Company Act of 1940.
(b) | Certification of chief executive officer and chief financial officer as required by |
Rule 30a-2(b) of the Investment Company Act of 1940.