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: 811-7510
ACM MUNICIPAL SECURITIES INCOME FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: October 31, 2005
Date of reporting period: April 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
ACM Municipal Securities Income Fund
Closed End
April 30, 2005
SEMI-ANNUAL REPORT
Investment Products Offered
-----------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
-----------------------------
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330
AllianceBernstein Investment Research and Management, Inc. is an affiliate of
Alliance Capital Management L.P., the manager of the funds, and is a member of
the NASD.
June 20, 2005
Semi-Annual Report
This report provides management's discussion of fund performance for ACM
Municipal Securities Income Fund (the "Fund") for the semi-annual reporting
period ended April 30, 2005. The Fund is a closed-end fund that trades under
the New York Stock Exchange symbol "AMU".
Investment Objective and Policies
The Fund is a closed-end management investment company designed to provide high
current income exempt from regular federal income tax. The Fund invests
substantially all of its assets in investment grade municipal securities. For
more information regarding the Fund's risks, please see "A Word About Risk" on
page 3 and "Note G--Risks Involved in Investing in the Fund" of the Notes to
Financial Statements on page 21.
Investment Results
The table on page 4 provides performance data for the Fund and its benchmark,
the Lehman Brothers (LB) Municipal Index, for the six- and 12-month periods
ended April 30, 2005. For comparison, returns for the Lipper General Municipal
Debt Funds (Leveraged) Average (the "Lipper Average") are also included. The
funds that comprise the Lipper Average have generally similar investment
objectives to the Fund, although some may have different investment policies
and sales and management fees.
The Fund outperformed its benchmark and its peer group, as represented by the
Lipper Average, during both the six- and 12-month periods ended April 30, 2005.
The Fund's stronger relative
performance versus its benchmark during the six-month reporting period was
largely the result of security selection in the insured, pre-refunded and
hospital sectors. Security selection in the industrial revenue bond sector
detracted from performance. The Fund's relative exposure to the industrial
revenue bond, hospital and pre-refunded sectors also contributed positively to
the Fund's performance.
Market Review and Investment Strategy
During the six-month period ended April 30, 2005, long-term municipal bond
yields declined and short-term municipal bond yields increased. Yields moved in
a similar manner in the Treasury bond market. The rise in short-term bond
yields was in response to the U.S. Federal Reserve increasing the target for
the Federal Funds rate by 1.00% through four rate hikes over the period.
Inconclusive economic signals and moderate inflation expectations, however,
allowed longer-term bond yields to decline. On a pre-tax basis, the municipal
market outperformed the taxable bond market for the six-month period ended
April 30, 2005. The LB Municipal Index gained 1.93%, versus the LB U.S.
Aggregate Index, representing taxable bonds, which returned 0.98% during the
same time frame. As of April 30, 2005, 30-year municipal bonds were yielding
approximately 97% of comparable maturity Treasury bonds.
Interest rates are still low by historical standards versus inflation and
indications of economic growth. As such, the Fund's portfolio managers (the
"managers") continue to maintain shorter-
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ACM MUNICIPAL SECURITIES INCOME FUND o 1
than-benchmark portfolio durations. The low-rate environment has led to
relatively strong demand for lower-rated bonds as investors seek higher income
producing bonds. As the yield premium on lower-rated bonds declined, making
them more expensive to buy/own versus high quality bonds, the managers sold
lower-rated bonds opportunistically. Stronger economic growth has helped boost
state and local government tax revenues, improving the creditworthiness of
state and local issuers. Holdings in general obligation bonds benefited from
this trend.
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2 o ACM MUNICIPAL SECURITIES INCOME FUND
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance on the following page represents past performance and does not
guarantee future results. Current performance may be lower or higher than the
performance information shown. Returns are annualized for periods longer than
one year. All fees and expenses related to the operation of the Fund have been
deducted. Performance assumes reinvestment of distributions and does not
account for taxes.
ACM Municipal Securities Income Fund Shareholder Information
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of The Wall Street Journal under the
abbreviation "ACM MuniSec." The Fund's NYSE trading symbol is "AMU." Weekly
comparative net asset value (NAV) and market price information about the Fund
is published each Monday in The Wall Street Journal, each Sunday in The New
York Times and each Saturday in Barron's and other newspapers in a table called
"Closed-End Bond Funds." For additional shareholder information regarding this
Fund, please see page 37.
Benchmark Disclosure
The unmanaged Lehman Brothers (LB) Municipal Index does not reflect fees and
expenses associated with the active management of a mutual fund portfolio. The
Index is a total return performance benchmark for the long-term, investment
grade, tax-exempt bond market. For both the six- and 12-month periods ended
April 30, 2005, the Lipper General Municipal Debt Funds (Leveraged) Average
consisted of 67 funds. These funds have generally similar investment objectives
to the Fund, although some may have different investment policies and sales and
management fees. An investor cannot invest directly in an index or average, and
their results are not indicative of the performance for any specific
investment, including the Fund.
A Word About Risk
Among the risks of investing in the Fund are changes in the general level of
interest rates or bond credit quality ratings. Changes in interest rates have a
greater effect on bonds with longer maturities than on those with shorter
maturities. Please note, as interest rates rise, existing bond prices fall and
can cause the value of your investment in the Fund to decline. While the Fund
invests principally in bonds and other fixed-income securities, in order to
achieve its investment objectives, the Fund may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
instruments involve risks different from, and in certain cases, greater than,
the risks presented by more traditional investments. At the discretion of the
Fund's Adviser, the Fund may invest up to 20% of its total assets in securities
that are not rated and up to 10% in securities that are not readily marketable.
The issuance of the Fund's preferred stock results in leveraging of the Common
Stock, an investment technique usually considered speculative. Leverage creates
certain risks for holders of Common Stock, including higher volatility of both
the net asset value and market value of the Common Stock, and fluctuations in
the dividend rates on the preferred stock will affect the return to holders of
Common Stock. If the Fund were fully invested in longer-term securities and if
short-term interest rates were to increase, then the amount of dividends paid
on the preferred shares would increase and both net investment income available
for distribution to the holders of Common Stock and the net asset value of the
Common Stock would decline. At the same time, the market value of the Fund's
Common Stock (that is, its price as listed on the New York Stock Exchange) may,
as a result, decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price of the
portfolio's investments, since the value of the Fund's Preferred Stock does not
fluctuate. In addition to the decline in net asset value, the market value of
the Fund's Common Stock may also decline.
(Historical Performance continued on next page)
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ACM MUNICIPAL SECURITIES INCOME FUND o 3
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARK Returns
---------------------------
PERIODS ENDED APRIL 30, 2005 6 Months 12 Months
-------------------------------------------------------------------------------
ACM Municipal Securities Income Fund (NAV) 4.32% 12.63%
-------------------------------------------------------------------------------
LB Municipal Index 1.93% 6.81%
-------------------------------------------------------------------------------
Lipper General Municipal Debt Funds
(Leveraged) Average 3.83% 10.67%
-------------------------------------------------------------------------------
The Fund's Market Price per share on April 30, 2005 was $10.38. For additional
Financial Highlights, please see page 25.
See Historical Performance and Benchmark disclosures on previous page.
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4 o ACM MUNICIPAL SECURITIES INCOME FUND
PORTFOLIO SUMMARY
April 30, 2005 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $127.9
BOND QUALITY RATING BREAKDOWN*
o 54.5% AAA
o 18.2% AA
o 15.5% A [PIE CHART OMITTED]
o 9.9% BBB
o 1.9% BB
* All data are as of April 30, 2005. The Fund's quality rating distribution is
expressed as a percentage of the Fund's total investments rated in particular
ratings categories by Standard & Poor's Rating Services and Moody's Investors
Service. The distributions may vary over time. If ratings are not available,
the Fund's Adviser will assign ratings that are considered to be of equivalent
quality to such ratings.
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ACM MUNICIPAL SECURITIES INCOME FUND o 5
PORTFOLIO OF INVESTMENTS
April 30, 2005 (unaudited)
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
LONG-TERM MUNICIPAL BONDS-167.7%
Alabama-4.7%
Jefferson Cnty Wtr and Swr Rev
FGIC Ser 02B
Prerefunded 8/01/12 @ 100
5.00%, 2/01/41 $ 1,535 $ 1,683,143
Jefferson Cnty Wtr and Swr Rev
FGIC Ser 02B
5.00%, 2/01/41 2,465 2,727,818
Jefferson Cnty Ltd Obligation
Sch Warrants Ser 04A
5.25%, 1/01/23 525 556,033
Montgomery Spl Care Fac Fin Auth
(Baptist Med Ctr) Ser 04C
5.25%, 11/15/29 1,000 1,017,230
-------------
5,984,224
-------------
Alaska-6.4%
Alaska International Airport
MBIA Ser 03B
5.00%, 10/01/26 1,000 1,041,750
Alaska Muni Bond Bank Auth
MBIA Ser 03E
5.25%, 12/01/26 3,000 3,231,480
Alaska Muni Bond Bank Auth
MBIA Ser 04G
5.00%, 2/15/22 1,585 1,682,002
Four Dam Pool Alaska
Ser 04
5.25%, 7/01/25 2,195 2,292,173
-------------
8,247,405
-------------
Arizona-2.3%
Arizona Cap Facs Fin Corp
(Arizona St Univ Proj)
6.25%, 9/01/32 1,550 1,617,968
Phoenix Civic Impt Corp
Wastewater Sys Rev (JR Lien)
MBIA Ser 04
5.00%, 7/01/23 1,250 1,332,163
-------------
2,950,131
-------------
California-15.7%
Burbank Redev Agy
FGIC Ser 03
5.625%, 12/01/28 2,700 3,028,239
California Dept of Wtr
Ser 02A
5.375%, 5/01/22 2,000 2,159,840
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6 o ACM MUNICIPAL SECURITIES INCOME FUND
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
California St
General Obligation Ser 03
5.00%, 2/01/32 $ 2,450 $2,528,302
5.00%, 2/01/33 1,100 1,134,386
Golden St
Tobacco Settlement XLCA Ser 03B
5.50%, 6/01/33 3,000 3,281,820
Golden St
Tobacco Settlement RADIAN Ser 03B
5.50%, 6/01/43 2,250 2,429,303
Lincoln California Spl Tax
Ser 04
5.90%, 9/01/24 500 510,810
Pomona Lease Rev
AMBAC Ser 03
5.50%, 6/01/24 1,465 1,640,536
5.50%, 6/01/34 3,000 3,318,390
-------------
20,031,626
-------------
Colorado-1.9%
Colorado Toll Rev
(Hwy E-470) Ser 00
Zero coupon, 9/01/35 10,000 1,263,800
Colorado Hlth Facs Auth Rev
(Parkview Med Ctr) Ser 04
5.00%, 9/01/25 760 771,841
Todd Creek Farms Metro Dist No 1
Wtr and Wastewater Rev Ser 04
6.125%, 12/01/19 400 399,752
-------------
2,435,393
-------------
Connecticut-2.3%
Connecticut St General Obligation
MBIA Ser 412
6.71%, 12/01/11(a)(b) 2,500 2,980,900
-------------
Florida-19.6%
Florida Hsg Fin Corp Rev MFHR
(Westlake Apts) FSA Ser 02-D1 AMT
5.40%, 3/01/42 8,780 8,995,637
Lee Cnty Hlth Fac Rev
(Shell Point Village Proj) Ser 99A
5.50%, 11/15/29 3,670 3,674,698
Miami Beach Hlth Fac Rev
(Mount Sinai Med Ctr)
6.75%, 11/15/24 2,000 2,251,280
Miami-Dade Cnty Spl Oblig
MBIA Ser 04B
5.00%, 4/01/24 4,000 4,235,640
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ACM MUNICIPAL SECURITIES INCOME FUND o 7
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Orange Cnty Hlth Fac Rev
(Orlando Regl Healthcare) Ser 02
5.75%, 12/01/32 $ 1,400 $1,512,154
Osceola Cnty Sch Brd Ctfs
FGIC Ser 04A
5.00%, 6/01/22 2,815 3,004,675
UCF Assn Ctfs
FGIC Ser 04A
5.125%, 10/01/24 1,325 1,427,939
-------------
25,102,023
-------------
Hawaii-2.0%
Hawaii Elec Rev
XLCA Ser 03B AMT
5.00%, 12/01/22 2,500 2,611,050
-------------
Illinois-10.5%
Chicago
General Obligation FSA Ser 04A
5.00%, 1/01/25 2,165 2,283,079
Chicago Arpt Rev
(O'Hare Intl Arpt) XLCA Ser B-1
5.25%, 1/01/34 3,100 3,285,535
Chicago Hsg Agy SFMR
(Mortgage Rev) GNMA/FNMA
Ser 02B AMT
6.00%, 10/01/33 710 739,273
Chicago Park Dist
General Obligation
(Ltd Tax) AMBAC Ser 04A
5.00%, 1/01/25 2,585 2,732,681
Cook Cnty Sch Dist
FSA Ser 04
4.60%, 12/01/20(c) 1,000 928,950
Illinois Fin Auth
(Loyola Univ Chicago) XLCA Ser 04A
5.00%, 7/01/24 1,495 1,561,931
Metropolitan Pier & Exposition Rev
(McCormick Pl) MBIA Ser 02A
5.25%, 6/15/42 1,750 1,854,178
-------------
13,385,627
-------------
Indiana-1.8%
Hendricks Cnty Bldg Facs
General Obligation Ser 04
5.50%, 7/15/21 1,045 1,158,288
Indiana Bd Bk Rev
FSA Ser 04B
5.00%, 2/01/21 1,100 1,171,214
-------------
2,329,502
-------------
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8 o ACM MUNICIPAL SECURITIES INCOME FUND
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Louisiana-0.1%
Calcasieu Parish Hsg Agy SFMR
(Mortgage Rev) GNMA/FNMA
Ser 97A AMT
6.40%, 4/01/32 $ 50 $51,613
-------------
Massachusetts-11.3%
Mass General Obligation Ser 02
Prerefunded 11/01/12 @ 100
5.25%, 11/01/30 3,310 3,681,912
Mass General Obligation Ser 02
5.25%, 11/01/30 1,690 1,879,888
Mass Hlth & Ed Fac Hosp Rev
(New England Med Ctr) MBIA Ser 94
8.53%, 7/01/18(b) 5,000 5,140,700
Mass Hsg Fin Agy MFHR
(Rental Rev) AMBAC Ser 00A AMT
6.00%, 7/01/41 2,965 3,116,778
Mass Hsg Fin Agy MFHR
(Rental Rev) MBIA Ser 00H AMT
6.65%, 7/01/41 545 588,943
-------------
14,408,221
-------------
Michigan-5.3%
Kent Hosp Fin Auth
5.75%, 7/01/25 310 331,120
Michigan St Hosp Rev
(Trinity Hlth) Ser 00A
6.00%, 12/01/27 3,000 3,319,530
Saginaw Hosp Fac Rev
(Covenant Med Ctr) Ser 00F
6.50%, 7/01/30 2,775 3,071,398
-------------
6,722,048
-------------
Minnesota-1.0%
Shakopee Health Care Facs Rev
(St Francis Regl Med Ctr) Ser 04
5.10%, 9/01/25 1,200 1,238,568
-------------
Mississippi-7.4%
Adams Cnty Poll Ctl Rev
(International Paper Co) Ser 99 AMT
6.25%, 9/01/23 5,000 5,292,650
Gulfport Hosp Fac Rev
(Mem Hosp at Gulfport Proj) Ser 01A
5.75%, 7/01/31 4,000 4,222,040
-------------
9,514,690
-------------
Nevada-1.7%
Carson City Hosp Rev
(Carson-Tahoe Hosp Proj)
RADIAN Ser 03A
5.00%, 9/01/23 2,100 2,170,623
-------------
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ACM MUNICIPAL SECURITIES INCOME FUND o 9
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
New Jersey-7.1%
Morris-Union Jointure Commission
Ctfs of Participation Ser 04 RADIAN
5.00%, 5/01/24 $ 2,000 $2,091,220
New Jersey Eco Dev Auth
(Cigarette Tax) Ser 04 FGIC
5.00%, 6/15/12 1,745 1,908,507
New Jersey Eco Dev Auth
(Sch Fac Construction) Ser 05K
5.25%, 12/15/15 1,000 1,126,570
New Jersey St Edl Facs
AMBAC Ser 02A-213
9.32%, 9/01/21(a)(b) 3,400 4,002,276
-------------
9,128,573
-------------
New Mexico-4.9%
Dona Ana Cnty Tax Rev
AMBAC Ser 03
5.25%, 5/01/25 500 537,085
University of New Mexico
FSA FHA Ser 04
5.00%, 1/01/24 2,235 2,350,550
5.00%, 7/01/24 3,195 3,360,182
-------------
6,247,817
-------------
New York-11.1%
Erie Cnty Indl Dev Agy Sch Fac Rev
(Buffalo Sch Dist Proj) Ser 04 FSA
5.75%, 5/01/23 950 1,084,539
5.75%, 5/01/24 810 921,416
New York City
General Obligation Ser 04I
5.00%, 8/01/21 3,300 3,469,290
New York City Indl Dev Agy Rev
(Terminal One Group) Ser 94 AMT
6.125%, 1/01/24 8,100 8,234,298
New York City Indl Dev Agy Rev
(British Airways) Ser 98 AMT
5.25%, 12/01/32 500 426,470
-------------
14,136,013
-------------
North Carolina-0.8%
Charlotte NC Arpt Rev
MBIA Ser 04
5.25%, 7/01/24 1,000 1,083,840
-------------
North Dakota-1.9%
North Dakota Hsg Fin Agy SFMR
(Mortgage Rev) Ser 98E AMT
5.25%, 1/01/30 2,465 2,489,551
-------------
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10 o ACM MUNICIPAL SECURITIES INCOME FUND
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Ohio-9.8%
Cuyahoga Cnty Hosp Fac Rev
(University Hosp Hlth) Ser 00
7.50%, 1/01/30 $ 2,400 $2,704,536
Fairfield Cnty Hosp Fac Rev
(Fairfield Med Ctr Proj) RADIAN Ser 03
5.00%, 6/15/23 1,255 1,299,728
Ohio Hsg Fin Agy MFHR
(Mortgage Rev) GNMA Ser 97 AMT
6.15%, 3/01/29 3,650 3,762,493
Ohio State Wtr Dev Auth
(North Star) Ser 95 AMT
6.45%, 9/01/20 4,075 4,208,456
Port Auth Columbiana Cnty Solid Waste Fac Rev
(Apex Environmental LLC) Ser 04A AMT
7.125%, 8/01/25 500 506,005
-------------
12,481,218
-------------
Pennsylvania-4.3%
Pennsylvania Parking Fac Rev
(30th St Station) ACA Ser 02 AMT
5.875%, 6/01/33 2,050 2,187,186
Philadelphia Gas Wks Rev
AGC Ser 04
5.25%, 9/01/19 2,045 2,199,336
5.25%, 8/01/21 1,000 1,066,250
-------------
5,452,772
-------------
Rhode Island-2.3%
Rhode Island Hlth & Edl Bldg Corp Rev
(Times2 Academy) LOC-Citizens Bank Ser 04
5.00%, 12/15/24 1,745 1,783,669
Rhode Island Hlth & Edl Bldg Corp Rev
(Univ of Rhode Island) AMBAC Ser 04A
5.50%, 9/15/24 1,000 1,111,190
-------------
2,894,859
-------------
South Carolina-0.4%
Richland Lexington Arpt Rev
(Columbia Met Arpt)
FSA Ser 04 AMT
5.125%, 1/01/25 500 519,860
-------------
Tennessee-7.8%
Tenn Ed Loan Rev
(Educational Funding of South )
Ser 97B AMT
6.20%, 12/01/21 9,600 10,012,128
-------------
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ACM MUNICIPAL SECURITIES INCOME FUND o 11
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Texas-16.0%
Dallas TX Arpt Rev
(Fort Worth Intl Arpt) MBIA
Ser 03A AMT
5.25%, 11/01/25 $ 2,000 $2,103,440
Harris Cnty
Ser 03
5.00%, 10/01/23 1,400 1,487,780
Harris Cnty Toll Rev
FSA Ser 02
5.125%, 8/15/32 5,000 5,229,750
Hidalgo Cnty Hlth Svcs
(Mission Hosp Inc Proj) Ser 05
5.00%, 8/15/14 80 82,402
5.00%, 8/15/15 185 189,880
5.00%, 8/15/19 60 61,019
Lower Colorado Riv Auth
AMBAC Ser 03
5.25%, 5/15/25 1,800 1,921,356
Lower Colorado Riv Auth
MBIA Ser 02
5.00%, 5/15/31 1,500 1,558,260
Matagorda Cnty Rev
(Centerpoint Energy Houston Electric LLC)
Ser 04
5.60%, 3/01/27 1,000 1,039,610
MC Allen Wt & Swr Rev
5.25%, 02/01/21 1,605 1,755,950
5.25%, 02/01/22 1,610 1,754,658
Richardson Hosp Auth Rev
(Richardson Med Ctr) Ser 04
6.00%, 12/01/19 915 1,007,616
5.875%, 12/01/24 1,155 1,231,357
Seguin Ed Fac Rev
(Texas Lutheran Univ) Ser 04
5.25%, 9/01/28 1,000 1,012,430
-------------
20,435,508
-------------
Utah-2.1%
Davis Cnty Sales Tax Rev
AMBAC Ser 03B
5.25%, 10/01/23 1,005 1,085,812
Salt Lake City Wtr Rev
AMBAC Ser 04
5.00%, 7/01/23 1,500 1,595,070
-------------
2,680,882
-------------
Washington-1.2%
Seattle Hsg Auth Rev MFHR
(Wisteria Ct Proj) GNMA Ser 03
5.20%, 10/20/28 1,475 1,536,611
-------------
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12 o ACM MUNICIPAL SECURITIES INCOME FUND
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Wisconsin-4.0%
Wisconsin General Obligation Ser 03
5.00%, 11/01/26 $ 3,700 $3,802,009
Wisconsin Hlth & Edl Fac Auth Rev
(Bell Tower Residence Proj) Ser 05
LOC-Allied Irish Bank PLC
5.00%, 7/01/20 1,300 1,355,692
-------------
5,157,701
-------------
Total Investments-167.7%
(cost $204,552,096) 214,420,977
Other assets less liabilities-2.7% 3,482,834
Preferred Stock, at redemption value-(70.4)% (90,000,000)
-------------
Net Assets Applicable to Common
Shareholders-100%(d) $ 127,903,811
=============
INTEREST RATE SWAP TRANSACTIONS (see Note C)
Rate Type
----------------------------------
Notional Payments Payments
Swap Amount Termination made by received by Unrealized
Counter Party (000) Date the Fund the Fund Appreciation
------------- ------------- ------------- ------------- ------------- -------------
BMA* Municipal
J.P. Morgan $5,000 7/8/05 1.257% Swap IndexTM $ 14,972
* BMA (Bond Market Association)
(a) Private Placement.
(b) Inverse Floater Security-Security with variable interest rate that moves
in the opposite direction of short-term interest rates.
(c) Initial yield is presented. Interest rate after 12/01/07 will be 5.00%
(d) Portfolio percentages are calculated based on net assets applicable to
common shareholders.
Glossary of Terms:
ACA - American Capital Access (Financial Guaranty Corporation)
AGC - American Guaranty Corporation
AMBAC - American Municipal Bond Assurance Corporation
AMT - Alternative Minimum Tax
FGIC - Financial Guaranty Insurance Company
FNMA - Federal National Mortgage Association
FHA - Federal Housing Administration
FSA - Financial Security Assurance, Inc.
GNMA - Government National Mortgage Association
LOC - Letter of Credit
MBIA - Municipal Bond Investors Assurance Corporation
MFHR - Multi-Family Housing Revenue
RADIAN - Radian Group, Inc.
SFMR - Single Family Mortgage Revenue
XLCA - XL Capital Assurance, Inc.
See notes to financial statements.
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 13
STATEMENT OF ASSETS & LIABILITIES
April 30, 2005 (unaudited)
Assets
Investments in securities, at value (cost $204,552,096) $214,420,977
Cash 49,339
Interest receivable 3,651,359
Prepaid expenses 80,891
Unrealized appreciation of swap contracts 14,972
-------------
Total assets 218,217,538
-------------
Liabilities
Advisory fee payable 103,466
Dividend payable--preferred shares 55,475
Administrative fee payable 49,434
Accrued expenses and other liabilities 105,352
-------------
Total liabilities 313,727
-------------
Preferred Stock, at redemption value
$.01 par value per share; 3,600 shares
Auction Preferred Stock authorized,
issued and outstanding at $25,000
per share liquidation preference 90,000,000
-------------
Net Assets Applicable to Common Shareholders $127,903,811
=============
Composition of Net Assets Applicable to
Common Shareholders
Common Stock, $.01 par value per share;
99,996,400 shares authorized,
11,145,261 shares issued and outstanding $111,453
Additional paid-in capital 140,897,505
Distributions in excess of net investment income (61,931)
Accumulated net realized loss on investment transactions (22,927,069)
Net unrealized appreciation of investments 9,883,853
-------------
Net Assets Applicable to Common Shareholders $127,903,811
=============
Net Asset Value Applicable to Common Shareholders
(based on 11,145,261 common shares outstanding) $11.48
======
See notes to financial statements.
-------------------------------------------------------------------------------
14 o ACM MUNICIPAL SECURITIES INCOME FUND
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2005 (unaudited)
Investment Income
Interest $5,649,113
Expenses
Advisory fee $539,754
Administrative fee 161,926
Auction Preferred Stock--auction
agent's fees 112,320
Custodian 62,426
Audit 44,954
Printing 22,386
Legal 19,474
Directors' fees and expenses 16,744
Transfer agency 14,924
Registration fees 12,012
Miscellaneous 20,384
----------
Total expenses 1,027,304
Less: Administration fee waiver (47,499)
----------
Net expenses 979,805
-----------
Net investment income 4,669,308
-----------
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain on:
Investment transactions 689,297
Swap transactions 15,169
Net change in unrealized appreciation/
depreciation of:
Investments 597,376
Swaps (9,736)
-----------
Net gain on investment transactions 1,292,106
-----------
Dividends to Auction Preferred
Shareholders from
Net investment income (811,472)
-----------
Net Increase in Net Assets Applicable
to Common Shareholders Resulting
from Operations $5,149,942
-----------
See notes to financial statements.
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 15
STATEMENT OF CHANGES IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS
Six Months
Ended Year Ended
April 30, 2005 October 31,
(unaudited) 2004
--------------- -------------
Increase (Decrease) in Net Assets
Applicable to Common Shareholders
Resulting from Operations
Net investment income $ 4,669,308 $9,757,431
Net realized gain on investment
transactions 704,466 388,026
Net change in unrealized
appreciation/depreciation
of investments 587,640 4,167,154
Dividends to Auction Preferred
Shareholders from
Net investment income (811,472) (980,894)
--------------- -------------
Net increase in net assets
applicable to common shareholders
resulting from operations 5,149,942 13,331,717
Dividends and Distributions to
Common Shareholders from
Net investment income (4,039,698) (9,660,631)
Common Stock Transactions
Reinvestment of dividends resulting in the
issuance of common stock 55,061 744,979
--------------- -------------
Total increase 1,165,305 4,416,065
Net Assets Applicable to Common
Shareholders
Beginning of period 126,738,506 122,322,441
--------------- -------------
End of period (including (distribution in
excess of net investment income)
($61,931) and undistributed net
investment income of $119,931,
respectively) $127,903,811 $126,738,506
--------------- -------------
See notes to financial statements.
-------------------------------------------------------------------------------
16 o ACM MUNICIPAL SECURITIES INCOME FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2005 (unaudited)
Notes to Financial Statements
NOTE A
Significant Accounting Policies
ACM Municipal Securities Income Fund, Inc. (the "Fund"), was incorporated in
the state of Maryland on February 11, 1993 and is registered under the
Investment Company Act of 1940 as a diversified, closed-end management
investment company. The financial statements have been prepared in conformity
with U.S. generally accepted accounting principles, which require management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities in the financial statements and amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
followed by the Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities not listed on an exchange but traded on The
NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ
Official Closing Price; listed put or call options are valued at the last sale
price. If there has been no sale on that day, such securities will be valued at
the closing bid prices on that day; open futures contracts and options thereon
are valued using the closing settlement price or, in the absence of such a
price, the most recent quoted bid price. If there are no quotations available
for the day of valuation, the last available closing settlement price is used;
securities traded in the over-the-counter market, (OTC) (but excluding
securities traded on NASDAQ) are valued at the mean of the current bid and
asked prices as reported by the National Quotation Bureau or other comparable
sources; U.S. Government securities and other debt instruments having 60 days
or less remaining until maturity are valued at amortized cost if their original
maturity was 60 days or less; or by amortizing their fair value as of the 61st
day prior to maturity if their original term to maturity exceeded 60 days;
fixed-income securities, including mortgage backed and asset backed securities,
may be valued on the basis of prices provided by a pricing service or at a
price obtained from one or more of the major broker/dealers. In cases where
broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the
"Adviser") may
-------------------------------------------------------------------------------
ACM Municipal Securities Income Fund o 17
establish procedures whereby changes in market yields or spreads are used to
adjust, on a daily basis, a recently obtained quoted price on a security; and
OTC and other derivatives are valued on the basis of a quoted bid price or
spread from a major broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially
all of its investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the trade date securities are purchased or sold. Investment gains and losses
are determined on the identified cost basis. The Fund amortizes premiums and
accretes original issue discounts and market discounts as adjustments to
interest income.
4. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
U.S. generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences do not require such
reclassification.
NOTE B
Advisory, Administrative Fees and Other Transactions with Affiliates
Under the terms of an investment advisory agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .50 of 1% of the average weekly net assets
of the Fund. Such fee is accrued daily and paid monthly.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Global
Investor Services, Inc. (AGIS), an affiliate of the Adviser, the Fund reim-
-------------------------------------------------------------------------------
18 o ACM MUNICIPAL SECURITIES INCOME FUND
burses AGIS for costs relating to servicing phone inquiries for the Fund.
During the six months ended April 30, 2005, there was no reimbursement paid to
AGIS.
Under the terms of an Administration Agreement, the Fund pays Alliance Capital
Management L.P. (the "Administrator") an administration fee at an annual rate
of .15 of 1% of the average weekly net assets of the Fund. Such fee is accrued
daily and paid monthly. Effective February 11, 2005, the Administrator has
agreed to reimburse the Fund for administrative expenses at an annual rate of
.10 of 1% of the average weekly net assets of the Fund. The Administrator has
engaged Prudential Investments LLC (the "Sub-Administrator"), an indirect,
wholly-owned subsidiary of Prudential Financial, Inc., to act as
sub-administrator. The Administrator, out of its own assets, will pay the
Sub-Administrator a monthly fee equal to an annual rate of .10 of 1% of the
Fund's average weekly net assets. The Sub-Administrator prepares financial and
regulatory reports for the Fund and provides other clerical services.
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended April 30, 2005, were as follows:
Purchases Sales
------------- -----------
Investment securities (excluding
U.S. government securities) $22,489,997 $17,873,963
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes was substantially the
same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation and unrealized depreciation (excluding swaps) are as
follows:
Gross unrealized appreciation $10,619,614
Gross unrealized depreciation (750,733)
-----------
Net unrealized appreciation $9,868,881
-----------
Swap Agreements
The Fund may enter into swaps to hedge its exposure to interest rates and
credit risk and for investment purposes. A swap is an agreement that obligates
two parties to exchange a series of cash flows at specified intervals based
upon or calculated by reference to changes in specified prices or rates for a
specific amount of an underlying asset. The payment flows are usually netted
against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of the counterparty is generally limited to the net interest
payment to be received by the Fund, and/or the termination value at the end of
the contract. Therefore,
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 19
the Fund considers the creditworthiness of each counterparty to a swap contract
in evaluating potential credit risk. Additionally, risks may arise from
unanticipated movements in interest rates or in the value of the underlying
securities.
As of November 1, 2003, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. The Fund accrues for the interim payments on
swap contracts on a daily basis, with the net amount recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities. Once the interim payments are settled in cash, the net amount is
recorded as realized gain/loss on swaps, in addition to realized gain/loss
recorded upon the termination of swap contracts on the statement of operations.
Prior to November 1, 2003, these interim payments were reflected within
interest income/expense in the statement of operations. Fluctuations in the
value of swap contracts are recorded as a component of net change in unrealized
appreciation/depreciation of investments.
NOTE D
Distributions To Common Shareholders
The tax character of distributions to be paid for the year ending October 31,
2005 will be determined at the end of the current fiscal year. The tax
character of distributions paid to common shareholders during the fiscal years
ended October 31, 2004 and October 31, 2003 were as follows:
2004 2003
------------ ----------
Distributions paid from:
Ordinary income $65,384 $87,103
Tax-exempt income 9,595,248 8,715,232
------------ ----------
Total distributions paid $9,660,632 $8,802,335
------------ ----------
As of October 31, 2004, the components of accumulated earnings/(deficit)
applicable to common shareholders on a tax basis were as follows:
Undistributed net tax exempt income $162,944
Accumulated capital and other losses (23,465,455)(a)
Unrealized appreciation/(depreciation) 9,127,197(b)
-------------
Total accumulated earnings/(deficit) $(14,175,314)(c)
-------------
(a) On October 31, 2004, the Fund had a net capital loss carryforward of
$23,465,455 of which $6,110,148 expires in the year 2007, $10,294,946 expires
in the year 2008, $1,971,343 expires in the year 2010, and $5,089,018 expires
in the year 2011. To the extent future capital gains are offset by capital loss
carryforward, such gains will not be distributed. During the current fiscal
year capital loss carryforward of $365,370 was utilized.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales and the difference between the book and tax treatment of
swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficits) is attributable primarily to dividends payable.
-------------------------------------------------------------------------------
20 o ACM MUNICIPAL SECURITIES INCOME FUND
During the current fiscal year, permanent differences, primarily due to the tax
treatment of swap income, resulted in a net decrease of undistributed net
investment income, and a decrease in accumulated net realized loss on
investment transactions. This reclassification had no effect on net assets.
NOTE E
Common Stock
There are 99,996,400 shares of $0.01 par value common stock authorized. There
are 11,145,261 shares of common stock outstanding at April 30, 2005. During the
six months ended April 30, 2005 and the year ended October 31, 2004, the Fund
issued 4,791 and 65,850 shares, respectively, in connection with the Fund's
dividend reinvestment plan.
NOTE F
Preferred Stock
The Fund has issued and outstanding 3,600 shares of Auction Preferred Stock,
consisting of 1,200 shares each of Series A, Series B and Series C. The
preferred shares have a liquidation value of $25,000 per share plus
accumulated, unpaid dividends.
The dividend rate on Series A is 2.70%, effective through May 4, 2005. The
dividend rate on Series B is 2.25%, effective through December 12, 2005. The
dividend rate on Series C is 2.71%, effective through May 5, 2005.
At certain times, the Preferred Shares are redeemable by the Fund, in whole or
in part, at $25,000 per share plus accumulated, unpaid dividends.
Although the Fund will not ordinarily redeem the Preferred Shares, it may be
required to redeem shares if, for example, the Fund does not meet an asset
coverage ratio required by law or to correct a failure to meet a rating agency
guideline in a timely manner. The Fund voluntarily may redeem the Preferred
Shares in certain circumstances.
The Preferred Shareholders, voting as a separate class, have the right to elect
at least two Directors at all times and to elect a majority of the Directors in
the event two years' dividends on the Preferred Shares are unpaid. In each
case, the remaining Directors will be elected by the Common Shareholders and
Preferred Shareholders voting together as a single class. The Preferred
Shareholders will vote as a separate class on certain other matters as required
under the Fund's Charter, the Investment Company Act of 1940 and Maryland law.
NOTE G
Risks Involved in Investing in the Fund
Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes
in interest rates will affect the value of the Fund's investments in
fixed-income debt
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 21
securities such as bonds or notes. Increases in interest rates may cause the
value of the Fund's investments to decline. Credit risk is the risk that the
issuer or guarantor of a debt security, or the counterparty to a derivative
contract, will be unable or unwilling to make timely principal and/or interest
payments, or to otherwise honor its obligations. The degree of risk for a
particular security may be reflected in its credit risk rating. Credit risk is
greater for medium quality and lower-rated securities. Lower-rated debt
securities and similar unrated securities (commonly known as "junk bonds") have
speculative elements or are predominantly speculative risks.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
NOTE H
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the Office of the New York Attorney General ("NYAG")
have been investigating practices in the mutual fund industry identified as
"market timing" and "late trading" of mutual fund shares. Certain other
regulatory authorities have also been conducting investigations into these
practices within the industry and have requested that the Adviser provide
information to them. The Adviser has been cooperating and will continue to
cooperate with all of these authorities. The shares of the Fund are not
redeemable by the Fund, but are traded on an exchange at prices established by
the market. Accordingly, the Fund and its shareholders are not subject to the
market timing and late trading practices that are the subject of the
investigations mentioned above or the lawsuits described below. Please see
below for a description of the agreements reached by the Adviser and the SEC
and NYAG in connection with the investigations mentioned above.
Numerous lawsuits have been filed against the Adviser and certain other
defendants in which plaintiffs make claims purportedly based on or related to
the same practices that are the subject of the SEC and NYAG investigations
referred to above. Some of these lawsuits name the Fund as a party. The
lawsuits are now pending in the United States District Court for the District
of Maryland pursuant to a ruling by the Judicial Panel on Multidistrict
Litigation transferring and centralizing all of the mutual fund cases involving
market and late trading in the District of Maryland. Management of the Adviser
believes that these private lawsuits are not likely to have a material adverse
effect on the results of operations or financial condition of the Fund.
-------------------------------------------------------------------------------
22 o ACM MUNICIPAL SECURITIES INCOME FUND
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds, commencing January 1,
2004, for a period of at least five years; and
(iii) The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order contemplates that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
The shares of the Fund are not redeemable by the Fund, but are traded on an
exchange at prices established by the market. Accordingly, the Fund and its
shareholders are not subject to the market timing practices described in the
SEC Order and are not expected to participate in the Reimbursement Fund. Since
the Fund is a closed-end fund, it will not have its advisory fee reduced
pursuant to the terms of the agreements mentioned above.
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
an unaffiliated broker/dealer violated federal securities laws relating to its
receipt of compensation for selling specific mutual funds and the disclosure of
such compensation. The SEC indicated publicly that, among other things, it was
considering enforcement action in connection with mutual funds' disclosure of
such arrangements and in connection with the practice of considering mutual
fund sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC issued subpoenas to the Adviser, and the NASD issued
requests for information in connection with this matter and the Adviser
provided documents and other information to the SEC and NASD and cooperated
fully with the
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 23
investigations. On June 8, 2005 the NASD announced that it had reached a
settlement with AllianceBernstein Investment Research and Management, Inc., a
wholly owned subsidiary of the Adviser and the distributor of the open-end
mutual funds sponsored by the Adviser, in connection with this matter.
Management of the Adviser expects that the settlement has resolved both
regulatory inquires described above.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Aucoin Complaint was filed in the United States District Court
for the Southern District of New York by an alleged shareholder of an
AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other
things, (i) that certain of the defendants improperly authorized the payment of
excessive commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain of the
defendants misrepresented and omitted from registration statements and other
reports material facts concerning such payments, and (iii) that certain
defendants caused such conduct as control persons of other defendants. The
Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and
48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act,
breach of common law fiduciary duties, and aiding and abetting breaches of
common law fiduciary duties. Plaintiffs seek an unspecified amount of
compensatory damages and punitive damages, rescission of their contracts with
the Adviser, including recovery of all fees paid to the Adviser pursuant to
such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
The Adviser believes that these matters are not likely to have a material
adverse effect on the Fund or the Adviser's ability to perform advisory
services relating to the Fund.
-------------------------------------------------------------------------------
24 o ACM MUNICIPAL SECURITIES INCOME FUND
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Six Months
Ended
April 30,
2005 Year Ended October 31,
(unaudited) 2004(a) 2003 2002 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning
of period $11.38 $11.05 $10.85 $12.10 $11.71 $11.64
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment
Operations
Net investment income .42 .88 .97 1.08 1.15 1.12
Net realized and unrealized
gain (loss) on investment
transactions .12 .41 .12 (1.32) .45 .16
Dividends to preferred
shareholders from net
investment income (common
stock equivalent basis) (.07) (.09) (.09) (.14) (.27) (.34)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
asset value from operations .47 1.20 1.00 (.38) 1.33 .94
----------- ----------- ----------- ----------- ----------- -----------
Less: Dividends and
Distributions to Common
Shareholders
Dividends from net investment
income (.37) (.87) (.80) (.87) (.88) (.78)
Distributions in excess of net
investment income -0- -0- -0- -0- (.06) (.09)
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions
to common shareholders (.37) (.87) (.80) (.87) (.94) (.87)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $11.48 $11.38 $11.05 $10.85 $12.10 $11.71
----------- ----------- ----------- ----------- ----------- -----------
Market price, end of period $10.38 $12.09 $11.62 $11.50 $12.70 $12.56
----------- ----------- ----------- ----------- ----------- -----------
Premium (Discount) (9.58)% 6.24% 5.16% 5.99% 4.96% 7.26%
Total Return
Total investment return based on:(b)
Market price (11.21)% 12.34% 8.53% (2.44)% 9.14% 16.16%
Net asset value 4.32% 11.20% 9.39% (3.35)% 11.59% 8.74%
Ratios/Supplemental Data
Net assets, applicable to
common shareholders, end
of period (000's omitted) $127,904 $126,739 $122,322 $119,323 $132,201 $127,142
Preferred stock, at redemption
value ($25,000 per share
liquidation preference)
(000's omitted) $90,000 $90,000 $90,000 $90,000 $90,000 $90,000
Ratios to average net assets
applicable to common
shareholders of:
Expenses(c) 1.55%(d)(e) 1.65% 1.71% 1.65% 1.53% 1.61%
Net investment income, before
preferred stock dividends(c) 7.41%(d)(e) 7.87% 8.78% 9.32% 9.60% 9.92%
Preferred stock dividends 1.29%(d) .79% .84% 1.19% 2.26% 3.03%
Net investment income, net of
preferred stock dividends 6.12%(d)(e) 7.08% 7.94% 8.13% 7.34% 6.89%
Portfolio turnover rate 8% 36% 32% 24% 82% 360%
Asset coverage ratio 242% 241% 236% 233% 247% 241%
See footnote summary on page 26.
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 25
(a) As of November 1, 2003, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. These interim payments are reflected within
net realized and unrealized gain (loss) on swap contracts, however, prior to
November 1, 2003, these interim payments were reflected within interest
income/expense on the statement of operations. For the year ended October 31,
2004, the effect of this change to the net investment income and the net
realized and unrealized gain (loss) on investment transactions was less than
$0.01 per share and the ratio of net investment income to average net assets
was less than .01%.
(b) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the premium of the market value to net asset value from the beginning to the
end of such periods. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
periods where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of the
period. Total investment returns for periods of less than one full year are not
annualized.
(c) These expense and net investment income ratios do not reflect the effect
of dividend payments to preferred shareholders.
(d) Annualized.
(e) Net of fee waiver. If the Administrator had not waived expenses, the
ratios to average net assets applicable to common shareholders for expenses,
net investment income before preferred stock dividends and net investment
income net of preferred stock dividends would have been 1.63%, 7.33% and 6.04%,
respectively, for the six months ended April 30, 2005.
-------------------------------------------------------------------------------
26 o ACM MUNICIPAL SECURITIES INCOME FUND
SUPPLEMENTAL PROXY INFORMATION
(unaudited)
Supplemental Proxy Information
The Annual Meeting of Stockholders of ACM Municipal Securities Income Fund, Inc.
was held on March 24, 2005.
A description of each proposal and number of shares voted at the meeting are as
follows:
Abstain/
Authority
Voted For Withheld
-------------------------------------------------------------------------------
1. To elect a common stock
Class One director:
(term expires in 2007) Michael J. Downey 10,108,966 282,037
2. To elect common stock
Class Two directors:
(term expires in 2008) David H. Dievler 10,110,318 280,685
William H.Foulk, Jr. 10,105,644 285,359
3. To elect a preferred stock
Class One director:
(term expires in 2007) Michael J. Downey 3,460 0
4. To elect preferred stock
Class Two directors:
(term expires in 2008) David H. Dievler 3,460 0
William H. Foulk, Jr. 3,460 0
James M. Hester 3,460 0
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 27
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Dr. James M. Hester(1)
Michael J.Downey(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Robert B. Davidson, III, Senior Vice President
Jeffrey L.Phlegar, Senior Vice President
Douglas J. Peebles, Senior Vice President
David M. Dowden(2), Vice President
Terrance T. Hults(2), Vice President
William E.Oliver, Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer andChief Financial Officer
Thomas R.Manley, Controller
Administrator
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105
Sub-Administrator
Prudential Investments LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Common Stock: Dividend Paying Agent, Transfer Agent and Registrar
Equiserve Trust Company N.A.
P.O. Box 43011
Providence, RI 02940-3011
Preferred Stock: Dividend Paying Agent, Transfer Agent and Registrar
The Bank of New York
100 Church Street
New York, NY10286
Independent Registered Public
Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036-6530
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its Common Stock in the open market.
This report, including the financial statements therein, is transmitted to the
shareholders of ACM Municipal Securities Income Fund for their information.This
is not a prospectus, circular or representation intended for use in the
purchase of shares of the Fund or any securities mentioned in the report.
Annual Certifications--As required, on April 21, 2005, the Fund submitted to
the New York Stock Exchange ("NYSE") the annual certification of the Fund's
Chief Executive Officer certifying 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 filed with the Securities and Exchange Commission for
the annual period.
(1) Member of the Audit Committee, the Independent Directors Committee and the
Governance and Nominating Committee.
(2) Messrs. Dowden and Hults are the persons primarily responsible for the
day-to-day management of the Fund's investment portfolio.
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28 o ACM MUNICIPAL SECURITIES INCOME FUND
Information Regarding the Review and Approval of the Fund's Advisory and
Administration Agreements
The Fund's disinterested directors (the "directors") unanimously approved the
continuance of the Advisory Agreement between the Fund and the Adviser and the
continuance of the Administration Agreement between the Adviser (in such
capacity, the "Administrator") and the Fund at a meeting held on February 7-10,
2005.
In preparation for the meeting, the directors had requested from the Adviser
and evaluated extensive materials, including performance and expense
information for other investment companies with similar investment objectives
derived from data compiled by Lipper Inc. ("Lipper"). Prior to voting, the
directors reviewed the proposed continuance of the Advisory Agreement and
Administration Agreement with management and with experienced counsel who are
independent of the Adviser and received a memorandum from such counsel
discussing the legal standards for their consideration of the proposed
continuance. The directors also discussed the proposed continuance in two
private sessions at which only the directors, their independent counsel and the
Fund's Independent Compliance Officer were present. In reaching their
determinations relating to continuance of the Advisory Agreement, the directors
considered all factors they believed relevant, including the following:
1. information comparing the performance of the Fund to other investment
companies with similar investment objectives and to an index;
2. the nature, extent and quality of investment, compliance, administrative
and other services rendered by the Adviser;
3. payments received by the Adviser from all sources in respect of the Fund
and all investment companies in the AllianceBernstein Fund complex;
4. the costs borne by, and profitability of, the Adviser and its affiliates
in providing services to the Fund and to all investment companies in the
AllianceBernstein Fund complex;
5. comparative fee and expense data for the Fund and other investment
companies with similar investment objectives;
6. the extent to which economies of scale would be realized as the Fund
grows and whether fee levels reflect these economies of scale for the benefit
of investors;
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ACM MUNICIPAL SECURITIES INCOME FUND o 29
7. the Adviser's policies and practices regarding allocation of portfolio
transactions of the Fund, including the extent to which the Adviser benefits
from soft dollar arrangements;
8. portfolio turnover rates for the Fund;
9. fall-out benefits which the Adviser and its affiliates receive from their
relationships with the Fund;
10. the Adviser's representation that it does not advise other clients with
similar investment objectives and strategies;
11. the professional experience and qualifications of the Fund's portfolio
management team and other senior personnel of the Adviser;
12. the terms of the Advisory Agreement; and
13. the terms of the Administration Agreement and the Administrator's
proposed one-year waiver of 10 basis points of the fees payable by the Fund
pursuant to the Administration Agreement.
The directors also considered their knowledge of the nature and quality of the
services provided by the Adviser to the Fund gained from their experience as
directors or trustees of most of the funds advised by the Adviser, their
overall confidence in the Adviser's integrity and competence they have gained
from that experience and the Adviser's responsiveness to concerns raised by
them in the past, including the Adviser's willingness to consider and implement
organizational and operational changes designed to improve investment results
and the services provided to the AllianceBernstein Funds.
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and each director attributed
different weights to the various factors.
The directors determined that the overall arrangements (i) between the Fund and
the Adviser, as provided in the Advisory Agreement, and (ii) between the Fund
and the Administrator, as provided in the Administration Agreement, were fair
and reasonable in light of the services performed, expenses incurred and such
other matters as the directors considered relevant in the exercise of their
business judgment.
The material factors and conclusions that formed the basis for the directors'
reaching their determinations to approve the continuance of the Advisory
Agreement and Administration Agreement (including their determinations that
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30 o ACM MUNICIPAL SECURITIES INCOME FUND
the Adviser should continue to be the investment adviser for the Fund, that the
Administrator should continue to be the administrator for the Fund, and that
the fees payable to the Adviser pursuant to the Advisory Agreement and to the
Administrator pursuant to the Administration Agreement are appropriate) were
separately discussed by the directors.
Nature, extent and quality of services provided by the Adviser
The directors noted that, under the Advisory Agreement, the Adviser, subject to
the control of the directors, administers the Fund's business and other
affairs. The Adviser manages the investment of the assets of the Fund,
including making purchases and sales of portfolio securities consistent with
the Fund's investment objective and policies. The Adviser also provides the
Fund with such office space, administrative and other services (exclusive of,
and in addition to, any such services provided by any others retained by the
Fund) and executive and other personnel as are necessary for the Fund's
operations. The Adviser pays all of the compensation of directors of the Fund
who are affiliated persons of the Adviser and of the officers of the Fund.
The directors also noted that under the Administration Agreement, the
Administrator, subject to the supervision of the directors, renders certain
administrative services to the Fund, including specified duties with respect
to, among other things, the preparation of reports required to be sent to
shareholders, the preparation of reports required to be filed with the
Securities and Exchange Commission on Form N-SAR, arranging for the
dissemination to shareholders of proxy materials, negotiating the terms and
conditions under which custodian and dividend disbursing services will be
provided and the related fees, the calculation of net asset value of the Fund,
determining the amounts available for distribution as dividends and
distributions to shareholders, assisting independent accountants of the Fund
with the filing of tax returns, assisting the Adviser in monitoring compliance
of the Fund's operations with the Investment Company Act of 1940, and providing
accounting and bookkeeping services. The directors noted that the
Administration Agreement provides that the Administrator may subcontract with
Prudential Investments LLC ("Prudential") for the provision of all or any part
of the services to be provided by it thereunder, and that Prudential has been
retained at the Administrator's expense as the Fund's Sub-Administrator since
it commenced operations. The directors noted that the Sub-Administration
Agreement between the Administrator and Prudential provides that Prudential,
subject to the supervision of the Administrator, renders certain specified
administrative services delegated to Prudential by the Administrator and
renders certain other administrative services to the extent requested by the
Administrator. All of the administrative services performed by Prudential are
services that the Administrator is required to provide to the Fund pursuant to
the Administration Agreement.
-------------------------------------------------------------------------------
ACM Municipal Securities Income Fund o 31
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and by the Administrator under the
Administration Agreement and noted that the scope of services provided by the
Adviser had expanded over time as a result of regulatory and other
developments. The directors noted that, for example, the Adviser is responsible
for maintaining and monitoring its own and, to varying degrees, the Fund's
compliance programs, and these compliance programs have recently been refined
and enhanced in light of new regulatory requirements. The directors considered
the quality of the investment research capabilities of the Adviser and the
other resources it has dedicated to performing services for the Fund. The
quality of administrative and other services, including the Adviser's role in
coordinating the activities of the Fund's other service providers, also were
considered. The directors also considered the Adviser's response to recent
regulatory compliance issues affecting many of the investment companies in the
AllianceBernstein Fund complex. The directors concluded that, overall, they
were satisfied with the nature, extent and quality of services provided to the
Fund under the Advisory Agreement and the Administration Agreement.
Costs of Services Provided and Profitability to the Adviser
The directors reviewed a schedule of the revenues, expenses and related notes
indicating the profitability of the Fund to the Adviser (including in its
capacity as Administrator) for calendar years 2002 and 2003. The directors
reviewed the assumptions and methods of allocation used by the Adviser in
preparing fund-specific profitability data, and noted the Adviser's
representation to them that it believed that the methods of allocation used in
preparing the profitability information were reasonable and appropriate and
that the Adviser had previously discussed with the directors that there is no
generally accepted allocation methodology for information of this type.
The directors recognized that it is difficult to make comparisons of
profitability from fund management contracts because comparative information is
not generally publicly available and is affected by numerous factors, including
the structure of the particular adviser, the types of funds it manages, its
business mix, numerous assumptions regarding allocations and the adviser's
capital structure and cost of capital. In considering profitability
information, the directors considered the effect of fall-out benefits on the
Adviser's expenses. The directors focused on the profitability of the Adviser's
relationship with the Fund before taxes. The directors recognized that the
Adviser should generally be entitled to earn a reasonable level of profits for
the services it provides to the Fund and, based on their review, concluded that
they were satisfied that the Adviser's level of profitability from its
relationship with the Fund was not excessive.
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32 o ACM MUNICIPAL SECURITIES INCOME FUND
Fall-Out Benefits
The directors considered that the Adviser benefits from soft dollar
arrangements whereby it receives brokerage and research services from many of
the brokers and dealers that execute purchases and sales of securities on
behalf of its clients, including the Fund. While the Fund does not normally
engage in brokerage transactions, the Adviser may benefit from soft dollar
arrangements when the Fund purchases securities in fixed price underwritings.
They noted that the Adviser makes presentations to the directors regarding its
trading practices and brokerage allocation policies, including its policies
with respect to soft dollar arrangements, from time to time and had made a
special presentation to the directors in 2004 on this subject. The directors
noted that the Adviser has represented to them that all of its soft dollar
arrangements are consistent with applicable legal requirements including the
achievement of best execution. At the special presentation, the directors
received and reviewed information concerning the Adviser's soft dollar
arrangements, which included a description of the Adviser's policies and
procedures with respect to allocating portfolio transactions for brokerage and
research services, data on the dollar amount of commissions allocated for
third-party research and brokerage services and for proprietary research and
brokerage services, and a list of firms providing third-party research and
brokerage to the Adviser.
The directors also noted that a subsidiary of the Adviser provides certain
shareholder services to the Fund and receives compensation from the Fund for
such services.
The directors recognized that the Adviser's profitability would be somewhat
lower if it did not receive research for soft dollars or if the Adviser's
subsidiary did not receive the other benefits described above. The directors
believe that the Adviser derives reputational and other benefits from its
association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the
meeting, the directors receive detailed comparative performance information for
the Fund at each regular Board meeting during the year. At the meeting, the
directors reviewed information showing performance of the Fund compared to
other funds in the Lipper General Municipal Debt Average (Leveraged) for
periods ending December 31, 2004, and compared to the Lehman Brothers Municipal
Bond Index. The directors noted that the Fund had outperformed the Lipper
medians significantly in the 1- and 3-month and 1-year periods although its
performance was somewhat below the Lipper median in the 10-year period and
significantly below the Lipper medians in the 3- and 5-year and since inception
periods (April 1993 inception). Based on their review, the directors concluded
that the Fund's relative investment performance was acceptable and noted the
improvement in more recent periods.
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 33
Advisory Fees and Other Expenses
The directors considered the advisory fee rate paid by the Fund to the Adviser
and information prepared by Lipper concerning fee rates paid by other funds in
the same Lipper category as the Fund. The directors also considered the
separate administration fees paid to the Administrator for administrative
services. They compared the combined advisory and administration fees paid by
the Fund to the advisory fees of other funds where there is no separate
administrator. The directors noted that under the Fund's Sub-Administration
Agreement, the Administrator pays the sub-administrators's fee out of the
Administrator's own assets. The directors recognized that it is difficult to
make comparisons of advisory fees because there are variations in the services
that are included in the fees paid by other funds.
The directors noted that in connection with the settlement of the market timing
matter with the New York Attorney General, the Adviser agreed to material
reductions (averaging 20%) in the fee schedules of most of the open-end funds
sponsored by the Adviser (other than money market funds). As a result of that
settlement, the Adviser's fees (i) for managing open-end high income funds are
.50% of the first $2.5 billion of average daily net assets, .45% for average
daily net assets over that level to $5 billion, and .40% for average daily net
assets over $5 billion; and (ii) for managing open-end low risk income funds
are .45% of the first $2.5 billion of average daily net assets, .40% for
average daily net assets over that level to $5 billion, and .35% for average
daily net assets over $5 billion.
At their December 14-16, 2004 meetings, the directors requested a reduction in
the advisory fees of the Fund to the fee levels charged to comparable open-end
funds managed by the Adviser and deferred renewal of the Fund's Advisory
Agreement and Administration Agreement pending receipt and consideration of
proposals by the Adviser. At the February 7-10, 2005 meeting, the directors
considered the Administrator's proposal to waive 10 basis points of its fee for
a one year period in order to reduce the fee rate under the Administration
Agreement for such period from 0.15% to 0.5%. The directors noted that since
the Administrator currently pays Prudential .10% for its services in respect of
the Fund, the Administrator's fee for the Fund would be less than Prudential's
for the one year period.
The directors also considered the total expense ratio of the Fund in comparison
to the fees and expenses of funds within the relevant Lipper category. The
expense ratio of the Fund was based on the Fund's latest fiscal year expense
ratio. The directors recognized that the expense ratio information for the Fund
potentially reflected on the Adviser's provision of services, as the Adviser is
responsible for coordinating services provided to the Fund by others. The
directors noted that the expense ratios of some funds in the Fund's Lipper
category also were lowered by waivers or reimbursements by those funds'
investment advisers, which in some cases were voluntary and perhaps temporary.
-------------------------------------------------------------------------------
34 o ACM MUNICIPAL SECURITIES INCOME FUND
The information reviewed by the directors showed that the Fund's at current
size combined advisory and administration contractual effective fee rate of 65
basis points was slightly above the Lipper average and the Lipper median. The
directors noted that the proposed reduction in the administration fee results
in a combined advisory and administration fee of 55 basis points, a level
somewhat below the Lipper average and the Lipper median. The directors also
noted that the Fund's expense ratio was significantly higher than the Lipper
median. The Adviser explained that the Fund's relatively high expense ratio was
in part due to the Fund's relatively small size (approximately $217 million).
The directors recognized that the Fund's expense ratio would be favorably
impacted by the proposed one-year reduction in the administration fee rate and
concluded that the Fund's expense ratio was acceptable in light of the Fund's
relatively small size.
Economies of Scale
The directors considered that the Fund is a closed-end Fund and that it was not
expected to have meaningful asset growth as a result. In such circumstances,
the directors did not view the potential for realization of economies of scale
as the Fund's assets grow to be a material factor in their deliberations. The
directors noted that if the Fund's net assets were to increase materially as a
result of, e.g., an acquisition or rights offering, they would review whether
potential economies of scale would be realized.
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 35
ALLIANCEBERNSTEIN FAMILY OF FUNDS
Wealth Strategies Funds
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
Blended Style Funds
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
Growth Funds
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund*
Small Cap Growth Portfolio
Global & International
Global Health Care Fund*
Global Research Growth Fund
Global Technology Fund*
Greater China '97 Fund
International Growth Fund*
International Research Growth Fund*
Value Funds
Domestic
Balanced Shares
Focused Growth & Income Fund*
Growth & Income Fund
Real Estate Investment Fund
Small/Mid-Cap Value Fund*
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
Taxable Bond Funds
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
Municipal Bond Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Intermediate Municipal Bond Funds
Intermediate California
Intermediate Diversified
Intermediate New York
Closed-End Funds
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
We also offer Exchange Reserves,** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current
prospectus. You should read the prospectus carefully before you invest.
* Prior to December 15, 2004, these Funds were named as follows: Global Health
Care Fund was Health Care Fund; Large Cap Growth Fund was Premier Growth Fund;
Global Technology Fund was Technology Fund; and Focused Growth & Income Fund
was Disciplined Value Fund. Prior to February 1, 2005, Small/Mid-Cap Value Fund
was named Small Cap Value Fund. Prior to May 16, 2005, International Growth
Fund was named Worldwide Privatization Fund and International Research Growth
Fund was named International Premier Growth Fund. On June 24, 2005, All-Asia
Investment Fund merged into International Research Growth Fund. On July 8, 2005,
New Europe Fund will merge into International Research Growth Fund.
** 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. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
-------------------------------------------------------------------------------
36 o ACM MUNICIPAL SECURITIES INCOME FUND
SUMMARY OF GENERAL INFORMATION
Shareholder Information
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of The Wall Street Journal under the
abbreviation "ACM MuniSec." The Fund's NYSE trading symbol is "AMU." Weekly
comparative net asset value (NAV) and market price information about the Fund
is published each Monday in The Wall Street Journal, each Sunday in The New
York Times and each Saturday in Barron's and other newspapers in a table called
"Closed-End Bond Funds."
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains in additional Fund shares.
For questions concerning shareholder account information, or if you would like
a brochure describing the Dividend Reinvestment Plan, please call Equiserve
Trust Company at (800) 219-4218.
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND o 37
ACM MUNICIPAL SECURITIES INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
MSISR0405
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
There have been no purchases of equity securities by the Fund or by affiliated
parties for the reporting period.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no significant changes in the registrant's internal controls
over financial reporting during the second fiscal quarter of the period that
could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- --------------------------
11 (b) (1) Certification of Principal Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
11 (b) (2) Certification of Principal Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
11 (c) Certification of Principal Executive Officer and
Principal Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
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.
(Registrant): ACM Municipal Securities Income Fund, Inc.
By: /s/ Marc O. Mayer
--------------------
Marc O. Mayer
President
Date: June 29, 2005
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/ Marc O. Mayer
--------------------
Marc O. Mayer
President
Date: June 29, 2005
By: /s/ Mark D. Gersten
--------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: June 29, 2005