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: 811-07510
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: October 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
ACM Municipal Securities Income Fund
Annual Report
October 31, 2005
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.
December 20, 2005
Annual Report
This report provides management's discussion of fund performance for ACM
Municipal Securities Income Fund (the "Fund") for the annual reporting period
ended October 31, 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 that invests a
substantial portion of its assets in longer-term municipal securities.
Municipal securities in which the Fund may invest include municipal notes,
which may be either "general obligation" or "revenue" securities, are intended
to fulfill short-term capital needs and generally have original maturities not
exceeding one year. 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 23.
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 October 31, 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 during the 12-month reporting period ended
October 31, 2005. The Fund's stronger relative performance during the 12-month
period under review was largely the result of the Fund's relative exposure to
the hospital and pre-refunded sectors. Security selection in the insured,
pre-refunded and hospital sectors contributed positively to the Fund's
performance. In addition, the Fund's leveraged structure aided its performance.
The Fund's lack of exposure to bonds backed by the Master Settlement Agreement
with the tobacco industry hurt performance relative to the benchmark. During
both the six- and 12-month periods, the Fund underperformed its peer group, as
represented by the Lipper Average.
Market Review and Investment Strategy
For the 12-month period ended October 31, 2005, yields on municipal bonds with
maturities out to 20 years rose, while those with longer than 20-year
maturities declined slightly. For example, five- to 10-year yields rose, on
average, 0.66% while 20- to 25-year bond yields declined by an average of
0.03%. Rising short-term rates were in line with the actions of the U.S.
Federal Reserve. Since October 2004, the Federal Reserve Open Market Committee
voted to increase the Fed Funds rate by 0.25% on nine separate occasions to the
current level of 4.0%. In contrast, strong demand for U.S. taxable bonds by
foreign investors and a relatively favorable inflationary environment have led
to lower yields for long-term bonds.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 1
During this period, total returns were positive for municipal bonds of all
maturities. On a pre-tax basis, the municipal bond market outperformed the
taxable bond market. The LB Municipal Index gained 2.54% during the period
while the LB U.S. Aggregate Index, representing taxable bonds, gained 1.13%. As
of October 31, 2005, 20- to 30-year municipal bonds were yielding, on average,
94.2% of comparable maturity Treasury bonds compared to an average ratio of
92.2% last year.
Interest rates are still low by historical standards versus inflation.
Therefore, portfolio durations are still slightly below the benchmark duration
as a defensive measure. The continued low municipal yield environment has also
led to ongoing heavier-than-normal demand for lower-rated, higher-yielding
bonds as investors seek income. In the view of the Fund's Municipal Bond
Investment Team, that demand has made lower-rated bonds more expensive than
they have been on an historic basis. To take advantage of that opportunity, the
Team sold lower-rated bonds and replaced them with higher-quality bonds. State
and local government tax revenues have continued to improve in line with
general economic growth.
_______________________________________________________________________________
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 39.
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
October 31, 2005, the Lipper General Municipal Debt Funds (Leveraged) Average
consisted of 64 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)
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 3
HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARK -------------------------
PERIODS ENDED OCTOBER 31, 2005 6 Months 12 Months
-------------------------------------------------------------------------------
ACM Municipal Securities Income Fund (NAV) 0.43% 4.77%
-------------------------------------------------------------------------------
LB Municipal Index 0.59% 2.54%
-------------------------------------------------------------------------------
Lipper General Municipal Debt Funds
(Leveraged) Average 1.16% 5.08%
-------------------------------------------------------------------------------
The Fund's Market Price per share on October 31, 2005 was $10.41. For
additional Financial Highlights, please see page 27.
GROWTH OF A $10,000 INVESTMENT IN THE FUND
10/31/95 TO 10/31/05
ACM Municipal Securities Income Fund (NAV): $18,143
LB Municipal Index: $17,653
[THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL]
ACM Municipal Securities
Income Fund (NAV) LB Municipal Index
-------------------------------------------------------------------------------
10/31/95 $ 10,000 $ 10,000
10/31/96 $ 10,874 $ 10,570
10/31/97 $ 12,314 $ 11,467
10/31/98 $ 13,162 $ 12,387
10/31/99 $ 12,141 $ 12,168
10/31/00 $ 13,202 $ 13,203
10/31/01 $ 14,732 $ 14,591
10/31/02 $ 14,237 $ 15,447
10/31/03 $ 15,574 $ 16,237
10/31/04 $ 17,317 $ 17,216
10/31/05 $ 18,143 $ 17,653
This chart illustrates the total value of an assumed $10,000 investment in ACM
Municipal Securities Income Fund at net asset value (NAV) (from 10/31/95 to
10/31/05) as compared to the performance of the Fund's benchmark. The chart
assumes the reinvestment of dividends and capital gains.
See Historical Performance and Benchmark disclosures on previous page.
_______________________________________________________________________________
4 o ACM MUNICIPAL SECURITIES INCOME FUND
PORTFOLIO SUMMARY
October 31, 2005
PORTFOLIO STATISTICS
Net Assets ($mil): $124.5
BOND QUALITY RATING BREAKDOWN*
54.3% AAA
19.0% AA
14.4% A [PIE CHART OMITTED]
10.6% BBB
1.7% BB
* All data are as of October 31, 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.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 5
PORTFOLIO OF INVESTMENTS
October 31, 2005
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Long-Term Municipal Bonds-164.7%
Alabama-4.7%
Jefferson Cnty Wtr and Swr Rev
FGIC Ser 02B
Prerefunded 8/01/12 @ 100
5.00%, 2/01/41 $ 1,535 $ 1,639,825
Jefferson Cnty Wtr and Swr Rev
FGIC Ser 02B
5.00%, 2/01/41 2,465 2,656,111
Jefferson Cnty Ltd Obligation
Sch Warrants Ser 04A
5.25%, 1/01/23 525 549,785
Montgomery Spl Care Fac Fin Auth
(Baptist Med Ctr) Ser 04C
5.25%, 11/15/29 1,000 1,007,130
-------------
5,852,851
-------------
Alaska-6.5%
Alaska International Airport
MBIA Ser 03B
5.00%, 10/01/26 1,000 1,024,240
Alaska Muni Bond Bank Auth
MBIA Ser 03E
5.25%, 12/01/26 3,000 3,180,030
Alaska Muni Bond Bank Auth
MBIA Ser 04G
5.00%, 2/15/22 1,585 1,646,974
Four Dam Pool Alaska
Ser 04
5.25%, 7/01/25 2,195 2,264,186
-------------
8,115,430
-------------
Arizona-2.3%
Arizona Cap Facs Fin Corp
(Arizona St Univ Proj)
6.25%, 9/01/32 1,550 1,600,918
Phoenix Civic Impt Corp
Wastewater Sys Rev (JR Lien)
MBIA Ser 04
5.00%, 7/01/23 1,250 1,302,538
-------------
2,903,456
-------------
California-15.6%
Burbank Redev Agy
FGIC Ser 03
5.625%, 12/01/28 2,700 2,961,171
California Dept of Wtr
Ser 02A
5.375%, 5/01/22 2,000 2,137,040
_______________________________________________________________________________
6 o ACM MUNICIPAL SECURITIES INCOME FUND
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
California St
GO Ser 03
5.00%, 2/01/32 $ 2,450 $ 2,498,682
5.00%, 2/01/33 1,100 1,121,857
Golden St
Tobacco Settlement XLCA Ser 03B
5.50%, 6/01/33 3,000 3,324,660
Golden St
Tobacco Settlement RADIAN Ser 03B
5.50%, 6/01/43 2,250 2,493,495
Pomona Lease Rev
AMBAC Ser 03
5.50%, 6/01/24 1,465 1,603,633
5.50%, 6/01/34 3,000 3,252,810
-------------
19,393,348
-------------
Colorado-2.0%
Colorado Toll Rev
(Hwy E-470) Ser 00
Zero coupon, 9/01/35 10,000 1,265,500
Colorado Hlth Facs Auth Rev
(Parkview Med Ctr) Ser 04
5.00%, 9/01/25 760 765,335
Todd Creek Farms Metro Dist No 1
Wtr and Wastewater Rev Ser 04
6.125%, 12/01/19 400 394,708
-------------
2,425,543
-------------
Florida-19.9%
Florida Hsg Fin Corp Rev MFHR
(Westlake Apts) FSA Ser 02-D1 AMT
5.40%, 3/01/42 8,780 8,896,598
Lee Cnty Hlth Care Fac Rev
(Shell Point Village Proj) Ser 99A
5.50%, 11/15/29 3,670 3,696,351
Miami Beach Hlth Fac Rev
(Mount Sinai Med Ctr)
6.75%, 11/15/24(a) 2,000 2,217,680
Miami-Dade Cnty Spl Oblig
MBIA Ser 04B
5.00%, 4/01/24 4,000 4,161,360
Orange Cnty Hlth Fac Auth Rev
(Orlando Regl Healthcare) Ser 02
5.75%, 12/01/32 1,400 1,494,528
Osceola Cnty Sch Brd Ctfs
FGIC Ser 04A
5.00%, 6/01/22(b) 2,815 2,950,936
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 7
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
UCF Assn Ctfs
FGIC Ser 04A
5.125%, 10/01/24 $ 1,325 $ 1,395,132
-------------
24,812,585
-------------
Hawaii-2.1%
Hawaii Elec Rev
XLCA Ser 03B AMT
5.00%, 12/01/22 2,500 2,555,800
-------------
Illinois-10.6%
Chicago
GO FSA Ser 04A
5.00%, 1/01/25 2,165 2,236,640
Chicago Arpt Rev
(O'Hare Intl Arpt) XLCA Ser B-1
5.25%, 1/01/34 3,100 3,227,069
Chicago Hsg Agy SFMR
(Mortgage Rev) GNMA/FNMA
Ser 02B AMT
6.00%, 10/01/33 700 725,095
Chicago Park Dist
GO
(Ltd Tax) AMBAC Ser 04A
5.00%, 1/01/25 2,585 2,674,829
Cook Cnty Sch Dist
FSA Ser 04
4.60%, 12/01/20(c) 1,000 925,220
Illinois Fin Auth
(Loyola Univ Chicago) XLCA Ser 04A
5.00%, 7/01/24 1,495 1,529,714
Metropolitan Pier & Exposition Rev
(McCormick Pl) MBIA Ser 02A
5.25%, 6/15/42 1,750 1,829,170
-------------
13,147,737
-------------
Indiana-2.6%
Hendricks Cnty Bldg Facs
GO Ser 04
5.50%, 7/15/21 1,045 1,139,771
Indiana Bd Bk Rev
FSA Ser 04B
5.00%, 2/01/21 1,100 1,145,925
Indiana St Dev Fin Auth Rev
(Inland Steel Co) Exempt Facs
5.75%, 10/01/11 865 891,175
-------------
3,176,871
-------------
Louisiana-0.9%
New Orleans
GO MBIA
5.25%, 12/01/20 1,000 1,064,370
-------------
_______________________________________________________________________________
8 o ACM MUNICIPAL SECURITIES INCOME FUND
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Massachusetts-10.4%
Mass GO Ser 02
Prerefunded 11/01/12 @ 100
5.25%, 11/01/30 $ 3,310 $ 3,583,340
Mass GO Ser 02
5.25%, 11/01/30 1,690 1,829,560
Mass Hlth & Ed Fac Hosp Rev
(New England Med Ctr) MBIA Ser 94
7.68%, 7/01/18(d) 5,000 5,131,800
Mass Hsg Fin Agy MFHR
(Rental Rev) AMBAC Ser 00A AMT
6.00%, 7/01/41 1,740 1,845,079
Mass Hsg Fin Agy MFHR
(Rental Rev) MBIA Ser 00H AMT
6.65%, 7/01/41 545 586,169
-------------
12,975,948
-------------
Michigan-5.3%
Kent Hosp Fin Auth
5.75%, 7/01/25 310 326,647
Michigan St Hosp Rev
(Trinity Hlth) Ser 00A
6.00%, 12/01/27 3,000 3,271,680
Saginaw Hosp Fac Rev
(Covenant Med Ctr) Ser 00F
6.50%, 7/01/30 2,775 3,032,048
-------------
6,630,375
-------------
Minnesota-1.4%
Shakopee Health Care Facs Rev
(St Francis Regl Med Ctr) Ser 04
5.10%, 9/01/25 1,200 1,223,844
St. Paul Hsg & Redev Auth Hosp Rev
Hlth Hosp Nursinghome Impr
6.00%, 11/15/25 500 536,995
-------------
1,760,839
-------------
Mississippi-7.5%
Adams Cnty Poll Ctl Rev
(International Paper Co) Ser 99 AMT
6.25%, 9/01/23 5,000 5,265,400
Gulfport Hosp Fac Rev
(Mem Hosp at Gulfport Proj) Ser 01A
5.75%, 7/01/31 4,000 4,090,640
-------------
9,356,040
-------------
Nevada-1.7%
Carson City Hosp Rev
(Carson-Tahoe Hosp Proj)
RADIAN Ser 03A
5.00%, 9/01/23 2,100 2,131,101
-------------
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 9
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
New Jersey-6.2%
Morris-Union Jointure Commission
Ctfs of Participation Ser 04 RADIAN
5.00%, 5/01/24 $ 2,000 $ 2,056,320
New Jersey Eco Dev Auth
(Cigarette Tax) Ser 04 FGIC
5.00%, 6/15/12 1,745 1,849,648
New Jersey St Edl Fac Auth Rev
AMBAC Ser 02A-213
6.14%, 9/01/21(a)(d)(e) 3,400 3,865,392
-------------
7,771,360
-------------
New Mexico-4.9%
Dona Ana Cnty Tax Rev
AMBAC Ser 03
5.25%, 5/01/25 500 527,210
University of New Mexico
FSA FHA Ser 04
5.00%, 1/01/24 2,235 2,304,576
5.00%, 7/01/24 3,195 3,294,460
-------------
6,126,246
-------------
New York-11.2%
Erie Cnty Indl Dev Agy Sch Fac Rev
(Buffalo Sch Dist Proj) Ser 04 FSA
5.75%, 5/01/23 950 1,064,371
5.75%, 5/01/24 810 906,900
New York City
GO Ser 04I
5.00%, 8/01/21 3,300 3,413,157
New York City Indl Dev Agy Rev
(Terminal One Group) Ser 94 AMT
6.125%, 1/01/24 8,100 8,146,413
New York City Indl Dev Agy Rev
(British Airways) Ser 98 AMT
5.25%, 12/01/32 500 427,475
-------------
13,958,316
-------------
North Carolina-0.9%
Charlotte NC Arpt Rev
MBIA Ser 04
5.25%, 7/01/24 1,000 1,062,090
-------------
North Dakota-1.8%
North Dakota Hsg Fin Agy SFMR
(Mortgage Rev) Ser 98E AMT
5.25%, 1/01/30 2,250 2,285,528
-------------
Ohio-6.2%
Cuyahoga Cnty Hosp Fac Rev
(University Hosp Hlth) Ser 00
7.50%, 1/01/30 2,400 2,666,616
_______________________________________________________________________________
10 o ACM MUNICIPAL SECURITIES INCOME FUND
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Fairfield Cnty Hosp Fac Rev
(Fairfield Med Ctr Proj) RADIAN Ser 03
5.00%, 6/15/23 $ 1,255 $ 1,278,280
Ohio Hsg Fin Agy MFHR
(Mortgage Rev) GNMA Ser 97 AMT
6.15%, 3/01/29 3,225 3,289,371
Port Auth Columbiana Cnty Solid Waste Fac Rev
(Apex Environmental LLC) Ser 04A AMT
7.125%, 8/01/25 500 499,415
-------------
7,733,682
-------------
Oregon-1.2%
Forest Grove
Campus Impr (Pacific Proj)
RADIAN Ser A
5.00%, 5/01/28 1,420 1,445,787
-------------
Pennsylvania-4.3%
Pennsylvania Parking Facs Rev
(30th St Station) ACA Ser 02 AMT
5.875%, 6/01/33 2,050 2,150,471
Philadelphia Gas Wks Rev
AGC Ser 04
5.25%, 9/01/19 2,045 2,157,107
5.25%, 8/01/21 1,000 1,043,360
-------------
5,350,938
-------------
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 1,761,455
Rhode Island Hlth & Edl Bldg Corp Rev
(Univ of Rhode Island) AMBAC Ser 04A
5.50%, 9/15/24 1,000 1,086,870
-------------
2,848,325
-------------
South Carolina-0.1%
Newberry Cnty Sch Dist Proj
5.00%, 12/01/30 165 162,444
-------------
Tennessee-7.9%
Tenn Ed Loan Rev
(Educational Funding of South)
Ser 97B AMT
6.20%, 12/01/21 9,600 9,856,416
-------------
Texas-16.8%
Dallas TX Arpt Rev
(Fort Worth Intl Arpt) MBIA
Ser 03A AMT
5.25%, 11/01/25 2,000 2,064,520
Garza Cnty
Pub Fac Corp Proj Rev
5.50%, 10/01/19 255 263,657
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 11
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Harris Cnty
Ser 03
5.00%, 10/01/23 $ 1,400 $ 1,446,102
Harris Cnty Toll Rev
FSA Ser 02
5.125%, 8/15/32 5,000 5,165,850
Hidalgo Cnty Hlth Svcs
(Mission Hosp Inc Proj) Ser 05
5.00%, 8/15/14 80 80,696
5.00%, 8/15/15 185 186,610
5.00%, 8/15/19 60 60,197
Lewisville TX Combination Contract Rev Spl
Assessment (Castle Hills Pub Impr Proj) ACA
6.00%, 10/01/25 550 596,574
Lower Colorado Riv Auth
AMBAC Ser 03
5.25%, 5/15/25 1,800 1,886,598
Lower Colorado Riv Auth
MBIA Ser 02
5.00%, 5/15/31 1,500 1,534,935
Matagorda Cnty Rev
(Centerpoint Energy Houston Electric LLC)
Ser 04
5.60%, 3/01/27 1,000 1,034,170
MC Allen Wtr & Swr Rev
5.25%, 2/01/21 1,605 1,715,135
5.25%, 2/01/22 1,610 1,715,423
Richardson Hosp Auth Rev
(Richardson Med Ctr) Ser 04
6.00%, 12/01/19 915 990,954
5.875%, 12/01/24 1,155 1,215,164
Seguin Ed Fac Rev
(Texas Lutheran Univ) Ser 04
5.25%, 9/01/28 1,000 1,002,020
-------------
20,958,605
-------------
Utah-2.1%
Davis Cnty Sales Tax Rev
AMBAC Ser 03B
5.25%, 10/01/23 1,005 1,063,028
Salt Lake City Wtr Rev
AMBAC Ser 04
5.00%, 7/01/23 1,500 1,561,950
-------------
2,624,978
-------------
Washington-1.2%
Seattle Hsg Auth Rev MFHR
(Wisteria Ct Proj) GNMA Ser 03
5.20%, 10/20/28 1,475 1,510,695
-------------
_______________________________________________________________________________
12 o ACM MUNICIPAL SECURITIES INCOME FUND
Principal
Amount
(000) Value
-------------------------------------------------------------------------------
Wisconsin-4.1%
Wisconsin GO Ser 03
5.00%, 11/01/26 $ 3,700 $ 3,745,214
Wisconsin Hlth & Edl Fac Auth Rev
(Bell Tower Residence Proj) Ser 05
LOC-Allied Irish Bank PLC
5.00%, 7/01/20 1,300 1,332,968
-------------
5,078,182
-------------
Total Long-Term Municipal Bonds
(cost $198,653,439) 205,075,886
-------------
Short-Term Municipal Bond-2.8%
Alaska-2.8%
Valdez Alaska Marine Term Rev
(Exxon Pipeline Co Proj) Ser 1993A
2.60%, 12/01/33(f) 3,500 3,500,000
-------------
Total Short-Term Municipal Bond
(cost $3,500,000) 3,500,000
-------------
Total Investments-167.5%
(cost $202,153,439) 208,575,886
Other assets less liabilities-4.8% 5,938,263
Preferred Stock, at redemption value-(72.3)% (90,000,000)
-------------
Net Assets Applicable to Common
Shareholders-100%(g) $ 124,514,149
=============
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 13
FINANCIAL FUTURES CONTRACTS PURCHASED (see Note C)
Value at
Number of Expiration Original October 31, Unrealized
Type Contracts Month Value 2005 (Depreciation)
-----------------------------------------------------------------------------------------------
Swap 10 Yr December
Future 27 2005 $ 2,932,133 $ 2,890,688 $ (41,445)
(a) Private placement.
(b) Positions, or portions thereof, with a market value of $73,380 have been
segregated to collateralize margin requirements for open futures contracts.
(c) Initial coupon is presented. Coupon after 12/01/07 will be 5.00%.
(d) Inverse Floater Security-Security with variable interest rate that moves
in the opposite direction of short-term interest rates.
(e) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At October 31, 2005, the aggregate market value of these securities
amounted to $3,865,392 or 3.1% of net assets applicable to common shareholders.
(f) Variable rate coupon, rate shown is the rate in effect at October 31, 2005.
(g) 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
GO - General Obligation
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.
_______________________________________________________________________________
14 o ACM MUNICIPAL SECURITIES INCOME FUND
STATEMENT OF ASSETS & LIABILITIES
October 31, 2005
ASSETS
Investments in securities, at value (cost $202,153,439) $ 208,575,886
Interest receivable 3,599,019
Receivable for investment securities sold 2,883,100
Prepaid expenses 26,690
--------------
Total assets 215,084,695
--------------
LIABILITIES
Due to custodian 3,017
Payable for investment securities purchased 264,932
Advisory fee payable 85,755
Administrative fee payable 27,505
Dividend payable--preferred shares 14,194
Payable for variation margin on futures contracts 844
Accrued expenses and other liabilities 174,299
--------------
Total liabilities 570,546
--------------
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 $ 124,514,149
==============
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 140,672,224
Distributions in excess of net investment income (14,194)
Accumulated net realized loss on investment transactions (22,636,336)
Net unrealized appreciation of investments 6,381,002
--------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS $ 124,514,149
==============
NET ASSET VALUE APPLICABLE TO COMMON SHAREHOLDERS
(based on 11,145,261 common shares outstanding) $11.17
======
See notes to financial statements.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 15
STATEMENT OF OPERATIONS
Year Ended October 31, 2005
INVESTMENT INCOME
Interest $ 11,280,816
EXPENSES
Advisory fee $ 1,085,441
Administrative fee 325,633
Auction Preferred Stock--auction
agent's fees 225,255
Custodian 102,673
Audit 76,020
Legal 67,543
Directors' fees and expenses 37,843
Transfer agency 31,061
Printing 28,112
Registration fees 23,898
Miscellaneous 46,575
------------
Total expenses 2,050,054
Less: Administration fee reimbursement
(see Note B) (156,635)
------------
Net expenses 1,893,419
------------
Net investment income 9,387,397
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on:
Investment transactions 995,199
Swap transactions 32,331
Net change in unrealized
appreciation/depreciation of:
Investments (2,849,058)
Futures (41,445)
Swaps (24,708)
------------
Net loss on investments (1,887,681)
------------
DIVIDENDS TO AUCTIONED PREFERRED
SHAREHOLDERS FROM
Net investment income (1,905,523)
------------
NET INCREASE IN NET ASSETS APPLICABLE
TO COMMON SHAREHOLDERS RESULTING
FROM OPERATIONS $ 5,594,193
============
See notes to financial statements.
_______________________________________________________________________________
16 o ACM MUNICIPAL SECURITIES INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
Year Ended Year Ended
October 31, October 31,
2005 2004
============== ==============
INCREASE (DECREASE) IN NET ASSETS
APPLICABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS
Net investment income $ 9,387,397 $ 9,757,431
Net realized gain on investment
transactions 1,027,530 388,026
Net change in unrealized
appreciation/depreciation
of investments (2,915,211) 4,167,154
DIVIDENDS TO AUCTION PREFERRED
SHAREHOLDERS FROM
Net investment income (1,905,523) (980,894)
-------------- --------------
Net increase in net assets
applicable to common shareholders
resulting from operations 5,594,193 13,331,717
DIVIDENDS AND DISTRIBUTIONS TO
COMMON SHAREHOLDERS FROM
Net investment income (7,873,611) (9,660,631)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting in the
issuance of common stock 55,061 744,979
-------------- --------------
Total increase (decrease) (2,224,357) 4,416,065
NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS
Beginning of period 126,738,506 122,322,441
-------------- --------------
End of period (including distributions
in excess of net investment income
and undistributed net investment
income of ($14,194) and $119,931,
respectively) $ 124,514,149 $ 126,738,506
============== ==============
See notes to financial statements.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 17
NOTES TO FINANCIAL STATEMENTS
October 31, 2005
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
_______________________________________________________________________________
18 o ACM MUNICIPAL SECURITIES INCOME FUND
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.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 19
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Global
Investor Services, Inc. (AGIS), an affiliate of the Adviser, the Fund
reimburses AGIS for costs relating to servicing phone inquiries for the Fund.
During the year ended October 31, 2005, there was no reimbursement paid to AGIS.
Under the terms of an Administration Agreement, the Fund is required to pay
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 voluntarily 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. For the year ended October 31, 2005, the amount of such reimbursement was
$156,635. 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 year ended October 31, 2005, were as follows:
Purchases Sales
============== ==============
Investment securities (excluding
U.S. government securities) $ 27,529,816 $ 29,110,673
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding futures contracts) are as
follows:
Cost $ 202,290,853
==============
Gross unrealized appreciation $ 7,522,558
Gross unrealized depreciation (1,237,525)
--------------
Net unrealized appreciation $ 6,285,033
==============
1. 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.
_______________________________________________________________________________
20 o ACM MUNICIPAL SECURITIES INCOME FUND
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, 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.
2. Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
the portfolio against adverse effects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments and the imperfect correlation between movements in the
price of the futures contracts and movements in the price of the securities
hedged or used for cover.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains as collateral an initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or losses.
Risks may arise from the potential inability of the counterparty to meet the
terms of the contract. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the time it was closed.
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
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 21
distributions paid to common shareholders during the fiscal years ended October
31, 2005 and October 31, 2004 were as follows:
2005 2004
============== ==============
Distributions paid from:
Ordinary income $ 262,628 $ 65,384
Tax-exempt income 7,610,983 9,595,248
-------------- --------------
Total distributions paid $ 7,873,611 $ 9,660,632
============== ==============
As of October 31, 2005, the components of accumulated earnings/(deficit)
applicable to common shareholders on a tax basis were as follows:
Accumulated capital and other losses $ (22,540,367)(a)
Unrealized appreciation/(depreciation) 6,285,033(b)
--------------
Total accumulated earnings/(deficit) $ (16,255,334)(c)
==============
(a) On October 31, 2005, the Fund had a net capital loss carryforward of
$22,540,367 of which $5,185,060 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 fiscal year
October 31, 2005, the Fund utilized capital loss carryforwards of $925,088.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficits) is attributable primarily to dividends payable.
During the current fiscal year, permanent differences, primarily due to the tax
treatment of swap income and distributions in excess of net investment income,
resulted in a net decrease in distributions in excess of net investment income,
an increase in accumulated net realized loss on investment transactions, and a
decrease in additional paid in capital. 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 October 31, 2005. During
the year ended October 31, 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.
_______________________________________________________________________________
22 o ACM MUNICIPAL SECURITIES INCOME FUND
The dividend rate on Series A is 2.48%, effective through November 2, 2005. The
dividend rate on Series B is 2.25%, effective through December 12, 2005. The
dividend rate on Series C is 2.62%, effective through November 3, 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 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
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 23
("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 funds involving
market and late trading in the District of Maryland (the "Mutual Fund MDL").
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.
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 Discontinuation dated September 1, 2004 ("NYAGOrder"). 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
_______________________________________________________________________________
24 o ACM MUNICIPAL SECURITIES INCOME FUND
(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.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commission") (together, the
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State of
West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), and various other defendants not affiliated with the Adviser. The
WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia
by the Attorney General of the State of West Virginia. The WVAG Complaint makes
factual allegations generally similar to those in certain of the complaints
related to the lawsuits discussed above. On May 31, 2005, defendants removed
the WVAG Complaint to the United States District Court for the Northern
District of West Virginia. On July 12, 2005, plaintiff moved to remand. On
October 19, 2005, the WVAG Complaint was transferred to the Mutual fund MDL.
On August 30, 2005, the deputy commissioner of securities of the West Virginia
Securities Commission signed a "Summary Order to Cease and Desist, and Notice
of Right to Hearing" addressed to the Adviser and Alliance Holding. The Summary
Order claims that the Adviser and Alliance Holding violated the West Virginia
Uniform Securities Act, and makes factual allegations generally similar to
those in the SEC Order and the NYAG Order. The Adviser intends to vigorously
defend against the allegations in the WVAG Complaint.
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
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 25
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 Fund was not named as a defendant in the Aucoin Complaint. 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.
On October 19, 2005, the District Court granted in part, and denied in part,
defendants' motion to dismiss the Aucoin Complaint and as a result the only
claim remaining is plaintiffs' Section 36(b).
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.
_______________________________________________________________________________
26 o ACM MUNICIPAL SECURITIES INCOME FUND
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Year Ended October 31,
---------------------------------------------------------------
2005 2004(a) 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value, beginning
of period $11.38 $11.05 $10.85 $12.10 $11.71
INCOME FROM INVESTMENT
OPERATIONS
Net investment income .84 .88 .97 1.08 1.15
Net realized and unrealized
gain (loss) on investment
transactions (.17) .41 .12 (1.32) .45
Dividends to preferred
shareholders from net
investment income (common
stock equivalent basis) (.17) (.09) (.09) (.14) (.27)
Net increase (decrease) in net
asset value from operations .50 1.20 1.00 (.38) 1.33
LESS: DIVIDENDS AND
DISTRIBUTIONS TO
COMMON SHAREHOLDERS
Dividends from net investment
income (.71) (.87) (.80) (.87) (.88)
Distributions in excess of net
investment income -0- -0- -0- -0- (.06)
Total dividends and distributions
to common shareholders (.71) (.87) (.80) (.87) (.94)
Net asset value, end of period $11.17 $11.38 $11.05 $10.85 $12.10
Market price, end of period $10.41 $12.09 $11.62 $11.50 $12.70
Premium (Discount) (6.80)% 6.24% 5.16% 5.99% 4.96%
TOTAL RETURN
Total investment return based on:(b)
Market price (8.09)% 12.34% 8.53% (2.44)% 9.14%
Net asset value 4.77% 11.20% 9.39% (3.35)% 11.59%
RATIOS/SUPPLEMENTAL DATA
Net assets, applicable to
common shareholders, end
of period (000's omitted) $124,514 $126,739 $122,322 $119,323 $132,201
Preferred stock, at redemption
value ($25,000 per share
liquidation preference)
(000's omitted) $90,000 $90,000 $90,000 $90,000 $90,000
Ratios to average net assets
applicable to common
shareholders of:
Expenses(c) 1.49%(d) 1.65% 1.71% 1.65% 1.53%
Net investment income, before
preferred stock dividends(c) 7.39%(d) 7.87% 8.78% 9.32% 9.60%
Preferred stock dividends 1.50% .79% .84% 1.19% 2.26%
Net investment income, net of
preferred stock dividends 5.89%(d) 7.08% 7.94% 8.13% 7.34%
Portfolio turnover rate 13% 36% 32% 24% 82%
Asset coverage ratio 238% 241% 236% 233% 247%
See footnote summary on page 28.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 27
(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) 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 1.61%, 7.26% and 5.76%,
respectively, for the year ended October 31, 2005.
_______________________________________________________________________________
28 o ACM MUNICIPAL SECURITIES INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
ACM Municipal Securities Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of ACM
Municipal Securities Income Fund, Inc., (the "Fund") including the portfolio of
investments, as of October 31, 2005, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of October 31, 2005 by correspondence with
the custodian and others or by other appropriate auditing procedures where
replies from others were not received. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of ACM
Municipal Securities Income Fund, Inc. at October 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
December 16, 2005
FEDERAL TAX INFORMATION (unaudited)
In accordance with Federal tax law, the Fund's designation of "exempt-interest
dividends" paid during the fiscal year ended October 31, 2005 was $9,452,929.
As required by Federal tax law rules, shareholders will receive notification of
their portion of the Fund's taxable ordinary dividends (if any) and capital
gain distributions (if any) paid for the 2005 calendar year on Form 1099-DIV
which will be mailed by January 31, 2006.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 29
ADDITIONAL INFORMATION
(unaudited)
Shareholders whose shares are registered in their own names will automatically
be participants in the Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), pursuant to which dividends and capital gain distributions to
shareholders will be paid in or reinvested in additional shares of the Fund
(the "Dividend Shares"). Equiserve Trust Company N.A. (the "Agent") will act as
agent for participants under the Plan. Shareholders whose shares are held in
the name of broker or nominee should contact such broker or nominee to
determine whether or how they may participate in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will issue new
shares at the greater of net asset value or 95% of the then current market
price.
(ii) If the shares of Common Stock are trading at a discount from net asset
value at the time of valuation, the Plan Agent will receive the dividend or
distribution in cash and apply it to the purchase of the Fund's shares of
Common Stock in the open market on the New York Stock Exchange or elsewhere,
for the participants' accounts. Such purchases will be made on or shortly after
the payment date for such dividend or distribution and in no event more than 30
days after such date except where temporary curtailment or suspension of
purchase is necessary to comply with Federal securities laws. If, before the
Plan agent has completed its purchases, the market price exceeds the net asset
value of a share of Common Stock, the average purchase price per share paid by
the Plan agent may exceed the net asset value of the Fund's shares of Common
Stock, resulting in the acquisition of fewer shares than if the dividend or
distribution had been paid in shares issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of
the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's account will be the average
_______________________________________________________________________________
30 o ACM MUNICIPAL SECURITIES INCOME FUND
cost, including brokerage commissions, of any shares purchased in the open
market plus the cost of any shares issued by the Fund.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent
to written notice of the change sent to participants in the Plan at least 90
days before the record date for such dividend or distribution. The Plan may
also be amended or terminated by the Agent on at least 90 days' written notice
to participants in the Plan. All correspondence concerning the Plan should be
directed to the Agent at Equiserve Trust Company N.A., P.O. Box 43011,
Providence, RI 02940-3011.
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change
of control of the Fund, and (iii) no material changes in the principal risk
factors associated with investment in the Fund, and (iv) no change to the
persons primarily responsible for the day-to-day management of the Fund's
investment port-folio, who are David Dowden and Terrance Hults, each of whom is
a Vice President of the Fund.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 31
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Michael J.Downey(1)
D. James Guzy(1)
Dr. James M. Hester(1)
Marshall C. Turner, Jr.(1)
OFFICERS(2)
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Robert B. Davidson, III, Senior Vice President
Douglas J. Peebles, Senior Vice President
Jeffrey S.Phlegar, Senior Vice President
Michael G. Brooks, Vice President
Fred S. Cohen, Vice President
David M. Dowden, Vice President
Terrance T. Hults, Vice President
Emilie D. Wrapp, Secretary
Mark D. Gersten, Treasurer and Chief 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) The day-to-day management of and investment decisions for the Portfolios
are made by the Municipal Bond Investment Team. The five investment
professionals with the most significant responsibility for the day-to-day
management of the Portfolios' portfolios are: Michael G. Brooks, Fred S. Cohen,
Robert B. Davidson III, David M. Dowden and Terrance T. Hults.
_______________________________________________________________________________
32 o ACM MUNICIPAL SECURITIES INCOME FUND
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS, DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
Marc O. Mayer, + Executive Vice President of Alliance 106 SCB Partners,
1345 Avenue of the Capital Management Corporation Inc.; and SCB,
Americas ("ACMC") since 2001 and Chairman Inc.
New York, NY 10105 of the Board of AllianceBernstein
10/2/57 (2003) Investment Research and Management,
Inc. ("ABIRM"); prior thereto, Chief
Executive Officer of Sanford C.
Bernstein & Co., LLC (institutional
research and brokerage arm of
Bernstein & Co., LLC ("SCB & Co."))
and its predecessor since prior to 2000.
DISINTERESTED DIRECTORS
William H. Foulk, Jr.,#++ Investment adviser and an 108 None
2 Sound View Drive independent consultant. He was
Suite 100 formerly Senior Manager of Barrett
Greenwich, CT 06830 Associates, Inc., a registered
9/7/32 (1998) investment adviser, with which he
Chairman of the Board had been associated since prior
to 2000. He was formerly Deputy
Comptroller and Chief Investment
Officer of the State of New York
and, prior thereto, Chief Investment
Officer of the New York Bank for
Savings.
Ruth Block,#,** Formerly Executive Vice President 106 None
500 SE Mizner Blvd., and Chief Insurance Officer of The
Boca Raton, FL 33432 Equitable Life Assurance Society
11/7/30 (1993) of the United States; Chairman
and Chief Executive Officer of
Evlico (insurance); Director of
Avon, BP (oil and gas), Ecolab
Incorporated (specialty chemicals),
Tandem Financial Group and
Donaldson, Lufkin & Jenrette
Securities Corporation; Governor
at Large, National Association
of Securities Dealers, Inc.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 33
PORTFOLIOS
IN FUND OTHER
NAME, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS, DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
David H. Dievler, # Independent consultant. Until 107 None
P.O. Box 167 December 1994 he was Senior
Spring Lake, NJ 07762 Vice President of ACMC responsible
10/23/29 (1993) for mutual fund administration. Prior
to joining ACMC in 1984, he was
Chief Financial Officer of Eberstadt
Asset Management since 1968. Prior
to that, he was a Senior Manager at
Price Waterhouse & Co. Member of
American Institute of Certified Public
Accountants since 1953.
John H. Dobkin, # Consultant. Formerly President of 106 None
P.O. Box 12 Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002,
2/19/42 (1998) a Senior Advisor from June 1999
-June 2000 and President of
Historic Hudson Valley (historic
preservation) from December
1989-May 1999. Previously,
Director of the National Academy
of Design and during 1988-1992,
Director and Chairman of the Audit
Committee of ACMC.
Michael J. Downey, # Consultant since 2004. Formerly 106 Asia Pacific
c/o Alliance Capital managing partner of Lexington Fund, Inc.
Management L.P. Capital, LLC (investment advisory and The
1345 Avenue of the firm) from December 1997 until Merger Fund
Americas December 2003. Prior thereto,
New York, NY 10105 Chairman and CEO of Prudential
Attn: Philip L. Kirstein Mutual Fund Management from
1/26/44 1987 to 1993.
(2005)
D. James Guzy, # Chairman of the Board of PLX 106 Intel Corporation,
P.O. Box 128 Technology (semi-conductors) and Cirrus Logic
Glenbrook, NV 89413 of SRC Computers Inc., with which Corporation,
3/7/36 he has been associated since prior to Novellus
(2005) 2000. He is also President of the Arbor Corporation,
Company (private family investments). Micro Component
Technology,
the Davis
Selected
Advisors Group
of Mutual Funds
and LogicVision
_______________________________________________________________________________
34 o ACM MUNICIPAL SECURITIES INCOME FUND
PORTFOLIOS
IN FUND OTHER
NAME, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS, DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
Dr. James M. Hester, # Formerly President of the Harry 11 None
25 Cleveland Lane Frank Guggenheim Foundation,
Princeton, NJ 08540 New York University and the
4/19/24 (2001) New York Botanical Gardens, Rector
of the United Nations University and
Vice Chairman of the Board of the
Federal Reserve Bank of New York.
Marshall C. Turner, Jr., # Principal of Turner Venture Associates 106 Toppen
220 Montgomery Street (venture capital and consulting) Photomasks, Inc.,
Penthouse 10 since prior to 2000. He is Chairman the George Lucas
San Francisco, and CEO, DuPont Photomasks, Inc, Educational
CA 94104-3402 Austin, Texas, 2003-2005, and Foundation and
10/10/41 President and CEO since company Chairman of the
(2005) acquired, and name changed to Board of the
Toppan Photomasks, Inc. in 2005 Smithsonian's
(semi-conductor manufacturing National Museum
services). of Natural History
* There is no stated term of office for the Fund's Directors.
# Member of the Audit Committee, the Governance and Nominating Committee and
the Independent Directors Committee.
** Ms. Block was an "interested person", as defined in the 1940 Act, from July
22, 1992 until October 21, 2004 by reason of her ownership of securities of a
control person of the Adviser. Ms. Block received shares of The Equitable
Companies Incorporated ("Equitable") as part of the demutualization of The
Equitable Life Assurance Society of the United States in 1992. Ms. Block's
Equitable shares were subsequently converted through a corporate action into
American Depositary Shares of AXA, which were sold for approximately $2,400 on
October 21, 2004. Equitable and AXA are control persons of the Adviser.
+ Mr. Mayer is an "interested person", as defined in the 1940 Act, due to his
position as an Executive Vice President of ACMC investment adviser.
++ Member of the Fair Value Pricing Committee.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 35
Officer Information
Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
--------------------------------------------------------------------------------------------------------------
Marc O. Mayer President and See biography above.
10/2/57 Chief Executive Officer
Robert B. Davidson, III Senior Vice President Senior Vice President of ACMC,** with
4/8/61 which he has been associated since
prior to 2000.
Philip L. Kirstein Senior Vice President Senior Vice President and Independent
5/29/45 and Independent Compliance Officer, the Alliance-
Compliance Officer Bernstein Funds, with which he has
been associated since October 2004.
Prior thereto, he was Of Counsel to
Kirkpatrick & Lockhart, LLP from
October 2003 to October 2004, and
General Counsel of Merrill Lynch
Investment Managers, L.P. since
prior to 2000 until March 2003.
Douglas J. Peebles, Senior Vice President Executive Vice President of ACMC,**
8/10/65 with which he has been associated
since prior to 2000.
Jeffrey S. Phlegar, Senior Vice President Executive Vice President of ACMC,**
6/28/66 with which he has been associated
since prior to 2000.
Michael G. Brooks Vice President Senior Vice President and Senior
6/18/48 Portfolio Manager of ACMC,** with
which he has been associated since
October 2000. Prior thereto, he was a
Vice President and a Senior Portfolio
Manager with Bernstein since prior
to 2000.
Fred S. Cohen Vice President Senior Vice President of ACMC,** with
4/16/58 which he has been associated since
prior to 2000.
David M. Dowden Vice President Senior Vice President of ACMC,** with
11/21/65 which he has been associated since
prior to 2000.
Terrance T. Hults Vice President Senior Vice President of ACMC,** with
5/17/66 which he has been associated since
prior to 2000.
Emilie D. Wrapp, Secretary Senior Vice President, Assistant
11/13/55 General Counsel and Assistant
Secretary of ABIRM,** with which
she has been associated since prior
to 2000.
_______________________________________________________________________________
36 o ACM MUNICIPAL SECURITIES INCOME FUND
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
--------------------------------------------------------------------------------------------------------------
Mark D. Gersten Treasurer and Chief Senior Vice President of Alliance Global
10/4/50 Financial Officer Investor Services, Inc. ("AGIS")** and
a Vice President of ABIRM,** with which
he has been associated since prior to
2000.
Thomas R. Manley Controller Vice President of ACMC,** with which
8/3/51 he has been associated since prior to
2000.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, AGIS, ABIRM and SCB & Co. are affiliates of the Fund.
_______________________________________________________________________________
ACM MUNICIPAL SECURITIES INCOME FUND o 37
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 merged 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.
_______________________________________________________________________________
38 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 39
NOTES
_______________________________________________________________________________
40 o ACM MUNICIPAL SECURITIES INCOME FUND
-------------------------------------------------------------------------------
Privacy Notice
Alliance, the AllianceBernstein Family of Funds and AllianceBernstein
Investment Research and Management, Inc. (collectively, "Alliance" or "we")
understand the importance of maintaining the confidentiality of our customers'
nonpublic personal information. In order to provide financial products and
services to our customers efficiently and accurately, we may collect nonpublic
personal information about our customers from the following sources: (1)
information we receive from account documentation, including applications or
other forms (which may include information such as a customer's name, address,
social security number, assets and income) and (2) information about our
customers' transactions with us, our affiliates and others (including
information such as a customer's account balances and account activity).
It is our policy not to disclose nonpublic personal information about our
customers (or former customers) except to our affiliates, or to others as
permitted or required by law. From time to time, Alliance may disclose
nonpublic personal information that we collect about our customers (or former
customers), as described above, to non-affiliated third party providers,
including those that perform processing or servicing functions and those that
provide marketing services for us or on our behalf pursuant to a joint
marketing agreement that requires the third party provider to adhere to
Alliance's privacy policy. We have policies and procedures to safeguard
nonpublic personal information about our customers (or former customers) which
include: (1) restricting access to such nonpublic personal information and (2)
maintaining physical, electronic and procedural safeguards that comply with
federal standards to safeguard such nonpublic personal information.
-------------------------------------------------------------------------------
ACM MUNICIPAL SECURITIES INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
MSIAR1005
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer. A copy of the registrant's code of ethics is filed herewith as
Exhibit 12(a)(1).
(b) During the period covered by this report, no material amendments were made
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent registered public accounting firm Ernst & Young LLP, for the
Fund's last two fiscal years for professional services rendered for: (i)
the audit of the Fund's annual financial statements included in the Fund's
annual report to stockholders; (ii) assurance and related services that are
reasonably related to the performance of the audit of the Fund's financial
statements and are not reported under (i), which include advice and education
related to accounting and auditing issues and quarterly press release review
(for those Funds that issue quarterly press releases), and preferred stock
maintenance testing (for those Funds that issue preferred stock); and (iii)
tax compliance, tax advice and tax return preparation.
Audit Audit-Related Tax
Fees Fees Fees
--------- ------------- --------
2004 $47,000 $ 13,145 $21,213
2005 $48,000 $ 9,180 $14,741
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on
or after May 6, 2003, the Fund's Audit Committee policies and procedures
require the pre-approval of all audit and non-audit services provided to the
Fund by the Fund's independent registered public accounting firm. The Fund's
Audit Committee policies and procedures also require pre-approval of all audit
and non-audit services provided to the Adviser and Service Affiliates to the
extent that these services are directly related to the operations or financial
reporting of the Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) - (c) are for services pre-approved by the Fund's
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided
to the Fund, the Fund's Adviser and entities that control, are controlled by or
under common control with the Adviser that provide ongoing services to the
Fund, which include preparing an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of
Foregoing Column Pre-
approved by the Audit
All Fees for Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit Related Fees)
Portfolio, the Adviser (Portion Comprised of
and Service Affiliates Tax Fees)
-------------------------------------------------------------------------------------------------------------
2004 $1,136,090 [ $184,358 ]
( $163,145 )
( $ 21,213 )
2005 $ 905,214 [ $193,921 ]
( $179,180 )
( $14,741 )
(h) The Audit Committee of the Fund has considered whether the provision of
any non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent registered public accounting firm to the Adviser and
Service Affiliates is compatible with maintaining the independent registered
public accounting firm's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The audit committee members are as follows:
Ruth Block Michael J. Downey
David H. Dievler William H. Foulk, Jr
John H. Dobkin D. James Guzy
Marshall C. Turner, Jr.
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.
October 2005
ALLIANCE CAPITAL MANAGEMENT L.P.
Statement of Policies and Procedures for Proxy Voting
Introduction
As a registered investment adviser, Alliance Capital Management L.P. ("Alliance
Capital", "we" or "us") has a fiduciary duty to act solely in the best
interests of our clients. We recognize that this duty requires us to vote
client securities in a timely manner and make voting decisions that are in the
best interests of our clients. Consistent with these obligations, we will
disclose our clients' voting records only to them and as required by mutual
fund vote disclosure regulations. In addition, the proxy committees may, after
careful consideration, choose to respond to surveys regarding past votes.
This statement is intended to comply with Rule 206(4)-6 of the Investment
Advisers Act of 1940. It sets forth our policies and procedures for voting
proxies for our discretionary investment advisory clients, including investment
companies registered under the Investment Company Act of 1940. This statement
applies to Alliance Capital's growth and value investment groups investing on
behalf of clients in both US and non-US securities.
Proxy Policies
This statement is designed to be responsive to the wide range of proxy voting
subjects that can have a significant effect on the investment value of the
securities held in our clients' accounts. These policies are not exhaustive due
to the variety of proxy voting issues that we may be required to consider.
Alliance Capital reserves the right to depart from these guidelines in order to
avoid voting decisions that we believe may be contrary to our clients' best
interests. In reviewing proxy issues, we will apply the following general
policies:
Corporate Governance: Alliance Capital's proxy voting policies recognize the
importance of good corporate governance in ensuring that management and the
board of directors fulfill their obligations to the shareholders. We favor
proposals promoting transparency and accountability within a company. We will
vote for proposals providing for equal access to the proxy materials so that
shareholders can express their views on various proxy issues. We also support
the appointment of a majority of independent directors on key committees and
separating the positions of chairman and chief executive officer. Finally,
because we believe that good corporate governance requires shareholders to have
a meaningful voice in the affairs of the company, we will support non-binding
shareholder proposals that request that companies amend their by-laws to
provide that director nominees be elected by an affirmative vote of a majority
of the votes cast.
Elections of Directors: Unless there is a proxy fight for seats on the Board
or we determine that there are other compelling reasons for withholding votes
for directors, we will vote in favor of the management proposed slate of
directors. That said, we believe that directors have a duty to respond to
shareholder actions that have received significant shareholder support. We may
withhold votes for directors that fail to act on key issues such as failure to
implement proposals to declassify boards, failure to implement a majority vote
requirement, failure to submit a rights plan to a shareholder vote or failure
to act on tender offers where a majority of shareholders have tendered their
shares. In addition, we will withhold votes for directors who fail to attend at
least seventy-five percent of board meetings within a given year without a
reasonable excuse. Finally, we may withhold votes for directors of non-U.S.
issuers where there is insufficient information about the nominees disclosed in
the proxy statement.
Appointment of Auditors: Alliance Capital believes that the company remains in
the best position to choose the auditors and will generally support
management's recommendation. However, we recognize that there may be inherent
conflicts when a company's independent auditor performs substantial non-audit
related services for the company. Although we recognize that there may be
special circumstances that could lead to high levels of non-audit fees in some
years, we would normally consider non-audit fees in excess of 70% of total fees
paid to the auditing firm to be disproportionate. Therefore, absent unique
circumstances, we may vote against the appointment of auditors if the fees for
non-audit related services exceed 70% of the total fees paid by the company to
the auditing firm or there are other reasons to question the independence of
the company's auditors.
Changes in Legal and Capital Structure: Changes in a company's charter,
articles of incorporation or by-laws are often technical and administrative in
nature. Absent a compelling reason to the contrary, Alliance Capital will cast
its votes in accordance with the company's management on such proposals.
However, we will review and analyze on a case-by-case basis any non-routine
proposals that are likely to affect the structure and operation of the company
or have a material economic effect on the company. For example, we will
generally support proposals to increase authorized common stock when it is
necessary to implement a stock split, aid in a restructuring or acquisition or
provide a sufficient number of shares for an employee savings plan, stock
option or executive compensation plan. However, a satisfactory explanation of a
company's intentions must be disclosed in the proxy statement for proposals
requesting an increase of greater than one hundred percent of the shares
outstanding. We will oppose increases in authorized common stock where there is
evidence that the shares will be used to implement a poison pill or another
form of anti-takeover device.
Corporate Restructurings, Mergers and Acquisitions: Alliance Capital believes
proxy votes dealing with corporate reorganizations are an extension of the
investment decision. Accordingly, we will analyze such proposals on a
case-by-case basis, weighing heavily the views of our research analysts that
cover the company and our investment professionals managing the portfolios in
which the stock is held.
Proposals Affecting Shareholder Rights: Alliance Capital believes that certain
fundamental rights of shareholders must be protected. We will generally vote in
favor of proposals that give shareholders a greater voice in the affairs of the
company and oppose any measure that seeks to limit those rights. However, when
analyzing such proposals we will weigh the financial impact of the proposal
against the impairment of shareholder rights.
Anti-Takeover Measures: Alliance Capital believes that measures that impede
corporate transactions such as takeovers or entrench management not only
infringe on the rights of shareholders but may also have a detrimental effect
on the value of the company. We will generally oppose proposals, regardless of
whether they are advanced by management or shareholders, the purpose or effect
of which is to entrench management or excessively or inappropriately dilute
shareholder ownership. Conversely, we support proposals that would restrict or
otherwise eliminate anti-takeover or anti-shareholder measures that have
already been adopted by corporate issuers. For example, we will support
shareholder proposals that seek to require the company to submit a shareholder
rights plan to a shareholder vote. We will evaluate, on a case-by-case basis,
proposals to completely redeem or eliminate such plans. Furthermore, we will
generally oppose proposals put forward by management (including the
authorization of blank check preferred stock, classified boards and
supermajority vote requirements) that appear to be anti-shareholder or intended
as management entrenchment mechanisms.
Executive Compensation: Alliance Capital believes that company management and
the compensation committee of the board of directors should, within reason, be
given latitude to determine the types and mix of compensation and benefit
awards offered to company employees. Whether proposed by a shareholder or
management, we will review proposals relating to executive compensation plans
on a case-by-case basis to ensure that the long-term interests of management
and shareholders are properly aligned. In general, we will analyze the proposed
plans to ensure that shareholder equity will not be excessively diluted. With
regard to stock award or option plans, we consider whether the option exercise
prices are below the market price on the date of grant and whether an
acceptable number of employees are eligible to participate in such programs. We
will generally oppose plans that have below market value exercise prices on the
date of issuance or permit repricing of underwater stock options without
shareholder approval. Other factors such as the company's performance and
industry practice will generally be factored into our analysis. We will
support proposals requiring managements to submit severance packages that
exceed 2.99 times the sum of an executive officer's base salary plus bonus that
are triggered by a change in control to a shareholder vote. Finally, we will
support shareholder proposals requiring companies to expense stock options
because we view them as a large corporate expense that should be appropriately
accounted for.
Social and Corporate Responsibility: Alliance Capital will review and analyze
on a case-by-case basis proposals relating to social, political and
environmental issues to determine whether they will have a financial impact on
shareholder value. We will vote against proposals that are unduly burdensome or
result in unnecessary and excessive costs to the company. We may abstain from
voting on social proposals that do not have a readily determinable financial
impact on shareholder value.
Proxy Voting Procedures
Proxy Voting Committees
Our growth and value investment groups have formed separate proxy voting
committees to establish general proxy policies for Alliance Capital and
consider specific proxy voting matters as necessary. These committees
periodically review these policies and new types of corporate governance
issues, and decide how we should vote on proposals not covered by these
policies. When a proxy vote cannot be clearly decided by an application of our
stated policy, the proxy committee will evaluate the proposal. In addition, the
committees, in conjunction with the analyst that covers the company, may
contact corporate management and interested shareholder groups and others as
necessary to discuss proxy issues. Members of the committee include senior
investment personnel and representatives of the Legal and Compliance
Department. The committees may also evaluate proxies where we face a potential
conflict of interest (as discussed below). Finally, the committees monitor
adherence to these policies.
Conflicts of Interest
Alliance Capital recognizes that there may be a potential conflict of interest
when we vote a proxy solicited by an issuer whose retirement plan we manage, or
we administer, who distributes Alliance Capital sponsored mutual funds, or with
whom we or an employee has another business or personal relationship that may
affect how we vote on the issuer's proxy. Similarly, Alliance may have a
potential material conflict of interest when deciding how to vote on a proposal
sponsored or supported by a shareholder group that is a client. We believe that
centralized management of proxy voting, oversight by the proxy voting
committees and adherence to these policies ensures that proxies are voted with
only our clients' best interests in mind. Additionally, we have implemented
procedures to ensure that our votes are not the product of a material conflict
of interests, including: (i) on an annual basis, the proxy committees will take
reasonable steps to evaluate the nature of Alliance Capital's and our
employees' material business and personal relationships (and those of our
affiliates) with any company whose equity securities are held in client
accounts and any client that has sponsored or has material interest in a
proposal upon which we will be eligible to vote; (ii) requiring anyone
involved in the decision making process to disclose to the chairman of the
appropriate proxy committee any potential conflict that they are aware of
(including personal relationships) and any contact that they have had with any
interested party regarding a proxy vote; (iii) prohibiting employees involved
in the decision making process or vote administration from revealing how we
intend to vote on a proposal in order to reduce any attempted influence from
interested parties; and (iv) where a material conflict of interests exists,
reviewing our proposed vote by applying a series of objective tests and, where
necessary, considering the views of third party research services to ensure
that our voting decision is consistent with our clients' best interests.
Because under certain circumstances Alliance Capital considers the
recommendation of third party research services, the proxy committees will take
reasonable steps to verify that any third party research service is in fact
independent based on all of the relevant facts and circumstances. This includes
reviewing the third party research service's conflict management procedures and
ascertaining, among other things, whether the third party research service (i)
has the capacity and competency to adequately analyze proxy issues; and (ii)
can make such recommendations in an impartial manner and in the best interests
of our clients.
Proxies of Certain Non-US Issuers
Proxy voting in certain countries requires "share blocking." Shareholders
wishing to vote their proxies must deposit their shares shortly before the date
of the meeting (usually one-week) with a designated depositary. During this
blocking period, shares that will be voted at the meeting cannot be sold until
the meeting has taken place and the shares are returned to the clients'
custodian banks. Absent compelling reasons to the contrary, Alliance Capital
believes that the benefit to the client of exercising the vote does not
outweigh the cost of voting (i.e. not being able to sell the shares during this
period). Accordingly, if share blocking is required we generally abstain from
voting those shares.
In addition, voting proxies of issuers in non-US markets may give rise to a
number of administrative issues that may prevent Alliance Capital from voting
such proxies. For example, Alliance Capital may receive meeting notices
without enough time to fully consider the proxy or after the cut-off date for
voting. Other markets require Alliance Capital to provide local agents with
power of attorney prior to implementing Alliance Capital's voting instructions.
Although it is Alliance Capital's policy to seek to vote all proxies for
securities held in client accounts for which we have proxy voting authority, in
the case of non-US issuers, we vote proxies on a best efforts basis.
Loaned Securities
Many clients of Alliance Capital have entered into securities lending
arrangements with agent lenders to generate additional revenue. Alliance
Capital will not be able to vote securities that are on loan under these types
of arrangements. However, under rare circumstances, for voting issues that may
have a significant impact on the investment, we may request that clients recall
securities that are on loan if we determine that the benefit of voting
outweighs the costs and lost revenue to the client or fund and the
administrative burden of retrieving the securities.
Proxy Voting Records
You may obtain 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
web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Item is not yet effective with respect to the registrant.
ITEM 9. 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 10. 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 11. 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 changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
---------- ----------------------
12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2
hereof
12 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (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: December 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: December 29, 2005
By: /s/ Mark D. Gersten
-------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: December 29, 2005