<PAGE>
Letter To Shareholders ACM Managed Income Fund
===============================================================================
October 3, 1997
Dear Shareholder:
The annual reporting period for ACM Managed Income Fund ended on August 31,
1997. Since our last report to you dated February 28, 1997, the U.S. bond market
has posted modest returns. After moving lower during the first quarter as
interest rates rose, the market rallied strongly over the summer to end the
period with moderate gains. Within the traditional bond market (i.e.
governments, investment grade corporates, mortgage-backed securities and asset-
backed securities), the yield-oriented sectors (investment grade corporates and
mortgage-backed securities) were the best performing. The high yield sector
continued to benefit from the strong economy and stable credit environment. As a
result, this sector posted solid gains and outperformed all sectors of the
traditional market.
INVESTMENT RESULTS
For the six months ended August 31, 1997, we are pleased to report that the ACM
Managed Income Fund returned 7.29% on a net asset value basis. The current
dividend distribution rate is 9% based on the August 31, 1997 market price of
$10.00 per share. Over the 12-month period ended August 31, 1997, the Fund
achieved a total return of 20.38% on a net asset value basis.
Your Fund's outperformance can be attributed to strong performance of the Fund's
corporate holdings, particularly non-investment grade bonds. The portfolio's
modestly longer duration (relative to the benchmark) also contributed positively
to performance as longer-duration securities outperformed shorter-duration
securities as interest rates fell during the period. By contrast, the fixed
income market as a whole was up 4.39% over the past six months and 10.00% over
the past year as measured by the Lehman Brothers Aggregate Bond Index.
INVESTMENT RESULTS*
Period Ended August 31, 1997
Total Return
6 Months 12 Months
-------- ---------
ACM Managed
Income Fund 7.29% 20.38%
Lehman Brothers
Aggregate Bond Index 4.39% 10.00%
* The Fund's investment results are cumulative total returns for the period and
are based on the net asset value as of August 31, 1997. All fees and expenses
related to the operation of the Fund have been deducted. Returns for the Fund
include the reinvestment of any distributions paid during the period. Past
performance is no guarantee of future results.
The Lehman Brothers Aggregate Bond Index is composed of the Mortgage Backed and
Asset Backed Securities Indices and the Government/Corporate Bond Index and
includes treasury issues, agency issues, corporate bond issues and mortgage
backed securities. Returns for the Fund and its comparative index include the
reinvestment of any distributions paid during the period. The index is unmanaged
and reflects no fees or expenses. An investor cannot invest directly in the
index.
ECONOMIC REVIEW
The U.S. economy has continued to perform strongly since our last report. Led by
continued strength in the labor market, the unemployment rate dropped to 20-year
lows during the first quarter and wages continued to climb. In response to the
continued economic strength and what were viewed as mounting inflationary
pressures, the Federal Reserve Bank raised short-term interest rates in March.
Overall, economic growth, which had risen to 4.3% at the end of 1996, further
accelerated to 4.9% during the first three months of 1997.
More recent data show that the economy slowed in the second quarter, but
continued to grow at a robust clip. The Commerce Department, which had initially
estimated second quarter growth at 2.2%, revised up its estimate for
the spring quarter's Gross Domestic Product (GDP) growth to 3.3%. The main
causes for
1
<PAGE>
ACM Managed Income Fund
================================================================================
this revision were significant upward corrections in exports and the rate of
inventory growth. Although the growth contributions from these components are
unlikely to be repeated during the second half of 1997, the stronger growth rate
reveals that the U.S. economy entered the third quarter with much more momentum
than originally thought. Preliminary data indicate that the labor market remains
strong with an estimated 200,000 jobs created in August (adjusted for the
effects of the UPS strike). Meanwhile, consumer confidence remains near its
recent highs and consumer spending continues to be strong.
In spite of an increase in wage pressures, inflation remained very well-behaved
during the period. Consumer prices increased at a 1.6% annual rate in the first
eight months of the year and are up 2.2% from the same period last year.
Wholesale inflation, as measured by the Producer Price Index, fell for an
unprecedented seven months in a row before finally showing an increase in
August. Overall, producer prices are down 0.2% from year earlier levels.
INVESTMENT OUTLOOK
We expect economic activity to slow towards the end of 1997. Consumer confidence
has reached new highs, real income is growing solidly, and the labor market
remains strong, with unemployment at 4.9%. With multi-quarter growth trending
above the level historically considered to be non-inflationary, Federal Reserve
policy makers will continue to closely monitor inflationary pressures with a
predisposition towards increasing rates at the first sign of economic
overheating.
Given our expectations for low inflation and strong economic growth over the
next six months, we expect to maintain the portfolio's current emphasis on the
yield-oriented sectors. We continue to have a favorable outlook for the high
yield market. The strong U.S. economy will provide solid support for this market
sector and, with interest rates trading within a relatively narrow range,
investor demand for higher yields should remain strong. However, as the economy
begins to slow, security selection within the high yield sector will take on
added importance. We will continue to review each security using a fundamental,
bottom-up approach.
Thank you for your continued interest in ACM Managed Income Fund. We look
forward to reporting its progress and market activity to you in the coming
months.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Wayne D. Lyski
Wayne D. Lyski
Senior Vice President
2
<PAGE>
PORTFOLIO OF INVESTMENTS
August 31, 1997 ACM Managed Income Fund
===============================================================================
<TABLE>
<CAPTION>
Moody's Principal
Investor Amount
Ratings+ (000) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS-59.0%
U.S. Treasury Bonds-28.3%
6.25%, 8/15/23........................ $ 1,250 $ 1,183,204
6.625%, 2/15/27....................... 12,000 11,981,256
8.125%, 8/15/19....................... 12,500 14,542,975
12.375%, 5/15/04...................... 32,300 42,827,797
14.00%, 11/15/11...................... 8,700 13,194,098
-----------
83,729,330
-----------
U.S. Treasury Notes-17.9%
6.125%, 8/15/07....................... 23,000 22,647,824
6.25%, 7/31/98........................ 2,600 2,612,189
6.25%, 10/31/01....................... 10,000 10,018,760
6.25%, 2/15/07........................ 17,800 17,627,571
-----------
52,906,344
-----------
U.S. Treasury Strips-12.8%
Zero coupon, 5/15/09.................. 2,880 1,341,542
Zero coupon, 5/15/10.................. 19,130 8,306,533
Zero coupon, 2/15/11.................. 16,500 6,793,545
Zero coupon, 5/15/14.................. 65,100 21,316,735
-----------
37,758,355
-----------
Total U.S. Government Obligations
(cost $176,246,467)................... 174,394,029
-----------
CORPORATE
OBLIGATIONS-43.2%
BASIC INDUSTRIES-1.8%
B3 MAXXAM Group
Holdings, Inc.,
12.00%, 8/01/03....................... 5,000 5,375,000
-----------
BROADCASTING
& CABLE-7.5%
Caa American Telecasting,
Inc.,
14.50%, 8/15/05(a).................... 5,000 1,625,000
B3 Digital Television
Services,
12.50%, 8/01/07(b).................... 3,000 3,000,000
B2 Intermedia Capital
Partners,
11.25%, 8/01/06....................... 3,000 3,285,000
B3 Optel, Inc., Series B
13.00%, 2/15/05 (c)................... 5,000 4,850,000
<CAPTION>
Moody's Principal
Investor Amount
Ratings+ (000) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
B1 Telemundo Group, Inc.,
7.00%, 2/15/06(d)..................... $ 6,000 $ 5,850,000
B3 Winstar
Equipment Corp.,
12.50%, 3/15/04(b).................... 3,500 3,552,500
-----------
22,162,500
-----------
CHEMICALS-1.1%
B1 Kaiser Aluminum &
Chemical Corp.,
10.875%, 10/15/06..................... 3,000 3,270,000
-----------
CONSUMER PRODUCTS
& SERVICES-5.1%
B3 Renaissance Cosmetics,
Inc.,
11.75%, 2/15/04....................... 2,500 2,512,500
Riverwood International
Corp.,
B3 10.625%, 8/01/07(b)................... 3,000 5,087,500
Caa 10.875%, 4/01/08...................... 5,000 2,880,000
NR Waterford Gaming
L.L.C.,
12.75%, 11/15/03...................... 4,000 4,475,000
-----------
14,955,000
-----------
ENERGY-2.8%
B1 National Energy
Group, Inc.,
10.75%, 11/01/06...................... 1,500 1,545,000
B3 Transamerican Energy,
Inc.,
11.50%, 6/15/02(b).................... 7,000 6,842,500
-----------
8,387,500
-----------
FINANCIAL-2.2%
B2 Cityscape Financial
Corp.,
12.75%, 6/01/04(b).................... 4,000 3,320,000
B3 Coleman Escrow Corp.,
Zero Coupon,
5/15/01(b)............................ 5,000 3,300,000
-----------
6,620,000
-----------
</TABLE>
3
<PAGE>
Portfolio Of Investments (continued) ACM Managed Income Fund
================================================================================
<TABLE>
<CAPTION>
Moody's Principal
Investor Amount
Ratings+ (000) Value
- -------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL-6.9%
B3 Amtrol Acquisition,
Inc.,
10.625%, 12/31/06................... $ 4,250 $ 4,483,750
B2 Anchor Glass Corp.,
11.25%, 4/01/05 (b)................. 2,500 2,737,500
B3 Belden & Blake
Energy Co.,
9.875%, 6/15/07(b).................. 4,000 3,990,000
B3 Delta Mills, Inc.,
9.625%, 9/01/07(b).................. 2,000 2,010,000
NR GST Equipment Corp.,
13.25%, 5/01/07 (b)................. 5,000 5,500,000
B3 MVE, Inc.,
12.50%, 2/15/02..................... 1,500 1,543,125
------------
20,264,375
------------
LEISURE &
ENTERTAINMENT-1.0%
B3 Alliance Gaming Corp.,
10.00%, 8/01/07(b).................. 3,000 2,925,000
------------
OIL & GAS-1.3%
Caa DeepTech
International, Inc.,
12.00%, 12/15/00.................... 3,500 3,727,500
------------
PLASTICS-1.9%
B3 Crain Industries, Inc.,
13.50%, 8/15/05..................... 5,000 5,712,500
------------
TECHNOLOGY-2.6%
B1 Unisys Corp.,
12.00%, 4/15/03,
Series B............................ 7,000 7,717,500
------------
TELECOMMUNICATIONS-7.6%
NR American Communications
Services, Inc.,
13.75%, 7/15/07(b).................. 3,000 3,187,500
<CAPTION>
Moody's Principal
Investor Amount
Ratings+ (000) Value
- -------------------------------------------------------------------------------
<S> <C> <C>
B2 Goss Graphic Systems,
Inc.,
12.00%, 10/15/06................... 3,000 3,345,000
B3 Iridium L.L.C. Capital
Corp.,
14.00%, 7/15/05(b)................. 5,000 5,350,000
B2 Orion Network Systems,
Inc.,
11.25%, 1/15/07.................... 4,950 5,420,250
B3 Price Communications
Wireless, Inc.,
11.75%, 7/15/07(b)................. 5,000 5,237,500
------------
22,540,250
------------
TRANSPORTATION-1.4%
B3 Johnstown America
Industries, Inc.,
11.75%, 8/15/05...................... 4,000 4,220,000
------------
Total Corporate Obligations
(cost $122,267,128)................... 127,877,125
------------
YANKEE OBLIGATIONS-7.7%
B1 Central European Media
Entertainment, Class A,
9.375%, 8/15/04...................... 3,000 3,000,000
B2 Innova S De R.L.,
12.875%, 4/01/07(b).................. 5,000 5,287,500
B1 Ivaco, Inc.,
11.50%, 9/15/05..................... 3,500 3,885,000
B3 Microcell
Telecommunications, Inc.,
14.00%, 6/01/06...................... 3,000 1,920,000
Ba3 Murrin Murrin
Holdings,
9.375%, 8/31/07(b)................... 4,000 3,990,408
B2 TFM S.A. De CV,
10.25%, 6/15/07(b)................... 4,500 4,635,000
------------
Total Yankee Obligations
(cost $21,907,076).................... 22,717,908
------------
</TABLE>
4
<PAGE>
Portfolio Of Investments (continued) ACM Managed Income Fund
===============================================================================
<TABLE>
<CAPTION>
Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS &
OTHER INVESTMENTS-0.2%
Eye Care Centers of America,
Inc., Warrants, expiring
10/01/03(e)(f)......................... 3,000 $ 13,500
Microcell
Telecommunications, Inc.,
Conditional Warrants(f)............... 12,000 7,500
Warrants, expiring
12/31/97(f)(g)........................ 12,000 169,500
Pegasus Media
& Communications,
Inc.(f)............................... 9,025 120,709
RSL Communications, Ltd.,
Warrants, expiring
11/15/06(f)(h)........................ 5,000 300,000
------------
Total Common Stocks
& Other Investments
(cost $235,653)....................... 611,209
------------
<CAPTION>
Principal
Amount
(000) Value
- -------------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSIT-1.4%
State Street Bank & Trust Co.,
5.25%, 9/02/97
(cost $4,011,000)..................... $ 4,011 $ 4,011,000
------------
TOTAL INVESTMENTS-111.5%
(cost $324,667,324).................... 329,611,271
Other assets
less liabilities-(11.5%).............. (33,936,823)
------------
NET ASSETS-100.0%...................... $295,674,448
============
</TABLE>
- -------------------------------------------------------------------------------
+ Unaudited
(a) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective.
(b) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1997, the market value of these securities aggregated $69,952,908 or 23.7%
of net assets.
(c) Consists of $5,000,000 senior notes and 5,000 shares of common stock.
(d) Stated rate in effect until 2/15/99, 10.50% thereafter until maturity.
(e) Each warrant entitles the holder to purchase .4522 shares of Common Stock.
The warrants are exercisable from 10/01/98 to 10/01/03.
(f) Non-income producing security.
(g) Each warrant entitles the holder to purchase 3.072 shares of Common Stock.
The warrants are excercisable from 6/13/96 to 12/31/97.
(h) Each warrant entitles the holder to purchase 1.815 shares of Common Stock.
The warrants are exercisable from 10/03/97 to 11/15/06.
Glossary:
NR - Not Rated.
See notes to financial statements.
5
<PAGE>
Statement Of Assets And Liabilities
August 31, 1997 ACM Managed Income Fund
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $324,667,324)......... $329,611,271
Cash............................................................ 829
Interest receivable............................................. 5,038,589
Prepaid expenses and other assets............................... 14,219
------------
Total assets.................................................... 334,664,908
------------
LIABILITIES
Payable for investment securities purchased..................... 38,637,810
Advisory fee payable............................................ 160,209
Administrative fee payable...................................... 49,295
Accrued expenses and other liabilities.......................... 143,146
------------
Total liabilities............................................... 38,990,460
------------
NET ASSETS....................................................... $295,674,448
============
COMPOSITION OF NET ASSETS
Preferred Stock, $.01 par value per share; 1,900 shares
Remarketed Preferred Stock authorized, 950 shares issued
and outstanding at $100,000 per share liquidation preference.. $ 95,000,000
Common Stock, $.01 par value per share; 299,998,100 shares
authorized, 21,986,075 shares issued and outstanding........... 219,861
Additional paid-in capital...................................... 197,627,723
Undistributed net investment income............................. 2,338,632
Accumulated net realized loss on investments.................... (4,455,715)
Net unrealized appreciation of investments...................... 4,943,947
------------
$295,674,448
============
NET ASSET VALUE PER SHARE OF COMMON STOCK
($295,674,448 less Remarketed Preferred Stock at
liquidation value of $95,000,000 divided by 21,986,075 shares
of Common Stock outstanding)................................... $9.13
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements
6
<PAGE>
Statement Of Operations
For the Year Ended August 31, 1997 ACM Managed Income Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................ $ 29,394,741
EXPENSES
Advisory fee........................................ $1,862,555
Administrative fee.................................. 573,093
Remarketed Preferred Stock-remarketing agent's fees. 240,798
Transfer agency..................................... 85,107
Audit & legal....................................... 75,289
Custodian........................................... 36,802
Registration fees................................... 32,183
Reports and notices to shareholders................. 25,668
Taxes............................................... 22,968
Directors' fees and expenses........................ 22,255
Miscellaneous....................................... 29,224
----------
Total expenses...................................... 3,005,942
------------
Net investment income............................... 26,388,799
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions........ 10,751,417
Net change in unrealized depreciation of investments 5,277,153
------------
Net gain on investments............................. 16,028,570
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS........... $ 42,417,369
============
<CAPTION>
Statement Of Changes In Net Assets
================================================================================
For the Year Ended
August 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 26,388,799 $ 25,683,402
Net realized gain on investment transactions........ 10,751,417 1,247,689
Net change in unrealized appreciation
(depreciation) of investments...................... 5,277,153 (527,220)
------------ ------------
Net increase in net assets from operations........... 42,417,369 26,403,871
DIVIDENDS TO SHAREHOLDERS
Common Stock:
Dividends from net investment income................ (19,578,018) (17,586,112)
Remarketed Preferred Stock:
Dividends from net investment income................ (6,400,824) (4,308,241)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting in the
issuance of Common Stock............................ 3,987,994 4,169,410
------------ ------------
Total increase...................................... 20,426,521 8,678,928
NET ASSETS
Beginning of year................................... 275,247,927 266,568,999
------------ ------------
End of year (including undistributed
net investment income of
$2,338,632 and $1,892,480, respectively)......... $295,674,448 $275,247,927
============ ============
</TABLE>
- -------------------------------------------------------------------------------
See notes to financial statements.
7
<PAGE>
Notes To Financial Statements
August 31, 1997 ACM Managed Income Fund
===============================================================================
NOTE A: Significant Accounting Policies
ACM Managed Income Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. The following is a summary of significant accounting policies followed
by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Listed securities not
traded and securities traded in the over-the-counter market, including listed
debt securities whose primary market is believed to be over-the-counter, are
valued at the mean between the most recently quoted bid and asked prices
provided by the principal market makers. Options are valued at market value or
fair value using methods determined by the Board of Directors. Securities for
which market quotations are not readily available and restricted securities
which are subject to limitations as to their resale are valued in good faith at
fair value using methods determined by the Board of Directors. Readily
marketable fixed-income securities are valued on the basis of prices provided by
a pricing service when such prices are believed by the Adviser to reflect the
fair value of such securities. Securities which mature in 60 days or less are
valued at amortized cost, which approximates market value, unless this method
does not represent fair value.
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 applicable,
to shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Dividend income is recorded on the ex-dividend
date. Investment transactions are accounted for on the date the investments are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes 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
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. During the current fiscal year, permanent differences,
primarily due to book and tax differences on accrual of income, resulted in a
net increase in accumulated net realized losses and a corresponding increase in
undistributed net investment income. This reclassification had no affect on net
assets.
8
<PAGE>
Notes To Financial Statements (continued) ACM Managed Income Fund
================================================================================
NOTE B: Advisory and Administrative Fees
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management, L.P. (the "Adviser") an advisory fee equal to an annualized
rate of .65 of 1% of the average adjusted weekly net assets of the Fund during
the month.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Adviser, the Fund reimburses AFS for
costs relating to servicing phone inquiries for the Fund. The Fund reimbursed
AFS $2,915 during the year ended August 31, 1997.
Under the terms of an Administrative Agreement, the Fund pays Princeton
Administrators, L.P. (the "Administrator") a monthly fee equal to an annualized
rate of .20 of 1% of the Fund's average adjusted weekly net assets. The
Administrator prepares certain financial and regulatory reports for the Fund and
provides clerical and other services.
- --------------------------------------------------------------------------------
NOTE C: Investment Transactions
Purchases and sales of investment securities (excluding U.S. government
securities, short term investments and options) aggregated $453,908,409 and
$487,226,077 respectively, for the year ended August 31, 1997. There were
purchases of $338,989,541 and sales of $309,790,825 of U.S. government and
government agency obligations for the year ended August 31, 1997.
At August 31, 1997, the cost of investments for federal income tax purposes was
$328,110,261. Accordingly, gross unrealized appreciation of investments was
$7,700,186 and gross unrealized depreciation of investments was $6,199,176,
resulting in net unrealized appreciation of $1,501,010.
For federal income tax purposes, the Fund had a capital loss carryforward at
August 31, 1997 of $1,012,778 which will expire in 2004.
- --------------------------------------------------------------------------------
NOTE D: Capital Stock
There are 300,000,000 shares of $.01 par value capital stock authorized.
Common Stock
There are 21,986,075 shares of common stock outstanding at August 31, 1997.
During the years ended August 31, 1997 and August 31, 1996, the Fund issued
433,096 and 479,992 shares, respectively, in connection with the Fund's dividend
reinvestment plan.
Preferred Stock
The Fund has issued and outstanding 950 shares of Remarketed Preferred Stock
each at a liquidation value of $100,000 per share. The dividend rate on the
Remarketed Preferred Stock may change generally every 28 days as set by the
remarketing agent. The dividend rate on the Remarketed Preferred Stock is 5.375%
and is effective through September 17, 1997.
9
<PAGE>
Financial Highlights ACM Managed Income Fund
================================================================================
Selected Data For A Share Of Common Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
------- ------ ------ ------ -------
Net asset value, beginning of year....................... $ 8.36 $ 8.14 $ 7.99 $10.79 $ 9.32
------- ------ ------ ------ -------
Income From Investment Operations
- ---------------------------------
Net investment income.................................... 1.20 1.20 1.18 1.16 1.18
Net realized and unrealized gain
(loss) on investments and option
transactions............................................. .76 .04 .30 (1.07) 1.63
------- ------ ------ ------ -------
Net increase in net asset value
from operations......................................... 1.96 1.24 1.48 .09 2.81
------- ------ ------ ------ -------
Less: Dividends and Distributions
- ---------------------------------
Distributions to common shareholders:
Dividends from net investment income.................. (.90) (.83) (.83) (1.09) (1.08)
Distributions from net realized gains................. -0- -0- -0- (1.48) (.09)
Distributions in excess of net
investment income.................................... -0- -0- (.09) (.09) -0-
Tax return of capital distribution.................... -0- -0- (.16) (.04) -0-
Distributions to preferred shareholders:
Common Stock equivalent of dividends
paid to Remarketed Preferred
shareholders........................................ (.29) (.19) (.25) (.19) (.17)
------- ------ ------ ------ -------
Total dividends and distributions....................... (1.19) (1.02) (1.33) (2.89) (1.34)
------- ------ ------ ------ -------
Net asset value, end of year............................ $ 9.13 $ 8.36 $ 8.14 $ 7.99 $ 10.79
======= ====== ====== ====== =======
Market value, end of year............................... $10.000 $9.500 $9.375 $8.875 $11.375
======= ====== ====== ====== =======
Total Return
- ------------
Total investment return based on: (a)
Market value......................................... 16.03% 11.39% 20.63% .66% 24.82%
Net asset value...................................... 20.38% 12.89% 16.34% (4.42%) 30.22%
Ratios/Supplemental Data
- ------------------------
Net assets, end of year (000's omitted)................ $295,674 $275,248 $266,569 $258,018 $301,379
Ratio of expenses to average net assets (b)............ 1.05% 1.09% 1.07% 1.14% 1.05%
Ratio of net investment income to average net assets (b) 9.21% 9.30% 9.69% 8.32% 8.06%
Portfolio turnover rate................................ 253% 360% 392% 366% 490%
</TABLE>
- --------------------------------------------------------------------------------
(a) 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 the 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 such periods.
(b) The expense ratio and net investment income ratio do not reflect the effect
of dividend payments to preferred shareholders
10
<PAGE>
Report Of Ernst & Young LLP
Independent Auditors ACM Managed Income Fund
================================================================================
To the Shareholders and Board of Directors
ACM Managed Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of ACM
Managed Income Fund, Inc., including the portfolio of investments, as of August
31, 1997, 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 periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1997, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of ACM
Managed Income Fund, Inc. at August 31, 1997, and 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 indicated
periods, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Ernst & Young LLP
New York, New York
October 6, 1997
11
<PAGE>
Additional Information ACM Managed Income Fund
================================================================================
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"). State Street Bank and Trust Company (the "Agent") will act
as agent for participants under the Plan. Shareholders whose shares are held in
the name of a 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 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 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 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 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 State Street Bank and Trust Company, P.O. Box 366,
Boston, Massachusetts 02101.
12
<PAGE>
ACM Managed Income Fund
================================================================================
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, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv) no change in the person
primarily responsible for the day-to-day management of the Fund's portfolio, who
is Wayne D. Lyski, a Senior Vice President of the Fund.
Supplemental Proxy Information
The Annual Meeting of Shareholders of The ACM Managed Income Fund, Inc. was held
Friday, July 10, 1997. The description of each proposal and number of shares
voted at the meeting are as follows:
<TABLE>
<CAPTION>
Shares Voted
Shares Without
Voted For Authority
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. To elect directors: Class Three Directors
(term expires in 2000)
Ruth Block
John D. Carifa 20,320,749 299,273
Robert C. White 20,349,654 270,368
20,297,402 322,620
Class One Nominee
(term expires in 1998)
Donald J. Robinson 20,354,138 265,884
Shares Shares Voted Shares
Voted For Against Abstaining
- ------------------------------------------------------------------------------------------------
2. To ratify the selection of Ernst & Young LLP
as the Fund's independent auditors for the Fund's
fiscal year ending August 31, 1997: 20,249,645 95,514 274,863
</TABLE>
13
<PAGE>
ACM Managed Income Fund
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block (1)
David H. Dievler (1)
James R. Greene (1)
Donald J. Robinson (1)
Dr. James M. Hester (1)
Clifford L. Michel (1)
Robert C. White (1)
OFFICERS
Wayne D. Lyski, Senior Vice President
Kathleen A. Corbet, Senior Vice President
Paul J. DeNoon, Vice President
Wayne C. Tappe, Vice President
Christian G. Wilson, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Juan J. Rodriguez, Controller
ADMINISTRATOR
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
COMMON STOCK:
CUSTODIAN, DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
LEGAL COUNSEL
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
PREFERRED STOCK:
DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
IBJ Schroder Bank & Trust Co.
1 State Street
New York, NY 10004
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
- -------------------------------------------------------------------------------
(1) Member of the Audit Committee
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 herein, is transmitted to the
shareholders of ACM Managed 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 this report.
14
<PAGE>
[This page intentionally left blank]
<PAGE>
ACM Managed Income Fund
Summary of General Information
The Fund
ACM Managed Income Fund is a closed-end investment company whose shares trade on
the New York Stock Exchange. The Fund seeks to provide investors with a high
level of total return by seeking both high current income and capital
appreciation. In seeking this objective the Fund will invest primarily in U.S.
Government securities and corporate fixed income securities. In addition, the
Fund may utilize certain other investment techniques, including options and
futures contracts.
Shareholder Information
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of newspapers. The Fund's NYSE trading
symbol is "AMF". Weekly comparative net asset value (NAV) and market price
information about the Fund is published each Monday in The Wall Street Journal
and each Sunday in The New York Times 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 distribution in additional Fund shares.
For questions concerning shareholder account information, or if you would like a
brochure describing the Dividend Reinvestment Plan, please call State Street
Bank and Trust Company at 1-800-219-4218
ACM Managed Income Fund
1345 Avenue of the Americas
New York, New York 10105
ALLIANCE CAPITAL[Logo]/(R)/
(R)These registered service marks used under license from the owner,
Alliance Capital Management L.P.
MIFSR
ACM
--------------------
Managed
--------------------
Income Fund
--------------------
Annual Report
August 31, 1997
[Logo]ALLIANCE/(R)/
