<PAGE>
LETTER TO SHAREHOLDERS ACM Managed Income Fund
================================================================================
April 26, 1999
Dear Shareholder:
We are pleased to report to you on the strategy, performance and outlook of ACM
Managed Income Fund (the Fund). The Fund's objective is to provide investors
with a high level of total return by seeking both high current income and
capital appreciation. To achieve its objective the Fund invests primarily in
U.S. Government securities and corporate fixed income securities. In addition,
the Fund may utilize certain other investment techniques, including investing in
options and futures contracts.
INVESTMENT RESULTS
The following table provides performance for your Fund over the six- and
12-month periods ended February 28, 1999. For comparison, we have included
performance for the Lehman Brothers Aggregate Bond Index, which is a standard
measure of the performance of a basket of unmanaged debt securities.
Your Fund underperformed the benchmark for both the six- and 12-month periods
ended February 28, 1999, primarily due, as discussed below, to the Fund's
positions in lower quality issues within the high-yield sector.
INVESTMENT RESULTS(*)
Periods Ended February 28, 1999
Total Returns
6 Months 12 Months
-------- ---------
ACM Managed
Income Fund -6.60% -9.55%
Lehman Brothers
Aggregate Bond Index 1.61% 6.27%
* The Fund's investment results represent total returns and are based on the
net asset value as of February 28, 1999. All fees and expenses related to the
operation of the Fund have been deducted, but no adjustment has been made for
sales charges that may apply when shares are purchased or redeemed. 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 (LB) Aggregate Bond Index is composed of the LB
Mortgage-Backed Securities Index, the LB Asset-Backed Securities Index and the
LB Government/Corporate Bond Index. An investor cannot invest directly in an
index.
MARKET OVERVIEW
During the six-month period ended February 28, 1999, financial markets
stabilized and recovered from the turmoil experienced in the third quarter of
1998. Despite an unprecedented wave of financial shocks both at home and abroad,
overall U.S. economic growth remained strong, while inflation, interest rates,
and unemployment reached historic lows. Strong consumer demand and productivity
growth were the driving forces behind the expansion. However, the manufacturing
sector continued to be negatively affected by weaker exports, as economies
outside the U.S. continued to slow. The Federal Reserve cut interest rates at
the beginning of the period when the risk of an economic slowdown outweighed the
risk of inflation.
1
<PAGE>
ACM Managed Income Fund
================================================================================
The U.S. bond market recorded modest returns over the six months ended February
28, 1999. At the beginning of the period, the U.S. bond market climbed as
investors continued to seek safety from global market turmoil. However, as
interest rate cuts and stronger-than-expected U.S. economic growth restored
investor confidence, the bond market lost its "safe-haven" appeal. Investors
moved back into higher yielding assets and the equity market resumed its climb
into record breaking territory. Later in the period, bond market returns were
further dampened as additional positive economic news made it increasingly
unlikely that the Federal Reserve would cut interest rates.
The high-yield sector performed poorly at the beginning of the period as
investors shunned credit risk in favor of safer government securities. After the
Federal Reserve cut interest rates and the equity market rebounded, investors
moved back into the high-yield sector in search of higher returns. Subsequently,
high-yield debt prices rebounded, but not to the levels reached prior to August
of 1998. Also, within the high-yield sector, lower quality issuers continued to
perform poorly as investors shunned all but the highest quality issuers.
INVESTMENT STRATEGY
Over the six-month period ended February 28, 1999, we maintained a longer
interest rate duration than the market, generally employing U.S. Treasury
holdings with maturities of 10 years or more. Within our corporate allocation,
we selectively picked solid credits, which we thought were undervalued. We were
particularly interested in the communications sector, which benefited from
strong earnings and merger activity in 1998. The utility sector also provided
some attractive investments, as this sector benefits from its "safe-haven"
status during times of market volatility.
OUTLOOK
We believe the risk of global recession has diminished after the recent wave of
official interest rate cuts around the world. However, global growth will
continue to slow and inflation will remain subdued as the consequences of excess
productive capacity are felt around the world. U.S. economic activity is
expected to remain strong in 1999, while inflation and interest rates remain
low. In this economic environment, it is unlikely that the Federal Reserve will
cut interest rates.
In the U.S. fixed income market, we expect the safe-haven premium on Treasuries
to diminish somewhat, but Treasuries will perform well given their
attractiveness to foreign investors, a low inflationary environment and investor
sentiment to constrain risk. Given the generally positive economic environment,
coupled with historically high yield spreads to Treasuries, we believe that the
high-yield sector is poised to perform strongly during the remainder of the
year. However, we anticipate volatility will remain elevated in the near term
as economic events from overseas impact financial markets.
Thank you for your continued interest and investment in ACM Managed Income Fund.
We look forward to reporting its progress 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
February 28, 1999 (unaudited) ACM Managed Income Fund
================================================================================
Moody's Principal
Investor Amount
Ratings (000) Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT
OBLIGATIONS-62.0%
Aaa U.S. TREASURY BONDS-29.4%
6.25%, 8/15/23 ...................... $ 1,250 $ 1,319,923
6.625%, 2/15/27 ..................... 12,000 13,383,756
8.125%, 8/15/19 ..................... 6,600 8,382,000
12.375%, 5/15/04 .................... 32,300 42,393,750
14.00%, 11/15/11 .................... 8,700 13,226,723
------------
78,706,152
------------
Aaa U.S. TREASURY NOTES-15.2%
6.25%, 10/31/01 ..................... 9,000 9,236,250
6.25%, 2/15/07 ...................... 7,800 8,214,375
7.00%, 7/15/06 ...................... 21,400 23,433,000
------------
40,883,625
------------
Aaa U.S. TREASURY STRIPS-17.4%
Zero coupon, 5/15/09 ................ 2,880 1,629,190
Zero coupon, 5/15/10 ................ 19,130 10,134,424
Zero coupon, 2/15/11 ................ 16,500 8,336,394
Zero coupon, 5/15/14 ................ 65,100 26,611,122
------------
46,711,130
------------
Total U.S. Government Obligations
(cost $164,496,119) ................. 166,300,907
------------
CORPORATE
OBLIGATIONS-44.8%
AEROSPACE-1.9%
B1 Hexcel Corp.,
9.75%, 1/15/09(a) ................. 5,000 5,150,000
------------
AUTOMOTIVE-0.5%
Caa1 Breed Technologies, Inc.,
9.25%, 4/15/08(a) ................. 3,000 1,515,000
------------
BROADCASTING & CABLE-2.2%
B3 Optel, Inc., Series B,
11.50%, 7/01/08 ................... 5,000 965,000
B3 Optel, Inc., Series B,
13.00%, 2/15/05 ................... 5,000 5,025,000
------------
5,990,000
------------
BUSINESS SERVICES-1.5%
B1 Geologistics Corp.,
9.75%, 10/15/07 ................... 5,000 4,025,000
------------
CHEMICALS-1.5%
Baa3 Equistar Chemicals L.P.,
8.75%, 2/15/09(a) ................. 4,000 4,105,000
------------
Moody's Principal
Investor Amount
Ratings (000) Value
- --------------------------------------------------------------------------------
COMMUNICATIONS-5.3%
NR Exodus Communications, Inc.,
11.25%, 7/01/08 ................... $ 3,000 $ 3,150,000
B3 ICO Global Communications,
15.00%, 8/01/05(b) ................ 5,000 3,600,000
NR Logix Communications
Enterprises,
12.25%, 6/15/08 ................... 8,000 7,440,000
------------
14,190,000
------------
CONSUMER PRODUCTS
& SERVICES-4.4%
B2 Evenflo Company, Inc.,
11.75%, 8/15/06(a) ................ 2,300 2,357,500
B3 Riverwood International Corp.,
10.625%, 8/01/07 .................. 5,000 5,112,500
NR Waterford Gaming L.L.C.,
12.75%, 11/15/03 .................. 3,784 4,304,300
------------
11,774,300
------------
CONTAINERS-1.0%
B2 Anchor Glass Corp.,
11.25%, 4/01/05 ................... 2,500 2,625,000
------------
ELECTRONICS-2.5%
B2 CHS Electronics, Inc.,
9.875%, 4/15/05 ................... 7,500 6,787,500
------------
ENERGY-2.5%
B3 Chesapeake Energy
Corp., Series B,
9.625%, 5/01/05 ................... 6,000 3,870,000
Caa2 Transamerican Energy,
Inc., Series B,
11.50%, 6/15/02 ................... 9,000 2,745,000
------------
6,615,000
------------
FINANCIAL SERVICES-1.9%
Ba3 Willis Corroon Corp.,
9.00%, 2/01/09(a) ................. 5,000 5,025,000
------------
FOOD-1.8%
Caa1 Specialty Foods Corp.,
Series B,
11.125%, 10/01/02 ................. 5,000 4,775,000
------------
MACHINERY-0.7%
Caa2 Goss Graphic Systems, Inc.,
12.00%, 10/15/06................... 5,000 1,775,000
------------
3
<PAGE>
PORTFOLIO OF INVESTMENTS(continued) ACM Managed Income Fund
================================================================================
Moody's Principal
Investor Amount
Ratings (000) Value
- --------------------------------------------------------------------------------
MEDICAL-0.6%
B3 MVE, Inc.,
12.50%, 2/15/02(c) .................. $ 1,500 $ 1,612,500
------------
METALS/MINERALS-0.2%
Ca Acme Metals, Inc.,
10.875%, 12/15/07(d) .............. 3,913 489,125
------------
OIL & GAS-1.1%
B3 Gothic Production Corp.,
Series B,
11.125%, 5/01/05 .................. 4,000 2,900,000
------------
PLASTICS-2.1%
B3 Foamex L.P.,
13.50%, 8/15/05(a) ................ 5,000 5,525,000
------------
TELECOMMUNICATIONS-13.1%
B3 Iridium L.L.C. Capital
Corp., Series B,
14.00%, 7/15/05 ................... 6,000 5,070,000
NR Knology Holdings, Inc.,
11.875%, 10/15/07(e) .............. 5,000 2,650,000
NR Long Distance Direct
Holdings, Inc.,
12.25%, 4/15/08(a) ................ 4,000 3,200,000
NR Pathnet, Inc.,
12.25%, 4/15/08 ................... 3,000 1,665,000
B3 Primus Telecommunications
Inc., 11.25%,
1/15/09(a) ........................ 5,000 5,100,000
NR Startec Global
Communications Corp.,
12.00%, 5/15/08 ................... 4,500 4,095,000
Caa1 Viatel, Inc.,
12.50%, 4/15/08(e) ................ 10,000 6,100,000
B3 Winstar Communications
Inc.,
12.50%, 3/15/04 ................... 7,500 7,312,500
------------
35,192,500
------------
Total Corporate Obligations
(cost $140,838,373) 120,070,925
------------
Shares or
Moody's Principal
Investor Amount
Ratings (000) Value
- --------------------------------------------------------------------------------
YANKEE OBLIGATIONS-7.1%
Caa1 Brunner Mond Group PLC,
11.00%, 7/15/08(a) ................ $ 4,000 $ 2,500,000
B2 Bulong Operations Pty,
12.50%, 12/15/08(a) ............... 4,000 4,050,000
B1 Centaur Mining &
Exploration,
11.00%, 12/01/07(a) ............... 3,000 2,880,000
B1 Filtronic PLC,
10.00%, 12/01/05(a) ............... 4,000 4,120,000
Ba3 Murrin Murrin Hldgs. Pty.,
9.375%, 8/31/07 ................... 4,000 3,620,000
B3 Northern Offshore ASA,
10.00%, 5/15/05(a) ................ 5,000 1,900,000
------------
Total Yankee Obligations
(cost $23,556,610) .................. 19,070,000
------------
PREFERRED STOCK-1.2%
Caa Nextel Communications,
Inc., Series E,
11.125%, 2/15/10(f)
(cost $3,343,343) ................. 3,350 3,157,375
------------
COMMON STOCKS &
OTHER INVESTMENTS-0.1%
NR Optel, Inc.
Common Stock(g) ................... 5,000 150
NR Knology Holdings, Inc.,
Warrants, expiring
10/15/07(a)(g)(h) ................. 2,500 6,250
NR Long Distance International
Warrants, expiring
4/13/08(g)(i) ..................... 4,000 10,000
NR Loral Space &
Communication, Inc.,
Warrants, expiring
1/15/07(g)(j) ..................... 4,950 54,450
NR Microcell
Telecommunications, Inc.,
Warrants, expiring
6/01/06(a)(g)(k) .................. 12,000 167,400
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) ACM Managed Income Fund
================================================================================
Moody's
Investor
Ratings Shares Value
- --------------------------------------------------------------------------------
NR Pathnet Inc.,
Warrants, expiring
4/15/08(a)(g)(l) .................. 3,000 $ 30,000
NR Startec Global
Warrants, expiring
5/15/08(g)(m) ..................... 4,500 4,500
------------
Total Common Stocks &
Other Investments
(cost $169,876) ..................... 272,750
------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
TIME DEPOSIT-0.2%
State Street Bank &
Trust Co., 4.50%, 3/01/99
(cost $670,000) ....................... $ 670 $ 670,000
------------
TOTAL INVESTMENTS-115.4%
(cost $333,074,321) ..................... 309,541,957
Other assets
less liabilities - (15.4%) .............. (41,344,131)
------------
NET ASSETS-100.0% ........................ $268,197,826
============
- --------------------------------------------------------------------------------
(a) 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
February 28, 1999, the market value of these securities aggregated
$47,631,150 or 17.8% of net assets.
(b) Warrants are attached. Each warrant entitles the holder to purchase
19.85 shares of Common Stock at $13.20 per share. The warrants are
exercisable until 8/01/05.
(c) Warrants are attached. Each warrant entitles the holder to purchase .24
shares of common stock at $.01 per share. The warrants are exerciseable
until 2/15/02.
(d) Security is in default and is non-income producing.
(e) 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.
(f) PIK Preferred, quarterly stock payments.
(g) Non-income producing security.
(h) Each warrant entitles the holder to purchase .00373 shares of Common
Stock. The warrants are exercisable until 10/15/07.
(i) Each warrant entitles the holder to purchase 15.0874 shares of Common
Stock at $.01 per share. The warrants are exercisable from 4/07/99 to
4/13/08.
(j) Each warrant entitles the holder to purchase .6056 shares of Common
Stock at $.014 per share. The warrants are exercisable until 1/15/07.
(k) Each warrant entitles the holder to purchase 3.072 shares of Common
Stock. The warrants are exercisable until 6/01/06.
(l) Each warrant entitles the holder to purchase 3.19 shares of Common Stock
at $.01 per share. The warrants are exercisable until 4/15/08.
(m) Each warrant entitles the holder to purchase 1.25141 shares of Common
Stock at $24.20 per share. The warrants are exercisable until 5/15/08.
Glossary of Terms:
NR - Not Rated.
PIK - Payment in Kind.
See notes to financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1999 (unaudited) ACM Managed Income Fund
================================================================================
ASSETS
Investments in securities, at value (cost $333,074,321) ..... $309,541,957
Cash ........................................................ 47
Interest receivable ......................................... 6,221,767
Receivable for investment securities sold ................... 674,084
Prepaid expenses ............................................ 29,233
------------
Total assets ................................................ 316,467,088
------------
LIABILITIES
Payable for investment securities purchased ................. 47,800,428
Advisory fee payable ........................................ 137,508
Administrative fee payable .................................. 42,308
Accrued expenses and other liabilities ...................... 289,018
------------
Total liabilities ........................................... 48,269,262
------------
NET ASSETS ................................................... $268,197,826
============
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, 22,818,226 shares issued and outstanding ....... 228,182
Additional paid-in capital .................................. 205,146,257
Undistributed net investment income ......................... 4,590,701
Accumulated net realized loss on investment transactions .... (13,234,950)
Net unrealized depreciation of investments .................. (23,532,364)
------------
$268,197,826
============
NET ASSET VALUE PER SHARE OF COMMON STOCK
($268,197,826 less Remarketed Preferred Stock at liquidation
value of $95,000,000 divided by 22,818,226 shares of Common
Stock outstanding) $ 7.59
============
- --------------------------------------------------------------------------------
See notes to financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended February 28, 1999 (unaudited) ACM Managed Income Fund
================================================================================
INVESTMENT INCOME
Interest ........................................... $ 15,029,155
Dividends .......................................... 161,645
------------
$ 15,190,800
EXPENSES
Advisory fees ...................................... 909,861
Administrative fee ................................. 279,949
Remarketed Preferred Stock-remarketing agent's fees 121,520
Audit & legal ...................................... 64,120
Reports and notices to shareholders ................ 29,319
Transfer agency .................................... 24,478
Directors' fees and expenses ....................... 20,535
Custodian .......................................... 17,653
Registration fees .................................. 16,406
Taxes .............................................. 11,980
Miscellaneous ...................................... 15,184
------------
Total expenses ..................................... 1,511,005
------------
Net investment income .............................. 13,679,795
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions ....... (10,285,819)
Net change in unrealized depreciation of investments (13,054,657)
------------
Net loss on investments ............................ (23,340,476)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS .......... $ (9,660,681)
============
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, 1999 August 31,
(unaudited) 1998
------------------ --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ............................................. $ 13,679,795 $ 27,768,803
Net realized gain (loss) on investment transactions ............... (10,285,819) 11,028,968
Net change in unrealized appreciation (depreciation) of investments (13,054,657) (15,421,654)
------------- -------------
Net increase (decrease) in net assets from operations ............. (9,660,681) 23,376,117
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividends From Net Investment Income:
Common Stock .................................................... (10,120,729) (20,855,196)
Remarketed Preferred Stock ...................................... (2,386,619) (5,384,809)
Distributions From Net Realized Gain on Investments:
Common Stock .................................................... (9,509,152) (462,408)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting in the issuance of Common Stock 3,606,721 3,920,134
------------- -------------
Total increase (decrease) ......................................... (28,070,460) 593,838
NET ASSETS
Beginning of year ................................................. 296,268,286 295,674,448
------------- -------------
End of period (including undistributed net investment income of
$4,590,701 and $3,418,254, respectively) ........................ $ 268,197,826 $ 296,268,286
============= =============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1999 (unaudited) 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 financial statements have been prepared in conformity with
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 traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sale price or, if there was no sale on such day, the
last bid price quoted on such day. If no bid prices are quoted, then the
security is valued at the mean of the bid and asked prices as obtained on that
day from one or more dealers regularly making a market in that security.
Securities traded on the over-the-counter market, and securities listed on a
foreign securities market whose operations are similar to the United States
over-the-counter market and securities listed on a national securities exchange
whose primary market is believed to be over-the-counter are valued at the mean
of the closing bid and asked price provided by two or more dealers regularly
making a market in such securities. U.S. Government securities and other debt
securities which mature in 60 days or less are valued at amortized cost unless
this method does not represent fair value. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith by, or in accordance with, procedures approved by the Board of
Directors. Fixed-income securities may be valued on the basis of prices provided
by a pricing service when such prices are believed to reflect the fair market
value of such 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. 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 discount as an adjustment 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.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) ACM Managed Income Fund
================================================================================
NOTE B: Advisory, Administrative Fees and Other Transactions with Affiliates
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. During the six months
ended February 28, 1999, there was no reimbursement paid to AFS.
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 $84,414,425 and
$57,494,852, respectively, for the six months ended February 28, 1999. There
were purchases of $237,241,150 and sales of $257,522,962 of U.S. government and
government agency obligations for the six months ended February 28, 1999. At
February 28, 1999, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $7,573,654 and
gross unrealized depreciation of investments was $31,106,018, resulting in net
unrealized depreciation of $23,532,364.
- --------------------------------------------------------------------------------
NOTE D: Capital Stock
There are 300,000,000 shares of $.01 par value capital stock authorized.
Common Stock
There are 22,818,226 shares of common stock outstanding at February 28, 1999.
During the six months ended February 28, 1999 and for the year ended August 31,
1998, the Fund issued 427,962 and 404,189 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 4.81%
and is effective through March 3, 1999.
- --------------------------------------------------------------------------------
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) ACM Managed Income Fund
================================================================================
NOTE E: Year 2000
Many computer systems and applications in use today process transactions using
two digit date fields for the year of the transaction, rather than the full four
digits. If these systems are not modified or replaced, transactions occurring
after 1999 could be processed as year "1900", which could result in processing
inaccuracies and computer system failures. This is commonly known as the Year
2000 problem. Should any of the computer systems employed by the Fund's major
service providers fail to process Year 2000 related information properly, that
could have a significant negative impact on the Fund's operations and the
services that are provided to the Fund's shareholders. In addition, to the
extent that the operations of issuers of securities held by the Fund are
impaired by the Year 2000 problem, or prices of securities held by the Fund
decline as a result of real or perceived problems relating to the Year 2000, the
value of the Fund's shares may be materially affected.
With respect to the Year 2000, the Fund has been advised that Alliance, the
Fund's investment adviser, Alliance Fund Distributors, Inc. ("AFD"), the Fund's
principal underwriter, and Alliance Fund Services, Inc. ("AFS"), the Fund's
registrar, transfer agent and dividend disbursing agent (collectively,
"Alliance"), began to address the year 2000 issue several years ago in
connection with the replacement or upgrading of certain computer systems and
applications. During 1997, Alliance began a formal Year 2000 initiative, which
established a structured and coordinated process to deal with the Year 2000
issues. Alliance reports that it has completed its assessment of the Year 2000
issues on its domestic and international computer systems and applications.
Currently, management of Alliance expects that the required modifications for
the majority of its significant systems and applications that will be in use on
January 1, 2000, will be completed and tested in early 1999. Full integration
testing of these systems and testing of interfaces with third-party suppliers
will continue through 1999. At this time, management of Alliance believes that
the costs associated with resolving this issue will not have a material adverse
effect on its operations or on its ability to provide the level of services it
currently provides to the Fund.
The Fund and Alliance have been advised by the Fund's Custodian that they are
also in the process of reviewing their systems with the same goals. As of the
date of this report the Fund and Alliance have no reason to believe that the
Custodian will be unable to achieve these goals.
10
<PAGE>
FINANCIAL HIGHLIGHTS ACM Managed Income Fund
================================================================================
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months
Ended Year Ended August 31,
February 28, 1999 --------------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........ $ 8.99 $ 9.13 $ 8.36 $ 8.14 $ 7.99 $ 10.79
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment Operations
- ---------------------------------
Net investment income ..................... .60 1.24 1.20 1.20 1.18 1.16
Net realized and unrealized gain
(loss) on investments and option
transactions ............................ (1.03) (.18) .76 .04 .30 (1.07)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net asset value
from operations .......................... (.43) 1.06 1.96 1.24 1.48 .09
----------- ----------- ----------- ----------- ----------- -----------
Less: Dividends and Distributions
- ---------------------------------
Distributions to common shareholders:
Dividends from net investment income ..... (.45) (.94) (.90) (.83) (.83) (1.09)
Distributions from net realized gains .... (.42) (.02) -0- -0- -0- (1.48)
Distributions in excess of net
investment income ...................... -0- -0- -0- -0- (.09) (.09)
Tax return of capital distribution ....... -0- -0- -0- -0- (.16) (.04)
Distributions to preferred shareholders:
Common Stock equivalent of dividends
paid to Remarketed Preferred
shareholders ........................... (.10) (.24) (.29) (.19) (.25) (.19)
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions ......... (.97) (1.20) (1.19) (1.02) (1.33) (2.89)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ............ $ 7.59 $ 8.99 $ 9.13 $ 8.36 $ 8.14 $ 7.99
=========== =========== =========== =========== =========== ===========
Market value, end of period ............... $ 8.875 $ 8.6875 $ 10.000 $ 9.500 $ 9.375 $ 8.875
=========== =========== =========== =========== =========== ===========
Total Return
- ------------
Total investment return based on: (a)
Market value ............................. 13.00% (4.05)% 16.03% 11.39% 20.63% .66%
Net asset value .......................... (6.60)% 8.74% 20.38% 12.89% 16.34% (4.42)%
Ratios/Supplemental Data
- ------------------------
Net assets, end of period (000's omitted) . $ 268,198 $ 296,268 $ 295,674 $ 275,248 $ 266,569 $ 258,018
Ratio of expenses to average net assets (b) 1.08%(c) 1.04% 1.05% 1.09% 1.07% 1.14%
Ratio of net investment income to
average net assets (b) ................... 9.77%(c) 9.04% 9.21% 9.30% 9.69% 8.32%
Portfolio turnover rate ................... 97% 157% 253% 360% 392% 366%
- -----------------------------------------------------------------------------------------------------------------------------------
</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. Total investment return for a period
of less than one year is not annualized.
(b) The expense ratio and net investment income ratio do not reflect the
effect of dividend payments to preferred shareholders.
(c) Annualized.
11
<PAGE>
ACM Managed Income Fund
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(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
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
William H. Foulk, Jr. (1)
Dr. James M. Hester(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
Robert C. White (1)
Edmund P. Bergan, Jr.,Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Juan J. Rodriguez, Controller
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.
12
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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
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling 1-800-426-5523. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper Analytical Services, Inc., Morningstar, Inc. and Bloomberg.
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
[LOGO OF ALLIANCE CAPITAL]
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
MIFSR
ACM
------------------------------
Managed
------------------------------
Income Fund
------------------------------
Semi-Annual
Report
February 28, 1999
[LOGO OF ALLIANCE]
