<PAGE>
Letter To Shareholders ACM Municipal Securities Income Fund, Inc.
================================================================================
December 4, 1995
Dear Shareholder:
We are pleased to report municipal market activity and investment results for
ACM Municipal Securities Income Fund's fiscal year ended October 31, 1995.
During the period, the Fund achieved a total return of +17.71% on a net asset
value basis and paid dividends totaling $0.90 per share, or $0.075 monthly.
Since we last reported to you in April, the Fund has continued to provide
shareholders with high current tax-free income.
MARKET OVERVIEW
The superb performance of long-term municipal bonds in the first three quarters
of this year produced the strongest investment results experienced in this
market since 1988.
The recovery from 1994's fixed income markets began in January and continued
throughout your Fund's fiscal year ended October 31, with prices and yields
approaching levels last seen in late 1993. This rally in bond prices was due in
part to continued signs of the United States' economy experiencing a "soft
landing" from its faster growth of 1994 while price inflation remained subdued.
The Federal Reserve Board also moved to lower short-term interest rates for the
first time since 1992, signaling an end to its aggressive policy of monetary
tightening that began early in 1994. Another contributor to performance was
favorable supply and demand conditions. Many state and local governments had
lower borrowing needs than in previous years, while the rapid pace of
redemptions through calls or maturities continued, reducing overall supply of
municipal bonds during the year.
As we anticipated, the Orange County, California, bankruptcy protection filing
has been an isolated event and the price dislocation that resulted from the
surprise filing has disappeared. Long term, we believe the bankruptcy filing
will serve to strengthen the municipal market. Specifically, financial
disclosure to investors has increased and many state and local governments have
enacted legislation to guard against future problems similar to those
experienced by the County.
The prospect of federal income tax legislation changing the tax benefits
associated with municipal securities has been the focus of the municipal market
during the past several months. Market fears of a flat tax, or worse, have
caused municipal bond yields to trade near the high end of their historic range
when compared to U.S. Treasurys, but in our view municipal bonds represent
excellent value at today's prices even with the possibility of lower tax rates.
We believe that any change in federal tax rates is not likely until 1997 at the
earliest, and that these changes will affect tax-exempt bond holders less than
currently projected. Furthermore, a decrease in federal tax rates will most
likely mean increases at the state level as a result of cutbacks in revenue
sharing by Washington, creating a shift in the tax burden but not lower combined
tax rates. This means that state-specific municipal bond funds may outperform as
a result of increased demand.
INVESTMENT STRATEGY
As we discussed in our last letter, the market decline of 1994 provided a unique
opportunity to restructure the Fund to potentially profit from longer-term
economic and municipal market trends. Specifically, the Fund was repositioned to
prepare for a gradual decline in both interest rates and the issuance of
municipal securities. Bonds with unfavorable early redemption provisions were
sold in favor of securities with more call protection and more total return
potential (as opposed to just current income) than the bonds that were sold.
Also, our practice of staying fully invested in higher yielding, long-term bonds
has resulted in the Fund gaining maximum benefit from
1
<PAGE>
ACM Municipal Securities Income Fund, Inc.
================================================================================
favorable market conditions this year. More recently we have been investing in
securities we consider undervalued while taking gains in bonds that have
recently outperformed the market, such as those issued by the new Denver
International Airport. In summary, the Fund's past performance combined with
current market conditions have afforded us the opportunity to selectively
purchase undervalued municipal bonds while gradually taking gains in bonds that
have appreciated fully in price.
MARKET OUTLOOK
The issue of tax reform will certainly be debated throughout the 1996
presidential election year. This will create market uncertainty, but we believe
that overall a hospitable environment for municipal bond investors will prevail
and that any market volatility will give us an opportunity to add value to the
Fund's portfolio. Supply and demand technicals will provide some stability as a
record number of bonds will be called or mature in 1996. Furthermore, we expect
there is a strong possibility that legislation will be passed reducing the
capital gains tax rate, thus stimulating longer-term investing. Should
discussions on tax reform be resolved sooner rather than later, or if equity
markets were to decline significantly, we would expect very strong inflows of
new money into the municipal market. Notwithstanding the uncertainties of an
election year, we believe that the Fund is well positioned as we enter 1996.
We appreciate your investment in ACM Municipal Securities Income Fund and look
forward to reporting to you again in the coming period
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Susan P. Keenan
Susan P. Keenan
Senior Vice President
2
<PAGE>
Portfolio Of Investments
October 31, 1995 ACM Municipal Securities Income Fund, Inc.
================================================================================
<TABLE>
<CAPTION>
Standard Principal
& Poor's Amount
Rating+ (000) Value
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL BONDS--100.2%
ARIZONA--6.0%
AA+ Maricopa County
IDR AMT (Citizens
Utilities)
6.20%, 5/01/30..................................... $ 8,260 $ 8,486,407
AAA Pima County IDR
(Tucson Electric Power)
Ser '88A FSA
7.25%, 7/15/10..................................... 2,310 2,499,512
AAA Yuma IDR
MFHR Alexandrite Sands
Apt AMT Ser '90 FHA
7.70%, 12/1/29..................................... 2,190 2,277,118
------------
13,263,037
------------
CALIFORNIA--23.2%
A+ California GO Veterans Hsg
AMT Ser '95
6.40%, 2/01/20..................................... 5,000 5,080,850
A+ California Dept of
Veterans Affairs
Home Purchase Rev
AMT Ser '86A
7.375%, 8/01/12.................................... 4,140 4,303,240
AA- California Hsg Fin Agy
SFMR (Homeownership
Mtg) AMT Ser '91B
7.55%, 8/01/20..................................... 1,025 1,081,406
AAA California Hsg Fin Agy
MFHR (Homeownership
Mtg) AMT Ser '91A MBIA
7.20%, 2/01/26..................................... 3,450 3,654,826
Ser '91C
7.00%, 8/01/23..................................... 1,475 1,549,104
A+ California Poll Ctl Fin
Auth PCR (Waste
Management)
AMT Ser '91A
7.15%, 2/01/11..................................... 7,000 7,837,690
AAA Fremont FHA
MFHR (Regency Square
Apts)
AMT Ser '86A
7.75%, 11/01/28.................................... 1,500 1,599,330
A+ Intermodal Container
Transfer Facility
(Southern Pacific)
Ser '89A
7.70%, 11/01/14.................................... 2,000 2,134,280
AA Los Angeles Harbor Rev
AMT Ser '95A
6.625%, 8/01/25.................................... 9,400 9,918,316
A- Vacaville
MFHR (Community Hsg)
Ser '94A
7.85%, 11/01/24.................................... 4,625 4,996,711
A- Western Placer County
Waste Mgmt Auth Rev
AMT Ser '94
6.75%, 7/1/14...................................... 5,100 5,251,674
BBB+ Westminster Redev Agy
MFHR (Rose Gardens Apts)
AMT Ser A
6.75%, 8/01/24..................................... 4,300 4,298,280
------------
51,705,707
------------
COLORADO--15.6%
Baa* Arapahoe County
Pub Hwy Auth
7.00%, 8/31/26..................................... 4,830 5,102,074
AAA Denver City & Cnty MBIA
AMT Airport Rev
8.50%, 11/15/07, Ser '90A.......................... 7,000 8,297,520
7.75%, 11/15/21, Ser '91D.......................... 8,000 9,095,040
BB Denver City & Cnty
Airport Rev
AMT (United Airlines)
Ser '92A
6.875%, 10/01/32................................... 12,075 12,262,525
------------
34,757,159
------------
FLORIDA--0.9%
Aaa* Pinellas County HFA
SFMR (GNMA
collateralized) AMT Ser A
6.55%, 8/01/27..................................... 2,025 2,073,357
------------
</TABLE>
3
<PAGE>
Portfolio Of Investments (cont.) ACM Municipal Securities Income Fund, Inc.
================================================================================
<TABLE>
<CAPTION>
Standard Principal
& Poor's Amount
Rating+ (000) Value
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
HAWAII--2.8%
AAA Hawaii Dept of Budget
& Fin (Hawaiian
Electric Co.)
AMT Ser '92 MBIA
6.55%, 12/01/22.................................... $ 6,000 $ 6,279,300
------------
ILLINOIS--4.2%
AAA Chicago MBIA
Airport Rev (O'Hare Int'l)
AMT Ser '93B
6.75%, 1/01/18..................................... 5,020 5,329,383
BB Chicago
Airport Rev (American
Airlines)
AMT Ser '94
8.20%, 12/01/24.................................... 3,500 4,111,415
------------
9,440,798
------------
INDIANA--5.3%
BB Indianapolis
Airport Rev (United
Airlines)
AMT Ser '95A
6.50%, 11/15/31.................................... 11,750 11,652,592
------------
LOUISIANA--0.8%
BBB St Charles Parish
Solid Waste
(Louisiana Pwr & Light)
AMT Ser '93A
6.20%, 5/01/23..................................... 1,650 1,637,081
------------
MASSACHUSETTS--4.5%
A- Mass Health & Ed Fac
Auth Hosp Rev (Jordan
Hospital) Ser B
6.875%, 10/01/15................................... 1,285 1,340,923
Baa1* Mass Health & Ed Fac
Auth Hosp Rev (Metro
West Health) Ser C
6.50%, 11/15/18.................................... 3,860 3,855,291
A1* New England Ed Loan
Mktg Student Loan Ref
AMT Ser '93H
6.90%, 11/01/09.................................... 4,355 4,765,938
------------
9,962,152
------------
MICHIGAN--4.0%
AAA Grand Ledge GO MBIA
School District Ser '94
7.875%, 5/01/11.................................... 1,355 1,677,111
AA+ Michigan Hsg Dev Auth
SFMR (Mortgage Rev)
AMT Ser '95B
7.05%, 6/01/26 .................................... 2,060 2,166,440
A- Michigan Strategic Fund
PCR (General Motors
Corp.)
6.20%, 9/01/20..................................... 2,960 2,996,793
AA Troy Downtown Dev
Auth Tax Increment Rev
Ser '95A Asset Guaranty
6.375%, 11/01/18................................... 1,980 2,017,382
------------
8,857,726
------------
MINNESOTA--0.3%
AA+ Minnesota Hsg Fin Agy
SFMR (Howeownership
Mtg) AMT Ser '89A
7.90%, 7/01/19..................................... 730 761,784
------------
NEBRASKA--1.3%
A* Nebraska Higher Ed
Student Loan Rev
AMT Ser '93B
6.00%, 6/01/28..................................... 3,000 2,916,270
------------
NEW HAMPSHIRE--4.2%
AAA Keene Housing Dev Corp
MFHR (Central Square)
FHA Ser '90A
7.50%, 2/01/25..................................... 4,440 4,947,847
AAA New Hampshire
PCR (Connecticut Light
& Power)
AMT AMBAC
7.375%, 12/01/19................................... 4,000 4,474,680
------------
9,422,527
------------
NEW YORK--9.7%
BBB+ New York City GO
Ser '92C
7.00%, 8/01/16..................................... 2,500 2,643,300
Ser '95B
7.25%, 8/15/19..................................... 9,750 10,539,263
</TABLE>
4
<PAGE>
ACM Municipal Securities Income Fund, Inc.
================================================================================
<TABLE>
<CAPTION>
Standard Principal
& Poor's Amount
Rating+ (000) Value
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
BBB NYS Environ Fac Auth
IDR (Occidental
Petroleum)
AMT Ser '93A
5.70%, 9/01/28..................................... $ 2,500 $ 2,299,175
Aa* NYS Mtg Agy
SFMR (Homeowner Mtg)
AMT Ser 30C-2
5.80%, 10/01/25.................................... 6,500 6,190,080
------------
21,671,818
------------
OHIO--2.8%
Aaa* Kent MFHR
(Silver Meadows)
(GNMA Collateralized)
AMT Ser '95
7.15%, 12/20/26.................................... 1,100 1,162,733
AAA Ohio Hsg Fin Agy
SFMR (GNMA
Collateralized)
AMT Ser '95 A-2
6.625%, 3/01/26.................................... 5,000 5,101,150
------------
6,263,883
------------
PENNSYLVANIA--3.7%
AAA Pennsylvania Higher Ed
Student Loan Rev
AMT Ser '88D AMBAC
6.05%, 1/01/19..................................... 5,065 5,145,939
AA Pennsylvania Hsg & Fin
Agy SFMR (Homeownership
Mtg) AMT Ser '94 41B
6.65%, 4/01/25..................................... 2,000 2,063,480
A Pittsburgh Urban Redev
Auth SFMR (Homeownership
Mtg) AMT Ser '95A
7.15%, 10/01/27.................................... 1,000 1,048,430
------------
8,257,849
------------
SOUTH CAROLINA--1.9%
AAA Horry Cnty Airport Rev
(Myrtle Beach Jet Port)
AMT Ser '90 FSA
7.30%, 7/01/20..................................... 4,000 4,318,160
------------
VIRGINIA--3.9%
A+ Fairfax Cty Econ Dev Auth
Res Rec (Ogden Martin
System) AMT Ser '88A
7.75%, 2/01/11..................................... 3,365 3,701,063
AA+ Virginia Hsg Dev Auth
SFMR (Commonwealth
Mtg) AMT Ser G
7.125%, 7/01/22.................................... 4,570 4,857,087
------------
8,558,150
------------
WASHINGTON--5.1%
BBB Pilchuck Dev Pub Corp
(BF Goodrich)
AMT Ser '93
6.00%, 8/01/23..................................... 11,750 11,229,945
------------
TOTAL INVESTMENTS--100.2%
(cost $215,611,990)................................ 223,029,295
Other assets less liabilites--(0.2%)............... (541,308)
------------
NET ASSETS--100%................................... $222,487,987
============
</TABLE>
- --------------------------------------------------------------------------------
+ Unaudited
* Moody's Rating
See notes to financial statements.
Glossary of Terms
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax (Subject to)
FHA Federal Housing Administration
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
GO General Obligation
HFA Housing Finance Authority
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
5
<PAGE>
Statement Of Assets And Liabilities
October 31, 1995 ACM Municipal Securities Income Fund, Inc.
================================================================================
<TABLE>
<S> <C>
ASSETS
Investment in securities, at value (cost $215,611,990)............................ $223,029,295
Cash.............................................................................. 948,216
Interest receivable............................................................... 4,588,321
Receivable for investment securities sold......................................... 4,498,714
Deferred organization expense and other assets.................................... 64,240
------------
Total assets...................................................................... 233,128,786
------------
LIABILITIES
Payable for investment securities purchased....................................... 10,444,047
Advisory fee payable.............................................................. 92,171
Administrative fee payable........................................................ 27,651
Accrued expenses and other liabilities............................................ 76,930
------------
Total liabilities................................................................. 10,640,799
------------
NET ASSETS........................................................................... $222,487,987
============
COMPOSITION OF NET ASSETS
Preferred Stock:
$.01 par value per share; 1,800 shares Preferred Stock authorized,
issued and outstanding at $50,000 per share liquidation preference............ $ 90,000,000
Common Stock:
$.01 par value per share; 100,000,000 shares authorized, 10,522,367
shares issued and outstanding................................................. 105,224
Additional paid-in capital........................................................ 145,078,182
Undistributed net investment income............................................... 412,371
Accumulated net realized loss..................................................... (20,525,095)
Net unrealized appreciation of investments........................................ 7,417,305
------------
$222,487,987
============
NET ASSET VALUE PER SHARE OF COMMON STOCK--$132,487,987
($222,487,987 less Preferred Stock at liquidation value of $90,000,000)
divided by 10,522,367 shares of Common Stock outstanding..................... $12.59
======
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
6
<PAGE>
Statement Of Operations
For The Year Ended October 31, 1995 ACM Municipal Securities Income Fund, Inc.
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................. $14,154,580
-----------
EXPENSES
Advisory fee......................................................... $1,071,615
Administrative fee................................................... 321,485
Auction Agent fee.................................................... 100,724
Audit and legal...................................................... 58,903
Transfer agency...................................................... 45,246
Custodian............................................................ 37,747
Printing............................................................. 32,132
Directors' fees...................................................... 32,000
Amortization of organization expenses................................ 12,000
Miscellaneous........................................................ 79,574
----------
Total expenses....................................................... 1,791,426
-----------
Net investment income................................................ 12,363,154
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments..................................... (11,183,658)
Net change in unrealized depreciation of investments................. 22,818,057
-----------
Net gain on investments.............................................. 11,634,399
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.............................. $23,997,553
===========
</TABLE>
Statement Of Changes In Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income................................................ $ 12,363,154 $ 12,775,974
Net realized loss on investments..................................... (11,183,658) (9,341,169)
Net change in unrealized depreciation of investments................. 22,818,057 (21,751,583)
------------ ------------
Net increase (decrease) in net assets from operations................ 23,997,553 (18,316,778)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Common Stock...................................................... (9,468,675) (9,456,480)
Preferred Stock................................................... (3,800,338) (3,281,255)
Net realized gains on investments
Common Stock...................................................... -0- (1,190,465)
Preferred Stock................................................... -0- (226,704)
CAPITAL STOCK TRANSACTIONS
Reinvestment of dividends resulting in the issuance of Common Stock.. 162,102 -0-
------------ ------------
Total increase (decrease)............................................ 10,890,642 (32,471,682)
NET ASSETS
Beginning of year.................................................... 211,597,345 244,069,027
------------ ------------
End of year (including undistributed net investment income of
$412,371 and $1,318,230, respectively)............................ $222,487,987 $211,597,345
============ ============
</TABLE>
See notes to financial statements.
7
<PAGE>
Notes To Financial Statements
October 31, 1995 ACM Municipal Securities Income Fund, Inc.
================================================================================
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 following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
The Fund values municipal securities at fair value based on prices provided by a
recognized pricing service which uses information with respect to transactions
in bonds, quotations from bond dealers, market transactions in comparable
securities and various relationships between securities in determining values.
If market quotations are not readily available from such pricing service, a
municipal security is valued by appraisal at its fair value as determined in
good faith by the Fund's Adviser under procedures established by the Fund's
Board of Directors. Short-term securities which mature in 60 days or less are
valued at amortized cost, which approximates market value.
2. Organization Expenses
Approximately $60,000 has been deferred and is being amortized on a straight-
line basis through May, 1998.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute 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.
4. Investment Income and Security Transactions
Interest income is accrued daily. Security transactions are accounted for on the
date the securities are purchased or sold. Security gains and losses are
determined on the identified cost basis. The Fund amortizes premiums and
accretes discounts as adjustments to interest income.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
- --------------------------------------------------------------------------------
NOTE B: Advisory and Administrative Fees
Under the terms of the investment advisory agreement, the Fund pays Alliance
Capital Management, L.P. (the "Advisor") an advisory fee equal to an annualized
rate of .50 of 1% of the average weekly net assets of the Fund during the month.
Under the terms of the Administration Agreement, the Fund pays Alliance Capital
Management, L.P. (the "Administrator") an administration fee equal to an
annualized rate of .15 of 1% of the average weekly net assets of the Fund during
the month. The Administrator has engaged Prudential Mutual Fund Management, Inc.
(the "Sub-Administrator") to act as Sub-Administrator. The Administrator, out of
its own assets, will pay the Sub-Administrator a monthly fee equal to an
annualized 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 aggregated $481,435,682 and
$477,162,573 respectively, for the year ended October 31, 1995. At October 31,
1995 the cost of investments for Federal income tax purposes was the same as the
cost for financial reporting purposes. Accordingly, gross unrealized
appreciation was $7,441,765 and gross unrealized depreciation was $24,460
resulting in net unrealized appreciation of $7,417,305.
8
<PAGE>
ACM Municipal Securities Income Fund, Inc.
================================================================================
NOTE D: Taxes
For Federal income tax purposes at October 31, 1995, the Fund had a capital loss
carryforward of $20,469,562; of which $9,311,771 expires in 2002 and $11,157,791
expires in 2003.
- --------------------------------------------------------------------------------
NOTE E: Capital Stock
Common Stock
There are 100,000,000 shares of $0.01 par value Common Stock authorized. Of the
10,522,367 shares outstanding at October 31, 1995, the Adviser owned 7,200
shares. During the year ended October 31, 1995 the Fund issued 15,167 shares in
connection with the Fund's dividend reinvestment plan.
Preferred Stock
The Fund has issued and outstanding 1,800 shares of Preferred Stock, consisting
of 600 shares each of Series A, Series B and Series C, with a liquidation value
of $50,000 per share.
The dividend rate on Series A is 4.98% and is effective through January 1996.
The dividend rate on Series B is 3.93% and is effective through January 1996.
The dividend rate on Series C is 4.125% and is effective through June 1996.
- --------------------------------------------------------------------------------
NOTE F: Quarterly Results of Operations (unaudited)
<TABLE>
<CAPTION>
Net Increase
Net Realized (Decrease) in
and Unrealized Net Assets
Net Investment Gain (Loss) Resulting From Market Price
Income on Investments Operations on NYSE
---------------- -------------------- --------------------- --------------------
Total Per Total Per Total Per
Quarter Ended (000) Share (000) Share (000) Share High Low
- ------------- ------- ----- -------- ------ -------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
October 31, 1995...... $ 2,966 $0.28 $ 5,558 $ 0.53 $ 8,524 $ 0.81 $12.000 $11.625
July 31, 1995......... 3,109 0.29 2,566 0.25 5,675 0.54 $12.250 $11.375
April 30, 1995........ 3,068 0.29 4,248 0.40 7,316 0.69 $11.750 $11.250
January 31, 1995...... 3,220 0.31 (738) (0.07) 2,482 0.24 $11.375 $10.125
------- ----- -------- ------ -------- ------
$12,363 $1.17 $ 11,634 $ 1.11 $ 23,997 $ 2.28
======= ===== ======== ====== ======== ======
October 31, 1994...... $3,265 $0.31 $(12,819) $(1.22) $ (9,554) $(0.91) $11.875 $10.000
July 31, 1994......... 3,230 0.31 765 0.08 3,995 0.39 $12.250 $11.375
April 30, 1994........ 3,131 0.30 (20,759) (1.98) (17,628) (1.68) $14.000 $11.875
January 31, 1994...... 3,150 0.30 1,720 0.16 4,870 0.46 $14.125 $13.000
------- ----- -------- ------ -------- ------
$12,776 $1.22 $(31,093) $(2.96) $(18,317) $(1.74)
======= ===== ======== ====== ======== ======
</TABLE>
9
<PAGE>
Financial Highlights ACM Municipal Securities Income Fund, Inc.
================================================================================
Selected Data For a Share of Common Stock Outstanding Throughout Each Period.
<TABLE>
<CAPTION>
April 23, 1993*
to
1995 1994 October 31, 1993
------ ------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period.............................. $11.57 $14.66 $13.98(a)
------ ------ ------
Income From Investment Operations
- ---------------------------------
Net investment income............................................. 1.17 1.21 0.50
Net realized and unrealized gain (loss) on investments............ 1.11 (2.96) 0.74
------ ------ ------
Net increase (decrease) in net asset value
from operations................................................ 2.28 (1.75) 1.24
------ ------ ------
Less: Dividends And Distributions
- ---------------------------------
Dividends from net investment income:
Paid to Common Stock shareholders.............................. (0.90) (0.90) (0.30)
Common Stock equivalent of dividends
paid to Preferred Stock shareholders........................ (0.36) (0.31) (0.08)
Distributions from realized capital gains:
Paid to Common Stock shareholders.............................. -0- (0.11) -0-
Common Stock equivalent of distributions
paid to Preferred Stock shareholders........................ -0- (0.02) -0-
------ ------ ------
Total dividends and distributions................................. (1.26) (1.34) (0.38)
------ ------ ------
Preferred Stock offering costs and underwriting discounts......... -0- -0- (0.18)
------ ------ ------
Net asset value, end of period.................................... $12.59 $11.57 $14.66
------ ------ ------
Market value, end of period....................................... $12.00 $10.25 $14.25
====== ====== ======
Total Investment Return
- -----------------------
Total investment return based on:(b)
Market value................................................... 26.65% (21.99)% 3.42%
Net asset value................................................ 17.71% (14.41)% 6.39%
Ratios/Supplemental Data
- ------------------------
Net assets, end of period (000's omitted)......................... $222,488 $211,597 $244,069
Ratio of expenses to average net assets(d)........................ 0.84% 0.77% 0.81%(c)
Ratio of net investment income to average net assets(d)........... 5.77% 5.58% 4.95%(c)
Portfolio turnover rate........................................... 222% 116% 79%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Net of offering costs of $.09.
(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
the 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 years 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 calculated for
a period of less than one year is not annualized.
(c) Annualized.
(d) The expense ratio and net investment income ratio do not reflect the effect
of dividend and distribution payments to Preferred Stock shareholders.
10
<PAGE>
Report Of Ernst & Young LLP
Independent Auditors ACM Municipal Securities Income Fund, Inc.
================================================================================
To the Shareholders and Board of Directors
ACM Municipal Securities Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of ACM
Municipal Securities Income Fund, Inc., including the portfolio of investments,
as of October 31, 1995, 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
October 31, 1995, 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
Municipal Securities Income Fund, Inc. at October 31, 1995, 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
New York, New York
December 5, 1995
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
In accordance with Federal requirements, the Fund designates substantially all
the dividends paid from investment income--net during the fiscal year ended
October 31, 1995 as "exempt-interest dividends."
As required by Federal regulations, shareholders will receive notification of
their portion of the Fund's taxable ordinary dividends and capital gains
distributions paid (if any) for 1995 calendar year, early in 1996.
11
<PAGE>
Additional Information ACM Municipal Securities Income Fund, Inc.
================================================================================
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 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 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.
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and
12
<PAGE>
ACM Municipal Securities Income Fund, Inc.
================================================================================
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 Susan P. Keenan, a Senior Vice
President of the Fund.
- --------------------------------------------------------------------------------
Supplemental Proxy Information
The Annual Meeting of Shareholders of The ACM Municipal Securities Income Fund,
Inc. was held on Thursday, May 25, 1995. The description of each proposal and
number of shares voted at the meeting are as follows:
<TABLE>
<CAPTION>
Shares Shares Voted
Voted For Without Authority
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect directors: James R. Greene 9,697,360 264,269
Clifford L. Michel 9,709,749 251,880
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP
as the Fund's independent auditors for the Fund's
fiscal year ending October 31, 1995: 9,699,809 121,756 140,064
</TABLE>
13
<PAGE>
ACM Municipal Securities Income Fund, Inc.
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President Dr. James M. Hester
Ruth Block Hon. James D. Hodgson
David H. Dievler Clifford L. Michel
James R. Greene Robert C. White
OFFICERS
Susan P. Keenan, Senior Vice President Edmund P. Bergen, Jr., Secretary
David U. Dowden, Vice President Mark D. Gersten, Treasurer & Chief
William E. Oliver, Vice President Financial Officer
Joseph J. Mantineo, Controller
ADMINISTRATOR PREFERRED STOCK:
Alliance Capital Management L.P. DIVIDEND PAYING AGENT,
1345 Avenue of the Americas TRANSFER AGENT AND REGISTRAR
New York, NY 10105 IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
SUB-ADMINISTRATOR INDEPENDENT AUDITORS
Prudential Mutual Fund Management, Inc. Ernst & Young LLP
One Seaport Plaza 787 Seventh Avenue
New York, NY 10292 New York, NY 10019
COMMON STOCK:
DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
CUSTODIAN
The Bank of New York
48 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 herein, is transmitted to the
shareholders of ACM Municipal Securities Income Fund, Inc. 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>
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15
<PAGE>
ACM Municipal Securities Income Fund, Inc.
Summary of General Information
The Fund
ACM Municipal Securities Income Fund, Inc. is a closed-end management investment
company designed to obtain the highest level of current tax exempt income,
consistent with what the Fund's investment adviser considers to be prudent
investment risk, that is available from a portfolio of high-quality municipal
debt securities.
Shareholder Information
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction Section of newspapers each day, under the
designation "ACMMSI." 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 and each Saturday in The New
York Times and Barron's and other newspapers in a table called "Closed-End Bond
Funds." Additional information about the Fund is available by calling
1-800-247-4154.
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains in additional Fund shares. For a copy of the Plan Brochure, please
write to the Plan Agent, State Street Bank & Trust Company P.O. Box 8200,
Boston, MA 02266-8200 or call 1-800-426-5523.
ACM Municipal Securities Income Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
[LOGO OF ALLIANCE CAPITAL /(R)/ APPEARS HERE]
/(R)/These registered service marks used under license from the owner, Alliance
Capital Management, L.P.
MSIAR
ACM
----------------------------
Municipal
----------------------------
Securities
----------------------------
Income Fund
----------------------------
Annual Report
October 31, 1995
[LOGO OF ALLIANCE /(R)/ MUTUAL FUNDS WITHOUT THE MYSTERY./SM/ APPEARS HERE]
