<PAGE>
LETTER TO SHAREHOLDERS ACM MUNICIPAL
SECURITIES INCOME FUND ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
May 16, 1997
Dear Shareholder:
This report provides you with an update on municipal market activity and the
investment results for ACM Municipal Securities Income Fund for the period ended
April 30, 1997.
INVESTMENT RESULTS
On a net asset value basis, the Fund achieved total returns of 2.94% for the six
month period and 11.00% for the twelve month period ended April 30, 1997. For
the second year in a row, your Fund achieved the #1 ranking, based on total
return, for "General and Insured Leveraged" Municipal Debt funds as tracked by
Lipper Analytical Services for the 1995 and 1996 calendar years.
INVESTMENT RESULTS
Period Ended April 30, 1997
Total Return
6 Months 12 Months
-------- ---------
ACM Municipal Securities
Income Fund 2.94% 11.00%
LIPPER RANKINGS
For period ended April 30, 1997
1 Year 3 Years Since Inception*
------ ------- ---------------
#1 of 63 funds #36 of 61 funds #51 of 53 funds
* Inception Date: 4/29/93.
MARKET OVERVIEW
Much like the market trend established in early 1996, the municipal bond market
returned inconsistent performance in the first quarter of 1997. After posting
strong returns through early February, the bond market became weaker as
investors grew more cautious about the strength of the economy and its potential
effect on the stock market. Confirming this strong economic growth outlook, in
early March, the Federal Reserve Board raised its benchmark Federal funds rate
by one quarter of one percent, or 25 basis points, in an effort to contain
present and future inflationary pressures. Volatility continued through the
remainder of the first quarter. At this writing, it is still widely believed by
the investment community that the Federal Reserve will need to increase rates at
least one more time in the near future to complete the current round of money
supply tightening.
THE MUNICIPAL BOND MARKET
One theme that we have discussed over the last several years has been the
importance of various technical factors affecting the relative value of
municipal bonds versus taxable bonds. Since late 1995, municipal bonds have been
trading at inexpensive prices when compared to their fully taxable counterparts.
This was due to the threat of "tax reform" during the last election. However,
now that the election and the tax reform debate seem well behind us, we expect
that municipal bond prices will improve relative to their taxable counterparts.
The volume of new issues of municipal securities accelerated in the first
quarter of 1997 for the first time in years. This trend is attributable to an
increase in voter authorized state and local government debt and a low interest
rate environment. As a result of this influx of new issues, municipal bonds
currently offer excellent value relative to other fixed-income investments,
especially when compared on a tax-adjusted basis.
Credit ratings of municipal issuers improved as state and local governments
benefited from a robust economy which resulted in higher-than-expected tax
receipts. Many large states such as California, New York, Massachusetts and
Michigan are in their best fiscal condition in years. In most cases, many of
these states have built up substantial "rainy day" funds to cushion against
future economic downturns. These
1
<PAGE>
ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
funds will be critical in maintaining strong fiscal performance, especially if
economic growth slows and big budget items such as Medicaid costs begin to rise.
For state and local governments, the continuation of tax reduction programs and
the likely continuation of anti-tax sentiment, will be constraining factors in
maintaining budgetary balances in the next couple of years. The recent proposal
by the State of New Jersey to close a budget gap by selling a $2.75 billion
pension funding bond may be a precursor of future budgetary actions in other
states where large tax cuts have severely cut the revenue base. This phenomenon
could result in weakening credit quality of issuers who pursue these types of
stop-gap measures.
INVESTMENT STRATEGY
The first quarter volatility in the bond market once again provided your
portfolio managers with an opportunity to capture higher incremental after-tax
yield and to further improve overall call protection in the Fund's portfolios.
At Alliance, we continue to believe that long-term interest rates will decline
modestly over the next several years, and that market weakness provides an
opportunity for us to purchase quality securities at advantageous prices. To
make room for these attractive new issues, we continue to sell lower-coupon
bonds with call protection of less than 10 years. We also continue to sell bonds
that have been "pre-refunded" by their issuers and have realized their maximum
price appreciation potential relative to other investment opportunities.
The overall theme of our municipal bond portfolio strategy continues to be one
of active management in terms of the performance factors we can control (namely
the securities owned in your portfolios) without attempting to manage the
portfolios for those factors that are out of our control (such as the future
direction of interest rates). This strategy is centered on selecting securities
with price appreciation potential, either through credit improvements,
structural features or technical factors. By continuing to keep a "buy low, sell
high" philosophy as part of our strategy, we expect to once again post strong
performance relative to our peers in the mutual fund industry.
MARKET OUTLOOK
Barring any unforeseen drama in the global financial markets, we expect 1997 to
be a calm year for municipal bond investors. Municipal bond prices should
continue to trade in a fairly narrow range and yields will most likely peak on
or around current levels in the near future. Any increase in short-term rates on
the part of the Federal Reserve should be viewed as a positive for long-term
fixed income investors because such action will help curb inflationary pressures
in the economy. Finally, we believe that the municipal bond market offers
excellent value at current prices, especially on a tax-adjusted basis.
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
APRIL 30, 1997 (UNAUDITED) ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATING+ (000) VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--99.0%
ARIZONA--1.1%
AAA Yuma Ind Dev Auth
MFHR (Alexandrite
Sands Apt)
AMT FHA Ser 90
7.70%, 12/01/29...... $ 2,395 $ 2,506,463
------------
CALIFORNIA--18.9%
AA- California HFA
SFMR (Homeownership
Mtg)
AMT Ser 91B
7.55%, 8/01/20 ...... 595 610,434
AMT Ser 94H
7.50%, 8/01/25 ...... 11,890 12,611,129
AAA Garden Grove
MFHR (Tudor Grove)
AMT GNMA Ser 89
7.25%, 5/20/32 ...... 2,255 2,311,826
NR Los Angeles County
Comm Fac
(Calabasas Area)
Ser 92A
7.70%, 9/01/17 ...... 5,750 5,934,173
NR Novato Comm Fac
(Hamilton Field)
Ser 95
7.375%, 9/01/25...... 8,000 8,300,000
NR Orange County Asses
Dist 88-1
(Pelican Hill Proj)
Ser 92A
8.25%, 9/02/18 ...... 3,915 4,025,638
A- Placer County
(Western Placer/
Waste Mgmt Auth)
AMT Ser 94
6.75%, 7/01/14 ...... 5,800 5,991,052
AAA Sacramento
Muni Util Dist
(Elec Rev)
Ser 92A FGIC
8.514%, 8/15/18(a)... 2,500 2,707,875
------------
42,492,127
------------
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATING+ (000) VALUE
- --------------------------------------------------------------------------------
COLORADO--14.2%
Baa* Arapahoe County
Public Hwy Auth
(E-470 Proj)
7.00%, 8/31/26...... $ 10,230 $ 10,965,025
BB+ Denver City & County
Arpt Rev (United Airlines)
AMT Ser 92A
6.875%, 10/01/32.... 20,300 21,004,816
------------
31,969,841
------------
FLORIDA--2.3%
Aaa* Brevard County HFA
SFMR (Homeownership
Mtg)
AMT FHA Ser 94
6.70%, 9/01/27...... 5,000 5,142,350
------------
ILLINOIS--1.8%
BB+ Chicago Arpt Rev
(American Airlines)
AMT Ser 94
8.20%, 12/01/24..... 3,500 4,072,845
------------
LOUISIANA--0.7%
Aaa* Calcasieu Parish
SFMR (Mortgage Rev.)
AMT GNMA/FNMA
Ser 97A
6.40%, 4/01/32...... 1,500 1,507,320
------------
MARYLAND--3.5%
AAA Baltimore County
MFHR (Dunfield Proj)
FHA Ser 92A
6.90%, 8/01/28...... 7,500 7,827,225
------------
MASSACHUSETTS--7.0%
A- Mass Hlth & Ed Fac Auth
Hosp Rev (Jordan
Hospital) Ser B
6.875%, 10/01/15.... 1,500 1,561,080
Aaa* Mass Hlth & Ed Fac
Auth Hosp Rev
(Metro West Health)
Ser 92C
6.50%, 11/15/18..... 2,690 2,944,178
3
<PAGE>
PORTFOLIO OF INVESTMENTS (CONT.) ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATING+ (000) VALUE
- --------------------------------------------------------------------------------
A+ Mass HFA
SFMR (Residential
Mtg)
AMT Ser 40
6.65%, 12/01/27...... $ 6,285 $ 6,508,369
A1* New England Ed Loan
Mktg Student Loan
AMT Ser 93H
6.90%, 11/01/09...... 4,325 4,663,648
------------
15,677,275
------------
MICHIGAN--0.8%
AA+ Michigan Hsg Dev Auth
SFMR (Homeownership
Mtg.) AMT Ser 95B
7.05%, 6/01/26....... 1,750 1,824,130
MINNESOTA--1.8%
A- Minneapolis
Cmty Dev Agy
(Common Bond Fund)
Ser 97-2
6.20%, 6/01/17....... 550 554,103
AA+ Minnesota HFA
SFMR (Homeownership
Mtg) AMT Ser 96F
6.30%, 1/01/28....... 1,240 1,251,358
BBB South St. Paul Hosp Rev
(Healtheast Proj)
Ser 94
6.75%, 11/01/09...... 2,130 2,217,714
------------
4,023,175
------------
NEW HAMPSHIRE--2.2%
AAA Keene Hsg Dev Corp
MFHR (Central Square)
FHA Ser 90A
7.50%, 2/01/25....... 4,380 4,818,219
------------
NEW YORK--4.0%
BBB+ New York City GO
Ser 95B
7.25%, 8/15/19....... 4,630 5,071,239
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATING+ (000) VALUE
- --------------------------------------------------------------------------------
Aa* New York City
Hsg Dev Corp
MFHR (S Williamsburg
Co-op) AMT Ser 90A
7.90%, 2/01/23....... $ 3,805 $ 3,983,378
------------
9,054,617
------------
OHIO--3.2%
AAA Cuyahoga County
MFHR (National
Terminal Apt Proj)
AMT FNMA Ser 96
6.40%, 7/01/16....... 600 616,302
BBB Hamilton County
Health Sys (Hlth Fac &
Franciscan Sisters
Providence Hosp)
Ser 92
6.875%, 7/01/15...... 500 523,320
Aaa* Kent Ohio MFHR
(Silver Meadows Apt Proj)
AMT GNMA Ser 95
7.15%, 12/20/26...... 1,100 1,164,262
AAA Ohio HFA
SFMR (Mortgage Rev)
AMT GNMA Ser 95 A-2
6.625%, 3/01/26...... 4,745 4,859,592
------------
7,163,476
------------
PENNSYLVANIA--0.7%
BBB- Allegheny County
Ind Dev Auth PCR
(Environmental Impt-
USX Corp)
Ser 96
6.10%, 1/15/18....... 1,000 1,002,370
A Pittsburgh Urban Redev
Auth SFMR
(Homeownership Mtg)
AMT Ser 95A
7.15%, 10/01/27...... 520 544,742
------------
1,547,112
------------
4
<PAGE>
ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATING+ (000) VALUE
- --------------------------------------------------------------------------------
RHODE ISLAND--4.3%
AA+ Rhode Island Hsg & Mtg
Fin Corp SFMR
(Homeownership Mtg)
AMT Ser 92-7A
6.75%, 10/01/25...... $ 2,000 $ 2,065,560
AMT Ser 91-8
10.032%, 4/01/24(a).. 7,000 7,552,580
------------
9,618,140
------------
SOUTH CAROLINA--1.9%
AAA Horry County Arpt Rev
(Myrtle Beach Jet Port)
AMT FSA Ser 90
7.30%, 7/01/20....... 4,000 4,334,800
------------
SOUTH DAKOTA--5.6%
AAA South Dakota HDA
SFMR (Homeownership Mtg)
AMT Ser 91D
6.25%, 5/01/26....... 1,440 1,432,339
A* South Dakota
Student Loan Fin Corp
AMT Ser 96-1E
6.55%, 8/01/20....... 11,000 11,029,920
------------
12,462,259
------------
TENNESSEE--7.6%
Aa2* Tennessee Ed Loan
AMT Ser 97B
6.20%, 12/01/21...... 14,100 14,112,690
AAA Metro Govt Nashville &
Davidson County
Water System Rev
Ser 92 AMBAC
8.124%, 1/01/22(a)... 3,000 3,047,100
------------
17,159,790
------------
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATING+ (000) VALUE
- --------------------------------------------------------------------------------
TEXAS--8.4%
BBB Alliance Airport Auth
(Federal Express)
AMT Ser 96
6.375%, 4/01/21...... $ 11,130 $ 11,142,132
AAA Amarillo Texas
Hosp Rev
(High Plains Baptist)
FSA Ser 92B
9.017%, 1/01/22(a)... 3,200 3,520,384
BB+ Dallas--Ft. Worth
Airport (American
Airlines)
AMT Ser 92
7.25%, 11/01/30...... 3,985 4,232,588
------------
18,895,104
------------
UTAH--2.4%
AAA Emery County
(Pacificorp Project)
AMT AMBAC Ser 93 B
5.625%, 11/01/23..... 5,700 5,396,418
------------
VIRGINIA--6.1%
A+ Giles County IDR
(Hoechst--Celanese Corp.)
AMT Ser 96
6.45%, 5/01/26....... 3,740 3,892,293
BBB+ Peninsula Port Auth
Health Fac
(Mary Immaculate Proj)
Ser 94
7.00%, 8/01/17....... 2,000 2,118,200
AAA Suffolk Virginia Redev
and Hsg MFHR (Prince
William Commons)
AMT FNMA Ser 95A
6.50%, 6/01/29....... 2,870 2,918,818
5
<PAGE>
PORTFOLIO OF INVESTMENTS (CONT.) ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
STANDARD PRINCIPAL
& POOR'S AMOUNT
RATING+ (000) VALUE
- --------------------------------------------------------------------------------
AA+ Virginia Hsg Dev Auth
SFMR (Commonwealth Mtg)
AMT Ser 94G
7.125%, 7/01/22...... $ 4,625 $ 4,785,765
------------
13,715,076
------------
WEST VIRGINIA--0.5%
AAA West Virginia Parkways
Eco Dev (Parkway Rev)
FGIC Ser 93
7.555%, 5/16/19(a)... 1,100 1,067,924
------------
Standard Principal
& Poor's Amount
Rating+ (000) Value
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--99.0%
(cost $216,707,170).. $ 222,275,686
Other assets less liabilities--1.0% 2,212,069
-------------
NET ASSETS--100% $224,487,755
=============
- --------------------------------------------------------------------------------
+ Unaudited.
* Moody's Rating.
(a) Inverse Floater Security--Security with variable or floating interest rate
that moves in opposite direction of short-term interest rates.
See notes to financial statements.
Glossary of Terms:
AMBAC American Municipal Bond Assurance
Corporation
AMT Alternative Minimum Tax--(subject to)
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Administration
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
GO General Obligation
HDA Housing Development Authority
HFA Housing Finance Authority
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
NR Rating not applied for
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED) ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $216,707,170)....... $222,275,686
Interest receivable........................................... 3,629,373
Receivable for investments securities sold.................... 1,963,840
Deferred organization expense and other assets................ 82,821
------------
Total assets................................................... 227,951,720
------------
LIABILITIES
Due to custodian.............................................. 358,136
Payable for investment securities purchased................... 2,787,998
Advisory fee payable.......................................... 92,737
Administrative fee payable.................................... 27,821
Accrued expenses and other liabilities........................ 197,273
------------
Total liabilities.............................................. 3,463,965
------------
NET ASSETS..................................................... $224,487,755
============
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,
10,623,282 shares issued and outstanding.................. 106,233
Additional paid-in capital.................................... 145,935,999
Undistributed net investment income........................... 36,896
Accumulated net realized loss on investments.................. (17,159,889)
Net unrealized appreciation of investments.................... 5,568,516
------------
$224,487,755
============
NET ASSET VALUE PER SHARE OF COMMON STOCK--$134,487,755
($224,487,755 less Preferred Stock at liquidation value of
$90,000,000) divided by 10,623,282 shares of
Common Stock outstanding.................................. $12.66
======
- --------------------------------------------------------------------------------
See notes to financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED) ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest...................................................... $7,422,547
----------
EXPENSES
Advisory fee.................................................. $562,394
Administrative fee............................................ 168,718
Auction Agent fee............................................. 111,694
Custodian..................................................... 57,619
Audit and legal............................................... 53,943
Transfer agency............................................... 29,921
Directors' fees............................................... 17,738
Printing...................................................... 16,652
Amortization of organization expenses......................... 5,973
Miscellaneous................................................. 23,428
--------
Total expenses................................................. 1,048,080
----------
Net investment income.......................................... 6,374,467
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions................... (86,028)
Net change in unrealized appreciation of investments........... (775,585)
----------
Net loss on investments........................................ (861,613)
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................... $5,512,854
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1997 Year Ended
(unaudited) October 31, 1996
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income................................................. $ 6,374,467 $ 12,527,055
Net realized gain (loss) on investment transactions................... (86,028) 3,335,681
Net change in unrealized appreciation of investments.................. (775,585) (1,073,204)
------------ ------------
Net increase in net assets from operations............................ 5,512,854 14,789,532
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Common Stock......................................................... (4,769,004) (8,994,324)
Preferred Stock...................................................... (1,568,567) (3,532,731)
Distributions in excess of net investment income
Common Stock......................................................... -0- (503,573)
Preferred Stock...................................................... -0- (202,580)
CAPITAL STOCK TRANSACTIONS
Reinvestment of dividends resulting in the issuance of Common Stock.... 424,183 843,978
------------ ------------
Total increase (decrease).............................................. (400,534) 2,400,302
NET ASSETS
Beginning of year...................................................... 224,888,289 222,487,987
------------ ------------
End of period.......................................................... $224,487,755 $224,888,289
============ ============
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED) ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
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 unless this method
does not represent fair market value.
2. Organization Expenses
Organization expenses of approximately $60,000 have been deferred and are 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 Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date the securities are purchased or sold. Investment 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
and are determined in accordance with income tax regulations.
For federal income tax purposes, the Fund's distributions of income and capital
gains are subject to recharacterization, which may include a tax return of
capital, at the end of the year to reflect the final investment results for that
year.
- --------------------------------------------------------------------------------
NOTE B: Advisory and Administrative Fees
Under the terms of the investment advisory agreement, the Fund pays Alliance
Capital Management L.P., (the "Adviser") an advisory fee equal to an annualized
rate of .50 of 1% of the average weekly net assets of the Fund during the month.
On November 28, 1995, the Fund entered into a Shareholder Inquiry Agency
Agreement with Alliance Fund Services, Inc. ("AFS"), an affiliate of the
Adviser, whereby the Fund reimburses AFS for costs relating to servicing phone
inquiries for the Fund. During the six months ended April 30, 1997 there was no
reimbursement paid to AFS.
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.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONT.) ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
NOTE C: Investment Transactions
Purchases and sales of investment securities (excluding short term investments
and U.S. government securities) aggregated $100,330,465 and $100,657,146,
respectively, for the six months ended April 30, 1997. There were no purchases
or sales of U.S. government and government agency obligations for the six months
ended April 30, 1997.
At April 30, 1997 the cost of the investments for Federal income tax purposes
was $216,722,947. Accordingly, gross unrealized appreciation was $5,608,098 and
gross unrealized depreciation was $55,359 resulting in net unrealized
appreciation of $5,552,739.
- --------------------------------------------------------------------------------
NOTE D: Taxes
For Federal income tax purposes at October 31, 1996, the Fund had a capital loss
carry forward of $17,054,040; of which $5,956,269 expires in 2002 and
$11,097,771 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
10,623,282 shares outstanding at April 30, 1997, the Adviser owned 7,200 shares.
During the six months ended April 30, 1997, and the year ended October 31, 1996,
the Fund issued 33,433 and 30,590 shares, respectively, 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 4.40% and is effective through April 30, 1997.
The dividend rate on Series B is 4.50% and is effective through May 5, 1997. The
dividend rate on Series C is 4.50% and is effective through May 1, 1997.
10
<PAGE>
FINANCIAL HIGHLIGHTS ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
Six Months Ended April 23, 1993(a)
April 30, 1997 to
(unaudited) 1996 1995 1994 October 31, 1993
-------------- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $12.74 $12.59 $11.57 $14.66 $13.98(b)
Income From Investment Operations................ ------ ------ ------ ------ ------
- ---------------------------------
Net investment income............................ .60 1.18 1.17 1.21 .50
Net realized and unrealized gain (loss)
on investment transactions..................... (.08) .22 1.11 (2.96) .74
------ ------ ------ ------ ------
Net increase (decrease) in net asset value
from operations................................ .52 1.40 2.28 (1.75) 1.24
------ ------ ------ ------ ------
Less: Dividends And Distributions
- ---------------------------------
Dividends from net investment income:
Paid to Common Stock shareholders.............. (.45) (.85) (.90) (.90) (.30)
Common Stock equivalent of dividends
paid to Preferred Stock shareholders......... (.15) (.33) (.36) (.31) (.08)
Distributions in excess of net investment income:
Paid to Common Stock shareholders.............. -0- (.05) -0- -0- -0-
Common Stock equivalent of distributions
paid to Preferred Stock shareholders......... -0- (.02) -0- -0- -0-
------ ------ ------ ------ ------
Distributions from realized capital gains:
Paid to Common Stock Shareholders.............. -0- -0- -0- (.11) -0-
Common Stock equivalent of distributions
paid to Preferred Stock Shareholders....... -0- -0- -0- (.02) -0-
------ ------ ------ ------ ------
Total dividends and distributions................ (.60) (1.25) (1.26) (1.34) (.38)
Preferred Stock offering costs and............... ------ ------ ------ ------ ------
underwriting discounts......................... -0- -0- -0- -0- (.18)
------ ------ ------ ------ ------
Net asset value, end of period................... $12.66 $12.74 $12.59 $11.57 $14.66
------ ------ ------ ------ ------
Market value, end of period...................... $12.75 $12.38 $12.00 $10.25 $14.25
====== ====== ====== ====== ======
Total Investment Return
- -----------------------
Total investment return based on: (c)
Market value................................... 6.73% 10.82% 26.65% (21.99)% 3.42%
Net asset value................................ 2.94% 8.74% 17.71% (14.41)% 6.39%
Ratios/Supplemental Data
- ------------------------
Net assets, end of period (000's omitted)........ $224,488 $224,888 $222,488 $211,597 $244,069
Ratio of expenses to average net assets (d) ..... .93%(e) .93% .84% .77% .81%(e)
Ratio of net investment income to average
net assets (d)................................. 5.71%(e) 5.64% 5.77% 5.58% 4.95%(e)
Portfolio turnover rate.......................... 45% 178% 222% 116% 79%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations.
(b) Net of offering costs of $.09.
(c) 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. (d) The expense ratio and net investment income ratio do not reflect
the effect of dividend and distribution payments to Preferred Stock
shareholders. (e) Annualized.
11
<PAGE>
ACM MUNICIPAL SECURITIES INCOME FUND
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block
David H. Dievler
James R. Greene
Dr. James M. Hester
Clifford L. Michel
Donald J. Robinson
Robert C. White
OFFICERS
Kathleen A. Corbet, Senior Vice President
Susan P. Keenan, Senior Vice President
Wayne D. Lyski, Senior Vice President
David M. Dowden, Vice President
Terrance Hults, Vice President
William E. Oliver, Vice President
Edmund P. Bergen, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Joseph J. Mantineo, Controller
ADMINISTRATOR
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105
SUB-ADMINISTRATOR
Prudential Mutual Fund Management, LLC
Gateway Center Three
Newark, NJ 07102-4077
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
PREFERRED STOCK:
DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
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 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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15
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ACM MUNICIPAL SECURITIES INCOME FUND
Summary of General Information
THE FUND
ACM Municipal Securities Income Fund 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, each Sunday in The New York
Times and each Saturday in 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
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.
MSISR
ACM
- -----------
MUNICIPAL
- -----------
SECURITIES
- -----------
INCOME FUND
Semi-Annual
Report
April 30, 1997
ALLIANCE(R)
