<PAGE>
LETTER TO SHAREHOLDERS ACM Municipal Securities Income Fund
================================================================================
June 26, 1998
Dear Shareholder:
We are pleased to report municipal market activity and investment results for
ACM Municipal Securities Income Fund's semi-annual reporting period ended April
30, 1998.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT RESULTS*
Periods Ended April 30, 1998
Total Returns
6 Months 12 Months
-------- ---------
<S> <C> <C>
ACM Municipal Securities
Income Fund 3.37% 13.72%
<CAPTION>
1 Year 3 Years 5 Years
------ ------- -------
<S> <C> <C> <C>
General & Leveraged
Muni Debt Funds
Average 10.33% 8.63% 6.70%
<CAPTION>
FUND LIPPER RANKING
1 Year 3 Years 5 Years
------ ------- -------
<S> <C> <C> <C>
#2 of 63 funds #2 of 62 funds #38 of 53 funds
</TABLE>
* The Fund's investment results are total returns for the periods and are
based on the net asset value as of April 30, 1998. All fees and expenses
related to the operation of the Fund have been deducted. Returns for the
Fund include the reinvestment of any distributions paid during the period.
Past performance is no guarantee of future results.
The General & Leveraged Muni Debt Funds Average represents the performance
of 64 funds for the six-month period and 63 funds for the 12-month period
ended April 30, 1998. Funds in the Lipper averages generally have similar
investment objectives, although some may have different investment
policies. An investor cannot invest directly in an average.
Your Fund's market price per share ended the period at $14.25.
- --------------------------------------------------------------------------------
MARKET OVERVIEW
After a very strong fourth quarter of 1997, municipal bonds slightly
underperformed U.S. Treasuries in the first quarter of 1998. However, the
tax-exempt market performed well on an absolute basis, with prices generally
higher across all sectors. Our view is that this relative underperformance was
due to heavy new issuance by municipalities refinancing older, higher-coupon
debt, and by the reduced supply of U.S. Treasury debt caused by the lower
Federal deficit. A "flight to quality" by international investors into U.S.
Treasuries, resulting from the Asian financial crisis, also fueled the
outperformance of that market. In addition, the Asian crisis lowered investor
expectations for growth and inflation in the domestic economy, another positive
for the U.S. bond markets. The net result for the municipal market was a
range-bound, quiet market focused on new issues. Continuing positive investment
flows into tax-exempt mutual funds, combined with stronger than usual insurance
company demand, absorbed much of the new issuance without affecting prices.
A consistent trend through the first quarter was improving credit quality for
state and local debt issuers. With local economies benefiting from the recent
protracted period of economic expansion, municipalities are experiencing record
surpluses. In many cases, surpluses have greatly exceeded budget projections.
For example, New York City recently announced a record $2 billion surplus,
compared to recent years of projected deficits. Highlighting this trend was
Standard and Poor's upgrading of nine issues for every downgrade during the
first quarter. There is a possibility that local governments will use these
surpluses to pay down older, high cost debt, reducing overall supply in the
market. However, in the past, surpluses have tended to be used for new projects,
not debt reduction.
1
<PAGE>
LETTER TO SHAREHOLDERS ACM Municipal Securities Income Fund
================================================================================
INVESTMENT STRATEGY
ACM Municipal Securities Income Fund seeks to provide shareholders with high
current tax-free income. At the same time, the Fund is managed to maintain
relative stability of principal without sacrificing competitive returns.
Due to the recent lack of volatility in the market and record low yields for
long term municipal bonds, there has been relatively little trading activity in
the Fund since the beginning of the year. Our style of management is contrarian
in outlook, seeking value during periods of market turmoil. Since 1994, the ACM
Municipal Securities Income Fund has had a significantly longer duration than
its peer group. As a result, this Fund dramatically outperformed most of its
peers in the declining interest rate environment of the last several years. More
recently, because of gains in bond prices, we have taken a slightly more
defensive posture by investing in securities with a shorter average duration. By
positioning the Fund for market moves in either direction, we stand prepared to
benefit if price volatility once again returns to the tax-exempt market.
MARKET OUTLOOK
Market volatility is likely to increase during the second half of the Fund's
fiscal year. With the continuing strength of the U.S. economy, and the
relatively modest impact of the turmoil in Asia on corporate earnings, we could
begin to see weaker bond prices and an opportunity to once again reposition the
Fund's portfolio. We firmly believe that the environment for long term municipal
bond investors should be positive. It is clear that the Federal Reserve is
committed to curbing inflationary pressures. We view any backup in interest
rates as an excellent opportunity to lock in attractive yields and to improve
long term call protection. Looking ahead, we believe that interest rates will
trend lower over the long term and that municipal credit quality will continue
to improve. Overall, we believe that the investing environment will continue to
be excellent for municipal bond investors.
We appreciate your investment in ACM Municipal Securities Income Fund and look
forward to reporting future investment results.
Sincerely,
/s/ JOHN D. CARIFA
John D. Carifa
Chairman and President
/s/ SUSAN P. KEENAN
Susan P. Keenan
Senior Vice President
2
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited) ACM Municipal Securities Income Fund
================================================================================
Standard Principal
& Poor's Amount
Rating (000) Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM
MUNICIPAL BONDS--98.8%
ALABAMA--5.2%
AAA West Jefferson
PCR (Alabama Power)
MBIA Ser 93C
6.05%, 5/01/23....... $ 11,900 $ 12,152,875
------------
ARIZONA--0.8%
AA Phoenix
MFHR (Woodstone &
Silver Springs)
Ser 93 Asset Guaranty
6.25%, 4/01/23....... 1,470 1,549,792
AAA Yuma
MFHR (Alexandrite
Sands Apt)
AMT FHA Ser 90
7.70%, 12/01/29...... 390 409,820
------------
1,959,612
------------
CALIFORNIA--18.3%
AA- California HFA
SFMR (Homeownership
Mtg)
AMT Ser 94H
7.50%, 8/01/25....... 10,455 11,141,057
NR Novato Comm Fac
(Hamilton Field)
Ser 95
7.375%, 9/01/25...... 2,030 2,110,043
NR Ontario Assess Dist #107
(CA Commerce Ctr So)
7.70%, 9/02/10....... 6,130 6,325,670
NR Orange County
Assess Dist #88-1
(Pelican Hill Proj)
Ser 92A
8.25%, 9/02/18....... 3,825 3,939,788
NR Orange County Comm
Fac Dist #87-2
(Portola Hills)
Ser 91A
9.30%, 8/15/16....... 8,950 9,455,764
AAA Sacramento
Muni Util Dist
(Elec Rev)
Ser 92A FGIC
6.30%, 8/15/18(a).... 2,500 2,907,150
A- Vacaville
MFHR (Vacaville
Comm Hsg)
Ser 94A
7.85%, 11/01/24...... 4,625 5,004,620
A- Placer County Res Rec
(Wstrn Placer Wst Mgmt)
AMT Ser 94
6.75%, 7/01/14....... 1,800 1,933,920
------------
42,818,012
------------
COLORADO--9.4%
BB+ Denver City & County
Arpt Rev (United Airlines)
AMT Ser 92A
6.875%, 10/01/32..... 20,300 21,987,742
------------
FLORIDA--2.8%
Aaa* Brevard County HFA
SFMR (Homeownership
Mtg)
AMT FHA Ser 94
6.70%, 9/01/27....... 3,060 3,270,651
A* Dade County
MFHR (Golden
Lakes Apts)
AMT Ser 97A
6.00%, 11/01/32...... 250 257,105
6.05%, 11/01/39...... 750 771,262
AAA Florida HFA
SFMR (Homeownership
Mtg)
AMT GNMA Ser 94B
6.65%, 7/01/26....... 1,230 1,292,152
Aaa* Pinellas County HFA
SFMR (Homeownership
Mtg)
AMT GNMA Ser 94A
6.55%, 8/01/27....... 960 1,017,475
------------
6,608,645
------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (cont.)
April 30, 1998 (unaudited) ACM Municipal Securities Income Fund
================================================================================
Standard Principal
& Poor's Amount
Rating (000) Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ILLINOIS--1.8%
BBB- Chicago Arpt Rev
(American Airlines)
AMT Ser 94
8.20%, 12/01/24...... $ 3,500 $ 4,193,035
------------
INDIANA--4.2%
BB+ Indianapolis
Airport Rev
(United Airlines)
AMT Ser 95A
6.50%, 11/15/31...... 1,900 2,049,606
AA Warrick County
PCR (So Indiana
Gas & Elec Co)
AMT Ser 93B
6.00%, 5/01/23....... 7,290 7,689,127
------------
9,738,733
------------
LOUISIANA--0.7%
Aaa* Calcasieu Parish
SFMR (Mortgage Rev)
AMT GNMA/FNMA
Ser 97A
6.40%, 4/01/32....... 1,500 1,586,805
------------
MARYLAND--3.4%
AAA Baltimore County
MFHR (Dunfield Proj)
FHA Ser 92A
6.90%, 8/01/28....... 7,500 8,034,900
------------
MASSACHUSETTS--4.0%
A- Mass Hlth & Ed Fac
Auth Hosp Rev
(Jordan Hospital)
Ser 92B
6.875%, 10/01/15..... 1,500 1,617,915
Aaa* Mass Hlth & Ed Fac
Auth Hosp Rev
(Metro West Health)
Ser 92C
6.50%, Preref:
11/15/02............. 2,690 2,969,599
A+ Mass HFA
SFMR (Residential Mtg)
AMT Ser 40
6.65%, 12/01/27...... 4,520 4,874,187
------------
9,461,701
------------
MICHIGAN--1.9%
AA+ Michigan
Hsg Dev Auth
SFMR (Mortgage Rev)
AMT Ser 95B
7.05%, 6/01/26....... 2,760 2,874,126
AA Troy Downtown
Dev Auth
Ser 95A Asset Guaranty
6.375%, 11/01/18.... 1,490 1,614,832
------------
4,488,958
------------
MINNESOTA--4.1%
AA+ Minnesota HFA
SFMR (Homeownership Mtg)
AMT Ser 96G
6.25%, 7/01/26....... 7,075 7,456,908
BBB South St. Paul Hosp Rev
(Healtheast Proj)
Ser 94
6.75%, 11/01/09...... 1,905 2,073,345
------------
9,530,253
------------
NEW HAMPSHIRE--2.2%
AAA Keene Hsg Dev Corp
MFHR (Central Square)
FHA Ser 90A
7.50%, 2/01/25....... 4,330 5,066,187
------------
NEW YORK--1.7%
Aaa* New York City GO
Ser 95B
7.25%, Preref: 8/15/04 3,465 4,017,252
------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
ACM Municipal Securities Income Fund
================================================================================
Standard Principal
& Poor's Amount
Rating (000) Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
OHIO--3.4%
BBB Hamilton County
Hlth Fac
(Franciscan Sisters /
Providence Hosp)
Ser 92
6.875%, 7/01/15...... $ 500 $ 535,475
Aaa* Kent MFHR
(Silver Meadows Apt Proj)
AMT GNMA Ser 95
7.15%, 12/20/26...... 525 585,018
AAA Ohio HFA
SFMR (Residential Dev)
AMT GNMA Ser 97
6.15%, 3/01/29....... 1,900 2,001,232
AAA Ohio HFA
SFMR (Mortgage Rev)
AMT GNMA Ser 95 A-2
6.625%, 3/01/26...... 4,555 4,859,729
------------
7,981,454
------------
PENNSYLVANIA--0.1%
BBB- Allegheny County
PCR (USX Corp)
Ser 96
6.10%, 1/15/18....... 295 310,113
------------
RHODE ISLAND--4.6%
AA+ Rhode Island Hsg & Mtg
Fin Corp SFMR
(Homeownership Mtg)
AMT Ser 92-7A
6.75%, 10/01/25...... 2,900 3,079,713
AMT Ser 91-8
10.317%, 4/01/24(a).. 7,000 7,703,570
------------
10,783,283
------------
SOUTH CAROLINA--1.8%
AAA Horry County Arpt Rev
(Myrtle Beach Jet Port)
AMT FSA Ser 90
7.30%, 7/01/20....... 4,000 4,310,280
------------
SOUTH DAKOTA--5.5%
AAA South Dakota
Hsg Dev Auth
SFMR (Homeownership Mtg)
AMT Ser 93-11
6.15%, 5/01/26....... 7,325 7,546,728
A* South Dakota
Student Loan Fin Corp
AMT Ser 96-1E
6.55%, Preref: 8/15/01 4,900 5,326,447
------------
12,873,175
------------
TENNESSEE--7.1%
Aa2* Tennessee Ed Loan
(Ed Funding South, Inc)
AMT Ser 97B
6.20%, 12/01/21...... 10,600 11,077,636
BBB Memphis Shelby
County Spec Fac
(Federal Express)
AMT Ser 93
6.20%, 7/01/14....... 2,000 2,115,620
AAA Metro Govt Nashville
& Davidson Cnty
Water System Rev
Ser 92 AMBAC
8.276%, 1/01/22(a)... 3,000 3,455,700
------------
16,648,956
------------
TEXAS--10.2%
BBB Alliance Arpt Auth
(Federal Express)
AMT Ser 96
6.375%, 4/01/21...... 14,500 15,696,685
AAA Amarillo Texas
Hosp Rev
(High Plains Baptist)
FSA Ser 92B
9.038%, 1/01/22(a)... 3,200 3,693,120
BBB- Dallas--Ft. Worth
Airport (American
Airlines)
AMT Ser 92
7.25%, 11/01/30...... 3,985 4,420,640
------------
23,810,445
------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (cont.) ACM Municipal Securities Income Fund
================================================================================
Standard Principal
& Poor's Amount
Rating (000) Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
VIRGINIA--2.9%
A+ Giles County IDR
(Hoechst--Celanese Corp.)
AMT Ser 96
6.45%, 5/01/26....... $ 3,670 $ 4,038,284
AAA Suffolk
MFHR (Prince
William Commons)
AMT FNMA Ser 95A
6.50%, 6/01/29....... 2,525 2,714,754
------------
6,753,038
------------
WEST VIRGINIA--2.7%
AA+ West Virginia
Public Energy Auth
(Morgantown Energy)
AMT Ser 90A
5.05%, 7/01/08....... 1,000 1,001,770
AAA West Virginia Parkways
Eco Dev (Parkway Rev)
FGIC Ser 93
7.555%, 5/16/19(a)... 5,000 5,456,950
------------
6,458,720
------------
TOTAL INVESTMENTS--98.8%
(cost $219,891,247) 231,574,174
Other assets less liabilities--1.2% 2,741,753
------------
NET ASSETS--100% $234,315,927
============
</TABLE>
- --------------------------------------------------------------------------------
* Moody's or Fitch 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
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
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998 (unaudited) ACM Municipal Securities Income Fund
================================================================================================================
<S> <C>
ASSETS
Investments in securities, at value (cost $219,891,247)......................................... $231,574,174
Interest receivable............................................................................. 4,009,154
Receivable for investment securities sold....................................................... 3,096,471
Other assets.................................................................................... 69,004
------------
Total assets.................................................................................... 238,748,803
------------
LIABILITIES
Due to custodian................................................................................ 211,853
Payable for investment securities purchased..................................................... 3,841,300
Advisory fee payable............................................................................ 97,864
Administrative fee payable...................................................................... 29,359
Accrued expenses and other liabilities.......................................................... 252,500
------------
Total liabilities............................................................................... 4,432,876
------------
NET ASSETS........................................................................................ $234,315,927
============
COMPOSITION OF NET ASSETS
Preferred Stock:
$.01 par value per share; 3,600 shares Preferred Stock authorized, issued and outstanding at
$25,000 per share liquidation preference.................................................... $ 90,000,000
Common Stock:
$.01 par value per share; 100,000,000 shares authorized, 10,711,752 shares issued and
outstanding.................................................................................... 107,118
Additional paid-in capital...................................................................... 147,127,790
Distributions in excess of net investment income................................................ (269,528)
Accumulated net realized loss on investments.................................................... (14,332,380)
Net unrealized appreciation of investments...................................................... 11,682,927
------------
$234,315,927
============
NET ASSET VALUE PER SHARE OF COMMON STOCK--$144,315,927
($234,315,927 less Preferred Stock at liquidation value of $90,000,000)
divided by 10,711,752 shares of Common Stock outstanding.................................... $13.47
============
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1998 (unaudited) ACM Municipal Securities Income Fund
================================================================================================================
<S> <C> <C>
INVESTMENT INCOME
Interest......................................................................... $7,184,206
----------
EXPENSES
Advisory fee..................................................................... $587,245
Administrative fee............................................................... 176,174
Auction Agent fee................................................................ 111,702
Audit and legal.................................................................. 70,378
Custodian........................................................................ 50,267
Transfer agency.................................................................. 27,552
Printing......................................................................... 21,648
Directors' fees.................................................................. 16,680
Amortization of organization expenses............................................ 5,649
Miscellaneous.................................................................... 21,244
--------
Total expenses................................................................... 1,088,539
----------
Net investment income............................................................ 6,095,667
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions..................................... 618,210
Net change in unrealized appreciation on investments............................. (253,376)
----------
Net gain on investments.......................................................... 364,834
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS......................................... $6,460,501
==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
==================================================================================================================
Six Months Ended
April 30, 1998 Year Ended
(unaudited) October 31, 1997
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income...................................................... $ 6,095,667 $ 12,830,510
Net realized gain on investment transactions............................... 618,210 2,128,635
Net change in unrealized appreciation (depreciation) on investments........ (253,376) 5,592,202
------------ ------------
Net increase in net assets from operations................................. 6,460,501 20,551,347
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Common Stock.............................................................. (4,605,372) (9,554,156)
Preferred Stock........................................................... (1,490,295) (3,276,354)
Distributions in excess of net investment income
Common Stock.............................................................. (203,594) (4,030)
Preferred Stock........................................................... (65,889) (1,379)
CAPITAL STOCK TRANSACTIONS
Reinvestment of dividends resulting in the issuance of Common Stock........ 579,656 1,037,203
------------ ------------
Total increase............................................................. 675,007 8,752,631
NET ASSETS
Beginning of year.......................................................... 233,640,920 224,888,289
------------ ------------
End of period ............................................................. $234,315,927 $233,640,920
============ ============
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (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 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 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 valued at the mean of the bid and asked prices as obtained on that day
from one or more dealers regularly marking a market in that security. Securities
traded on the over-the-counter market are valued at the mean of the closing bid
and asked prices 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 bases of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities.
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 any, 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.
Income and capital gains distributions are determined in accordance with federal
tax regulation and may differ from those determined in accordance with generally
accepted accounting principles. To the extent these differences are permanent,
such amounts are reclassified within the capital accounts based on their federal
tax basis treatment; temporary differences do not require such reclassification.
During the current fiscal year, permanent differences, primarily due to
book-to-tax differences, resulting from distributions in excess of net
tax-exempt income, resulted in a net decrease in additional paid-in capital and
a corresponding increase in distributions in excess of net investment income.
This reclassification had no effect on net assets.
- --------------------------------------------------------------------------------
NOTE B: Advisory and Administrative Fees
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") an advisory fee equal to an annualized
rate of .50 of 1% of the average weekly net assets of the Fund during the month.
On November 28, 1995, the Fund entered into a
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (cont.) ACM Municipal Securities Income Fund
================================================================================
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,
1998 the Fund reimbursed AFS $460.
Under the terms of an 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 (excluding short term investments
and U.S. government securities) aggregated $68,630,528 and $80,085,587,
respectively, for the six months ended April 30, 1998. There were no purchases
or sales of U.S. government and government agency obligations for the six months
ended April 30, 1998.
At April 30, 1998 the cost of the investments for Federal income tax purposes
was $219,901,406. Accordingly, gross unrealized appreciation was $11,738,456 and
gross unrealized depreciation was $65,688 resulting in net unrealized
appreciation of $11,672,768.
- --------------------------------------------------------------------------------
NOTE D: Taxes
For Federal income tax purposes at October 31, 1997, the Fund had a capital loss
carry forward of $14,926,533; of which $3,828,762 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
10,711,752 shares outstanding at April 30, 1998, the Adviser owned 7,200 shares.
During the six months ended April 30, 1998, and the year ended October 31, 1997,
the Fund issued 41,885 and 80,018 shares, respectively, in connection with the
Fund's dividend reinvestment plan.
Preferred Stock
The Fund has issued and outstanding 3,600 shares of Preferred Stock, consisting
of 1,200 shares each of Series A, Series B and Series C, with a liquidation
value of $25,000 per share.
The dividend rate on Series A is 3.95% and is effective through May 6, 1998. The
dividend rate on Series B is 4.15% and is effective through May 4, 1998. The
dividend rate on Series C is 4.09% and is effective through May 7, 1998.
10
<PAGE>
FINANCIAL HIGHLIGHTS ACM Municipal Securities Income Fund
================================================================================
Selected Data For a Share of Common Stock Outstanding Throughout Each Period.
<TABLE>
<CAPTION>
April 23,
1993(a)
Six Months Ended to
April 30, 1998 October 31,
(unaudited) 1997 1996 1995 1994 1993
---------------- ------ ------ ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............. $13.46 $12.74 $12.59 $11.57 $14.66 $13.98(b)
-------- -------- -------- -------- -------- --------
Income From Investment Operations
- ---------------------------------
Net investment income ............................. .57 1.20 1.18 1.17 1.21 .50
Net realized and unrealized gain
(loss) on investment transactions ............... 03 .72 .22 1.11 (2.96) .74
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net
asset value from operations ..................... .60 1.92 1.40 2.28 (1.75) 1.24
-------- -------- -------- -------- -------- --------
Less: Dividends And Distributions
Dividends from net investment income:
Paid to Common Stock shareholders ............... (.43) (.89) (.85) (.90) (.90) (.30)
Common Stock equivalent of dividends
paid to Preferred Stock shareholders ........... (.14) (.31) (.33) (.36) (.31) (.08)
Distributions in excess of net investment income:
Paid to Common Stock shareholders ............... (.02) -0- (.05) -0- -0- -0-
Common Stock equivalent of distributions
paid to Preferred Stock shareholders ........... -0- -0- (.02) -0- -0- -0-
Distributions from realized capital gains:
Paid to Common Stock Shareholders ............... -0- -0- -0- -0- (.11) -0-
Common Stock equivalent of distributions
paid to Preferred Stock Shareholders ........... -0- -0- -0- -0- (.02) -0-
-------- -------- -------- -------- -------- --------
Total dividends and distributions ................. (.59) (1.20) (1.25) (1.26) (1.34) (.38)
-------- -------- -------- -------- -------- --------
Preferred Stock offering costs and
underwriting discounts .......................... -0- -0- -0- -0- -0- (.18)
-------- -------- -------- -------- -------- --------
Net asset value, end of period .................... $13.47 $13.46 $12.74 $12.59 $11.57 $14.66
-------- -------- -------- -------- -------- --------
Market value, end of period ....................... $14.25 $14.12 $12.38 $12.00 $10.25 $14.25
======== ======== ======== ======== ======== ========
Total Investment Return
Total investment return based on: (c)
Market value ................................... 4.21% 22.34% 10.82% 26.65% (21.99)% 3.42%
Net asset value ................................ 3.37% 13.34% 8.74% 17.71% (14.41)% 6.39%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ......... $234,316 $233,641 $224,888 $222,488 $211,597 $244,069
Ratio of expenses to average
net assets (d) .................................. .93%(e) .94% .93% .84% .77% .81%(e)
Ratio of net investment income
to average net assets (d) ....................... 5.23%(e) 5.64% 5.64% 5.77% 5.58% 4.95%(e)
Portfolio turnover rate ........................... 29% 90% 178% 222% 116% 79%
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</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 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 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
John H. Dobkin
William H. Foulk, Jr.
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. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Juan J. Rodriguez, Controller
ADMINISTRATOR
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105
PREFERRED STOCK:
DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
SUB-ADMINISTRATOR
Prudential Mutual Fund Management, LLC
Gateway Center Three
Newark, NJ 07102-4077
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
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 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 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) 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, 1998
Alliance(R)
- --------------------------------------------------------------------------------
