<PAGE>
LETTER TO SHAREHOLDERS ACM Municipal Securities Income Fund
================================================================================
June 24, 1999
Dear Shareholder:
We are pleased to report municipal market activity and investment results for
ACM Municipal Securities Income Fund's six-month fiscal reporting period ending
April 30, 1999.
INVESTMENT RESULTS*
Periods Ended April 30, 1999
Total Returns
ACM Municipal Securities Income Fund
6 Months 1 Year 3 Years 5 Years
-------- ------ ------- -------
2.37% 5.86% 10.14% 8.46%
Fund Market Price Per Share $13.688
Lipper General & Leveraged Muni Debt Funds Average
1 Year 3 Years 5 Years
------ ------- -------
7.01% 8.70% 8.32%
*The Fund's investment results are total returns for the periods shown and are
based on the net asset value as of April 30, 1999. 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 Lipper General & Leveraged Muni Debt Funds Average represents the
performance of 46 funds for the 1-year period, 44 funds for the 3-year period
and 43 funds for the 5-year period ended April 30, 1999. Funds in the Lipper
averages generally have similar investment objectives to the Fund, although some
may have different investment policies. An investor cannot invest directly in an
average.
MARKET OVERVIEW
For the six months ended April 30, 1999, the municipal bond market continued to
perform well compared to the U.S. government bond (Treasury) market. Part of
this positive performance was attributable to a declining yield ratio, or
relationship of municipal bond yields to Treasury yields, over the period. In
the latter part of calendar 1998, investors seeking the "safe haven" of U.S.
government bonds during the emerging markets crisis pushed the yield ratio
toward 100%, compared with traditional levels of roughly 85%. The markets
reversed course in recent months, retracing much of the ground lost in 1998. In
addition to the easing of international financial tensions, continued investor
demand for tax-exempt income and the absence of any significant tax reform
legislation contributed to the price appreciation we have seen throughout the
municipal market.
Another significant contributor to the health of the municipal bond market was
the continuing improvement of the creditworthiness of state and local
governments. The strong domestic economy continued to produce record levels of
sales, income and property tax receipts. In addition, state and local government
spending increased at a lower rate than tax revenues, resulting in overall
budget surpluses.
INVESTMENT STRATEGY
In response to the unusually high yields on municipal bonds compared with
government bonds (on an after-tax basis) during the reporting period, your
management team selectively added new municipal positions to the portfolio. In
particular, we have continued to focus our research efforts on project-specific
financings, primarily basic infrastructure improvement projects. Over time, we
expect that the underlying credit fundamentals of the issuers of these
securities will improve and that the original, higher-yielding debt that we hold
will outperform the broader municipal market.
In addition to our overall portfolio strategy built on fundamental credit
analysis, we attempt, when market conditions are favorable, to make
opportunistic purchases and sales of securities at advantageous
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<PAGE>
ACM Municipal Securities Income Fund
================================================================================
prices. A good example of such a time in the market was December 1998, when
dealers and investors provided lower levels of liquidity during holiday and
year-end reporting periods. In December, we made several purchases at attractive
prices. We also use these market opportunities to improve the call protection in
the Fund and to increase the overall risk-adjusted return profile. Over time, we
have found that this type of opportunistic investing provides an important part
of our total return advantage compared with our peer group of competing mutual
funds.
MARKET OUTLOOK
The U.S. economy's low inflation, steady growth and federal budget surplus
should lead to further stability in all sectors of the bond market. The
municipal market should continue to perform in line with the broader market. In
this type of trading-range environment, we anticipate that the yield ratio of
municipals to Treasuries should continue to decline to its historic mean level
of approximately 85%. This room for improvement should allow municipals to
continue to perform well relative to Treasuries and corporate bonds. However,
more new infrastructure projects are under consideration at the state level and
the local level than in the recent past. This may lead to an increased supply of
new issues of tax-exempt bonds. We expect, however, that the overall supply and
demand characteristics of the market will remain in approximate equilibrium and
that neither new issues nor net redemptions will move the market appreciably.
As always, we will continue to pursue our tactics of buying on weakness and
selling on strength within the overall strategy of fundamental credit analysis.
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
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<PAGE>
PORTFOLIO OF INVESTMENTS
April 30, 1999 (unaudited) ACM Municipal Securities Income Fund
================================================================================
Standard Principal
& Poor's Amount
Rating (000) Value
- --------------------------------------------------------------------------------
LONG TERM
MUNICIPAL BONDS-98.4%
ARIZONA--1.8%
NR Goodyear
Wtr & Swr (Litchfield Park)
AMT Ser 99
5.95%, 10/01/23................. $3,160 $3,159,779
AA Phoenix
MFHR (Woodstone &
Silver Springs)
Ser 93 Asset Guaranty
6.25%, 4/01/23.................. 1,000 1,057,360
------------
4,217,139
------------
CALIFORNIA--14.0%
A+ California GO
SFMR (Veterans Housing)
AMT Ser 95
6.40%, 2/01/20.................. 5,670 5,766,333
AA- California HFA
SFMR (Homeownership Mtg)
AMT Ser 94H
7.50%, 8/01/25.................. 5,100 5,382,234
AAA AMT Ser 91C MBIA
7.00%, 8/01/23.................. 1,475 1,554,252
AAA Garden Grove
MFHR: (Tudor Grove)
GNMA Ser 89 AMT
7.25%, 5/20/32.................. 6,120 7,236,198
NR Orange County
Assess Dist #88-1
(Pelican Hill Proj)
Ser 92A
8.25%, 9/02/18.................. 3,825 3,936,843
A- Placer County Res Rec
(Wstrn Placer Wst Mgmt)
AMT Ser 94
6.75%, 7/01/14.................. 2,450 2,680,521
AAA Sacramento
Muni Util Dist (Elec Rev)
Ser 92A FGIC
6.30%, 8/15/18(a)............... 2,500 2,942,350
BBB+ Westminster Redev Agy
MFHR (Rose Garden Apt)
AMT
6.75%, 8/01/24.................. 3,300 3,492,786
------------
32,991,517
------------
COLORADO--9.3%
Baa3 Denver City & County
Arpt Rev (United Airlines)
AMT Ser 92A
6.875%, 10/01/32 (b)............ 20,300 21,740,894
------------
ILLINOIS--1.8%
BBB- Chicago Arpt Rev
(American Airlines)
AMT Ser 94
8.20%, 12/01/24................. 3,500 4,135,005
------------
INDIANA--7.5%
Baa3 Indianapolis
Airport Rev
(United Airlines)
AMT Ser 95A
6.00%, 11/15/31 (b)............. 8,910 9,630,284
Baa2 Warrick County
PCR (So Indiana Gas & Elec Co)
AMT Ser 93B
6.00%, 5/01/23.................. 7,290 7,868,462
------------
17,498,746
------------
LOUISIANA--0.2%
Aaa Calcasieu Parish
SFMR (Mortgage Rev)
AMT GNMA/FNMA
Ser 97A
6.40%, 4/01/32 (b).............. 340 357,541
------------
MARYLAND--3.4%
AAA Baltimore County
MFHR (Dunfield Proj)
FHA Ser 92A
6.90%, 8/01/28.................. 7,500 8,091,075
------------
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<PAGE>
PORTFOLIO OF INVESTMENTS (cont.) ACM Municipal Securities Income Fund
================================================================================
Standard Principal
& Poor's Amount
Rating (000) Value
- --------------------------------------------------------------------------------
MASSACHUSETTS--4.2%
BBB+ Mass Hlth & Ed Fac
Auth Hosp Rev
(Jordan Hospital)
Ser 92B
6.875%, 10/01/15................ $1,500 $ 1,613,310
Aaa Mass Hlth & Ed Fac
Auth Hosp Rev
(Metro West Health)
Ser 92C Preref:
6.50%, 11/15/18................. 2,690 2,987,998
A+ Mass HFA
SFMR (Residential Mtg)
AMT Ser 40
6.65%, 12/01/27................. 2,500 2,678,525
BBB Mass Hlth & Ed Fac Auth
Hosp Rev (Caritas Christi)
Ser 99A
5.75%, 7/01/28.................. 2,500 2,489,275
------------
9,769,108
------------
MICHIGAN--4.7%
AA+ Michigan
Hsg Dev Auth SFMR (Mortgage Rev)
AMT Ser 96B
6.20%, 6/01/27.................. 1,000 1,057,320
AAA Michigan
Hsg Dev Auth
MFHR (Rental Rev)
AMT AMBAC Ser 97A
6.10%, 10/01/33................. 8,400 8,865,864
AA Troy Downtown
Dev Auth
Ser 95A Asset Guaranty
6.375%, 11/01/18................ 1,025 1,127,357
------------
11,050,541
------------
MINNESOTA--4.5%
AA+ Minnesota HFA
SFMR (Homeownership Mtg)
AMT Ser 96F
6.30%, 1/01/28.................. 4,345 4,563,162
6.25%, 7/01/26.................. 2,765 2,922,633
BBB South St. Paul
Hosp Rev (Health East Proj)
Ser 94
6.75%, 11/01/09................. 3,000 3,161,820
------------
10,647,615
------------
MISSISSIPPI--1.0%
Aaa Mississippi Hsg Corp
SFMR (Mortgage Rev)
AMT GNMA Ser 99A-7
6.30%, 6/01/31.................. 2,250 2,456,010
------------
NEW JERSEY--1.7%
A+ New Jersey Hsg & Mtg Fin
MFHR (Sect 8)
Ser1
6.70%, 11/01/28................. 3,735 4,000,073
------------
NEW YORK--3.3%
Aaa New York City GO
Ser 95B Preref
7.25%, 8/15/04 (a).............. 3,465 4,049,060
AAA New York State HFA
MFHR (Erie Monroe Cty Proj)
AMT AMBAC Ser 89B
7.55%, 11/01/29................. 3,470 3,598,945
------------
7,648,005
------------
OHIO--2.0%
AAA Ohio HFA
SFMR (Mortgage Rev)
AMT GNMA Ser 95 A-2
6.625%, 3/01/26................. 4,555 4,808,668
------------
RHODE ISLAND--4.9%
AA+ Rhode Island Hsg & Mtg
Fin Corp SFMR
(Homeownership Mtg)
AMT Ser 92-7A
6.75%, 10/01/25................. 3,700 3,897,210
AMT Ser 91-8
10.317%, 4/01/24 (a)............ 7,000 7,653,940
------------
11,551,150
------------
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4
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<PAGE>
ACM Municipal Securities Income Fund
================================================================================
Standard Principal
& Poor's Amount
Rating (000) Value
- --------------------------------------------------------------------------------
SOUTH CAROLINA--1.8%
AAA Horry County Arpt Rev
(Myrtle Beach Jet Port)
AMT FSA Ser 90
7.30%, 7/01/20.................. $4,000 $ 4,226,560
------------
SOUTH DAKOTA--3.4%
AAA South Dakota
SFMR (Homeownership Mtg)
AMT Ser 93-11
6.15%, 5/01/26.................. 2,500 2,604,950
A South Dakota (Education Loans)
AMT Ser 96-1E 6.55%
Preref: 8/01/01(b).............. 4,900 5,323,556
------------
7,928,506
------------
TENNESSEE--7.6%
Aa2 Tennessee Ed Loan
(Ed Funding South, Inc)
AMT Ser 97B
6.20%, 12/01/21(b).............. 10,600 11,035,872
BBB Memphis Shelby
County Spec Fac
(Federal Express)
AMT Ser 93
6.20%, 7/01/14.................. 3,000 3,188,040
AAA Metro Govt Nashville
& Davidson Cnty
Water System Rev
Ser 92 AMBAC 8.783%,
Preref: 8/01/01(a)............. 3,000 3,473,760
------------
17,697,672
------------
TEXAS--10.1%
BBB Alliance Arpt Auth
(Federal Express)
AMT Ser 96
6.375%, 4/01/21................. 14,500 15,530,515
AAA Amarillo Texas
Hosp Rev (High Plains Baptist)
FSA Ser 92B
9.504%, 1/01/22 (a)............. 3,200 3,778,880
BBB- Dallas - Ft. Worth
Airport (American Airlines)
AMT Ser 92
7.25%, 11/01/30................. 3,985 4,361,383
------------
23,670,778
------------
VIRGINIA--3.8%
A+ Giles County IDR
(Hoechst - Celanese Corp.)
AMT Ser 96
6.45%, 5/01/26.................. 4,910 5,334,371
A- Henrico County
Swr (Browning-Ferris)
AMT Ser 97A
5.875%, 3/01/17................. 2,750 2,756,298
AAA Suffolk
MFHR (Prince William Commons)
AMT FNMA Ser 95A
6.50%, 6/01/29.................. 700 756,203
------------
8,846,872
------------
WEST VIRGINIA--7.4%
A Braxton
Swr (Weyerhauser)
AMT Ser 98
5.4%, 5/01/25................... 11,700 11,598,210
AAA West Virginia Parkways
Eco Dev (Parkway Rev)
FGIC Ser 93
8.022%, 5/16/19 (a)............. 5,000 5,635,000
------------
17,233,210
------------
TOTAL INVESTMENTS--98.4%
(Cost $220,572,059)........... 230,566,685
Other assets less liabilities-1.6% 3,686,630
------------
NET ASSETS--100% $234,253,315
============
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<PAGE>
PORTFOLIO OF INVESTMENTS (cont.) ACM Municipal Securities Income Fund
================================================================================
- --------------------------------------------------------------------------------
(a) Inverse Floater Security - Security with variable or floating interest
rate that moves in opposite direction of short-term interest rates.
(b) Moody's or Fitch's Rating.
Glossary of Terms:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
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
NR Not Rated
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
See notes to financial statements.
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6
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<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (unaudited) ACM Municipal Securities Income Fund
================================================================================
ASSETS
Investments in securities, at value (cost $220,572,059)......... $230,566,685
Cash............................................................ 121,354
Receivable for investment securities sold....................... 3,097,500
Interest receivable............................................. 3,827,218
Other receivable................................................ 178,351
------------
Total assets.................................................... 237,791,108
------------
LIABILITIES
Payable for investment securities purchased..................... 3,160,000
Advisory fee payable............................................ 112,277
Administrative fee payable...................................... 33,683
Accrued expenses and other liabilities.......................... 231,833
------------
Total liabilities............................................... 3,537,793
------------
NET ASSETS........................................................ $234,253,315
============
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,
10,789,383 shares issued and outstanding..................... 107,894
Additional paid-in capital...................................... 147,948,541
Distribution in excess of net investment income................. (80,631)
Accumulated net realized loss on investments.................... (13,717,115)
Net unrealized appreciation of investment....................... 9,994,626
------------
$234,253,315
============
NET ASSET VALUE PER SHARE OF COMMON STOCK--$144,253,315
($234,253,315 less Preferred Stock at liquidation value of
$90,000,000) divided by 10,789,383 shares of Common Stock
outstanding.................................................... $13.37
======
- --------------------------------------------------------------------------------
See notes to financial statements.
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7
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<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1999 (unaudited) ACM Municipal Securities Income Fund
================================================================================
INVESTMENT INCOME
Interest................................................ $7,096,230
EXPENSES
Advisory fee............................................ $587,570
Administrative fee...................................... 176,271
Auction Agent fee....................................... 112,937
Custodian............................................... 74,200
Audit and legal......................................... 62,791
Transfer agency......................................... 28,658
Directors' fees......................................... 24,610
Printing................................................ 10,164
Miscellaneous........................................... 15,318
--------
Total expenses.......................................... 1,092,519
----------
Net investment income................................... 6,003,711
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions............ 196,187
Net change in unrealized appreciation on investments.... (1,366,715)
----------
Net loss on investments................................. (1,170,528)
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS................ $4,833,183
==========
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1999 Year Ended
(unaudited) October 31, 1998
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ................................................ $ 6,003,711 $ 12,443,822
Net realized gain on investment transactions ......................... 196,187 1,031,923
Net change in unrealized appreciation on investments ................. (1,366,715) (574,962)
------------ ------------
Net increase in net assets from operations ........................... 4,833,183 12,900,783
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Common Stock ........................................................ (4,683,584) (9,255,074)
Preferred Stock ..................................................... (1,400,064) (3,188,748)
Distributions in excess of net investment income
Common Stock ........................................................ -0- (220,563)
CAPITAL STOCK TRANSACTIONS
Reinvestment of dividends resulting in the issuance of Common Stock .. 508,540 1,117,922
------------ ------------
Total increase (decrease) ............................................ (741,925) 1,354,320
NET ASSETS
Beginning of year .................................................... 234,995,240 233,640,920
------------ ------------
End of period ........................................................ $234,253,315 $234,995,240
============ ============
</TABLE>
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See notes to financial statements.
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8
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<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 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 reporting 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 a day,
the last bid price quoted on such day. If no bid prices are quoted, then the
security is valued at the mean of the bid and asked prices as obtained on that
day from one or more dealers regularly making a market in that security.
Securities traded on the over-the-counter market are valued at the mean of the
closing bid and ask 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 basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities.
2. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. 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.
4. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax 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.
- --------------------------------------------------------------------------------
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 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, 1999 there was no
reimbursement paid to AFS.
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
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9
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<PAGE>
NOTES TO FINANCIAL STATEMENTS (cont.) ACM Municipal Securities Income Fund
================================================================================
has engaged Prudential Investments Fund Management LLC (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 $87,411,335 and $87,216,706,
respectively, for the period ended April 30, 1999. There were no purchases or
sales of U.S. government and government agency obligations for the period ended
April 30, 1999. At April 30, 1999 the cost of the investments for Federal income
tax purposes was $220,643,703. Accordingly, gross unrealized appreciation was
$10,122,581 and gross unrealized depreciation was $199,599 resulting in net
unrealized appreciation of $9,922,982.
- --------------------------------------------------------------------------------
NOTE D: Taxes
For Federal income tax purposes at October 31, 1998, the Fund had a capital loss
carry forward of $13,898,478; of which $2,800,707 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
10,789,383 shares outstanding at April 30, 1999, the Adviser owned 7,200 shares.
During the period ended April 30, 1999, and the year ended October 31, 1998, the
Fund issued 37,895 and 81,621 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 3.60% and is
effective through May 5, 1999 The dividend rate on Series B is 3.50% and is
effective through May 3, 1999. The dividend rate on Series C is 3.50% and is
effective through May 6, 1999.
- --------------------------------------------------------------------------------
NOTE F: Year 2000
Many computer systems and applications in use today process transactions using
two-digit date fields for the year of the transaction, rather than the full four
digits. If these systems are not modified or replaced, transactions occurring
after 1999 could be processed as year "1900," which could result in processing
inaccuracies and computer system failures at or after the Year 2000. This is
commonly known as the Year 2000 problem. The Fund and its major service
providers, including Alliance, utilize a number of computer systems and
applications that have been either developed internally or licensed from third
party suppliers. In addition, the Fund and its major service providers,
including Alliance, are dependent on third party suppliers for certain systems
applications and for electronic receipt of information. Should any of computer
systems employed by the Fund or its major service providers fail to process year
2000 related information properly, that could have a significant negative impact
on the Fund's operations and the services that are provided to the Fund's
stockholders. To the extent that the operations of issuers of securities held by
the Fund are impaired by the Year 2000 problem, or prices of securities held by
the Fund decline
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10
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<PAGE>
ACM Municipal Securities Income Fund
================================================================================
as a result of real or perceived problems relating to the Year 2000, the value
of the Fund's shares may be materially affected. In addition, for the Fund's
investments in foreign markets, it is possible that foreign companies and
markets will not be as prepared for Year 2000 as domestic companies and markets.
The Year 2000 issue is a high priority for the Fund and Alliance. The Fund has
been advised that, during 1997, Alliance began a formal Year 2000 initiative
which established a structured and coordinated process to deal with the Year
2000 issue. As part of its initiative, Alliance established a Year 2000 project
office to manage the Year 2000 initiative, focusing on both information
technology and non-information technology systems. Alliance has also retained
the services of a number of consulting firms which have expertise in advising
and assisting with regard to Year 2000 issues. Alliance reports that by June 30,
1998 it had completed its inventory and assessment of its domestic and
international computer systems and applications, identified mission critical
systems and non-mission critical systems and determined which of these systems
are not Year 2000 compliant. All third party suppliers of mission critical
computer systems and applications have been contacted to verify whether their
systems and applications will be Year 2000 compliant and their responses are
being evaluated. Substantially all of those contacted have responded and
approximately 90% have informed Alliance that their systems and applications are
or will be Year 2000 compliant. Alliance will seek alternative solutions or
third party suppliers for all suppliers who do not furnish a satisfactory
response by June 30, 1999. The same process is being performed for non-mission
critical systems with estimated completion by June 30, 1999. Alliance had
remediated, replaced or retired all of its non-compliant mission critical
systems and applications which can impact the Fund. The same process is being
performed for non-mission critical systems and is estimated to be completed by
June 30, 1999. After each system has been remediated, it is tested with 1900
dates to determine if it still performs its intended business function
correctly. Next, each system undergoes a simulation test using dates occurring
after December 31, 1999. Inclusive of the replacement and retirement of some of
its systems, Alliance has completed these testing phases for approximately 98%
of mission critical systems and approximately 89% of nonmission critical
systems. Integrated systems tests will then be conducted to verify that the
systems will continue to work together. Full integration testing of all mission
critical and nonmission critical systems is estimated to be completed by June
30, 1999. Testing of interfaces with third-party suppliers has begun and will
continue throughout 1999. Alliance reports that it has completed an inventory of
its facilities and related technology applications and has begun to evaluate and
test these systems. Alliance reports that it anticipates that these systems will
be fully operable in the year 2000. Alliance, with the assistance of a
consulting firm, is developing Year 2000 specific contingency plans with
emphasis on mission critical functions. These plans seek to provide alternative
methods of processing in the event of a failure that is outside Alliance's
control. The estimated date for the completion of these plans is June 30, 1999.
There are many risks associated with Year 2000 issues, including the risks that
the computer systems and applications used by the Fund and its major service
providers, including Alliance, will not operate as intended and that the systems
and applications of third party providers to the Fund and its service providers
will not be Year 2000 compliant. Likewise there can be no assurance the
compliance schedules outlined above will be met or that the actual cost incurred
will not exceed current cost estimates. Should the significant computer systems
and applications used by the Fund and its major service providers or the systems
of its important third party suppliers be unable to process date sensitive
information accurately after 1999, the Fund and Alliance or its other service
providers may be unable to conduct its normal business operations and to provide
shareholders with the required services. In addition, the Fund and its service
providers may incur unanticipated expenses, regulatory actions and legal
liabilities. The Fund and Alliance cannot determine which risks, if any, are
most reasonably likely to occur or the effects of any particular failure to be
Year 2000 compliant.
---
11
---
<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 Year Ended October 31,
April 30, 1999 ----------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $13.49 $13.46 $12.74 $12.59 $11.57 $14.66
------ ------ ------ ------ ------ ------
Income From Investment Operations
Net investment income ........................... .56 1.16 1.20 1.18 1.17 1.21
Net realized and unrealized gain (loss)
on investment transactions .................... (.12) .04 .72 .22 1.11 (2.96)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset value
from operations ............................... .44 1.20 1.92 1.40 2.28 (1.75)
------ ------ ------ ------ ------ ------
Less: Dividends And Distributions
Dividends from net investment income:
Paid to Common Stock shareholders ............. (.43) (.86) (.89) (.85) (.90) (.90)
Common Stock equivalent of dividends
paid to Preferred Stock shareholders ........ (.13) (.29) (.31) (.33) (.36) (.31)
Distributions in excess of net investment income:
Paid to Common Stock shareholders ............. -0- (.02) -0- (.05) -0- -0-
Common Stock equivalent of distributions
paid to Preferred Stock shareholders .......... -0- -0- -0- (.02) -0- -0-
Distributions from realized capital gains:
Paid to Common Stock shareholders ............. -0- -0- -0- -0- -0- (.11)
Common Stock equivalent of distributions
paid to Preferred Stock shareholders ........ -0- -0- -0- -0- -0- (.02)
------ ------ ------ ------ ------ ------
Total dividends and distributions ............... (.56) (1.17) (1.20) (1.25) (1.26) (1.34)
------ ------ ------ ------ ------ ------
Net asset value, end of period .................. $13.37 $13.49 $13.46 $12.74 $12.59 $11.57
====== ====== ====== ====== ====== ======
Market value, end of period ..................... $13.69 $14.06 $14.12 $12.38 $12.00 $10.25
====== ====== ====== ====== ====== ======
Total Investment Return
Total investment return based on: (a)
Market value .................................. .53% 6.19% 22.34% 10.82% 26.65% (21.99)%
Net asset value ............................... 2.37% 6.89% 13.24% 8.74% 17.71% (14.41)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) .........$234,253 $234,995 $233,641 $224,888 $222,488 $211,597
Ratio of expenses to average net assets (b) ..... .94%(c) .89% .94% .93% .84% .77%
Ratio of net investment income to
average net assets (b) ........................ 5.17%(c) 5.30% 5.64% 5.64% 5.77% 5.58%
Portfolio turnover rate ......................... 38% 60% 90% 178% 222% 116%
</TABLE>
- --------------------------------------------------------------------------------
(a) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of the year 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 the period. Total investment return calculated
for a period of less than one year is not annualized.
(b) The expense ratio and net investment income ratio do not reflect the
effect of dividend and distribution payments to Preferred Stock
shareholders.
(c) Annualized.
- ---
12
- ---
<PAGE>
ADDITIONAL INFORMATION ACM Municipal Securities Income Fund
================================================================================
Supplemental Proxy Information
The annual Meeting of Shareholders of the ACM Municipal Securities Income Fund,
Inc. was held on Tuesday, March 9, 1999. The description of each proposal and
number of shares voted at the meeting are as follows:
Abstain/Authority
Voted For Withheld
- --------------------------------------------------------------------------------
1. To elect directors: Class Two Nominees
(term expires in 2002)
David H. Dievler 9,927,290 103,311
William H. Foulk, Jr. 9,927,885 102,716
Dr. James M. Hester 9,926,760 103,841
Abstain/Authority
Voted For Voted Against Withheld
- --------------------------------------------------------------------------------
2. To ratify the selection of Ernst
& Young LLP as the Fund's
independent auditors for the
Fund's fiscal year ending
October 31, 1999: 9,893,682 35,016 101,904
---
13
---
<PAGE>
ACM Municipal Securities Income Fund
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block (1)
David H. Dievler (1)
John H. Dobkin (1)
William H. Foulk, Jr. (1)
Dr. James M. Hester (1)
Clifford L. Michel (1)
Donald J. Robinson (1)
Robert C. White (1)
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
Juan J. Rodriquez, 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 Whitehall 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.
(1) Members of Audit Committee
- ---
14
- ---
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ACM
-------------------------------------
MUNICIPAL
-------------------------------------
SECURITIES
-------------------------------------
INCOME FUND
-------------------------------------
Semi-Annual
Report
April 30, 1999
Alliance(R)
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 provide high current income exempt from regular federal
income tax. The Fund invests substantially all of its assets in investment grade
municipal 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."
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains in additional Fund shares.
For questions concerning shareholder account information, or if you would like a
brochure describing the Dividend Reinvestment Plan, please call State Street
Bank and Trust Company at 1-800-219-4218.
ACM 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.
MSIAR
