UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05207
ACM INCOME FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: December 31, 2004
Date of reporting period: December 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
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Closed End
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ACM Income Fund
Annual Report -- December 31, 2004
Investment Products Offered
---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
---------------------------
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investment Research and Management, Inc. is an affiliate of
Alliance Capital Management L.P., the manager of the funds, and is a member of
the NASD.
February 23, 2005
Annual Report
This report provides management's discussion of fund performance for ACM Income
Fund (the "Fund") for the annual reporting period ended December 31, 2004. The
Fund is a closed-end fund that trades under the New York Stock Exchange symbol
"ACG".
Investment Objectives and Policies
This closed-end fund is designed to provide high current income consistent with
the preservation of capital. The Fund invests principally in U.S. government
obligations. The Fund may also invest a portion of its assets in other
fixed-income securities, including those issued by foreign governments.
Additionally, the Fund may utilize other investment instruments, including
options and futures, and employs leverage. For more information regarding the
Fund's risks, please see "A Word About Risk" on page 4 and "Note G--Risks
Involved in Investing in the Fund" of the Notes to Financial Statements on page
34.
Investment Results
The table on page 6 provides performance data for the Fund and its benchmark,
the Lehman Brothers (LB) U.S. Aggregate Index, for the six- and 12-month
periods ended December 31, 2004.
For both the six- and 12-month periods ended December 31, 2004, the Fund
outperformed its benchmark. The Fund's emerging market debt and high yield
holdings significantly outperformed the components of the benchmark, which is
comprised solely of U.S. investment-grade holdings.
During 2004, lower-rated fixed-income market sectors outperformed the
higher-rated traditional sectors as economic conditions generally improved.
Additionally, the relatively lower interest rate environment was favorable for
lower-rated debt. The Fund's ability to leverage during a year of strong
individual sector returns also contributed positively to returns, allowing the
Fund to further enhance its relative outperformance.
Within the emerging market sector, the Fund's overall individual country
weighting decisions for the year contributed positively to the Fund's
performance. The returns of most emerging market countries exceeded those of
the Fund's benchmark. The Fund's security selection, however, was defensive
relative to U.S. interest rates, modestly dampening the emerging market
sector's relative outperformance. The Fund's duration was shortened during the
spring and summer of 2004, as interest rates were expected to rise. However, a
mid-year slowdown in the U.S. enabled a measured tightening pace by the U.S.
Federal Reserve and kept interest rates relatively low, providing a continued
favorable environment for emerging market debt.
Within the Fund's high yield allocation, positive security selection within the
cable/media and health care sectors positively impacted performance during the
annual reporting period. The Fund's performance also benefited from its
underweighted positions in the
_______________________________________________________________________________
ACM INCOME FUND o 1
technology, auto and retail sectors, which underperformed relative to other
high yield sectors. Almost all high yield sectors outperformed the Fund's
benchmark during the 12-month period ended December 31, 2004.
Market Review and Investment Strategy
The U.S. Treasury market, as measured by the LB Treasury Index, posted a very
modest return of 3.54% for the year as Treasury prices reflected mixed economic
news throughout the reporting period. In April 2004, the Treasury market sold
off sharply in response to strong payroll employment data. Subsequently, the
Treasury market rebounded somewhat as the U.S. economy experienced a mid-year
economic slowdown. Although short-term U.S. interest rates followed the U.S.
Federal Reserve and moved higher, longer-term rates failed to increase as
expected. Instead, the yield on the 10-year Treasury ended the year roughly
where it began and longer-maturity yields ended about 25 basis points lower,
resulting in a significantly flatter yield curve. The yield spread between two-
and 30-year Treasuries narrowed more than 150 basis points during the year.
One of the strongest performing sectors in 2004 was emerging-market debt, which
posted a return of 11.73%, according to the J.P. Morgan Emerging Markets Bond
Index (EMBI) Global Index. This sector enjoyed a favorable low interest rate
environment, strong global liquidity and improving individual country
fundamentals, which encouraged investor risk-taking and strengthened local
currencies. Strong currencies have provided opportunities for these countries'
central banks to accumulate reserves, which in turn has improved their debt
sustainability.
High yield also posted very strong performance for the year, returning 11.96%
according to the Credit Suisse First Boston (CSFB) High Yield Index. After a
volatile first half of the year in which investors worried about the speed of
imminent U.S. Federal Reserve tightening, official rate hikes commenced at a
measured pace and market volatility subsided. The result was an inflow of funds
into the asset class from yield-seeking investors. The average high-yield
spread over Treasuries tightened over 100 basis points during the year to its
tightest level since April 1998, with all major industry sectors recording
gains in 2004.
During the reporting period, the Fund maintained allocations to its core
emerging market countries (Brazil, Russia, Colombia, Mexico, Ecuador, Turkey
and Venezuela); however, the Fund's emerging market interest rate duration
exposure was reduced later in the reporting period as global liquidity
tightened and interest rates were poised to move higher.
The Fund generally maintained an overweighted position in Russian debt early in
the period as credit statistics continued to improve and Russia benefited from
higher oil prices. In July 2004, however, the Fund's Russian holdings were
reduced as positive economic fundamentals were offset by ad-
_______________________________________________________________________________
2 o ACM INCOME FUND
ministrative paralysis and the Yukos affair. Russia's Justice Ministry had
seized the assets of Yukos, the country's largest oil producer, and was
preparing to sell its main oil-producing unit in Siberia to recover payment of
back taxes. Additionally, the Fund's spread exposure in Brazil was reduced as
valuations became rich. The Fund's position in the Ukraine was increased due to
strong economic growth and prospects for rating upgrades.
Within the Fund's high yield allocation, the lower-spread tiers have been
underweighted given expectations for rising rates in 2005. The lower spread
tiers offer not only a smaller yield cushion but tend to be more sensitive to
changes in interest rates. The Fund's portfolio management team (the "team") is
taking a more concentrated position in its best ideas in the higher-spread
tiers, where its research indicates that the Fund is being adequately
compensated for taking increased risk and where securities tend to be less
interest-rate sensitive. With historically tight spread levels and a lack of
dispersion across most industries, individual security selection is critical.
Therefore, the team has been focused on identifying the best security-specific
total-return opportunities, and taking larger positions in our analysts' best
ideas.
In Memory
It is with sadness that we announce the passing of Clifford L. Michel, a member
of the Board of Directors of ACM Income Fund. Mr. Michel served the interests
of the Fund's shareholders for the last 18 years. His hard work, dedication and
contributions to the Fund will be greatly missed.
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ACM INCOME FUND o 3
Historical Performance
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HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance on page 6 represents past performance and does not guarantee
future results. Current performance may be lower or higher than the performance
information shown. Returns are annualized for periods longer than one year. All
fees and expenses related to the operation of the Fund have been deducted.
Performance assumes reinvestment of distributions and does not account for
taxes.
ACM Income Fund Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 426-5523. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper Inc., Morningstar, Inc. and Bloomberg. Daily market prices for
the Fund's shares are published in the New York Stock Exchange Composite
Transaction section of The Wall Street Journal under the abbreviation "ACM
IncFd." The Fund's NYSE trading symbol is "ACG." Weekly comparative net asset
value (NAV) and market price information about the Fund is published each
Monday in The Wall Street Journal and each Sunday in The New York Times and
other newspapers in a table called "Closed-End Bond Funds." For additional
shareholder information regarding this Fund, please see page 50.
Benchmark Disclosure
The unmanaged Lehman Brothers (LB) U.S. Aggregate Index does not reflect fees
and expenses associated with the active management of a mutual fund portfolio.
The Index covers the U.S. investment-grade fixed-rate bond market, including
government and credit securities, agency mortgage passthrough securities,
asset-backed securities and commercial mortgage-backed securities. An investor
cannot invest directly in an index, and its results are not indicative of the
performance for any specific investment, including the Fund.
A Word About Risk
The Fund may utilize additional leverage through the investment techniques of
reverse repurchase agreements and dollar rolls. Repurchase agreements involve
sales by the Fund of portfolio assets concurrently with an agreement by the
Fund to repurchase the same assets at a later date at a fixed price. Generally,
the effect of such a transaction is that the Fund can recover all or most of
the cash invested in the portfolio securities involved during the term of the
reverse repurchase agreement, while it will be able to keep the interest income
associated with those portfolio securities. Such transactions are only
advantageous if the interest cost to the Fund of the reverse repurchase
agreement transaction is less than the cost of otherwise obtaining the cash.
The Fund may enter into dollar rolls in which the Fund sells securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type and coupon) securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
the securities. The Fund is compensated by the difference between the current
sales price and the lower forward price for the future purchase (often referred
to as the "drop") as well as by the interest earned on the cash proceeds of the
initial sale.
Reverse repurchase agreements and dollar rolls are speculative techniques and
are considered borrowings by the Fund. The effect of leverage can realize
shareholders higher returns than if the Fund were not leveraged, and the use of
leverage techniques can add to net asset value (NAV). However, the risks of
such techniques are potentially a higher volatility of the NAV of the Common
Stock, potentially more volatility in the market value of the Common Stock and
the relatively greater effect on the NAV of the Common Stock caused by
favorable or adverse changes in the currency exchange rates. In addition,
changes in the interest rate environment can increase or decrease shareholder
returns. This additional leverage will not exceed 33% of the Fund's total
assets, less liabilities.
(Historical Performance continued on next page)
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4 o ACM INCOME FUND
Historical Performance
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HISTORICAL PERFORMANCE
(continued from previous page)
To the extent that the current interest rate on the Fund's indebtedness
approaches the net return on the leveraged portion of the Fund's investment
portfolio, then the benefit to the shareholders will be reduced. If the rate on
indebtedness were to exceed the net return on the same portion of the
portfolio, then this would result in a lower rate of return for the
shareholders. Similarly, the use of leverage in a declining market can advance
the decrease of the Fund's NAV more so than if the Fund were not leveraged,
which would likely be reflected in a greater decline in the market price for
shares of Common Stock than if the Fund were not leveraged. In extreme cases,
if the Fund's current investment income were not sufficient to meet interest
payments on indebtedness or if the Fund failed to maintain the asset coverage
required by the 1940 Act, then it could be necessary for the Fund to liquidate
certain investments at a time when it may be disadvantageous to do so, thereby
reducing its NAV. The Fund can also invest in foreign securities, including
emerging markets, which may magnify these fluctuations due to changes in
foreign exchange rates and the possibility of substantial volatility due to
political and economic uncertainties in foreign countries.
(Historical Performance continued on next page)
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ACM INCOME FUND o 5
Historical Performance
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HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARK -------------------------
PERIODS ENDED DECEMBER 31, 2004 6 Months 12 Months
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ACM Income Fund (NAV) 9.83% 8.44%
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LB U.S. Aggregate Index 4.18% 4.34%
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The Fund's Market Price per share on December 31, 2004 was $8.16. For
additional Financial Highlights, please see page 39.
GROWTH OF A $10,000 INVESTMENT IN THE FUND
12/31/94 TO 12/31/04
ACM Income Fund (NAV): $28,040
LB U.S. Aggregate Index: $21,036
[THE FOLLOWING TABLE WAS DEPICTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
ACM Income Fund (NAV) LB U.S. Aggregate Index
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12/31/94 $ 10,000 $ 10,000
12/31/95 $ 12,874 $ 11,847
12/31/96 $ 14,987 $ 12,277
12/31/97 $ 17,221 $ 13,462
12/31/98 $ 15,778 $ 14,632
12/31/99 $ 15,221 $ 14,512
12/31/00 $ 18,815 $ 16,199
12/31/01 $ 19,402 $ 17,567
12/31/02 $ 21,976 $ 19,367
12/31/03 $ 25,857 $ 20,161
12/31/04 $ 28,040 $ 21,036
This chart illustrates the total value of an assumed $10,000 investment in ACM
Income Fund at net asset value (NAV) (from 12/31/94 to 12/31/04) as compared to
the performance of the Fund's benchmark. The chart assumes the reinvestment of
dividends and capital gains.
See Historical Performance and Benchmark disclosures on pages 4-5.
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6 o ACM INCOME FUND
Portfolio Summary
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PORTFOLIO SUMMARY
December 31, 2004
PORTFOLIO STATISTICS
Net Assets ($mil): $1,888.3
SECURITY TYPE BREAKDOWN*
64.3% U.S. Government and Government
Sponsored Agency Obligations
20.1% Sovereign Debt Obligations
7.7% Corporate Debt Obligations [PIE CHART OMITTED]
3.0% Bank Loans
0.1% Preferred Stock
4.8% Short-Term
* All data are as of December 31, 2004. The Fund's security type breakdown is
expressed as a percentage of total investments (excluding security lending
collateral) and may vary over time.
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ACM INCOME FUND o 7
Portfolio of Investments
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PORTFOLIO OF INVESTMENTS
December 31, 2004
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT
SPONSORED AGENCY OBLIGATIONS-97.0%
U.S. Treasury Bonds-39.2%
5.375%, 2/15/31(a) U.S.$ 1,854 $ 2,004,782
6.25%, 5/15/30(a)(b) 62,230 74,401,317
11.25%, 2/15/15(a) 160,000 251,506,240
12.00%, 8/15/13(a) 82,000 105,683,896
12.50%, 8/15/14(a) 70,300 96,725,629
13.25%, 5/15/14(a) 150,000 208,429,650
--------------
738,751,514
--------------
U.S. Treasury Notes-20.3%
2.00%, 7/15/14 TIPS(a)(b) 15,189 15,670,470
2.375%, 8/15/06(b) 34,000 33,677,272
2.625%, 5/15/08(a)(b) 24,615 24,065,002
2.75%, 6/30/06(b) 40,000 39,892,200
3.00%, 2/15/09(b) 35,000 34,356,070
3.25%, 8/15/08(b) 50,000 49,767,600
3.50%,11/15/06(b) 110,000 110,928,180
3.50%,11/15/09(a) 154 153,278
3.875%, 2/15/13(a) 3,030 2,989,522
4.00%, 11/15/12(a) 4,664 4,656,164
4.25%, 11/15/13-8/15/14(a) 4,895 4,932,613
4.375%, 8/15/12(a) 700 716,707
4.75%, 5/15/14(b) 58,900 61,380,220
4.875%, 2/15/12(a) 250 264,238
--------------
383,449,536
--------------
U.S. Treasury Strips-14.2%
Zero coupon, 5/15/17(a) 260,000 145,845,440
Zero coupon, 11/15/21(a) 285,350 122,637,723
--------------
268,483,163
--------------
Federal National Mortgage
Association-16.8%
4.00%, 1/25/27(c) 10,605 10,591,744
4.50%, 4/25/13 I/O(c) 16,995 1,720,744
4.60%, 12/01/34(c) 37,170 37,522,959
5.00%, 4/25/13 I/O(c) 11,866 749,121
5.00%, 9/25/23-12/25/26(c) 40,597 40,866,928
5.50%, TBA 92,085 93,466,275
5.50%, 6/25/31(c) 7,316 7,444,261
6.00%, 5/25/30(c) 9,885 10,052,885
6.50%, TBA 40,090 42,031,879
6.50%, 9/25/42-1/25/44(a) 11,280 11,857,160
7.00%, 11/01/17(a) 58,236 61,741,919
--------------
318,045,875
--------------
Resolution Funding Corp.-3.5%
Zero coupon, 10/15/20 150,000 66,806,400
--------------
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8 o ACM INCOME FUND
Portfolio of Investments
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Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Federal Home Loan Mortgage
Corporation-2.6%
5.00%, 6/15/14(a) U.S.$ 6,268 $ 6,304,093
5.00%, 1/15/17-7/15/26 I/O(c) 32,973 3,416,209
5.00%, 11/15/26-2/15/30(c) 18,609 18,755,070
5.50%, 7/15/17(c) 15,680 16,257,635
6.50%, 3/15/28(a) 4,798 5,013,121
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49,746,128
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Government National Mortgage
Association-0.4%
7.00%, 12/15/26(a) 6,314 6,747,025
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Total U.S. Government and Government
Sponsored Agency Obligations
(cost $1,766,572,653) 1,832,029,641
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SOVEREIGN DEBT OBLIGATIONS-30.3%
Argentina-0.9%
Republic of Argentina
1.98%, 8/03/12 FRN(c) 5,151 4,378,350
11.375%, 3/15/10(d) 1,330 445,550
11.75%, 6/15/15(d) 3,675 1,203,563
12.00%, 6/19/31(d) 7,563 2,458,007
12.25%, 6/19/18(d) 13,182 4,336,808
15.50%, 12/19/08(d) 12,737 4,190,473
--------------
17,012,751
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Brazil-5.3%
Brazilian Real Structured Note
Zero coupon, 9/20/07(e) BRL 120,551 29,443,177
Republic of Brazil
9.25%, 10/22/10(c) U.S.$ 2,125 2,377,875
10.50%, 7/14/14(c) 2,577 3,057,610
11.00%, 8/17/40(b) 14,933 17,718,004
12.00%, 4/15/10(c) 13,100 16,204,700
12.75%, 1/15/20(c) 2,380 3,220,140
C-Bonds
8.00%, 4/15/14(b) 24,032 24,603,741
DCB FRN
3.125%, 4/15/12(c) 3,504 3,339,680
--------------
99,964,927
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Bulgaria-0.0%
Republic of Bulgaria
8.25%, 1/15/15(e) 528 660,000
--------------
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ACM INCOME FUND o 9
Portfolio of Investments
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Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Colombia-1.4%
Republic of Colombia
8.25%, 12/22/14(c) U.S.$ 397 $ 413,873
10.75%, 1/15/13(c) 1,239 1,479,366
11.75%, 2/25/20(c) 13,780 17,693,520
11.75%, 3/01/10(c) COP 14,075,780 6,127,206
--------------
25,713,965
--------------
Ecuador-1.0%
Republic of Ecuador
Zero coupon, 10/11/05(e) U.S.$ 6,438 6,152,668
8.00%, 8/15/30(e)(f) 14,179 12,250,656
--------------
18,403,324
--------------
El Salvador-0.0%
Republic of El Salvador
7.625%, 9/21/34(e) 527 542,810
--------------
Indonesia-0.1%
Republic of Indonesia
6.75%, 3/10/14(e) 965 967,412
--------------
Jamaica-0.0%
Government of Jamaica
11.75%, 5/15/11(e) 50 59,000
12.75%, 9/01/07(e) 200 236,000
--------------
295,000
--------------
Mexico-3.6%
Mexican Bonos
8.00%, 12/07/23(c) MXP 241,502 17,472,289
9.50%, 3/08/07(c) 328,855 30,468,749
United Mexican States
6.375%, 1/16/13(c) U.S.$ 426 452,625
7.50%, 1/14/12(c) 775 878,850
8.00%, 9/24/22(c) 3,901 4,495,903
8.125%, 12/30/19(c) 4,025 4,739,438
9.875%, 2/01/10(c) 6,730 8,274,535
11.375%, 9/15/16(c) 1,201 1,768,473
--------------
68,550,862
--------------
Panama-0.3%
Republic of Panama
2.75%, 7/17/14 VRN(c) 2,117 2,074,638
8.875%, 9/30/27(c) 675 745,200
9.375%, 7/23/12-4/01/29(c) 904 1,069,550
9.625%, 2/08/11(c) 480 565,200
10.75%, 5/15/20(c) 730 949,000
--------------
5,403,588
--------------
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10 o ACM INCOME FUND
Portfolio of Investments
-------------------------------------------------------------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Peru-0.5%
Republic of Peru
8.375%, 5/03/16(c) U.S.$ 4,013 $ 4,494,560
8.75%, 11/21/33(c) 640 697,600
9.125%, 2/21/12(c) 1,892 2,199,450
9.875%, 2/06/15(c) 1,156 1,427,660
--------------
8,819,270
--------------
Philippines-0.4%
Republic of Philippines
9.00%, 2/15/13(c) 450 459,000
9.875%, 1/15/19(c) 750 768,750
10.625%, 3/16/25(c) 6,342 6,770,085
--------------
7,997,835
--------------
Russia-7.4%
Russian Federation
5.00%, 3/31/30(e)(f) 126,309 130,256,157
Russian Ministry of Finance
3.00%, 5/14/08-5/14/11(c) 11,600 10,554,394
--------------
140,810,551
--------------
Turkey-6.7%
Republic of Turkey
11.00%, 1/14/13(c) 1,860 2,366,850
11.50%, 1/23/12(c) 2,147 2,760,935
11.75%, 6/15/10(c) 475 596,125
12.375%, 6/15/09(c) 475 596,125
Turkish Lira Structured Notes
Zero coupon, 8/25/05(e) TRL 71,284,104,123 47,020,500
Zero coupon, 12/8/05(e) 63,936,550,000 40,110,478
Zero coupon, 2/23/06(e) 55,243,366,523 33,253,325
--------------
126,704,338
--------------
Ukraine-0.8%
Government of Ukraine
6.875%, 3/04/11(e) U.S.$ 5,825 5,976,743
7.65%, 6/11/13(e) 6,922 7,361,339
11.00%, 3/15/07(e) 1,290 1,380,309
--------------
14,718,391
--------------
Uruguay-0.3%
Republic of Uruguay
7.25%, 2/15/11(c) 1,044 926,938
7.50%, 3/15/15(c) 4,360 4,261,900
7.875%, 1/15/33 PIK(c) 500 495,000
--------------
5,683,838
--------------
_______________________________________________________________________________
ACM INCOME FUND o 11
Portfolio of Investments
-------------------------------------------------------------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Venezuela-1.6%
Republic of Venezuela
3.09%, 4/20/11 FRN(e) U.S.$ 4,250 $ 3,856,875
5.375%, 8/07/10(e) 2,680 2,516,520
8.50%, 10/8/14(c) 1,005 1,065,300
9.25%, 9/15/27(c) 21,451 22,630,805
--------------
30,069,500
--------------
Total Sovereign Debt Obligations
(cost $465,995,556) 572,318,362
--------------
CORPORATE DEBT OBLIGATIONS-11.6%
Australia-0.0%
WMC Finance USA
5.125%, 5/15/13(c) 500 498,556
--------------
Bermuda-0.2%
NCL Corp. LTD
10.625%, 7/15/14(e) 4,845 4,845,000
--------------
Canada-0.5%
Fairfax Financial Holdings Ltd.
7.375%, 4/15/18(c)* 4,500 4,275,000
8.30%, 4/15/26(c)* 5,000 4,887,500
Rogers Cable Inc.
5.50%, 3/15/14(c) 360 339,300
--------------
9,501,800
--------------
Indonesia-0.0%
Freeport-McMoran Copper &
Gold, Inc.
10.125%, 2/01/10(c) 500 571,250
--------------
Japan-0.1%
Mizuho Finance
5.79%, 4/15/14(e) 100 105,040
8.375%, 12/29/49(c) 2,295 2,515,091
--------------
2,620,131
--------------
Kazakhstan-0.2%
Hurricane Finance BV
9.625%, 2/12/10(e) 200 220,220
Kazkommerts International BV
8.50%, 4/16/13(e) 125 130,625
Tengizchevroil Fin Co
6.124%, 11/15/14(e) 2,852 2,859,130
--------------
3,209,975
--------------
_______________________________________________________________________________
12 o ACM INCOME FUND
Portfolio of Investments
-------------------------------------------------------------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Mexico-0.1%
Pemex Project
9.125%, 10/13/10(c) U.S.$ 500 $ 599,500
Vitro Envases
10.75%, 7/23/11(e) 700 726,250
--------------
1,325,750
--------------
Romania-0.3%
Mobifon Holdings BV
12.50%, 7/31/10(c) 5,205 6,174,431
--------------
Russia-0.1%
Gazprom OAO
9.625%, 3/01/13(e) 370 437,512
Mobile Telesystems Finance S.A.
9.75%, 1/30/08(e) 1,185 1,250,175
Tyumen Oil Co.
11.00%, 11/06/07(e) 90 102,200
--------------
1,789,887
--------------
Ukraine-0.0%
Kyivstar
10.375%, 8/17/09(e) 200 220,000
--------------
United Kingdom-0.4%
Barclays Bank
8.55%, 9/29/49(e) 638 776,881
British Telecommunications PLC
7.125%, 2/15/11(c)(f) EUR 1,500 2,401,252
Inmarsat Finance PLC
10.375%, 11/15/12(e)(g) U.S.$ 7,475 5,382,000
WPP Finance
5.875%, 6/15/14(e) 180 187,333
--------------
8,747,466
--------------
United States-9.5%
Amerada Hess Corp.
7.125%, 3/15/33(c) 500 549,781
American Cellular Corp.
10.00%, 8/01/11(c) 5,000 4,287,500
Amkor Technologies Inc.
7.75%, 5/15/13(c)* 10,000 9,400,000
Amtrol Inc.
10.625%, 12/31/06(c) 625 562,500
Associated Materials Inc.
11.25%, 3/01/14(c)(f) 12,545 9,032,400
Berkley W R Corp
6.15%, 8/15/19(c) 100 100,512
Berry Plastics Corp.
10.75%, 7/15/12(c) 3,820 4,373,900
Calpine Corp.
8.50%, 7/15/10(e)* 6,700 5,745,250
_______________________________________________________________________________
ACM INCOME FUND o 13
Portfolio of Investments
-------------------------------------------------------------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Capital One Financial Corp.
6.25%, 11/15/13(c) U.S.$ 1,005 $ 1,080,564
Charter Communications Holdings
10.75%, 10/01/09(c) 4,655 4,236,050
11.75%, 5/15/11(c)(g)* 10,000 7,350,000
Clear Channel Communications, Inc.
5.75%, 1/15/13(c) 220 227,316
Columbia/HCA HealthCare Corp.
6.25%, 2/15/13(c) 175 176,534
6.30%, 10/01/12(c) 100 101,420
7.58%, 9/15/25(c) 630 633,173
7.69%, 6/15/25(c) 355 363,847
Comerica Bank
8.375%, 7/15/24 2,000 2,488,126
Continental Airlines, Inc.
6.703%, 12/15/22(c) 1,816 1,765,758
6.748%, 3/15/17(c) 62 50,586
7.033%, 6/15/11(c) 460 378,481
Dex Media, Inc.
9.00%, 11/15/13(c)(g) 7,000 5,486,250
Dominion Resources Capital Trust III
8.40%, 1/15/31(c) 500 627,868
Duke Capital Corp.
5.50%, 3/01/14(c) 500 510,844
6.25%, 2/15/13(c) 1,500 1,621,171
Farmers Exchange Capital
7.05%, 7/15/28(e) 200 204,857
First Energy Corp.
7.375%, 11/15/31(c) 849 969,544
Ford Motor Co.
6.375%, 2/01/29(c) 473 425,670
7.45%, 7/16/31(c) 653 656,747
General Motors Corp.
8.375%, 7/15/33(c) 1,399 1,449,480
Hilcorp Energy I LP
10.50%, 9/01/10(e) 4,250 4,802,500
HSBC Bank USA
4.625%, 4/01/14(c) 1,000 980,618
Huntsman ICI Chemicals LLC
10.125%, 7/01/09(c) 6,052 6,369,730
Huntsman LLC
11.50%, 7/15/12(e) 5,000 5,912,500
Insight Communications Inc.
12.25%, 2/15/11(c)(g)* 7,000 6,807,500
International Lease Finance Corp.
3.50%, 4/01/09(c) 496 482,967
Ipalco Enterprises Inc.
8.375%,11/14/08(c) 100 112,500
J.P. Morgan Chase & Co.
5.125%, 9/15/14(c) 250 251,640
6.625%, 3/15/12 1,400 1,567,044
_______________________________________________________________________________
14 o ACM INCOME FUND
Portfolio of Investments
-------------------------------------------------------------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
K Hovnanian Enterprises
6.25%, 1/15/15(e) U.S.$ 43 $ 42,248
Liberty Mutual Group Inc.
5.750%, 3/15/14(e) 170 167,131
Merrill Lynch & Co.
6.00%, 2/17/09(c) 100 107,328
Milacron Escrow Corp
11.50%, 5/15/11(c) 5,000 5,300,000
Panamsat Holding Corp.
10.375%, 11/01/14(e)(g)* 8,405 5,778,438
Paxson Communications Corp.
12.25%, 1/15/09(c)(g) 10,000 9,350,000
Pliant Corp.
13.00%, 6/01/10(c)* 7,625 7,419,175
Quality Distribution LLC
9.00%, 11/15/10(e) 1,775 1,770,563
Qwest Services Corp.
14.50%, 12/15/14(e) 11,907 15,062,355
Rainbow National Services LLC
10.375%, 9/1/14(e)* 10,000 11,275,000
Rite Aid Corp.
11.25%, 7/01/08(c)* 5,220 5,663,700
Rural Cellular Corp.
9.75%, 1/15/10(c)* 10,000 9,050,000
SBC Communications Inc.
5.875%, 8/15/12(c) 123 132,502
Sprint Capital Corp.
8.75%, 3/15/32(c) 6,800 9,059,701
Time Warner Entertainment Co. LP
8.38%, 3/15/23(c) 145 181,788
Triton PCS Inc.
9.375%, 2/01/11(c)* 3,500 2,800,000
TXU Corp.
6.55%, 11/15/34(e) 150 148,548
Williams Cos Inc. Series A
7.50%, 1/15/31(c) 4,025 4,165,875
Zurich Capital Trust
8.376%, 6/01/37(e) 261 293,041
--------------
179,910,521
--------------
Total Corporate Debt Obligations
(cost $202,154,032) 219,414,767
--------------
BANK LOANS-4.6%
Advanced Medical Optics
4.28125-4.66%, 6/26/09 1,164 1,174,140
Advertising Directory Solution
6.15%, 4/1/12 1,000 1,019,000
Alderwoods Group Inc.
4.51-4.81%, 9/17/09 1,509 1,522,331
Allegheny Energy Supply
5.06-5.16%, 2/28/11 1,023 1,039,952
_______________________________________________________________________________
ACM INCOME FUND o 15
Portfolio of Investments
-------------------------------------------------------------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
American Safety Razor Co.
5.38-5.85%, 4/28/11 U.S.$ 2,820 $ 2,819,559
Boise Cascade
4.68750%, 10/26/11 1,301 1,315,468
Celanese AG
6.06%, 11/01/11 1,500 1,516,249
Cognis
7.2225%, 11/10/13 1,000 1,035,000
Coinstar Inc.
4.29-6.50%, 7/1/11 831 843,882
Consolidated Communictions
4.81-5.06%, 9/18/11 993 1,008,233
Freedom Communications Inc.
4.14-4.15%, 4/04/12 3,000 3,043,500
General Growth Properties
4.53%, 12/01/08 2,000 2,005,000
Graham Packaging
6.8125%, 3/04/12 1,000 1,024,500
Hagemeyer NV
5.00%, 1/15/08 EUR 2,744 3,621,398
Holmes Group Inc.
5.58-5.73%, 4/14/11 U.S.$ 995 999,975
Huntsman ICI Chemicals LLC
4.9375%, 12/31/10 1,914 1,933,101
Jarden Corp.
2.00%, 1/01/12 1,000 1,008,750
Key Automotive
5.36-5.41%, 6/01/10 1,922 1,947,503
Kranson Industries
5.31%, 7/31/11 995 1,002,462
Maax Corp.
4.79-5.1875%, 6/01/11 1,990 2,004,925
MGM Studios
5.06%, 4/30/11 2,993 2,998,485
Midwest Generation
5.2556-5.47%, 4/05/11 960 972,706
Motorsport Aftermarket Group
3.25%, 12/30/11 1,500 1,507,500
Mueller Group
4.880-5.15%, 3/24/11 2,780 2,804,140
Nextel Partners, Inc.
4.9375%, 5/18/11 4,000 4,053,572
Owens Illinois General Inc.
5.17%, 4/01/08 810 824,935
Panamsat Corp.
5.16%, 7/01/11 985 988,633
Prestige Brands
4.75-4.86%, 4/15/11 2,691 2,717,524
Rail America
4.375%, 9/29/11 2,000 2,028,334
_______________________________________________________________________________
16 o ACM INCOME FUND
Portfolio of Investments
-------------------------------------------------------------------------------
Shares or
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Rainbow National Services LLC
5.19%, 3/3/12 U.S.$ 3,000 $ 3,043,749
Regency Gas Services
2.75%, 5/15/10 1,000 1,017,500
Reliant Energy
4.795%, 12/22/10 1,000 1,011,667
Resolution Specialty
5.125%, 8/01/10 2,000 2,027,500
Riverside
6.38%, 6/22/11 1,671 1,696,270
Rocky Mountain Energy Center
6.38%, 6/22/11 1,328 1,348,730
Sealy Mattress
4.45-4.65%, 3/31/12 2,098 2,126,190
Semgroup
5.32-7.00%, 8/26/10 998 1,011,216
Simmons Company
3.875-6.75%, 12/19/11 2,500 2,529,168
Smurfit Stone Container
2.30%, 10/1/10 349 354,414
4.3125-4.6875%, 10/1/11 1,096 1,110,842
Texas Genco Holdings
4.48%, 12/14/11 2,000 2,025,968
United Industries Corp.
6.63-6.92%, 10/31/11 995 1,009,925
Universal City Development
2.00%, 6/9/11 1,000 1,015,000
Valor Communications
5.75-5.92%, 11/3/11 1,496 1,508,718
Venetian Resort
4.90%, 7/25/11 2,500 2,539,346
VWR International
4.58%, 4/05/11 2,204 2,239,476
Warner Music Group
4.97-5.38%, 3/22/11 3,471 3,514,653
Western Wireless Term B1
5.03-5.42%, 5/30/11 3,483 3,533,494
--------------
Total Bank Loans
(cost $84,157,393) 85,444,583
--------------
NON-CONVERTIBLE PREFERRED STOCKS-0.1%
Banco Santander
6.41%(c) 4,000 103,500
Duquesne Light Co.
6.50%(c) 14,950 789,734
Zurich Funding Trust
1.71%(e) 500 492,750
--------------
Total Non-Convertible
Preferred Stocks
(cost $1,335,000) 1,385,984
--------------
_______________________________________________________________________________
ACM INCOME FUND o 17
Portfolio of Investments
-------------------------------------------------------------------------------
Shares or
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
WARRANTS(h)-0.0%
Central Bank of Nigeria
Warrants, expiring 11/15/20 4,500 $ -0-
Republic of Venezuela
Warrants, expiring 4/15/20 1,785 -0-
--------------
Total Warrants
(cost $0) -0-
--------------
SHORT-TERM INVESTMENTS-7.2%
Repurchase Agreement-3.2%
Greenwich Capital Markets
2.00%, 12/31/04, due
1/03/05 in the amount of
$60,510,083 (collateralized
by $61,770,000 FNMA,
zero coupon due
1/05/05; value-$61,763,823)
(cost $60,500,000) U.S.$ 60,500 60,500,000
--------------
Canada Government Treasury
Obligation-1.0%
Canada Government Treasury Bill
Zero Coupon, 5/03/10(c)
(cost $18,533,652) CAD 22,810 18,873,406
--------------
U.S. Treasury Obligation-3.0%
U.S. Treasury Bill
Zero Coupon, 3/10/05(c) U.S.$ 48,000 47,809,147
Zero Coupon, 3/24/05(i) 9,000 8,955,935
--------------
(cost $56,765,082) 56,765,082
--------------
Total Short-Term Investments
(cost $135,798,734) 136,138,488
--------------
Total Investments Before Security
Lending Collateral-150.8%
(cost $2,656,013,368) 2,846,731,825
--------------
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED-2.1%
Short-Term Investment
UBS Private Money Market Fund, LLC
2.16%
(cost $39,998,940) 39,998,940 39,998,940
--------------
Total Investments-152.9%
(cost $2,696,012,308) 2,886,730,765
Other assets less liabilities-(52.9%) (998,459,097)
--------------
Net Assets-100.0% $1,888,271,668
==============
_______________________________________________________________________________
18 o ACM INCOME FUND
Portfolio of Investments
-------------------------------------------------------------------------------
CALL OPTIONS WRITTEN (see Note C)
Exercise Expiration
Description Contracts(j) Price Month U.S. $ Value
---------------------------------------------------------------------------------------------
Republic of Brazil
11.00%, 8/17/40 4,175,000 $117.65 January '05 $(66,800)
Republic of Brazil
11.00%, 8/17/40 1,960,000 118.15 January '05 (25,480)
Republic of Brazil
11.00%, 8/17/40 350,000 118.10 January '05 (4,900)
Republic of Brazil
11.00%, 8/17/40 3,380,000 118.50 January '05 (43,940)
Republic of Brazil
11.00%, 8/17/40 1,690,000 118.75 January '05 (20,280)
(premiums received $166,838)
FINANCIAL FUTURES CONTRACTS SOLD (see Note C)
Value at
Number of Expiration December 31, Unrealized
Type Contracts Month Original Value 2004 Depreciation
----------------------------------------------------------------------------------------------------
5 Year Swap March
Futures 6,568 2005 $711,623,754 $712,012,250 $ (388,496)
10 Year Swap March
Futures 2,117 2005 231,707,908 233,465,406 (1,757,498)
-----------
$(2,145,994)
-----------
FORWARD EXCHANGE CURRENCY CONTRACTS (see Note C)
U.S. $
Contract Value on U.S. $ Unrealized
Amount Origination Current Appreciation/
(000) Date Value (Depreciation)
------------------------------------------------------------------------------------------------
BUY CONTRACTS
Canadian Dollar,
settling 2/09/05 23,294 $19,052,547 $19,357,978 $ 305,431
SALE CONTRACTS
Canadian Dollar,
settling 2/09/05 23,303 19,282,086 19,365,740 (83,654)
Euro,
settling 1/07/05 4,663 6,137,325 6,313,058 (175,733)
Mexican Peso,
settling 1/21/05 122,578 10,781,802 10,944,756 (162,954)
_______________________________________________________________________________
ACM INCOME FUND o 19
Portfolio of Investments
-------------------------------------------------------------------------------
CREDIT DEFAULT SWAP CONTRACTS (see Note C)
Notional Unrealized
Swap Counterparty & Amount Interest Termination Appreciation/
Referenced Obligation (000) Rate Date (Depreciation)
---------------------------------------------------------------------------------------------
BUY CONTRACTS:
Citigroup Global Markets, Inc.
Republic of Colombia
8.375%, 2/15/27 1,900 3.02% 1/20/10 $ (13,390)
Citigroup Global Markets, Inc.
Republic of Hungary
4.50%, 2/06/13 10,250 0.50 11/26/13 (192,775)
Citigroup Global Markets, Inc.
Republic of Philippines
10.625%, 3/16/25 3,360 5.60 3/20/14 (19,846)
SALE CONTRACTS:
Citigroup Global Markets, Inc.
Republic of Brazil
12.25%, 3/06/30 3,000 6.35 8/20/05 182,167
Citigroup Global Markets, Inc.
Republic of Brazil
12.25%, 3/06/30 6,275 4.40 5/20/06 325,704
Citigroup Global Markets, Inc.
Republic of Colombia
8.375%, 2/15/27 3,750 1.13 1/20/07 5,302
Citigroup Global Markets, Inc.
Republic of Philippines
10.625%, 3/16/25 3,360 4.95 3/20/09 72,038
Credit Suisse First Boston
Republic of Brazil
12.25%, 3/06/30 600 6.90 6/20/07 52,845
Morgan Stanley
Republic of Brazil
12.25%, 3/06/30 4,800 3.80 8/20/06 284,800
REVERSE REPURCHASE AGREEMENTS (see Note C)
Interest
Broker Rate Maturity Amount
-------------------------------------------------------------------------------------
Citigroup Global Markets, Inc. 1.75% 1/13/05 $ 34,093,910
Citigroup Global Markets, Inc. 2.10 1/11/05 16,891,572
Citigroup Global Markets, Inc. 2.20 1/13/05 109,180,851
Citigroup Global Markets, Inc. 2.20 1/13/05 33,288,518
Citigroup Global Markets, Inc. 2.25 1/13/05 10,452,143
Merrill Lynch 2.05 1/13/05 60,300,075
Merrill Lynch 2.15 1/13/05 49,392,342
Merrill Lynch 2.15 1/13/05 23,082,228
Merrill Lynch 2.20 1/13/05 39,638,867
Merrill Lynch 2.25 1/13/05 72,587,834
------------
$448,908,340
============
See footnote summary on page 21.
_______________________________________________________________________________
20 o ACM INCOME FUND
Portfolio of Investments
-------------------------------------------------------------------------------
* Represents entire or partial securities out on loan. See Note E for
securities lending information.
(a) Positions, or portion thereof, with an aggregate market value of
$1,044,438,726 have been segregated to collateralize the loan payable
outstanding.
(b) Positions, or portion thereof, with an aggregate market value of
$458,159,588 have been segregated to collateralize reverse repurchase
agreements.
(c) Positions, or portion thereof, with an aggregate market value of
$557,186,386 have been segregated to collateralize open forward exchange
currency contracts.
(d) Security is in default and is non-income producing.
(e) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At December 31, 2004, the aggregate market value of these securities
amounted to $390,981,516 or 20.7% of net assets.
(f) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at December 31, 2004.
(g) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective until
final maturity.
(h) Non-income producing security.
(i) Position, or a portion thereof, with an aggregate market value of
$8,955,935 has been segregated as collateral for the futures transactions
outstanding at December 31, 2004.
(j) One contract relates to principal amount of $1.00.
Currency Abbreviations:
BRL - Brazilian Real
CAD - Canadian Dollar
COP - Colombian Peso
EUR - Euro
MXP - Mexican Peso
TRL - Turkish Lira
U.S.$ - United States Dollar
Glossary of Terms:
DCB - Debt Conversion Bond
FNMA - Federal National Mortgage Association
FRN - Floating Rate Note
I/O - Interest Only
PIK - Pay-In-Kind Payments
TBA - (To Be Assigned)--Securities are purchased on a forward commitment with
an approximate principal amount (generally +/- 1.0%) and no definite maturity
date. The actual principal amount and maturity date will be determined upon
settlement when the specific mortgage pools are assigned.
TIPS - Treasury Inflation Protected Security
VRN - Variable Rate Note
See notes to financial statements.
_______________________________________________________________________________
ACM INCOME FUND o 21
Statement of Assets & Liabilities
-------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
December 31, 2004
ASSETS
Investments in securities, at value (cost $2,696,012,308 --
including investment of cash collateral for securities
loaned of $39,998,940) $2,886,730,765(a)
Cash 9,097,495
Foreign cash, at value (cost $3,212,596) 3,262,742
Unrealized appreciation of credit default swap contracts 922,856
Unrealized appreciation of forward exchange
currency contracts 305,431
Interest and dividends receivable 34,130,350
Receivable for investment securities sold 6,225,824
--------------
Total assets 2,940,675,463
--------------
LIABILITIES
Outstanding call options written, at value
(premiums received $166,838) 161,400
Reverse repurchase agreements 448,908,340
Loan payable 400,000,000
Payable for investment securities purchased 157,361,548
Payable for collateral received on securities loaned 39,998,940
Payable for variation margin on futures contracts 2,290,000
Advisory fee payable 1,357,707
Loan interest payable 1,300,366
Unrealized depreciation of forward exchange
currency contracts 422,341
Unrealized depreciation of credit default swap contracts 226,011
Administrative fee payable 32,869
Accrued expenses 344,273
--------------
Total liabilities 1,052,403,795
--------------
Net Assets $1,888,271,668
==============
COMPOSITION OF NET ASSETS
Capital stock, at par $ 2,284,025
Additional paid-in capital 2,127,519,595
Distributions in excess of net investment income (44,489,589)
Accumulated net realized loss on investment
and foreign currency transactions (386,277,876)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities 189,235,513
--------------
$1,888,271,668
==============
Net Asset Value Per Share
(based on 228,402,531 shares outstanding) $8.27
=====
(a) Includes securities on loan with a value of $37,955,603 (see Note E).
See notes to financial statements.
_______________________________________________________________________________
22 o ACM INCOME FUND
Statement of Operations
-------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year Ended December 31, 2004
INVESTMENT INCOME
Interest $183,781,775
Dividends 593,103 $184,374,878
------------
EXPENSES
Advisory fee 14,791,745
Administrative fee 1,603,136
Custodian 566,993
Transfer agency 401,260
Printing 236,878
Registration fee 171,692
Audit 87,254
Directors' fees 36,090
Legal 33,733
Miscellaneous 180,303
------------
Total expenses before interest 18,109,084
Interest expense 12,701,475
------------
Total expenses 30,810,559
------------
Net investment income 153,564,319
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on:
Investment transactions 64,941,478
Swap Contracts 4,577,498
Futures contracts (31,157,617)
Written options 723,787
Foreign currency transactions 1,546,558
Net change in unrealized
appreciation/depreciation of:
Investments (47,490,937)
Swap contracts (2,974,596)
Futures contracts 6,473,381
Written options 5,438
Foreign currency denominated
assets and liabilities 24,019
------------
Net loss on investment and
foreign currency transactions (3,330,991)
------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $150,233,328
============
See notes to financial statements.
_______________________________________________________________________________
ACM INCOME FUND o 23
Statement of Changes in Net Assets
-------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
2004 2003
============== ==============
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 153,564,319 $ 172,795,433
Net realized gain on investment and
foreign currency transactions 40,631,704 52,973,949
Net change in unrealized
appreciation/depreciation of
investments and foreign currency
denominated assets and liabilities (43,962,695) 78,521,785
-------------- --------------
Net increase in net assets from
operations 150,233,328 304,291,167
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income (177,629,178) (195,843,523)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting
in issuance of common stock 10,814,470 11,241,411
-------------- --------------
Total increase (decrease) (16,581,380) 119,689,055
NET ASSETS
Beginning of period 1,904,853,048 1,785,163,993
-------------- --------------
End of period (including distributions
in excess of net investment income
of $44,489,589 and $32,025,412,
respectively) $1,888,271,668 $1,904,853,048
============== ==============
See notes to financial statements.
_______________________________________________________________________________
24 o ACM INCOME FUND
Statement of Cash Flows
-------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
Year Ended December 31, 2004
INCREASE (DECREASE) IN CASH FROM
OPERATING ACTIVITIES:
Interest and dividends received $ 152,160,790
Interest expense paid (12,085,544)
Operating expenses paid (18,441,603)
--------------
Net increase in cash from operating
activities $ 121,633,643
INVESTING ACTIVITIES:
Purchases of long-term portfolio
investments (3,841,997,465)
Proceeds from disposition of long-term
portfolio investments 3,954,830,956
Purchases of short-term investments,
net (72,572,674)
Premiums received on written options 166,838
Variation margin paid on futures
contracts (1,548,125)
--------------
Net increase in cash from investing
activities 38,879,530
FINANCING ACTIVITIES*:
Cash dividends paid (166,814,708)
Effect of exchange rate on cash 1,242,077
Increase in reverse repurchase
agreements 17,352,751
--------------
Net decrease in cash from financing
activities (148,219,880)
--------------
Net increase in cash 12,293,293
Cash at beginning of period 66,944
--------------
Cash at end of period $ 12,360,237
==============
-------------------------------------------------------------------------------
RECONCILIATION OF NET INCREASE IN
NET ASSETS FROM OPERATIONS TO
NET INCREASE IN CASH FROM
OPERATING ACTIVITIES:
Net increase in net assets from
operations $ 150,233,328
ADJUSTMENTS:
Decrease in interest and dividend
receivable $ 7,239,998
Accretion of bond discount and
amortization of bond premium (39,454,086)
Increase in interest payable 615,931
Decrease in accrued expenses (332,519)
Net realized gain on investment
and foreign currency transactions (40,631,704)
Net change in unrealized
appreciation/depreciation of
investments and foreign currency
denominated assets and liabilities 43,962,695
--------------
Total adjustments (28,599,685)
--------------
Net increase in Cash from Operating
Activities $ 121,633,643
==============
* Non-cash financing activities not included herein consist of reinvestment of
dividends.
See notes to financial statements.
_______________________________________________________________________________
ACM INCOME FUND o 25
Notes to Financial Statements
-------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
NOTE A
Significant Accounting Policies
ACM Income Fund, Inc. (the "Fund'') 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 U.S. 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 are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities not listed on an exchange but traded on The
NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ
Official Closing Price; listed put or call options are valued at the last sale
price. If there has been no sale on that day, such securities will be valued at
the closing bid prices on that day; open futures contracts and options thereon
are valued using the closing settlement price or, in the absence of such a
price, the most recent quoted bid price. If there are no quotations available
for the day of valuation, the last available closing settlement price is used;
securities traded in the over-the-counter market, ("OTC") (but excluding
securities traded on NASDAQ) are valued at the mean of the current bid and
asked prices as reported by the National Quotation Bureau or other comparable
sources; U.S. Government securities and other debt instruments having 60 days
or less remaining until maturity are valued at amortized cost if their original
maturity was 60 days or less; or by amortizing their fair value as of the 61st
day prior to maturity if their original term to maturity exceeded 60 days;
fixed-income securities, including mortgage backed and asset backed securities,
may be valued on the basis of prices provided by a pricing service or at a
price obtained from one or more of the major broker/dealers. In cases where
broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the
"Adviser") may establish procedures whereby changes in market yields or spreads
are used to adjust, on a daily basis, a recently obtained quoted price on a
security; and OTC and other derivatives are valued on the basis of a quoted bid
price or spread from a major broker/dealer in such security.
_______________________________________________________________________________
26 o ACM INCOME FUND
Notes to Financial Statements
-------------------------------------------------------------------------------
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at the rates of
exchange prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on foreign investment transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of unrealized appreciation and depreciation of investments and
foreign currency denominated assets and liabilities.
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. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
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
_______________________________________________________________________________
ACM INCOME FUND o 27
Notes to Financial Statements
-------------------------------------------------------------------------------
determined on the identified cost basis. The Fund accretes discounts as
adjustments to interest income. Additionally, the Fund amortizes premiums on
debt securities for financial statement reporting purposes only.
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 regulations and may differ from those determined in accordance with
U.S. 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.
6. Repurchase Agreements
The Fund's custodian or designated subcustodian will take control of securities
as collateral under repurchase agreements and determine on a daily basis that
the value of such securities are sufficient to cover the value of the
repurchase agreements. If the seller defaults and the value of collateral
declines, or if bankruptcy proceedings are commenced with respect to the seller
of the security, realization of collateral by the Fund may be delayed or
limited.
NOTE B
Advisory, Administrative Fees and Other Transactions with Affiliates
Under the terms of an investment advisory agreement, the Fund pays the Adviser
a monthly advisory fee in an amount equal to the sum of 1/12th of .30 of 1% of
the Fund's average weekly net assets up to $250 million, 1/12th of .25 of 1% of
the Fund's average weekly net assets in excess of $250 million, and 5.25% of
the Fund's daily gross income (i.e., income other than gains from the sale of
securities and foreign currency transactions or gains realized from options and
futures contracts less interest on money borrowed by the Fund) accrued by the
Fund during the month (the "Income Component"). However, such monthly advisory
fee shall not exceed in the aggregate 1/12th of 1% of the Fund's average weekly
net assets during the month (approximately 1% on an annual basis). Please see
the Subsequent Events Note for additional information regarding the advisory
fee.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Global
Investor Services, Inc. ("AGIS"), a wholly-owned subsidiary of the Adviser, the
Fund reimburses AGIS for costs relating to servicing phone inquiries on behalf
of the Fund. During the year ended December 31, 2004, the Fund reimbursed AGIS
$7,850 for such costs.
For the period January 1, 2004 through June 30, 2004, under the terms of an
Administrative Agreement, the Fund pays its Administrator, UBS Global Asset
Management (US) Inc. ("UBS Global AM"), a monthly fee equal to the annual
_______________________________________________________________________________
28 o ACM INCOME FUND
Notes to Financial Statements
-------------------------------------------------------------------------------
rate of .18 of 1% of the Fund's average weekly net assets up to $100 million,
.16 of 1% of the Fund's next $200 million of average weekly net assets and .15
of 1% of the Fund's average weekly net assets in excess of $300 million. For
the period July 1, 2004 through December 31, 2004, the Fund paid UBSGlobal AM
.02 of 1% of the Fund's average weekly net assets. Such fee is accrued daily
and paid monthly. UBS Global AM is an indirect wholly-owned asset management
subsidiary of UBS AG. UBS Global AM prepares financial and regulatory reports
for the Fund and provides other administrative services.
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended December 31, 2004 were as follows:
Purchases Sales
============== ==============
Investment securities (excluding
U.S. government securities) $1,211,647,381 $1,311,621,896
U.S. government securities 2,668,698,289 2,507,377,373
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding foreign currency contracts,
futures contracts, written options and swap contracts) are as follows:
Cost $2,750,302,101
==============
Gross unrealized appreciation $ 175,049,726
Gross unrealized depreciation (38,621,062)
--------------
Net unrealized appreciation $ 136,428,664
==============
1. Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse affects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments and the imperfect correlation between movements in the
price of the future contracts and movements in the price of the securities
hedged or used for cover.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains as collateral an initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or losses.
Risks may arise from the potential inability of a counterparty to meet the
terms of the contract. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the time it was closed.
_______________________________________________________________________________
ACM INCOME FUND o 29
Notes to Financial Statements
-------------------------------------------------------------------------------
2. Forward Exchange Currency Contracts
The Fund may enter into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchase and sales commitments
denominated in foreign currencies. A forward exchange currency contract is a
commitment to purchase or sell a foreign currency on a future date at a
negotiated forward rate. The gain or loss arising from the difference between
the original contract and the closing of such contract would be included in net
realized gain or loss on foreign currency transactions.
Fluctuations in the value of open forward exchange currency contracts are
recorded for financial reporting purposes as unrealized appreciation and
depreciation by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value at
least equal to the aggregate amount of the Fund's commitments under forward
exchange currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount in U.S.
dollars, reflects the total exposure the Fund has in that particular currency
contract.
3. Option Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) put
and call options on U.S. and foreign government securities and foreign
currencies that are traded on U.S. and foreign securities exchanges and
over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of the premium and a change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by the premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from options
written. The difference between the premium received and the amount paid on
effecting a closing purchase transaction, including brokerage commis-
_______________________________________________________________________________
30 o ACM INCOME FUND
Notes to Financial Statements
-------------------------------------------------------------------------------
sions, is also treated as a realized gain, or if the premium received is less
than the amount paid for the closing purchase transaction, as a realized loss.
If a call option is exercised, the premium received is added to the proceeds
from the sale of the underlying security or currency in determining whether the
Fund has realized a gain or loss. If a put option is exercised, the premium
received reduces the cost basis of the security or currency purchased by the
Fund. In writing an option, the Fund bears the market risk of an unfavorable
change in the price of the security or currency underlying the written option.
Exercise of an option written by the Fund could result in the Fund selling or
buying a security or currency at a price different from the current market
value.
Transactions in written options for the year ended December 31, 2004, were as
follows:
Number of
Contracts Premiums
(000) Received
============= =============
OPTIONS OUTSTANDING AT
DECEMBER 31, 2003 -0- $ -0-
Options written 200,667 1,072,282
Options terminated in closing purchase
transactions (29,605) (426,216)
Options expired (159,507) (479,228)
------------- -------------
OPTIONS OUTSTANDING AT
DECEMBER 31, 2004 11,555 $ 166,838
============= =============
4. Swap Agreements
The Fund may enter into swaps on sovereign debt obligations to hedge its
exposure to interest rates and credit risk or for investment purposes. A swap
is an agreement that obligates two parties to exchange a series of cash flows
at specified intervals based upon or calculated by reference to changes in
specified prices or rates for a specified amount of an underlying asset. The
payment flows are usually netted against each other, with the difference being
paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net interim payment
to be received by the Fund, and/or the termination value at the end of the
contract. Therefore, the Fund considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the value of the underlying securities.
As of January 1, 2004, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Acounting
Standard Board Statement No. 133.
_______________________________________________________________________________
ACM INCOME FUND o 31
Notes to Financial Statements
-------------------------------------------------------------------------------
The Fund accrues for the interim payments on swap contracts on a daily basis,
with the net amount recorded within unrealized appreciation/depreciation of
swap contracts on the statement of assets and liabilities. Once the interim
payments are settled in cash, the net amount is recorded as realized gain/loss
on swaps, in addition to realized gain/loss recorded upon the termination of
swap contracts on the statement of operations. Prior to January 1, 2004, these
interim payments were reflected within interest income/expense in the Statement
of Operations. Fluctuations in the value of swap contracts are recorded as a
component of net change in unrealized appreciation/ depreciation of investments.
The Fund may enter into credit default swaps. The Fund may purchase credit
protection on the referenced obligation of the credit default swap ("Buy
Contract") or provide credit protection on the referenced obligation of the
credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap
provides upon the occurrence of a credit event, as defined in the swap
agreement, for the Fund to buy/(sell) from/(to) the counterparty at the
notional amount (the "Notional Amount") and receive/(deliver) the principal
amount of the referenced obligation. If a credit event occurs, the maximum
payout amount for a Sale Contract is limited to the Notional Amount of the swap
contract ("Maximum Payout Amount"). During the term of the swap agreement, the
Fund receives/(pays) semi-annual fixed payments from/(to) the respective
counterparty, calculated at the agreed upon interest rate applied to the
Notional Amount. These interim payments are recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities.
Credit default swaps may involve greater risks than if a Fund had invested in
the referenced obligation directly. Credit default swaps are subject to general
market risk, liquidity risk, counterparty risk and credit risk. If the Fund is
a buyer and no credit event occurs, it will lose its investment. In addition,
if the Fund is a seller and a credit event occurs, the value of the referenced
obligation received by the Fund coupled with the periodic payments previously
received, may be less than the Maximum Payout Amount it pays to the buyer,
resulting in a loss to the Fund.
At December 31, 2004, the Fund had Sale Contracts outstanding with Maximum
Payout Amounts aggregating $21,785,000, with net unrealized appreciation of
$737,369 and terms ranging from 1 year to 10 years, as reflected in the
portfolio of investments.
In certain circumstances, the Fund may hold Sale Contracts on the same
referenced obligation and with the same counterparty it has purchased credit
protection, which may reduce its obligation to make payments on Sale Contracts,
if a credit event occurs. The Fund had Buy Contracts outstanding with a
Notional Amount of $5,260,000 with respect to the same referenced obligations
and same counterparties of certain Sale Contracts outstanding, which reduced
its obligation to make payments on Sale Contracts to $16,525,000 as of December
31, 2004.
_______________________________________________________________________________
32 o ACM INCOME FUND
Notes to Financial Statements
-------------------------------------------------------------------------------
5. Dollar Rolls
The Fund may enter into dollar rolls. Dollar rolls involve sales by the Fund of
securities for delivery in the current month and the Fund's simultaneously
contracting to repurchase substantially similar (same type and coupon)
securities on a specified future date. During the roll period, the Fund forgoes
principal and interest paid on the securities. The Fund is compensated by the
difference between the current sales price and the lower forward price for the
future purchase (often referred to as the "drop") as well as by the interest
earned on the cash proceeds of the initial sale. Dollar rolls involve the risk
that the market value of the securities the Fund is obligated to repurchase
under the agreement may decline below the repurchase price. Dollar rolls are
speculative techniques and may be considered to be borrowings by the Fund.
6. Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account with the custodian containing liquid assets having a value at least
equal to the repurchase price.
For the year ended December 31, 2004, the average amount of reverse repurchase
agreements outstanding was $489,131,264 and the daily weighted average annual
interest rate was 1.24%.
NOTE D
Capital Stock
There are 300,000,000 shares of $.01 par value common stock authorized of which
228,402,531 shares were issued and outstanding at December 31, 2004. During the
years ended December 31, 2004 and December 31, 2003, the Fund issued 1,328,765
and 1,349,486 shares, respectively, in connection with the Fund's dividend
reinvestment plan.
NOTE E
Securities Lending
The Fund has entered into a securities lending agreement with AG Edwards &
Sons, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending
Agent, on behalf of the Fund, administers the lending of portfolio securities
to certain broker-dealers. In return, the Fund receives fee income from the
lending transactions or it retains a portion of interest on the investment of
any cash received as collateral. The Fund also continues to receive dividends
or interest on the securities loaned. Unrealized gain or loss on the value of
the securities loaned that may occur during the term of the loan will be
reflected in the accounts of the Fund. All loans are continuously secured by
collateral exceeding the value of the securities loaned. All collateral
consists of either cash or U.S. Government securities. The Lending Agent may
invest the cash collateral received in accordance with the investment
restrictions of the Fund in one or more of the following investments: U.S.
Government or U.S. Government agency obligations, bank obligations, corporate
debt obligations, asset-backed
_______________________________________________________________________________
ACM INCOME FUND o 33
Notes to Financial Statements
-------------------------------------------------------------------------------
securities, structured products, repurchase agreements and an eligible money
market fund. The Lending Agent will indemnify the Fund for any loss resulting
from a borrower's failure to return a loaned security when due. As of December
31, 2004, the Fund had loaned securities with a value of $37,955,603 and
received cash collateral of $39,998,940, which was invested in a money market
fund as included in the accompanying portfolio of investments. For the year
ended December 31, 2004, the Fund earned fee income of $290,196, which is
included in interest income in the accompanying statement of operations.
NOTE F
Bank Borrowing
The Fund participated in a credit facility for a commercial paper asset
securitization program with Societe Generale ("SG") as Administrative Agent,
and Barton Capital Corporation ("Barton") as lender. The credit facility has a
maximum limit of $400 million. Under the SG Program, Barton will fund advances
to the Fund through the issuance of commercial paper rated A-1+ by Standard &
Poor's Ratings Services and P-1 by Moody's Investors Service, Inc. The
collateral value must be at least 171% of outstanding borrowings. The
borrowings under the SG program are secured by the pledging of the Fund's
portfolio securities as collateral. The interest rate on the Fund's borrowings
is based on the interest rate carried by the commercial paper. The weighted
average annual interest rate was 1.46% and the average borrowing was
$400,000,000 for the year ended December 31, 2004. At December 31, 2004, the
interest rate in effect was 2.31% and the amount of borrowings outstanding was
$400,000,000.
NOTE G
Risks Involved in Investing in the Fund
Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes
in interest rates will affect the value of the Fund's investments in
fixed-income debt securities such as bonds or notes. Increases in interest
rates may cause the value of the Fund's investments to decline. Credit risk is
the risk that the issuer or guarantor of a debt security, or the counterparty
to a derivative contract, will be unable or unwilling to make timely principal
and/or interest payments, or to otherwise honor its obligations. The degree of
risk for a particular security may be reflected in its credit risk rating.
Credit risk is greater for medium quality and lower-rated securities.
Lower-rated debt securities and similar unrated securities (commonly known as
"junk bonds") have speculative elements or are predominantly speculative risks.
Foreign Securities Risk--Investing in securities of foreign companies or
foreign governments involves special risks which include changes in foreign
exchange rates and the possibility of future political and economic
developments which could adversely affect the value of such securities.
Moreover, securities of many foreign companies or foreign governments and their
markets may be less liquid and their prices more volatile than those of
comparable United States companies or the United States government.
_______________________________________________________________________________
34 o ACM INCOME FUND
Notes to Financial Statements
-------------------------------------------------------------------------------
The Fund invests in sovereign debt obligations of countries that are considered
emerging market countries at the time of purchase. Therefore, the Fund is
susceptible to governmental factors and economic and debt restructuring
developments adversely affecting the economies of these emerging market
countries. In addition, these debt obligations may be less liquid and subject
to greater volatility than debt obligations of more developed countries.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
NOTE H
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December
31, 2004 and December 31, 2003 were as follows:
2004 2003
============= =============
Distributions paid from:
Ordinary income $ 177,629,178 $ 195,843,523
------------- -------------
Total taxable distributions 177,629,178 195,843,523
Tax return of capital -0- -0-
------------- -------------
Total distributions paid $ 177,629,178 $ 195,843,523
============= =============
As of December 31, 2004, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $(378,567,879)(a)
Unrealized appreciation/(depreciation) 137,035,927(b)
-------------
Total accumulated earnings/(deficit) $(241,531,952)
=============
(a) On December 31, 2004, the Fund had a net capital loss carryforward of
$378,564,547 of which $116,390,821 expires in the year 2006, $67,513,083
expires in the year 2007, $8,878,672 expires in the year 2008, $48,113,872
expires in the year 2009 and $137,668,099 expires in the year 2010. To the
extent future capital gains are offset by capital loss carryforwards, such
gains will not be distributed. Based on certain provisions in the Internal
Revenue Code, various limitations regarding the future utilization of these
carryforwards, brought forward as a result of the Fund's merger with ACM
Government Securities Fund and ACM Government Spectrum Fund, may apply. During
the fiscal year, the Fund utilized capital loss carryforwards of $35,897,321.
For the year ended December 31, 2004, the Fund deferred losses on straddles of
$3,332.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales, the difference between book and tax amortization methods
for premium, the realization for tax purposes of unrealized gains and losses on
certain derivative instruments and the difference between book and tax
treatment of swap income.
_______________________________________________________________________________
ACM INCOME FUND o 35
Notes to Financial Statements
-------------------------------------------------------------------------------
During the current fiscal year, permanent differences primarily due to the tax
treatment of foreign currency gains and losses, tax treatment of swap income,
tax treatment of paydown losses, tax treatment of bond premium and
distributions in excess of net investment income, resulted in a net decrease in
distributions in excess of net investment income, a net increase in accumulated
net realized loss on investment and foreign currency transactions and a net
decrease to additional paid-in capital. This reclassification had no effect on
net assets.
NOTE I
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the Office of New York Attorney General ("NYAG") have
been investigating practices in the mutual fund industry identified as "market
timing" and "late trading" of mutual fund shares. Certain other regulatory
authorities have also been conducting investigations into these practices
within the industry and have requested that the Adviser provide information to
them. The Adviser has been cooperating and will continue to cooperate with all
of these authorities. The shares of the Fund are not redeemable by the Fund,
but are traded on an exchange at prices established by the market. Accordingly,
the Fund and its shareholders are not subject to the market timing and late
trading practices that are the subject of the investigations mentioned above or
the lawsuits described below. Please see below for a description of the
agreements reached by the Adviser and the SEC and NYAG in connection with the
investigations mentioned above.
Numerous lawsuits have been filed against the Adviser and certain other
defendants in which plaintiffs make claims purportedly based on or related to
the same practices that are the subject of the SEC and NYAG investigations
referred to above. Some of these lawsuits name the Fund as a party. The
lawsuits are now pending in the United States District Court for the District
of Maryland pursuant to a ruling by the Judicial Panel on Multidistrict
Litigation transferring and centralizing all of the mutual fund cases involving
market and late trading in the District of Maryland. Management of the Adviser
believes that these private lawsuits are not likely to have a material adverse
effect on the results of operations or financial condition of the Fund.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
_______________________________________________________________________________
36 o ACM INCOME FUND
Notes to Financial Statements
-------------------------------------------------------------------------------
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds, commencing January 1,
2004, for a period of at least five years; and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order contemplates that the Adviser's
registered investment company clients, including the Fund, will introduce
governance and compliance changes.
The shares of the Fund are not redeemable by the Fund, but are traded on an
exchange at prices established by the market. Accordingly, the Fund and its
shareholders are not subject to the market timing practices described in the
SEC Order and are not expected to participate in the Reimbursement Fund. Since
the Fund is a closed-end fund, it will not have its advisory fee reduced
pursuant to the terms of the agreements mentioned above.
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
an unaffiliated broker/dealer violated federal securities laws relating to its
receipt of compensation for selling specific mutual funds and the disclosure of
such compensation. The SEC has indicated publicly that, among other things, it
is considering enforcement action in connection with mutual funds' disclosure
of such arrangements and in connection with the practice of considering mutual
fund sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC has issued subpoenas to the Adviser in connection with
this matter and the Adviser has provided documents and other information to the
SEC and is cooperating fully with its investigation.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Fund was not named as a nominal defendant in the Aucoin
_______________________________________________________________________________
ACM INCOME FUND o 37
Notes to Financial Statements
-------------------------------------------------------------------------------
Complaint. The Aucoin Complaint was filed in the United States District Court
for the Southern District of New York by an alleged shareholder of an
AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other
things, (i) that certain of the defendants improperly authorized the payment of
excessive commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain of the
defendants misrepresented and omitted from registration statements and other
reports material facts concerning such payments, and (iii) that certain
defendants caused such conduct as control persons of other defendants. The
Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and
48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act,
breach of common law fiduciary duties, and aiding and abetting breaches of
common law fiduciary duties. Plaintiffs seek an unspecified amount of
compensatory damages and punitive damages, rescission of their contracts with
the Adviser, including recovery of all fees paid to the Adviser pursuant to
such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
The Adviser believes that these matters are not likely to have a material
adverse effect on the Fund or the Adviser's ability to perform advisory
services relating to the Fund.
NOTE J
Subsequent Events
Effective January 1, 2005, UBS Global AM resigned as Administrator. Since
January 1, 2005, Princeton Administrators, L.P. has been acting as
Administrator for the Fund pursuant to the terms of an Administrative agreement
for a fee equal to .02 of 1% of the Fund's average weekly net assets.
Effective February 11, 2005, the terms of the Advisory Agreement were amended
so that the Income Component of the advisory fee was reduced to 4.75% of the
Fund's daily gross income, as described in Note B, and so that the monthly
advisory fee shall not exceed in the aggregate 1/12th of .95% of the Fund's
average weekly net assets during the month (approximately .95% on an annual
basis).
_______________________________________________________________________________
38 o ACM INCOME FUND
Financial Highlights
-------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended December 31,
---------------------------------------------------------------
2004(a) 2003 2002 2001(b) 2000
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $8.39 $7.91 $7.87 $8.45 $7.64
INCOME FROM INVESTMENT
OPERATIONS
Net investment income(c) .67 .76 .89 .76 .70
Net realized and unrealized
gain (loss) on investment,
future contracts, option
contracts and foreign
currency transactions (.01) .59 .07 (.11) .91
Net increase in net asset value
from operations .66 1.35 .96 .65 1.61
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income (.78) (.87) (.85) (.77) (.70)
Distributions in excess of
net investment income -0- -0- -0- (.07) (.10)
Tax return of capital -0- -0- (.07) -0- -0-
Total dividends and distributions (.78) (.87) (.92) (.84) (.80)
LESS: FUND SHARE TRANSACTIONS
Dilutive effect of rights offering -0- -0- -0- (.32) -0-
Offering costs charged to
paid-in-capital in excess
of par -0- -0- -0- (.07) -0-
Total fund share transactions -0- -0- -0- (.39) -0-
Net asset value, end of period $8.27 $8.39 $7.91 $7.87 $8.45
Market value, end of period $8.16 $8.58 $8.46 $7.30 $7.50
Premium/(Discount) (1.33)% 2.26% 6.95% (7.24)% (11.24)%
TOTAL INVESTMENT RETURN
Total investment return
based on:(d)
Market value 4.63% 12.50% 30.60% 7.80% 28.97%
Net asset value 8.44% 17.66% 13.27% 3.11% 23.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $1,888,272 $1,904,853 $1,785,164 $1,764,895 $1,390,542
Ratio to average net assets of:
Expenses 1.66% 1.67% 1.87% 2.31% 2.54%
Expenses, excluding interest
expense(e) 0.98% 1.10% 1.26% 1.18% 1.19%
Net investment income 8.27% 9.28% 11.69% 9.33% 9.40%
Portfolio turnover rate 139% 276% 414% 676% 538%
Asset coverage ratio 492% 559% 376% 379% 339%
Bank borrowing outstanding
(in millions) $400 $400 $400 $300 $300
See footnote summary on page 40.
_______________________________________________________________________________
ACM INCOME FUND o 39
Financial Highlights
-------------------------------------------------------------------------------
(a) As of January 1 2004, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. These interim payments are reflected within
net realized and unrealized gain (loss) on swap contracts, however prior to
January 1 2004, these interim payments were reflected within interest
income/expense on the statement of operations. The effect of this change for
the year ended December 31, 2004, was to decrease net investment income per
share and increase net realized and unrealized gain (loss) on investment
transactions. The effect on the per share amounts was less than $0.005. The
ratio of net investment income to average net assets was decreased by 0.03%.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide Audits of Investment
Companies, and began amortizing premium on debt securities for financial
reporting purposes only. The effect of this change for the year ended December
31, 2001, was to decrease net investment income per share by $.05, decrease net
realized and unrealized loss on investment transactions per share by $.05, and
decrease the ratio of net investment income to average net assets from 9.92% to
9.33%. Per share, ratios and supplemental data for periods prior to January 1,
2001 have not been restated to reflect this change in presentation.
(c) Based on average shares outstanding.
(d) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's Dividend Reinvestment Plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the premium of the market value to the net asset value from the beginning to
the end of such periods. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
periods where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such periods. Total investment return calculated for a period of less than one
year is not annualized.
(e) Net of interest expense of .68%, .57%, .61%, 1.13% and 1.35%,
respectively, on borrowings (see Notes C and F).
_______________________________________________________________________________
40 o ACM INCOME FUND
Report of Independent Registered Public Accounting Firm
-------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of ACM Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of ACM
Income Fund, Inc. (the "Fund"), including the schedule of investments, as of
December 31, 2004, and the related statements of operations and cash flows for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standard require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significcant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2004, by correspondence
with the custodian and others. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
ACM Income Fund, Inc. at December 31, 2004, the results of its operations and
cash flows for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
February 16, 2005
_______________________________________________________________________________
ACM INCOME FUND o 41
Additional Information
-------------------------------------------------------------------------------
ADDITIONAL INFORMATION
(unaudited)
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
pursuant to which dividends and capital gain distributions to shareholders will
be paid in or reinvested in additional shares of the Fund. Equiserve Trust
Company, N.A. (the "Agent") will act as agent for participants under the Plan.
Shareholders whose shares are held in the name of a broker or nominee should
contact such broker or nominee to determine whether or how they may participate
in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will issue new
shares at the greater of net asset value or 95% of the then current market
price.
(ii) If the shares of Common Stock are trading at a discount from net asset
value at the time of valuation, the Agent will receive the dividend or
distribution in cash and apply it to the purchase of the Fund's shares of
Common Stock in the open market on the New York Stock Exchange or elsewhere,
for the participants' accounts. Such purchases will be made on or shortly after
the payment date for such dividend or distribution and in no event more than 30
days after such date except where temporary curtailment or suspension of
purchase is necessary to comply with Federal securities laws. If, before the
Agent has completed its purchases, the market price exceeds the net asset value
of a share of Common Stock, the average purchase price per share paid by the
Agent may exceed the net asset value of the Fund's shares of Common Stock,
resulting in the acquisition of fewer shares than if the dividend or
distribution had been paid in shares issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of
the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro-rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's account will be the average cost,
including brokerage commissions, of any shares purchased in the open market
plus the cost of any shares issued by the Fund.
_______________________________________________________________________________
42 o ACM INCOME FUND
Additional Information
-------------------------------------------------------------------------------
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent
to written notice of the change sent to participants in the Plan at least 90
days before the record date for such dividend or distribution. The Plan may
also be amended or terminated by the Agent on at least 90 days written notice
to participants in the Plan. All correspondence concerning the Plan should be
directed to the Agent at Equiserve Trust Company, N.A., P.O. Box 43011,
Providence, RI 02940-3011.
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change
of control of the Fund's, (iii) no material changes in the principal risk
factors associated with investment in the Fund.
_______________________________________________________________________________
ACM INCOME FUND o 43
Board of Directors
-------------------------------------------------------------------------------
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
Dr. James M. Hester(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Andrew M. Aran, Vice President
Paul J. DeNoon(2), Vice President
Michael L. Mon, Vice President
Douglas J. Peebles(2), Vice President
Michael A. Snyder, Vice President
Kewjin Yuoh, Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Administrator
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ08543-9095
Dividend Paying Agent, Transfer Agent and Registrar
Equiserve Trust Company, N.A.
P.O. Box 43011
Providence, RI 02940-3011
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee and the Governance and Nominating Committee.
(2) Messrs. DeNoon and Peebles are the persons primarily responsible for the
day-to-day management of the Fund's investment portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase from time to time at market
prices shares of its Common Stock in the open market.
This report, including the financial statements herein, is transmitted to the
shareholders of ACM Income Fund for their information. The financial
information included herein is taken from the records of the Fund. 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.
Annual Certifications - As required, on April 27, 2004, the Fund submitted to
the New York Stock Exchange ("NYSE") the annual certification of the Fund's
Chief Executive Officer certifying that he is not aware of any violation of the
NYSE's Corporate Governance listing standards. Subsequently, the Fund notified
the NYSE that it had determined that a member of the Fund's Audit Committee was
an "interested person," as defined in the 1940 Act, of the Fund's Adviser from
March 25, 2004 through October 21, 2004, which was inconsistent with then
applicable audit committee composition requirements. The Fund also has included
the certifications of the Fund's Chief Executive Officer and Chief Financial
Officer required by Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits
to the Fund's Form N-CSR filed with the Securities and Exchange Commission for
the annual period.
_______________________________________________________________________________
44 o ACM INCOME FUND
Management of the Fund
-------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIP
DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
--------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
Marc O. Mayer, + Executive Vice President of ACMC 66 None
1345 Avenue of the since 2001; prior thereto, Chief
Americas Executive Officer of Sanford C.
New York, NY 10105 Bernstein & Co., LLC and its
10/2/57 predecessor since prior to 2000.
(2003)
DISINTERESTED DIRECTORS
William H. Foulk, Jr., # Investment adviser and an inde- 113 None
2 Sound View Drive pendent consultant. He was for-
Suite 100 merly Senior Manager of Barrett
Greenwich, CT 06830 Associates, Inc., a registered invest-
9/7/32 ment adviser, with which he had
(1998) been associated since prior to 2000.
Chairman of the Board He was formerly Deputy Comptroller
and Chief Investment Officer of the
State of New York and, prior thereto,
Chief Investment Officer of the New
York Bank for Savings.
Ruth Block, #, ** Formerly Executive Vice President 94 None
500 SE Mizner Blvd., and Chief Insurance Officer of The
Boca Raton, FL 33432 Equitable Life Assurance Society of
11/7/30 the United States; Chairman and
(1987) Chief Executive Officer of Evlico;
Director of Avon, BP (oil and gas),
Ecolab Incorporated (specialty
chemicals), Tandem Financial Group
and Donaldson, Lufkin & Jenrette
Securities Corporation; former
Governor at Large, National Associ-
ation of Securities Dealers,Inc.
David H. Dievler, # Independent consultant. Until 98 None
P.O. Box 167 December 1994 he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
10/23/29 Management Corporation ("ACMC")
(1987) responsible for mutual fund admin-
istration. Prior to joining ACMC in
1984 he was Chief Financial Officer
of Eberstadt Asset Management
since 1968. Prior to that he was a
Senior Manager at Price Waterhouse
& Co. Member of American Institute
of Certified Public Accountants
since 1953.
_______________________________________________________________________________
ACM INCOME FUND o 45
Management of the Fund
-------------------------------------------------------------------------------
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIP
DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
--------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
John H. Dobkin, # Consultant. Formerly President 96 None
P.O. Box 12 of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002, a
2/19/42 Senior Advisor from June 1999-
(1998) June 2000 and President of Historic
Hudson Valley (historic preservation)
from December 1989-May 1999.
Previously, Director of the National
Academy of Design and during
1988-1992, he was Director and
Chairman of the Audit Committee
of ACMC.
Michael J. Downey, # Consultant since January 2004. 66 Asia Pacific
c/o Alliance Capital Formerly managing partner of Fund, Inc.
Management L.P. Lexington Capital, LLC (investment and The
1345 Avenue of the advisory firm) from December 1997 Merger Fund
Americas until December 2003. Prior thereto,
New York, NY 10105 Chairman and CEO of Prudential
1/26/44 Mutual Fund Management from 1987
(2005) to 1993.
Dr. James M. Hester, # Formerly President of the Harry Frank 11 None
25 Cleveland Lane Guggenheim Foundation, New York
Princeton, NJ 08540 University and the New York Botanical
4/19/24 Garden, Rector of the United Nations
(1987) University and Vice Chairman of the
Board of the Federal Reserve Bank
of New York.
* There is no stated term of office for the Fund's Directors.
** Ms. Block was an "interested person", as defined in the 1940 Act, until
October 21, 2004 by reason of her ownership of 116 American Depositary Shares
of AXA having a value of approximately $2,396. AXA is a controlling person of
ACMC. Ms. Block received shares of The Equitable Companies Incorporated as part
of the demutualization of The Equitable Life Assurance Society of the United
States, which were subsequently converted through a corporate action into 116
American Depositary Shares of AXA.
# Member of the Audit Committee and the Governance and Nominating Committee.
+ Mr. Mayer is an "interested person", as defined in the 1940 Act, due to his
position as Executive Vice President of ACMC.
_______________________________________________________________________________
46 o ACM INCOME FUND
Management of the Fund
-------------------------------------------------------------------------------
Officer Information
Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
--------------------------------------------------------------------------------------------------------------
Marc O. Mayer President See biography above.
10/2/57
Philip L. Kirstein Senior Vice President Senior Vice President and Independent
5/29/45 and Independent Compliance Officer--Mutual Funds of
Compliance Officer ACMC**, with which he has been
associated since October 2004. Prior
thereto, he was Of Counsel to
Kirkpatrick & Lockhart, LLP from
October 2003 to October 2004, and
General Counsel and First Vice
President of Merrill Lynch Investment
Managers, L.P. since prior to 2000 until
March 2003.
Andrew M. Aran Vice President Senior Vice President of ACMC,** with
4/24/57 which he has been associated since
prior to 2000.
Paul J. DeNoon Vice President Senior Vice President of ACMC,** with
4/18/62 which he has been associated since
prior to 2000.
Michael L. Mon Vice President Vice President of ACMC,** with which
3/2/69 he has been associated since prior to
June 2000.
Douglas J. Peebles Vice President Executive Vice President of ACMC,**
8/10/65 with which he has been associated
since prior to 2000.
Michael A. Snyder Vice President Senior Vice President of ACMC**
4/18/62 since May, 2001. Previously he was a
Managing Director in the high yield
asset management group at
Donaldson, Lufkin & Jenrette
Corporation since prior to 2000.
Kewjin Yuoh Vice President Vice President of ACMC,** since
3/11/71 March 2003. Previously, he was a
Vice President of Credit Suisse Asset
Management from 2000 to 2002 and
a Vice President of Brundage, Story
& Rose since prior to 2000.
Mark R. Manley Secretary Senior Vice President, Deputy General
10/23/62 Counsel and Chief Compliance Officer
of ACMC,** with which he has been
associated since prior to 2000.
_______________________________________________________________________________
ACM INCOME FUND o 47
Management of the Fund
-------------------------------------------------------------------------------
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
--------------------------------------------------------------------------------------------------------------
Mark D. Gersten Treasurer and Chief Senior Vice President of Alliance
10/4/50 Financial Officer Global Investor Services, Inc.
("AGIS")** and a Vice President of
AllianceBernstein Investment Research
and Management, Inc. ("ABIRM")**,
with which he has been associated
since prior to 2000.
Vincent S. Noto Controller Vice President of AGIS**, with which
12/14/64 he has been associated since prior
to 2000.
* The address for each of the Fund's officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM and AGIS are affiliates of the Fund.
_______________________________________________________________________________
48 o ACM INCOME FUND
AllianceBernstein Family of Funds
-------------------------------------------------------------------------------
ALLIANCEBERNSTEIN FAMILY OF FUNDS
--------------------------------------------
Wealth Strategies Funds
--------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
--------------------------------------------
Blended Style Funds
--------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
--------------------------------------------
Growth Funds
--------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund*
Small Cap Growth Fund
Global & International
All-Asia Investment Fund
Global Health Care Fund*
Global Research Growth Fund
Global Technology Fund*
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
--------------------------------------------
Value Funds
--------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund*
Growth & Income Fund
Real Estate Investment Fund
Small/Mid-Cap Value Fund**
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
--------------------------------------------
Taxable Bond Funds
--------------------------------------------
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
--------------------------------------------
Municipal Bond Funds
--------------------------------------------
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
--------------------------------------------
Intermediate Municipal Bond Funds
--------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
--------------------------------------------
Closed-End Funds
--------------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
We also offer Exchange Reserves,*** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current
prospectus. You should read the prospectus carefully before you invest.
* Prior to December 15, 2004, these Funds were named as follows: Global Health
Care Fund was Health Care Fund; Large Cap Growth Fund was Premier Growth Fund;
Global Technology Fund was Technology Fund; and Focused Growth & Income Fund
was Disciplined Value Fund.
** Prior to February 1, 2005, Small/Mid-Cap Value Fund was named Small Cap
Value Fund.
*** An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
_______________________________________________________________________________
ACM INCOME FUND o 49
Summary of General Information
-------------------------------------------------------------------------------
SUMMARY OF GENERAL INFORMATION
ACM Income Fund Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 426-5523. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper Inc., Morningstar, Inc. and Bloomberg.
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of The Wall Street Journal under the
designation "ACM IncFd." The Fund's NYSE trading symbol is "ACG." Weekly
comparative net asset value (NAV) and market price information about the Fund
is published each Monday in The Wall Street Journal and each Sunday in The New
York Times and other newspapers in a table called "Closed-End Bond Funds."
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains distributions in additional Fund shares. The Plan also allows you
to make optional cash investments in Fund Shares through the Plan Agent. If you
wish to participate in the Plan and your shares are held in your name, simply
complete and mail the enrollment form in the brochure. If your shares are held
in the name of your brokerage firm, bank or other nominee, you should ask them
whether or how you can participate in the Plan.
For questions concerning shareholder account information, or if you would like
a brochure describing the Dividend Reinvestment Plan, please call Equiserve
Trust Company, N.A. at (800) 219-4218.
_______________________________________________________________________________
50 o ACM INCOME FUND
NOTES
_______________________________________________________________________________
ACM INCOME FUND o 51
NOTES
_______________________________________________________________________________
52 o ACM INCOME FUND
ACM INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
AllianceBernstein [LOGO](SM)
Investment Research and Management
SM This service mark used under license from the owner, Alliance Capital
Management L.P.
INCAR1204
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer. A copy of the registrant's code of ethics is filed herewith as
Exhibit 11(a)(1).
(b) During the period covered by this report, no material amendments were made
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent registered public accounting firm Ernst & Young LLP, for the Fund's
last two fiscal years for professional services rendered for: (i) the audit of
the Fund's annual financial statements included in the Fund's annual report to
stockholders; (ii) assurance and related services that are reasonably related
to the performance of the audit of the Fund's financial statements and are not
reported under (i), which include advice and education on accounting and
auditing issues and quarterly press release review, and preferred stock
maintenance testing (for those Funds that issue preferred stock); and (iii) tax
compliance, tax advice and tax return preparation.
Audit-Related
Audit Fees Fees Tax Fees
------------- --------------- -----------
ACM Income Fund, Inc. 2003 $55,000 $12,500 $18,000
2004 $58,000 $10,030 $17,880
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or
after May 6, 2003, the Fund's Audit Committee policies and procedures require
the pre-approval of all audit and non-audit services provided to the Fund by
the Fund's independent registered public accounting firm. The Fund's Audit
Committee policies and procedures also require pre-approval of all audit and
non-audit services provided to the Adviser and Service Affiliates to the extent
that these services are directly related to the operations or financial
reporting of the Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) - (c) are for services pre-approved by the Fund's
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to
the Fund, the Fund's Adviser and entities that control, are controlled by or
under common control with the Adviser that provide ongoing services to the
Fund, which include conducting an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of
Foregoing Column Pre-
approved by the Audit
All Fees for Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit Related Fees)
Portfolio, the Adviser (Portion Comprised of
and Service Affiliates Tax Fees)
------------------------ ----------------------
ACM Income Fund, Inc. 2003 $929,765 $392,500
$374,500
$18,000
2004 $985,628 $102,910
$85,030
$17,880
(h) The Audit Committee of the Fund has considered whether the provision of any
non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent registered public accounting firm to the Adviser and Service
Affiliates is compatible with maintaining the auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The audit committee members are as follows:
Ruth Block Michael J. Downey
David H. Dievler William H. Foulk, Jr
John H. Dobkin Dr. James M. Hester
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant has adopted the following proxy voting policies and procedures
of its investment adviser, Alliance Capital Management L.P.
ALLIANCE CAPITAL MANAGEMENT L.P.
Statement of Policies and Procedures for Proxy Voting
Introduction
As a registered investment adviser, Alliance Capital Management L.P. ("Alliance
Capital", "we" or "us") has a fiduciary duty to act solely in the best
interests of our clients. We recognize that this duty requires us to vote
client securities in a timely manner and make voting decisions that are in the
best interests of our clients. Consistent with these obligations, we will
disclose our clients' voting records only to them and as required by mutual
fund vote disclosure regulations. In addition, the proxy committees may, after
careful consideration, choose to respond to surveys regarding past votes.
This statement is intended to comply with Rule 206(4)-6 of the Investment
Advisers Act of 1940. It sets forth our policies and procedures for voting
proxies for our discretionary investment advisory clients, including investment
companies registered under the Investment Company Act of 1940. This statement
applies to Alliance Capital's growth and value investment groups investing on
behalf of clients in both US and non-US securities.
Proxy Policies
This statement is designed to be responsive to the wide range of proxy voting
subjects that can have a significant effect on the investment value of the
securities held in our clients' accounts. These policies are not exhaustive due
to the variety of proxy voting issues that we may be required to consider.
Alliance Capital reserves the right to depart from these guidelines in order to
avoid voting decisions that we believe may be contrary to our clients' best
interests. In reviewing proxy issues, we will apply the following general
policies:
Corporate Governance: Alliance Capital's proxy voting policies recognize the
importance of good corporate governance in ensuring that management and the
board of directors fulfill their obligations to the shareholders. We favor
proposals promoting transparency and accountability within a company. We will
vote for proposals providing for equal access to the proxy materials so that
shareholders can express their views on various proxy issues. We also support
the appointment of a majority of independent directors on key committees and
separating the positions of chairman and chief executive officer.
Elections of Directors: Unless there is a proxy fight for seats on the Board or
we determine that there are other compelling reasons for withholding votes for
directors, we will vote in favor of the management proposed slate of directors.
That said, we believe that directors have a duty to respond to shareholder
actions that have received significant shareholder support. We may withhold
votes for directors that fail to act on key issues such as failure to implement
proposals to declassify boards, failure to implement a majority vote
requirement, failure to submit a rights plan to a shareholder vote or failure
to act on tender offers where a majority of shareholders have tendered their
shares. In addition, we will withhold votes for directors who fail to attend at
least seventy-five percent of board meetings within a given year without a
reasonable excuse. Finally, we may withhold votes for directors of non-U.S.
issuers where there is insufficient information about the nominees disclosed in
the proxy statement.
Appointment of Auditors: Alliance Capital believes that the company remains in
the best position to choose the auditors and will generally support
management's recommendation. However, we recognize that there may be inherent
conflicts when a company's independent auditor performs substantial nonaudit
related services for the company. While we will recognize that there may be
special circumstances that could lead to high non-audit fees in some years, we
would normally consider non-audit fees in excess of 70% to be disproportionate.
Therefore, we may vote against the appointment of auditors if the fees for
non-audit related services exceed 70% of the total audit fees paid by the
company or there are other reasons to question the independence of the
company's auditors.
Changes in Legal and Capital Structure: Changes in a company's charter,
articles of incorporation or by-laws are often technical and administrative in
nature. Absent a compelling reason to the contrary, Alliance Capital will cast
its votes in accordance with the company's management on such proposals.
However, we will review and analyze on a case-by-case basis any non-routine
proposals that are likely to affect the structure and operation of the company
or have a material economic effect on the company. For example, we will
generally support proposals to increase authorized common stock when it is
necessary to implement a stock split, aid in a restructuring or acquisition or
provide a sufficient number of shares for an employee savings plan, stock
option or executive compensation plan. However, a satisfactory explanation of a
company's intentions must be disclosed in the proxy statement for proposals
requesting an increase of greater than one hundred percent of the shares
outstanding. We will oppose increases in authorized common stock where there is
evidence that the shares will be used to implement a poison pill or another
form of anti-takeover device, or if the issuance of new shares could
excessively dilute the value of the outstanding shares upon issuance.
Corporate Restructurings, Mergers and Acquisitions: Alliance Capital believes
proxy votes dealing with corporate reorganizations are an extension of the
investment decision. Accordingly, we will analyze such proposals on a
case-by-case basis, weighing heavily the views of the research analysts that
cover the company and the investment professionals managing the portfolios in
which the stock is held.
Proposals Affecting Shareholder Rights: Alliance Capital believes that certain
fundamental rights of shareholders must be protected. We will generally vote in
favor of proposals that give shareholders a greater voice in the affairs of the
company and oppose any measure that seeks to limit those rights. However, when
analyzing such proposals we will weigh the financial impact of the proposal
against the impairment of shareholder rights.
Anti-Takeover Measures: Alliance Capital believes that measures that impede
takeovers or entrench management not only infringe on the rights of
shareholders but may also have a detrimental effect on the value of the
company. We will generally oppose proposals, regardless of whether they are
advanced by management or shareholders, the purpose or effect of which is to
entrench management or dilute shareholder ownership. Conversely, we support
proposals that would restrict or otherwise eliminate antitakeover measures that
have already been adopted by corporate issuers. For example, we will support
shareholder proposals that seek to require the company to submit a shareholder
rights plan to a shareholder vote. We will evaluate, on a case-by-case basis,
proposals to completely redeem or eliminate such plans. Furthermore, we will
generally oppose proposals put forward by management (including blank check
preferred stock, classified boards and supermajority vote requirements) that
appear to be intended as management entrenchment mechanisms.
Executive Compensation: Alliance Capital believes that company management and
the compensation committee of the board of directors should, within reason, be
given latitude to determine the types and mix of compensation and benefit
awards offered. Whether proposed by a shareholder or management, we will review
proposals relating to executive compensation plans on a case-by-case basis to
ensure that the long-term interests of management and shareholders are properly
aligned. We will analyze the proposed plans to ensure that shareholder equity
will not be excessively diluted, the option exercise price is not below market
price on the date of grant and an acceptable number of employees are eligible
to participate in such programs. We will generally oppose plans that permit
repricing of underwater stock options without shareholder approval. Other
factors such as the company's performance and industry practice will generally
be factored into our analysis. We will support proposals to submit severance
packages that do not exceed 2.99 times the sum of an executive officer's base
salary plus bonus that are triggered by a change in control to a shareholder
vote. Finally, we will support shareholder proposals requiring companies to
expense stock options because we view them as a large corporate expense.
Social and Corporate Responsibility: Alliance Capital will review and analyze
on a case-by-case basis proposals relating to social, political and
environmental issues to determine whether they will have a financial impact on
shareholder value. We will vote against proposals that are unduly burdensome or
result in unnecessary and excessive costs to the company. We may abstain from
voting on social proposals that do not have a readily determinable financial
impact on shareholder value.
Proxy Voting Procedures
Proxy Voting Committees
Our growth and value investment groups have formed separate proxy voting
committees to establish general proxy policies for Alliance Capital and
consider specific proxy voting matters as necessary. These committees
periodically review these policies and new types of corporate governance
issues, and decide how we should vote on proposals not covered by these
policies. When a proxy vote cannot be clearly decided by an application of our
stated policy, the proxy committee will evaluate the proposal. In addition, the
committees, in conjunction with the analyst that covers the company, may
contact corporate management and interested shareholder groups and others as
necessary to discuss proxy issues. Members of the committee include senior
investment personnel and representatives of the Legal and Compliance
Department. The committees may also evaluate proxies where we face a potential
conflict of interest (as discussed below). Finally, the committees monitor
adherence to these policies.
Conflicts of Interest
Alliance Capital recognizes that there may be a potential conflict of interest
when we vote a proxysolicited by an issuer whose retirement plan we manage, or
we administer, who distributes Alliance Capital sponsored mutual funds, or with
whom we or an employee has another business or personal relationship that may
affect how we vote on the issuer's proxy. Similarly, Alliance may have a
potential material conflict of interest when deciding how to vote on a proposal
sponsored or supported by a shareholder group that is a client. We believe that
centralized management of proxy voting, oversight by the proxy voting
committees and adherence to these policies ensures that proxies are voted with
only our clients' best interests in mind. That said, we have implemented
additional procedures to ensure that our votes are not the product of a
material conflict of interests, including: (i) on an annual basis, the proxy
committees will take reasonable steps to evaluate the nature of Alliance
Capital's and our employees' material business and personal relationships (and
those of our affiliates) with any company whose equity securities are held in
client accounts and any client that has sponsored or has material interest in a
proposal upon which we will be eligible to vote; (ii) requiring anyone involved
in the decision making process to disclose to the chairman of the appropriate
proxy committee any potential conflict that they are aware of (including
personal relationships) and any contact that they have had with any interested
party regarding a proxy vote; (iii) prohibiting employees involved in the
decision making process or vote administration from revealing how we intend to
vote on a proposal in order to reduce any attempted influence from interested
parties; and (iv) where a material conflict of interests exists, reviewing our
proposed vote by applying a series of objective tests and, where necessary,
considering the views of a third party research service to ensure that our
voting decision is consistent with our clients' best interests. Because under
certain circumstances Alliance Capital considers the recommendation of third
party research services, the proxy committees will take reasonable steps to
verify that any third party research service is in fact independent based on
all of the relevant facts and circumstances. This includes reviewing the third
party research service's conflict management procedures and ascertaining, among
other things, whether the third party research service (i) has the capacity and
competency to adequately analyze proxy issues; and (ii) can make such
recommendations in an impartial manner and in the best interests of our clients.
Proxies of Certain Non-US Issuers
Proxy voting in certain countries requires "share blocking." Shareholders
wishing to vote their proxies must deposit their shares shortly before the date
of the meeting (usually one-week) with a designated depositary. During this
blocking period, shares that will be voted at the meeting cannot be sold until
the meeting has taken place and the shares are returned to the clients'
custodian banks. Alliance Capital may determine that the benefit to the client
of exercising the vote does not outweigh the cost of voting, which is not being
able to transact in the shares during this period. Accordingly, if share
blocking is required we may abstain from voting those shares.
In addition, voting proxies of issuers in non-US markets may give rise to a
number of administrative issues that may prevent Alliance Capital from voting
such proxies. For example, Alliance Capital may receive meeting notices without
enough time to fully consider the proxy or after the cut-off date for voting.
Other markets require Alliance Capital to provide local agents with power of
attorney prior to implementing Alliance Capital's voting instructions. Although
it is Alliance Capital's policy to seek to vote all proxies for securities held
in client accounts for which we have proxy voting authority, in the case of
non-US issuers, we vote proxies on a best efforts basis.
Proxy Voting Records
Clients may obtain information about how we voted proxies on their behalf by
contacting their Alliance Capital administrative representative. Alternatively,
clients may make a written request for proxy voting information to: Mark R.
Manley, Senior Vice President & Chief Compliance Officer, Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, NY 10105.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
There have been no purchases of equity securities by the Fund or by affiliated
parties for the reporting period.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no significant changes in the registrant's internal controls
over financial reporting that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
ITEM 11. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
11 (a) (1) Code of ethics that is subject to the disclosure of Item 2
hereof
11 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (c) Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): ACM Income Fund, Inc.
By: /s/ Marc O. Mayer
--------------------
Marc O. Mayer
President
Date: February 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
--------------------
Marc O. Mayer
President
Date: February 28, 2005
By: /s/ Marc D. Gersten
--------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: February 28, 2005