-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K5MohDeVUORunFIZBnAJDbLkGFSbE26lxg0c27wOBOPiYrKgSSAmQv2NtBbzD2HY 43Uhlgvjy3JPq5XkOhcfIg== 0000936772-05-000207.txt : 20051108 0000936772-05-000207.hdr.sgml : 20051108 20051108173038 ACCESSION NUMBER: 0000936772-05-000207 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050831 FILED AS OF DATE: 20051108 DATE AS OF CHANGE: 20051108 EFFECTIVENESS DATE: 20051108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACM MANAGED INCOME FUND INC /NY/ CENTRAL INDEX KEY: 0000838133 IRS NUMBER: 133482100 STATE OF INCORPORATION: NY FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-05643 FILM NUMBER: 051187242 BUSINESS ADDRESS: STREET 1: MERRILL LYNCH ASSET MGMT STREET 2: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 2129692127 MAIL ADDRESS: STREET 1: MERRILL LYNCH ASSET MGMT STREET 2: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 N-CSR 1 edg11290_ar.txt 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: 811-05643 ACM MANAGED 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: August 31, 2005 Date of reporting period: August 31, 2005 ITEM 1. REPORTS TO STOCKHOLDERS. [LOGO] ALLIANCEBERNSTEIN (R) Investment Research and Management ACM Managed Income Fund Annual Report August 31, 2005 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. October 18, 2005 Annual Report This report provides management's discussion of fund performance for ACM Managed Income Fund (the "Fund") for the annual reporting period ended August 31, 2005. The Fund is a closed-end fund that trades under the New York Stock Exchange symbol "AMF". Investment Objectives and Policies This closed-end fund is designed to provide investors with a high level of total return by seeking both high current income and capital appreciation. The Fund invests at least 50% of its total assets in U.S. Government Securities and repurchase agreements pertaining to U.S. Government Securities including certain securities not backed by the full faith and credit of the U.S. Government. A significant portion (which may be up to 50% of the Fund's total assets) of the Fund's portfolio may be invested in lower-rated securities, including securities rated Ba, B, or Caa by Moody's Investors Service, or BB, B, or CCC by Standard & Poor's Ratings Services or in comparable non-rated securities. In addition, the Fund may utilize certain other investment techniques, including investing in options and futures contracts. For more information regarding the Fund's risks, please see "A Word About Risk" on pages 4-5 and "Note G--Risks Involved in Investing in the Fund" of the Notes to Financial Statements on page 27. Investment Results The table on page 6 provides performance data for the Fund and its benchmark, a 50%/50% composite of the Lehman Brothers (LB) Government Index/Credit Suisse First Boston (CSFB) High Yield Index, for the six- and 12-month periods ended August 31, 2005. The Fund outperformed its composite benchmark for the 12-month period ended August 31, 2005. Contributing positively to the Fund's performance during the period under review was the Fund's ability to leverage during a year of relatively strong positive returns for fixed-income markets. Within the Fund's high yield holdings, overweighted positions in the bank/finance and property and casualty insurance sectors helped performance as did an underweighted position in the automotive sector. The Fund's holdings in the media/telecom sector also contributed positively to relative performance during the reporting period. Market Review and Investment Strategy The U.S. Treasury market, as measured by the LB Treasury Index, posted a return of 4.12% for the annual period despite continued rate increases by the U.S. Federal Reserve (the "Fed"). Beginning in June 2004, the Fed hiked the Fed Funds benchmark rate 11 times for a total of 275 basis points, bringing the Fed Funds target from its all-time low of 1% to a still-accommodative 3.75%. Although short-term U.S. interest rates followed the Fed higher, longer-term rates failed to increase as expected and actually declined. Longer-term 30-year yields declined 67 basis points, while shorter-term two- and five-year yields rose 142 and 55 basis points, respectively. As a result, the yield curve flattened significantly. In the view of the Fund's portfolio management team, falling ACM MANAGED INCOME FUND o 1 yields were the result of sustained buying of U.S. Treasuries and other U.S. bonds by official and private foreign investors, coupled with complacency about inflation pressures. The high yield market outperformed traditional fixed-income sectors, returning 8.98%, as represented by the CSFB High Yield Index. A combination of factors supported the high yield market including strong investor demand and limited supply. The lack of negative news, as well as a smooth transition of General Motors (GM) into high yield, also helped high yield spreads to tighten. High yield fundamentals remained positive with companies reporting strong earnings and improvements in balance sheets. Liquidity in the high yield market also remained ample with default rates near all-time lows. High yield spreads, according to CSFB, were 379 basis points over Treasuries at the end of the reporting period, representing a tightening of 78 basis points during the annual period. The average yield at the end of the period was 8.05%. With the exception of consumer durables and transportation, all high yield industries posted positive returns. Outperforming industries included media/telecom at 11.71%, utilities at 11.51%, metals/minerals at 10.88%, service at 10.77% and energy at 10.68%. Underperforming industries included consumer durables at -3.92%, transportation at -0.06% and forest products at 3.72%. Notable market events during the reporting period included downgrades to Ford Motor Company and GM which meaningfully affected the high yield and investment-grade credit markets, as they are among the largest bond issuers in the U.S. Both GM and Ford were removed from Lehman Brothers' investment-grade indices in June 2004--the month following Standard & Poor's downgrade to non-investment grade. Both of these events created a period of volatility in the credit markets. Also during the period, Intelsat Ltd. agreed to purchase PanAmSat Holding Corp. for $3.2 billion to form the world's largest commercial satellite operator. The transaction will be entirely debt financed which caused the Fund's positions in both companies to significantly underperform. However, the new company will offer expanded coverage with additional satellites covering more than 220 countries. The merger combines PanAmSat's strong video-centric customer base, including leading providers of cable TV, with Intelsat's historical strength in core telephony and advanced data services. At their current trading levels, the portfolio management team sees good value in these securities and is maintaining the Fund's weighting in these names. Additionally, Charter Communications, the fourth largest cable television operator, announced a private exchange of $8.4 billion of outstanding debt. The offer is made to qualified institutional buyers. The purpose of the private exchange offer is to improve Charter Holdings' financial flexibility by extending its debt payments by as much as six years until 2015. The Fund will be participating in this exchange offer. 2 o ACM MANAGED INCOME FUND Despite some spread widening among certain high yield industries during the period, spread dispersion generally remained quite narrow. This led to limited opportunities for outperformance through industry overweights and underweights. As such, the portfolio management team continued to emphasize security selection as the primary means of achieving value, drawing on its extensive fundamental and quantitative research to help identify the winners and losers. As a result, the team continues to expect high yield to deliver modestly positive absolute returns in 2005. During the reporting period, fundamentals remained supportive as U.S. economic momentum continued, along with solid growth in corporate profits, cash flow and liquidity. Additionally, the high yield sector was underpinned by a continued historic low default rate. ACM MANAGED INCOME FUND o 3 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 Managed 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 newspapers. The Fund's NYSE trading symbol is "AMF." 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 44. Benchmark Disclosure The unmanaged Lehman Brothers (LB) Government Index and the unmanaged Credit Suisse First Boston (CSFB) High Yield Index do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The LB Government Index is composed of the LB Treasury Index and the LB Agency Index. The CSFB High Yield Index is a measure of lower-rated, fixed-income, non-convertible, U.S. dollar-denominated securities meeting certain criteria and is designed to reflect the high yield market. An investor cannot invest directly in indices, and their results are not indicative of the performance for any specific investment, including the Fund. A Word About Risk Price fluctuations in the Fund's securities may be caused by changes in the general level of interest rates or changes in bond credit quality ratings. Increases in interest rates may cause the value of the Fund's investment to decline. Changes in interest rates have a greater effect on bonds with longer maturities than on those with shorter maturities. Treasury securities provide fixed rates of return, as well as principal guarantees, if held to maturity. The Fund's investments in foreign securities are subject to risks not associated with investing in U.S. government securities, such as the risk of adverse changes in currency exchange rates, exchange control regulations and the application of foreign tax laws. Similar to direct bond ownership, bond funds have the same interest rate, inflation and credit risks that are associated with underlying bonds owned by the Fund. Fund purchasers should understand that, in contrast to owning individual bonds, there are ongoing fees and expenses associated with owning shares of bond funds. While the Fund invests principally in bonds and other fixed-income securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from and in certain cases, greater than, the risks presented by more traditional investments. (Historical Performance continued on next page) 4 o ACM MANAGED INCOME FUND HISTORICAL PERFORMANCE (continued from previous page) The issuance of the Fund's preferred stock results in leveraging of the Common Stock, an investment technique usually considered speculative. Leverage creates certain risks for holders of Common Stock, including higher volatility of both the net asset value and market value of the Common Stock, and fluctuations in the dividend rates on the preferred stock will affect the return to holders of Common Stock. If the Fund were fully invested in longer-term securities and if short-term interest rates were to increase, then the amount of dividends paid on the preferred shares would increase and both net investment income available for distribution to the holders of Common Stock and the net asset value of the Common Stock would decline. At the same time, the market value of the Fund's Common Stock (that is, its price as listed on the New York Stock Exchange) may, as a result, decline. Furthermore, if long-term interest rates rise, the Common Stock's net asset value will reflect the full decline in the price of the portfolio's investments, since the value of the Fund's Preferred Stock does not fluctuate. In addition to the decline in net asset value, the market value of the Fund's Common Stock may also decline. (Historical Performance continued on next page) ACM MANAGED INCOME FUND o 5 HISTORICAL PERFORMANCE (continued from previous page) Returns THE FUND VS. ITS BENCHMARK --------------------------- PERIODS ENDED AUGUST 31, 2005 6 Months 12 Months - ------------------------------------------------------------------------------- ACM Managed Income Fund (NAV) 3.48% 8.87% - ------------------------------------------------------------------------------- 50%/50% LB Government Index / CSFB High Yield Index 2.31% 6.44% - ------------------------------------------------------------------------------- LB Government Index 3.27% 3.90% - ------------------------------------------------------------------------------- CSFB High Yield Index 1.34% 8.98% - ------------------------------------------------------------------------------- The Fund's Market Price per share on August 31, 2005 was $3.69. For additional Financial Highlights, please see page 32. GROWTH OF A $10,000 INVESTMENT IN THE FUND 8/31/95 TO 8/31/05 [THE FOLLOWING TABLE WAS DEPICTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
ACM Managed Income Fund (NAV) Composite - ------------------------------------------------ 8/31/95 $10,000 $10,000 8/31/96 $11,289 $10,693 8/31/97 $13,590 $12,016 8/31/98 $14,777 $12,842 8/31/99 $12,273 $13,154 8/31/00 $12,133 $13,800 8/31/01 $12,009 $14,641 8/31/02 $11,648 $15,150 8/31/03 $13,357 $17,126 8/31/04 $14,811 $18,836 8/31/05 $16,124 $20,049
This chart illustrates the total value of an assumed $10,000 investment in ACM Managed Income Fund at net asset value (NAV) (from 8/31/95 to 8/31/05) as compared to the performance of the Fund's benchmark. The chart assumes the reinvestment of dividends and capital gains. See Historical Performance and Benchmark disclosures on pages 4 and 5. 6 o ACM MANAGED INCOME FUND PORTFOLIO SUMMARY August 31, 2005 PORTFOLIO STATISTICS Net Assets Applicable to Common Shareholders ($mil): $106.3 SECURITY TYPE BREAKDOWN* 58.1% U.S. Government Obligations 39.4% Corporate Obligations [PIE CHART OMITTED] 1.5% Yankee Obligations 0.5% Preferred Stock 0.5% Short-Term * All data are as of August 31, 2005. The Fund's security type breakdown is expressed as a percentage of total investments and may vary over time. ACM MANAGED INCOME FUND o 7 PORTFOLIO OF INVESTMENTS August 31, 2005 Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS-90.7% U.S. Treasury Bonds-90.7% 3.875%, 7/31/07 Aaa $10,000 $10,005,860 5.375%, 2/15/31 Aaa 8,000 9,379,376 7.00%, 7/15/06 Aaa 24,050 24,705,747 8.125%, 8/15/19 Aaa 19,400 27,297,158 11.25%, 2/15/15 Aaa 16,000 24,961,872 ----------- Total U.S. Government Obligations (cost $92,919,422) 96,350,013 ----------- CORPORATE OBLIGATIONS-72.2% Aerospace & Defense-1.0% DRS Technologies, Inc. 6.875%, 11/01/13 B2 210 212,625 L-3 Communications Corp. 5.875%, 1/15/15 Ba3 310 306,125 Sequa Corp. 9.00%, 8/01/09 B1 145 159,500 TD Funding Corp. 8.375%, 7/15/11 B3 320 339,200 ----------- 1,017,450 ----------- Automotive-2.9% Asbury Automotive Group, Inc. 8.00%, 3/15/14 B3 171 169,717 Delphi Corp. 7.125%, 5/01/29 Ca 290 203,000 Ford Motor Co. 7.45%, 7/16/31 Ba1 260 207,904 Ford Motor Credit Co. 4.95%, 1/15/08 Baa3 315 303,005 General Motors Acceptance Corp. 6.875%, 9/15/11 Ba1 431 408,150 General Motors Corp. 7.75%, 3/15/36(a) Ba2 665 179,550 HLI Operating, Inc. 10.50%, 6/15/10 B3 286 284,570 Keystone Automotive Operations, Inc. 9.75%, 11/01/13 B3 394 399,910 Navistar International 6.25%, 3/01/12 Ba3 300 288,000 TRW Automotive, Inc. 9.375%, 2/15/13 Ba3 180 199,800 11.00%, 2/15/13 B1 175 201,250 United Auto Group, Inc. 9.625%, 3/15/12 B3 240 257,700 ----------- 3,102,556 ----------- 8 o ACM MANAGED INCOME FUND Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- Broadcasting & Media-0.8% Albritton Communications Co. 7.75%, 12/15/12 B3 $ 370 $ 372,312 Corus Entertainment, Inc. 8.75%, 3/01/12 B1 325 349,375 Emmis Communications Corp. 9.314%, 6/15/12(b) B3 135 136,688 ----------- 858,375 ----------- Building & Real Estate-2.8% Associated Materials, Inc. 11.25%, 3/01/14(a) Caa2 595 348,075 D.R. Horton, Inc. 6.875%, 5/01/13 Ba1 330 352,334 KB HOME 7.75%, 2/01/10 Ba2 215 226,699 Meritage Corp. 6.250%, 3/15/15 Ba3 490 458,762 M/I Homes, Inc. 6.875%, 4/01/12(c) Ba2 425 405,875 Schuler Homes, Inc. 10.50%, 7/15/11 Ba2 405 440,944 WCI Communities, Inc. 6.625%, 3/15/15 Ba3 260 237,250 William Lyon Homes, Inc. 10.75%, 4/01/13 B2 460 506,000 ----------- 2,975,939 ----------- Cable-6.3% Cablevision Systems Corp. 8.00%, 4/15/12 B3 715 710,531 Charter Communications Operations, LLC 8.00%, 4/30/12(c) B2 1,520 1,539,000 CSC Holdings, Inc. 7.00%, 4/15/12(c) B1 160 153,200 7.625%, 7/15/18 B1 445 431,650 DirectTV Holdings LLC 6.375%, 6/15/15(c) Ba2 460 458,850 8.375%, 3/15/13 Ba2 150 164,625 Echostar DBS Corp. 6.375%, 10/01/11 Ba3 255 253,406 Insight Midwest LP 9.75%, 10/01/09 B2 420 435,225 Intelsat Bermuda, Ltd. 8.625%, 1/15/15(c) B2 390 404,625 8.695%, 1/15/12(b)(c) B2 95 96,662 ACM MANAGED INCOME FUND o 9 Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- Inmarsat Finance PLC 7.625%, 6/30/12 B1 $ 328 $ 344,810 PanAmSat Corp. 9.00%, 8/15/14 B1 378 397,845 10.375%, 11/01/14(a) B3 1,005 690,937 Rogers Cable, Inc. 6.75%, 3/15/15 Ba3 570 582,825 ----------- 6,664,191 ----------- Chemicals-2.6% Borden Chemicals, Inc. 9.00%, 7/15/14(c) B3 330 341,550 Equistar Chemical Funding LP 10.125%, 9/01/08 B2 555 607,725 10.625%, 5/01/11 B2 100 111,000 Huntsman Advanced Materials LLC 11.00%, 7/15/10 Ba3 285 323,475 Huntsman International LLC 9.875%, 3/01/09 B2 215 228,975 Nell AF S.a.r.l. 8.375%, 8/15/15(c) B2 825 834,281 Westlake Chemical Corp. 8.75%, 7/15/11 Ba2 283 307,055 ----------- 2,754,061 ----------- Communications - Fixed-4.0% Cincinnati Bell, Inc. 7.00%, 2/15/15 B1 240 235,200 8.375%, 1/15/14 B3 330 333,300 Citizens Communications Co. 6.25%, 1/15/13 Ba3 460 444,475 Eircom Funding 8.25%, 8/15/13 B1 385 413,875 Hawaiian Telecom Communications, Inc. 9.75%, 5/01/13(c) B3 425 447,312 MCI, Inc. 7.688%, 5/01/09 B2 240 249,600 Qwest Corp. 8.875%, 3/15/12 Ba3 1,575 1,720,687 VALOR Telecom Enterprise 7.75%, 2/15/15 B1 430 422,475 ----------- 4,266,924 ----------- Communications - Mobile-2.4% Iridium LLC Capital Corp. Series B 14.00%, 7/15/05(d) NR 3,000 592,500 Nextel Communications, Inc. 5.95%, 3/15/14 Baa2 210 218,182 6.875%, 10/31/13 Baa2 460 492,694 10 o ACM MANAGED INCOME FUND Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- Rogers Wireless Communications, Inc. 7.25%, 12/15/12 Ba3 $ 400 $ 429,000 7.50%, 3/15/15 Ba3 389 425,469 Rural Cellular Corp. 8.25%, 3/15/12 B2 390 409,500 ----------- 2,567,345 ----------- Consumer Manufacturing-1.6% Acco Brands Corp. 7.625%, 8/15/15(c) B2 390 390,975 Broder Brothers Co. 11.25%, 10/15/10 B3 480 468,000 Jostens, Inc. 7.625%, 10/01/12 B3 405 416,138 Playtex Products, Inc. 8.00%, 3/01/11 B2 310 330,150 Quiksilver, Inc. 6.875%, 4/15/15(c) B1 125 124,844 ----------- 1,730,107 ----------- Diversified Media-3.0% Dex Media, Inc. 8.00%, 11/15/13 B3 420 446,250 Dex Media East LLC 9.875%, 11/15/09 B1 130 141,862 12.125%, 11/15/12 B2 227 268,427 Dex Media West LLC 8.50%, 8/15/10 B1 160 173,000 9.875%, 8/15/13 B2 571 645,944 Lamar Media Corp. 6.625%, 8/15/15(c) Ba3 215 219,300 PRIMEDIA, Inc. 8.00%, 5/15/13 B2 200 204,000 8.875%, 5/15/11 B2 350 366,625 Rainbow National Services LLC 8.75%, 9/01/12(c) B3 675 734,906 ----------- 3,200,314 ----------- Energy-3.3% Amerada Hess Corp. 7.30%, 8/15/31 Ba1 395 478,825 Chesapeake Energy Corp. 6.625%, 1/15/16 Ba3 205 210,125 7.75%, 1/15/15 Ba3 200 215,000 El Paso Corp. 7.75%, 1/15/32 Caa1 270 272,700 Grant Prideco, Inc. 6.125%, 8/15/15(c) Ba2 180 182,250 Hilcorp Energy 10.50%, 9/01/10(c) B3 745 826,950 ACM MANAGED INCOME FUND o 11 Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- Kerr-McGee Corp. 6.875%, 9/15/11 Ba3 $ 630 $ 683,737 Premco Refining Group, Inc. 9.50%, 2/01/13 Baa3 190 216,125 Pride Int'l., Inc. 7.375%, 7/15/14 Ba2 360 390,600 ----------- 3,476,312 ----------- Entertainment & Leisure-1.8% Gaylord Entertainment Co. 8.00%, 11/15/13 B3 330 349,800 NCL Corp. 11.625%, 7/15/14(c) B2 420 446,250 Royal Caribbean Cruises 8.00%, 5/15/10 Ba1 40 43,800 8.75%, 2/02/11 Ba1 485 551,081 Universal City Development 11.75%, 4/01/10 B2 400 454,000 Universal City Florida 8.375%, 5/01/10 B3 100 105,250 ----------- 1,950,181 ----------- Financial-1.2% iStar Financial, Inc. 6.00%, 12/15/10 Baa3 320 333,666 7.00%, 3/15/08 Baa3 185 195,129 PXRE Capital Trust I 8.85%, 2/01/27 Ba2 720 752,400 ----------- 1,281,195 ----------- Food & Beverages-0.6% Dole Food Company, Inc. 8.625%, 5/01/09 B2 275 292,188 8.875%, 3/15/11 B2 71 75,615 Domino's, Inc. 8.25%, 7/01/11 B2 252 269,640 ----------- 637,443 ----------- Gaming-5.1% Ameristar Casinos, Inc. 10.75%, 2/15/09 B2 250 270,000 Argosy Gaming Co. 9.00%, 9/01/11 Ba3 260 282,750 Boyd Gaming Corp. 7.75%, 12/15/12 B1 295 314,175 Harrah's Operating Company, Inc. 7.875%, 12/15/05 Ba1 160 161,600 Mandalay Resort Group 10.25%, 8/01/07 Ba3 620 671,925 MGM Mirage, Inc. 6.625%, 7/15/15(c) Ba2 482 486,820 8.375%, 2/01/11 Ba3 545 592,688 12 o ACM MANAGED INCOME FUND Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- Mohegan Tribal Gaming Authority 6.375%, 7/15/09 Ba3 $ 170 $ 172,550 7.125%, 8/15/14 Ba3 430 451,500 Park Place Entertainment 7.875%, 3/15/10 Ba1 350 383,688 Penn National Gaming, Inc. 6.875%, 12/01/11 B2 340 343,400 Riviera Holdings Corp. 11.00%, 6/15/10 B2 390 425,100 Seneca Gaming Corp. 7.25%, 5/01/12 B1 405 421,200 7.25%, 5/01/12(c) B1 125 130,000 Turning Stone Casino Resort Enterprise 9.125%, 12/15/10(c) B1 290 305,225 ----------- 5,412,621 ----------- Health Care-4.2% Concentra Operating Corp. 9.125%, 6/01/12 B3 155 162,750 9.50%, 8/15/10 B3 140 147,700 Coventry Health Care, Inc. 5.875%, 1/15/12 Ba1 145 148,625 6.125%, 1/15/15 Ba1 155 160,425 DaVita, Inc. 7.25%, 3/15/15(c) B3 520 528,450 Extendicare Health Services 9.50%, 7/01/10 B1 150 160,875 Genesis HealthCare Corp. 8.00%, 10/15/13 B3 145 157,506 HCA, Inc. 6.375%, 1/15/15 Ba2 560 574,940 Iasis Healthcare Corp. 8.75%, 6/15/14 B3 440 474,100 PacifiCare Health Systems, Inc. 10.75%, 6/01/09 Ba3 348 380,190 Select Medical Corp. 7.625%, 2/01/15 B3 625 607,813 Triad Hospitals, Inc. 7.00%, 11/15/13 B3 520 533,650 Universal Hospital Services, Inc. 10.125%, 11/01/11 B3 420 424,200 ----------- 4,461,224 ----------- Hotels & Lodging-2.2% Host Marriott LP 9.25%, 10/01/07 Ba3 205 219,350 9.50%, 1/15/07 Ba3 350 367,500 Intrawest Corp. 7.50%, 10/15/13 B1 190 196,175 ACM MANAGED INCOME FUND o 13 Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- La Quinta Properties, Inc. 8.875%, 3/15/11 Ba3 $ 415 $ 447,162 Starwood Hotels & Resorts Worldwide, Inc. 7.875%, 5/01/12 Ba1 380 420,850 Sun International Hotels 8.875%, 8/15/11 B2 285 303,525 Vail Resorts, Inc. 6.75%, 2/15/14 B2 350 357,875 ----------- 2,312,437 ----------- Index-1.5% Dow Jones CDX HY 7.75%, 12/29/09(c) B3 433 439,119 8.25%, 6/29/10(c) B3 1,129 1,146,234 ----------- 1,585,353 ----------- Industrial-3.4% AMSTED Industries, Inc. 10.25%, 10/15/11(c) B3 465 511,500 Case New Holland, Inc. 9.25%, 8/01/11 Ba3 290 308,850 Dayton Superior Corp. 10.75%, 9/15/08 Caa1 420 424,200 FastenTech, Inc. 11.50%, 5/01/11 B3 350 374,500 FIMEP S.A. 10.50%, 2/15/13 B1 320 366,400 Goodman Global Holding Company 7.875%, 12/15/12(c) Caa1 430 406,350 NMHG Holding Co. 10.00%, 5/15/09 B3 135 144,450 Terex Corp. 10.375%, 4/01/11 B3 215 230,588 TriMas Corp. 9.875%, 6/15/12 B3 410 350,550 Trinity Industries, Inc. 6.50%, 3/15/14 Ba3 510 502,350 ----------- 3,619,738 ----------- Insurance-1.2% Crum & Forster Holdings Corp. 10.375%, 6/15/13 Ba3 215 237,575 Liberty Mutual Group 5.75%, 3/15/14(c) Baa3 430 431,140 Markel Capital Trust I Series B 8.71%, 1/01/46 Ba1 505 557,142 ----------- 1,225,857 ----------- 14 o ACM MANAGED INCOME FUND Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- Metal & Mining-1.9% AK Steel Corp. 7.875%, 2/15/09 B1 $ 750 $ 729,375 Freeport-McMoran Copper & Gold, Inc. 10.125%, 2/01/10 B1 385 423,500 International Steel Group, Inc. 6.50%, 4/15/14 Ba2 391 388,068 Ispat Inland ULC 9.75%, 4/01/14 Ba1 104 121,680 Peabody Energy Corp. 6.875%, 3/15/13 Ba3 370 385,263 ----------- 2,047,886 ----------- Paper & Packaging-3.9% Abitibi-Consolidated Inc. 8.55%, 8/01/10 Ba3 285 291,412 Berry Plastics Corp. 10.75%, 7/15/12 B3 430 473,000 Crown Euro Holdings S.A. 9.50%, 3/01/11 B1 445 490,613 Georgia-Pacific Corp. 8.875%, 5/15/31 Ba3 210 259,284 9.375%, 2/01/13 Ba2 510 569,925 Graphic Packaging Int'l Corp. 9.50%, 8/15/13 B3 465 476,625 Newpage Corp. 10.00%, 5/01/12(c) B3 410 412,050 Owens-Brockway Glass Container, Inc. 8.875%, 2/15/09 B1 680 719,100 Pliant Corp. 11.125%, 9/01/09 Caa3 425 396,313 Vitro Envases Norteamrca 10.75%, 7/23/11(c) B2 105 108,150 ----------- 4,196,472 ----------- Retail-0.5% J.C. Penney Corporation, Inc. 7.625%, 3/01/97 Ba1 195 203,775 8.00%, 3/01/10 Ba1 315 349,700 ----------- 553,475 ----------- Service-2.5% Allied Waste North America 6.375%, 4/15/11 B2 395 380,681 8.875%, 4/01/08 B2 275 290,125 H & E Equipment/Finance 11.125%, 6/15/12 B3 500 558,750 Service Corp. International 6.50%, 3/15/08 Ba3 320 324,000 7.70%, 4/15/09 Ba3 310 325,113 ACM MANAGED INCOME FUND o 15 Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- United Rentals North America, Inc. 6.50%, 2/15/12 B3 $ 478 $ 466,647 Williams Scotsman, Inc. 9.875%, 6/01/07 B3 345 346,725 ----------- 2,692,041 ----------- Supermarket & Drugstore-1.1% Couche-Tard, Inc. 7.50%, 12/15/13 Ba3 292 305,870 Roundy's, Inc. 8.875%, 6/15/12 B2 275 292,875 Stater Bros. Holdings, Inc. 8.125%, 6/15/12 B1 530 537,950 ----------- 1,136,695 ----------- Technology-2.5% Celestica, Inc. 7.875%, 7/01/11 B2 585 602,550 Flextronics International, Ltd. 6.50%, 5/15/13 Ba2 490 498,575 Lucent Technologies, Inc. 6.45%, 3/15/29 B1 140 122,850 6.50%, 1/15/28 B1 275 240,625 SunGard Data Systems, Inc. 9.125%, 8/15/13(c) B3 580 609,000 Telcordia Technologies, Inc. 10.00%, 3/15/13(c) B3 220 209,000 Unisys Corp. 6.875%, 3/15/10 Ba3 155 150,350 7.875%, 4/01/08 Ba3 210 211,050 ----------- 2,644,000 ----------- Utilities - Electric & Gas-7.9% AES Corporation 8.75%, 5/15/13(c) Ba3 65 71,500 9.00%, 5/15/15(c) Ba3 205 226,525 Aquila, Inc. 14.875%, 7/01/12 B2 215 289,712 Calpine Corp. 8.50%, 7/15/10(c) NR 495 371,250 DPL, Inc. 6.875%, 9/01/11 Ba1 288 315,360 Dynegy Holdings, Inc. 10.125%, 7/15/13(c) B3 545 609,038 Enterprise Products Operating L.P. 5.60%, 10/15/14 Baa3 425 435,634 FirstEnergy Corp. 6.45%, 11/15/11 Baa3 470 509,060 Northwest Pipeline Corp. 8.125%, 3/01/10 Ba2 255 273,487 NRG Energy, Inc. 8.00%, 12/15/13 B1 352 380,160 16 o ACM MANAGED INCOME FUND Shares or Moody's Principal Investor Amount Ratiing (000) U.S. $ Value - ------------------------------------------------------------------------------- Ormat Funding Corp. 8.25%, 12/30/20 NR $ 373 $ 376,742 Reliant Energy, Inc. 6.75%, 12/15/14 B1 300 295,500 Reliant Resources, Inc. 9.50%, 7/15/13 B1 390 433,875 Southern Natural Gas Co. 7.35%, 2/15/31 B1 425 460,745 8.875%, 3/15/10 B1 340 370,925 TECO Energy, Inc. 6.75%, 5/01/15(c) Ba2 365 387,813 7.00%, 5/01/12 Ba2 390 417,788 The Williams Companies, Inc. 7.625%, 7/15/19 B1 1,150 1,276,500 7.875%, 9/01/21 B1 220 248,050 TXU Corp. 5.55%, 11/15/14 Ba1 340 333,338 6.50%, 11/15/24 Ba1 338 331,109 ----------- 8,414,111 ----------- Total Corporate Obligations (cost $75,938,223) 76,784,303 ----------- YANKEE OBLIGATIONS-2.7% Citigroup (JSC Severstal) 9.25%, 4/19/14 B2 426 470,730 Fairfax Financial Holdings 7.375%, 4/15/18 Ba3 420 382,200 7.75%, 4/26/12 Ba3 465 460,350 Innova S. de R.L. 9.375%, 9/19/13 Ba3 455 516,425 Mobile Telesystems 8.00%, 1/28/12(c) Ba3 448 478,800 Nortel Networks Corp. 6.875%, 9/01/23 B3 265 254,400 Royal & Sun Alliance Insurance Group PLC 8.95%, 10/15/29 Baa3 205 271,563 ----------- Total Yankee Obligations (cost $2,581,144) 2,834,468 ----------- NON-CONVERTIBLE PREFERRED STOCK-0.9% Sovereign Real Estate Investment Trust 12.00%(c) (cost $713,375) Ba1 650 942,500 ----------- ACM MANAGED INCOME FUND o 17 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENT-16.9% Time Deposit-1.0% State Street Bank & Trust Co. 2.85%, 9/01/05 (cost $1,028,000) $ 1,028 $ 1,028,000 ----------- U.S. Treasury Obligations-15.9% U.S. Treasury Bill 3.678%, 2/16/06 (cost $16,953,921) 17,250 16,964,564 ----------- Total Short-Term Investments (cost $17,981,921) 17,992,564 ----------- Total Investments-183.4% (cost $190,134,085) 194,903,848 Other assets less liabilities-1.3% 1,346,278 Preferred Stock at redemption value-(84.7%) (90,000,000) ----------- Net Assets Applicable to Common Shareholders-100.0%(e) $106,250,126 ============ (a) Indicates a security has a zero coupon that remains in effect until a predetermined date at which time the stated coupon rate becomes effective until final maturity. (b) Coupon changes periodically based upon a predetermined schedule. Stated interest rate in effect at August 31, 2005. (c) 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 August 31, 2005, the aggregate market value of these securities amounted to $16,417,294 or 15.5% of net assets applicable to common shareholders. (d) Security is in default and is non-income producing. (e) Portfolio percentages are calculated based on net assets applicable to common shareholders. Glossary: NR-Not Rated. Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. See notes to financial statements. 18 o ACM MANAGED INCOME FUND STATEMENT OF ASSETS & LIABILITIES August 31, 2005 Assets Investments in securities, at value (cost $190,134,085) $194,903,848 Cash 512 Interest and dividends receivable 2,086,073 Receivable for investment securities sold 20,795 ----------- Total assets 197,011,228 ----------- Liabilities Payable for investment securities purchased 501,007 Advisory fee payable 96,816 Administrative fee payable 21,123 Accrued expenses and other liabilities 142,156 ----------- Total liabilities 761,102 ----------- Preferred Stock, at redemption value $.01 par value per share; 1,900 shares Remarketed Preferred Stock authorized, 900 shares issued and outstanding at $100,000 per share liquidation preference 90,000,000 ------------ Net Assets Applicable to Common Shareholders $106,250,126 ============ Composition of Net Assets Applicable to Common Shareholders Common stock, $.01 par value per share; 299,998,100 shares authorized, 25,300,262 shares issued and outstanding $ 253,003 Additional paid-in capital 210,832,557 Distributions in excess of net investment income (954,903) Accumulated net realized loss on investment transactions (108,650,294) Net unrealized appreciation of investments 4,769,763 ------------ Net Assets Applicable to Common Shareholders $106,250,126 ============ Net Asset Value Applicable to Common Shareholders (based on 25,300,262 common shares outstanding) $4.20 ===== See notes to financial statements. ACM MANAGED INCOME FUND o 19 STATEMENT OF OPERATIONS Year Ended August 31, 2005 Investment Income Interest $ 10,848,585 Dividends 40,717 $ 10,889,302 ------------ Expenses Advisory fee 1,267,745 Administrative fee 234,019 Remarketed Preferred Stock-- remarketing agent's fees 235,208 Audit 84,609 Legal 72,059 Printing 67,932 Transfer agency 42,959 Custodian 41,449 Directors' fees 38,941 Registration fees 32,997 Miscellaneous 42,993 ------------ Total expenses 2,160,911 Less: expenses waived by the Adviser (see Note B) (107,601) ------------ Net expenses 2,053,310 ------------ Net investment income 8,835,992 ------------ Realized and Unrealized Gain on Investments Net realized gain on investment transactions 441,094 Net change in unrealized appreciation/depreciation of investments 1,092,319 ------------ Net gain on investments 1,533,413 ------------ Dividends to Remarketed Preferred Shareholders from Net investment income (2,061,504) ------------ Net Increase in Net Assets Applicable to Common Shareholders Resulting from Operations $ 8,307,901 ============ See notes to financial statements. 20 o ACM MANAGED INCOME FUND STATEMENT OF CHANGES IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS Year Ended Year Ended August 31, August 31, 2005 2004 ============ ============ Increase (Decrease) in Net Assets Applicable to Common Shareholders Resulting from Operations Net investment income $ 8,835,992 $ 9,151,451 Net realized gain on investment transactions 441,094 2,391,352 Net change in unrealized appeciation/depreciation of investments 1,092,319 938,870 Dividends to Remarketed Preferred Shareholders from Net investment income (2,061,504) (1,124,802) ------------ ------------ Net increase in net assets applicable to Common Shareholders resulting from operations 8,307,901 11,356,871 ------------ ------------ Dividends to Common Shareholders from Net investment income (6,906,123) (10,809,460) Tax return of capital -0- (481,652) Common Stock Transactions Reinvestment of dividends resulting in the issuance of Common Stock -0- 1,664,721 ------------ ------------ Total increase 1,401,778 1,730,480 Net Assets Applicable to Common Shareholders Beginning of year 104,848,348 103,117,868 ------------ ------------ End of year (including distributions in excess of net investment income of $954,903 and $4,053,156, respectively) $106,250,126 $104,848,348 ============ ============ See notes to financial statements. ACM MANAGED INCOME FUND o 21 NOTES TO FINANCIAL STATEMENTS August 31, 2005 NOTE A Significant Accounting Policies ACM Managed 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 are 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 22 o ACM MANAGED INCOME FUND 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. 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. Taxes It is the Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially 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. 3. Investment Income and Investment Transactions Interest income is accrued daily. Dividend income is recorded on the ex-dividend date or as soon as the Fund is informed of the dividend. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Fund accretes discount as adjustments to interest income. Additionally, the Fund amortizes premiums on debt securities for financial statement reporting purposes only. 4. Dividends and Distributions Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in conformity 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. ACM MANAGED INCOME FUND o 23 NOTE B Advisory, Administrative Fees and Other Transactions with Affiliates Under the terms of an Investment Advisory Agreement, the Fund pays Alliance Capital Management L.P. (the "Adviser") an advisory fee at an annualized rate of .65% of the Fund's average weekly adjusted total assets (i.e., the average weekly value of total assets, including assets attributable to any preferred stock less accrued liabilities other than principal amount of money borrowed and accumulated dividends on shares of preferred stock). Such fee is accrued daily and paid monthly. Effective February 11, 2005, the Adviser voluntarily began to waive .10% of the Adviser's advisory fee; this fee waiver is expected to last for a period of one year. Such waiver amounted to $107,601. Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Global Investor Services, Inc. (AGIS), an affiliate of the Adviser, the Fund reimburses AGIS for costs relating to servicing phone inquiries for the Fund. During the year ended August 31, 2005, the Fund reimbursed $865 to AGIS. Under the terms of an Administrative Agreement, the Fund paid Princeton Administrators, L.P. (the "Administrator") a fee at an annual rate of .20% of average adjusted weekly net assets of the Fund for the period September 1, 2003 through June 30, 2004. Effective July 1, 2004, this fee was reduced so as to charge the Fund at a reduced annual rate of .12% of the average adjusted weekly net assets of the Fund but in no event less than $12,500 per month. Such fee is accrued daily and paid monthly. The Administrator prepares certain financial and regulatory reports for the Fund and provides clerical and other services. NOTE C Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the year ended August 31, 2005, were as follows: Purchases Sales =========== =========== Investment securities (excluding U.S. government securities) $53,606,722 $56,380,474 U.S. government securities 49,179,920 58,136,367 At August 31, 2005, the cost of investments for federal income tax purposes, gross unrealized appreciation and gross unrealized depreciation are as follows: Cost $191,156,423 ------------ Gross unrealized appreciation $ 7,051,949 Gross unrealized depreciation (3,304,524) ------------ Net unrealized appreciation $ 3,747,425 ============ 24 o ACM MANAGED INCOME FUND 1. 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 commissions, 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. NOTE D Common Stock There are 299,998,100 shares of $.01 par value common stock authorized. There are 25,300,262 shares of common stock issued and outstanding at August 31, 2005. During the year ended August 31, 2005 the Fund did not issue any shares in connection with the Fund's dividend reinvestment plan. During the year ended August 31, 2004, the Fund issued 383,116 shares in connection with the Fund's dividend reinvestment plan. NOTE E Preferred Stock The Fund has 1,900 shares of Remarketed Preferred Stock authorized. There are 900 shares of Remarketed Preferred Stock issued and outstanding, each at a ACM MANAGED INCOME FUND o 25 liquidation value of $100,000 per share plus accumulated, unpaid dividends. The dividend rate on the Remarketed Preferred Stock may change generally every 28 days as set by the remarketing agent. In accordance with the provisions of paragraph 3(k) of Part 1 of the Articles Supplementary of Remarketed Preferred Stock, the Fund determined to designate a special dividend period of 182 days commencing on Thursday, March 24, 2005 and ending September 21, 2005. As of March 24, 2005, the dividend rate on the Remarketed Preferred Stock is 3.60% and is effective through September 21, 2005. Prior to March 24, 2005, the dividend rate on the Remarketed Preferred Stock was 2.65%. The redemption of the Fund's remarketed preferred stock is outside of the control of the Fund because it is redeemable upon the occurrence of an event that is not solely within the control of the Fund. At certain times, the Preferred Shares are redeemable by the Fund, in whole or in part, at $100,000 per share plus accumulated, unpaid dividends. Although the Fund will not ordinarily redeem the Preferred Shares, it may be required to redeem shares if, for example, the Fund does not meet an asset coverage ratio required by law or to correct a failure to meet a rating agency guideline in a timely manner. The Fund voluntarily may redeem the Preferred Shares in certain circumstances. The Preferred Shareholders, voting as a separate class, have the right to elect at least two Directors at all times and to elect a majority of the Directors in the event two years' dividends on the Preferred Shares are unpaid. In each case, the remaining Directors will be elected by the Common Shareholders and Preferred Shareholders voting together as a single class. The Preferred Shareholders will vote as a separate class on certain other matters as required under the Fund's Charter, the Investment Company Act of 1940 and Maryland law. NOTE F Securities Lending The Fund may make secured loans of portfolio securities to brokers, dealers and financial institutions, provided that cash, liquid high-grade debt securities or bank letters of credit equal to at least 100% of the market values of the securities loaned is deposited and maintained by the borrower with the Fund. The risks in lending portfolio securities, as with other extensions of credit, consist of possible loss of rights in the collateral should the borrower fail financially. In determining whether to lend securities to a particular borrower, the Adviser will consider all relevant facts and circumstances, including the creditworthiness of the borrower. While securities are on loan, the borrower will pay the Fund any income earned thereon and the Fund may invest any cash collateral in portfolio securities, thereby earning additional income, or receive an agreed upon amount 26 o ACM MANAGED INCOME FUND of income from a borrower who has delivered equivalent collateral. When such securities are borrowed against cash, the Fund agrees to pay the borrower of such securities a "rebate rate" for the use of the cash the borrower has pledged as collateral. As of August 31, 2005, the Fund had no securities on loan. 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 of the United States Government. 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 Common Shareholders The tax character of the distributions paid to common shareholders during the fiscal year ended August 31, 2005 and August 31, 2004 were as follows: 2005 2004 =========== =========== Distributions paid from: Ordinary income $ 6,906,123 $10,809,460 ----------- ----------- Total taxable distributions 6,906,123 10,809,460 Tax return of capital -0- 481,652 ----------- ----------- Total distributions paid $ 6,906,123 $11,291,112 =========== =========== ACM MANAGED INCOME FUND o 27 As of August 31, 2005, the components of accumulated earnings/(deficit) applicable to common shareholders on a tax basis were as follows: Accumulated capital and other losses $(108,582,859)(a) Unrealized appreciation/(depreciation) 3,747,425(b) ------------- Total accumulated earnings/(deficit) $(104,835,434) ============= (a) On August 31, 2005, the Fund had a net capital loss carryforward for federal income tax purposes of $105,754,498 of which $599,427 expires in the year 2007, $30,192,284 expires in the year 2008, $35,940,601 expires in the year 2009, $28,986,731 expires in the year 2010, $10,023,463 expires in the year 2011 and $11,992 expires in the year 2012. To the extent future capital gains are offset by capital loss carryforward, such gains will not be distributed. For the year ended August 31, 2005, the Fund deferred to October, 2005 post October capital losses of $2,828,361. During the fiscal year, the Fund utilized capital loss carryforwards of $98,020. (b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the difference between book and tax amortization methods for premium. During the current fiscal year, permanent differences, primarily due to the tax character of paydown gains/losses, distributions in excess of net investment income and the tax treatment of bond premium, resulted in a net decrease in distributions in excess of net investment income, a net increase in accumulated net realized loss on investments and a decrease in 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 the 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 pur- 28 o ACM MANAGED INCOME FUND suant to a ruling by the Judicial Panel on Multidistrict Litigation transferring and centralizing all of the mutual fund cases involving market timing 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 February 10, 2004, the Adviser received (i) a subpoena duces tecum from the Office of the Attorney General of the State of West Virginia and (ii) a request for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commission") (together, the "Information Requests"). Both Information Requests require the Adviser to produce documents concerning, among other things, any market timing or late trading in the Adviser's sponsored mutual funds. The Adviser responded to the Information Requests and has been cooperating fully with the investigation. On April 11, 2005, a complaint entitled The Attorney General of the State of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P. ("Alliance Holding"), and various other defendants not affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia by the Attorney General of the State of West Virginia. The WVAG Complaint makes factual allegations generally similar to those in certain of the complaints related to the lawsuits discussed above. On May 31, 2005, defendants removed the WVAG Complaint to the United States District Court for the Northern District of West Virginia. On July 12, 2005, plaintiff moved to remand. That motion is pending. On August 30, 2005, the deputy commissioner of securities of the West Virginia Securities Commission signed a "Summary Order to Cease and Desist, and Notice of Right to Hearing" addressed to the Adviser and Alliance Holding. The Summary Order claims that the Adviser and Alliance Holding violated the West Virginia Uniform Securities Act, and makes factual allegations generally similar to those in certain of the complaints related to the lawsuits discussed above. The time for the Adviser and Alliance Holding to respond to the Summary Order has been extended. The Adviser intends to vigorously defend against the allegations in the WVAG Complaint and the Summary Order. 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 Discontinuation dated September 1, 2004 ("NYAGOrder"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of ACM MANAGED INCOME FUND o 29 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. 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 defendant in the Aucion Compliant. 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 30 o ACM MANAGED INCOME FUND 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. On October 19, 2005, the District Court granted in part, and denied in part, defendants' motion to dismiss the Aucoin Complaint and as a result the only claim remaining is plaintiffs' Section 36(b) claim against the Adviser. 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. ACM MANAGED INCOME FUND o 31 FINANCIAL HIGHLIGHTS Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended August 31, ------------------------------------------------------------- 2005 2004 2003 2002(a) 2001 ------------------------------------------------------------- Net asset value, beginning of period $4.14 $4.14 $4.06 $4.71 $5.31 ------------------------------------------------------------- Income From Investment Operations Net investment income(b) .35 .36(c) .39 .54 .74 Net realized and unrealized gain (loss) on investment transactions .06 .13 .26 (.59) (.58) Dividends to preferred shareholders from net investment income (common stock equivalent basis) (.08) (.04) (.06) (.09) (.22) ------------------------------------------------------------- Net increase (decrease) in net asset value from operations .33 .45 .59 (.14) (.06) ------------------------------------------------------------- Less: Dividends and Distributions to Common Shareholders Dividends from net investment income (.27) (.43) (.50) (.50) (.43) Tax return of capital -0- (.02) (.01) (.01) (.11) ------------------------------------------------------------- Total dividends and distributions to common shareholders (.27) (.45) (.51) (.51) (.54) ------------------------------------------------------------- Net asset value, end of period $4.20 $4.14 $4.14 $4.06 $4.71 ============================================================= Market value, end of period $3.69 $4.03 $4.61 $4.33 $4.93 ============================================================= Premium/(Discount) (12.14)% (2.66)% 11.35% 6.65% 4.67% ------------------------------------------------------------- Total Return Total investment return based on:(d) Market value 8.87% (3.08)% 19.74% (1.17)% (12.86)% Net asset value (1.74)% 10.88% 14.68% (3.01)% (1.02)% Ratios/Supplemental Data Net assets applicable to common shareholders, end of period (000's omitted) $106,250 $104,848 $103,118 $99,549 $113,748 Preferred Stock, at redemption value ($100,000 per share liquidation preference) (000's omitted) $90,000 $90,000 $90,000 $90,000 $95,000 Ratios to average net assets applicable to common shareholders of: Expenses, net of waivers(e) 1.95% 2.14%(c) 2.28% 2.31% 3.26% Expenses, before waivers(e) 2.06% 2.14%(c) 2.28% 2.31% 3.26% Expenses, before waivers, excluding interest expense(e) 2.06% 2.14%(c) 2.28% 2.19% 2.10% Net investment income, before preferred stock dividends(e) 8.41% 8.72%(c) 9.46% 12.56% 15.09% Preferred stock dividends 1.96% 1.07% 1.35% 2.19% 4.49% Net investment income, net of preferred stock dividends 6.45% 7.65%(c) 8.11% 10.37% 10.60% Portfolio turnover rate 55% 53% 97% 99% 248% Asset coverage ratio 218% 216% 215% 211% 220%
See footnote summary on page 33. 32 o ACM MANAGED INCOME FUND (a) As required, effective September 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 statement reporting purposes only. The effect of this change for the year ended August 31, 2002 was to decrease net investment income per share by $0.05, decrease net realized and unrealized loss on investments by $0.05 and decrease the ratios of net investment income before and net preferred stock dividends to average net assets applicable to common shareholders from 13.78% and 11.58% to 12.56% and 10.37%, respectively. Per share, ratios and supplemental data for periods prior to September 1, 2001 have not been restated to reflect this change in presentation. (b) Based on average shares outstanding. (c) Net of audit expenses reimbursed by the Adviser. The expense ratio before reimbursement was 2.14%. (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) The expense and net investment income ratios do not reflect the effect of dividend payments to preferred shareholders. ACM MANAGED INCOME FUND o 33 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of ACM Managed Income Fund, Inc. We have audited the accompanying statement of assets and liabilities of ACM Managed Income Fund, Inc. (the "Fund"), including the portfolio of investments, as of August 31, 2005, and the related statement of operations for the year then ended, the statement of changes in net assets applicable to common shareholders 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 standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audit included 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of August 31, 2005, by correspondence with the custodian and others. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of ACM Managed Income Fund, Inc. at August 31, 2005, the results of its operations for the year then ended, the changes in its net assets applicable to common shareholders 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 October 5, 2005 34 o ACM MANAGED INCOME FUND ADDITIONAL INFORMATION (unaudited) ACM Managed Income Fund 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 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 a 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 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 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. ACM MANAGED INCOME FUND o 35 The automatic reinvestment of distributions will not relieve participants of any income taxes that may be payable (or required to be withheld) on 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 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 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, (iii) no material changes in the principal risk factors associated with investment in the Fund, (iv) Mr. Mark A. Hamilton has replaced Ms. Sheryl Rothman as one of the persons primarily responsible for the day-to-day management of the Fund's investment portfolio. Mr. Kewjin Yuoh has replaced Mr. Matthew D.W. Bloom as the other person primarily responsible for the day-to-day management of the Fund's investment portfolio. 36 o ACM MANAGED INCOME FUND SUPPLEMENTAL PROXY INFORMATION (unaudited) The Annual Meeting of Stockholders of ACM Managed Income Fund, Inc. was held on March 24, 2005. The description of each proposal and number of shares voted at the meeting are as follows:
Authority Voted For Withheld - ------------------------------------------------------------------------------------------------------- To elect three Directors Class One of ACM V's common (term expires 2007) stockholders for a term Michael J. Downey 22,280,904 770,547 of two or three years and until his or her successor Class Two is duly elected and (term expires 2008) qualifies. William H. Foulk, Jr. 22,266,220 785,231 David H. Dievler 22,277,296 774,155 To elect four Directors Class One of ACM V's preferred (term expires 2007) stockholders for a term Michael J. Downey 887 0 of two or three years and until his or her Class Two successor is duly elected (term expires 2008) and qualifies. William H. Foulk, Jr. 887 0 David H. Dievler 887 0 James M. Hester 887 0
ACM MANAGED INCOME FUND o 37 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 Jeffrey L. Phlegar, Senior Vice President Douglas J. Peebles, Senior Vice President Paul J. DeNoon, Vice President Matthew D.W. Bloom, Vice President Mark A. Hamilton(2), Vice President Kewjin Yuoh(2), Vice President Mark R. Manley, Secretary Mark D. Gersten, Treasurer & Chief Financial Officer Vince S. Noto, Controller Administrator Princeton Administrators, L.P. P.O.Box 9095 Princeton, NJ 08543-9095 Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 Common Stock: Dividend Paying Agent, Transfer Agent And Registrar Equiserve Trust Company, N.A. P.O. Box 43011 Providence, RI 02940-3011 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 Preferred Stock: Dividend PayingAgent, Transfer Agent And Registrar Bank of New York 385 Rifle Camp Road West Paterson, NJ 07424 Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York,NY 10036 (1) Member of the Audit Committee, the Independent Directors Committee and the Governance and Nominating Committee. (2) Messrs. Hamillton and Yuoh 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 at market prices from time to time shares of its Common Stock in the open market. This report, including the financial statements therein, is transmitted to the shareholders of ACM Managed Income Fund for their information. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report. Annual Certifications--As required, on April 21, 2005, 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. 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. 38 o ACM MANAGED INCOME 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 DIRECTORSHIPS 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 83 SCBPartners 1345 Avenue of the since 2001; prior thereto, Chief Inc., SCB Inc. 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 109 None 2 Soundview Drive independent consultant. He Suite 100 was formerly Senior Manager Greenwich, CT 06830 of Barrett Associates, Inc., a 9/7/32 registered investment adviser, (1998) with which he had been Chairman of the Board associated since prior to 2000. 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 106 None 500 SE Mizner Blvd. President and Chief Insurance Boca Raton, FL 33432 Officer of The Equitable Life 11/7/30 Assurance Society of the United (1988) States; Chairman and Chief Executive Officer of Evlico (insurance); Director of Avon, BP (oil and gas), Ecolab Incorporated (specialty chemicals), Tandem Financial Group, and Donaldson, Lufkin & Jenrette Securities Corporation; Governor at Large-National Asociation of Securities Dealers, Inc. David H. Dievler, # Independent consultant. Until 108 None P.O. Box 167 December 1994, he was Senior Spring Lake, NJ 07762 Vice President of ACMC responsible 10/23/29 for mutual fund administration. (1988) Prior to joining ACMC in 1984, he was Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that, he was Senior Manager at Price Waterhouse & Co. Member of the American Institute of Certified Public Accountants since 1953.
ACM MANAGED INCOME FUND o 39
PORTFOLIOS IN FUND OTHER NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY (YEAR ELECTED) DURING PAST 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS (continued) John H. Dobkin, # Consultant. He was formerly 106 Municipal P.O. Box 12 President of Save Venice, Inc. Art Society Annandale, NY 12504 (preservation organization) (New York 2/19/42 from 2001-2002, Senior Advisor City) (1998) from June 1999-June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989 - May 1999. Previously, Director of the National Academy of Design. During 1988-92, he was Director and Chairman of the Audit Committee of ACMC. Dr. James M. Hester, # Formerly President of The Harry 11 None 25 Cleveland Lane Frank Guggenheim Foundation, Princeton, NJ 08540 New York University and the New 4/19/24 York Botanical Garden. Formerly (1988) Rector of the United Nations University and Vice Chairman of the Board of the Federal Reserve Bank of New York. Michael J. Downey, # Consultant since 2004. Formerly 81 Asia Pacific c/o Alliance Capital managing partner of Lexington Fund, Inc. Management L.P. Capital, LLC (investment advisory and The 1345 Avenue of the firm) from 1997 until December Merger Fund Americas 2003. Prior thereto, Chairman Attn: Philip L. Kirstein and CEO of Prudential Mutual New York, NY 10105 Fund Management (1987-1993). 1/26/44 (2005)
* Mr. Mayer is an "interested person", as defined in the 1940 Act, due to his position as Executive Vice President of ACMC, the Fund's investment adviser. # Member of the Audit Committee, the Independent Directors Committee and the Governance and Nominating Committee. + Ms. Block was an "interested person", as defined in the 1940 Act, from July 22, 1992 until October 21, 2004 by reason of her ownership of securities of a control person of the Adviser. Ms. Block received shares of The Equitable Companies Incorporated ("Equitable") as part of the demutualization of The Equitable Life Assurance Society of the United States in 1992. Ms. Block's Equitable shares were subsequently converted through a corporate action into American Depositary Shares of AXA, which were sold for approximately $2,400 on October 21, 2004. Equitable and AXA are control persons of the Adviser. 40 o ACM MANAGED INCOME FUND Officers of the Fund Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* AND PRINCIPAL POSITION(S) PRINCIPAL OCCUPATION 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 Independent Compliance Officer-- 5/29/45 and Independent Mutual Funds of ACMC**, with which Compliance Officer 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 of Merrill Lynch Investment Managers, L.P. since prior to 2000 until March 2003. Jeffrey L. Phlegar Senior Vice President Executive Vice President of ACMC** 6/28/66 with which he has been associated since prior to 2000. Douglas J. Peebles Senior Vice President Executive Vice President of ACMC**, 8/10/65 with 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. Mathew D.W. Bloom Vice President Senior Vice President of ACMC**, with 7/15/56 which he has been associated since prior to 2000. Mark A. Hamilton Vice President Vice President of ACMC** with which 3/24/65 he has been associated since October 2000 and a member of the Global High Yield portfolio-management team. Prior thereto, he managed European and Global fixed-income portfolios for institutional and retail clients in London since prior to 2000. Kewjin Yuoh Vice President Vice President of ACMC** since March 3/11/72 2003. Prior thereto, 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.
ACM MANAGED INCOME FUND o 41
NAME, ADDRESS* AND PRINCIPAL POSITION(S) PRINCIPAL OCCUPATION DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS - ---------------------------------------------------------------------------------------------- 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. Mark D. Gersten Treasurer and Chief Senior Vice President of AGIS** and a 10/4/50 Financial Officer Vice President of 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. 42 o ACM MANAGED INCOME FUND 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 Portfolio Global & International Global Health Care Fund* Global Research Growth Fund Global Technology Fund* Greater China '97 Fund International Growth Fund* International Research Growth 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. Prior to May 16, 2005, International Growth Fund was named Worldwide Privatization Fund and International Research Growth Fund was named International Premier Growth Fund. On June 24, 2005, All-Asia Investment Fund merged into International Research GrowthFund. On July 8, 2005, New Europe Fund merged into International Research Growth 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 MANAGED INCOME FUND o 43 SUMMARY OF GENERAL INFORMATION ACM Managed 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 newspapers. The Fund's NYSE trading symbol is "AMF." Weekly comparative net asset value (NAV) and market price information about the Fund is published each Monday in The Wall Street Journal, each Sunday in The New York Times and other newspapers in a table called "Closed-End Funds." Dividend Reinvestment Plan A Dividend Reinvestment Plan provides automatic reinvestment of dividends and capital gains distribution in additional Fund shares. 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. 44 o ACM MANAGED INCOME FUND Privacy Notice Alliance, the AllianceBernstein Family of Funds and AllianceBernstein Investment Research and Management, Inc. (collectively, "Alliance" or "we") understand the importance of maintaining the confidentiality of our customers' nonpublic personal information. In order to provide financial products and services to our customers efficiently and accurately, we may collect nonpublic personal information about our customers from the following sources: (1) information we receive from account documentation, including applications or other forms (which may include information such as a customer's name, address, social security number, assets and income) and (2) information about our customers' transactions with us, our affiliates and others (including information such as a customer's account balances and account activity). It is our policy not to disclose nonpublic personal information about our customers (or former customers) except to our affiliates, or to others as permitted or required by law. From time to time, Alliance may disclose nonpublic personal information that we collect about our customers (or former customers), as described above, to non-affiliated third party providers, including those that perform processing or servicing functions and those that provide marketing services for us or on our behalf pursuant to a joint marketing agreement that requires the third party provider to adhere to Alliance's privacy policy. We have policies and procedures to safeguard nonpublic personal information about our customers (or former customers) which include: (1) restricting access to such nonpublic personal information and (2) maintaining physical, electronic and procedural safeguards that comply with federal standards to safeguard such nonpublic personal information. ACM MANAGED INCOME FUND 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN (R) Investment Research and Management MIFAR0805 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 12(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 auditor 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 related to 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 Audit-Related Tax Fees Fees Fees -------- ------------- -------- 2004 $ 51,000 $ 22,535 $ 28,743 2005 $ 53,000 $ 10,355 $ 18,304 (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 auditors. 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 ("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) ---------------------- --------------------- 2004 $ 1,103,010 [$301,278] ($272,535) ($ 28,743) 2005 $ 905,852 [$198,659] ($180,355) ($ 18,304) (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 auditor 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. 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. Finally, because we believe that good corporate governance requires shareholders to have a meaningful voice in the affairs of the company, we will support non-binding shareholder proposals that request that companies amend their by-laws to provide that director nominees be elected by an affirmative vote of a majority of the votes cast. 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 non-audit related services for the company. Although we recognize that there may be special circumstances that could lead to high levels of non-audit fees in some years, we would normally consider non-audit fees in excess of 70% of total fees paid to the auditing firm to be disproportionate. Therefore, absent unique circumstances, we may vote against the appointment of auditors if the fees for non-audit related services exceed 70% of the total fees paid by the company to the auditing firm 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. 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 our research analysts that cover the company and our 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 corporate transactions such as 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 excessively or inappropriately dilute shareholder ownership. Conversely, we support proposals that would restrict or otherwise eliminate anti-takeover or anti-shareholder 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 the authorization of blank check preferred stock, classified boards and supermajority vote requirements) that appear to be anti-shareholder or 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 to company employees. 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. In general, we will analyze the proposed plans to ensure that shareholder equity will not be excessively diluted. With regard to stock award or option plans, we consider whether the option exercise prices are below the market price on the date of grant and whether an acceptable number of employees are eligible to participate in such programs. We will generally oppose plans that have below market value exercise prices on the date of issuance or 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 requiring managements to submit severance packages that 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 that should be appropriately accounted for. 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 proxy solicited 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. Additionally, we have implemented 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 third party research services 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. Absent compelling reasons to the contrary, Alliance Capital believes that the benefit to the client of exercising the vote does not outweigh the cost of voting (i.e. not being able to sell the shares during this period). Accordingly, if share blocking is required we generally 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. Loaned Securities Many clients of Alliance Capital have entered into securities lending arrangements with agent lenders to generate additional revenue. Alliance Capital will not be able to vote securities that are on loan under these types of arrangements. However, under rare circumstances, for voting issues that may have a significant impact on the investment, we may request that clients recall securities that are on loan if we determine that the benefit of voting outweighs the costs and lost revenue to the client or fund and the administrative burden of retrieving the securities. Proxy Voting Records You may obtain 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 web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Item is not yet effective with respect to the registrant. ITEM 9. 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 10. 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 11. 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 during the second fiscal quarter of the period 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 12. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2 hereof 12 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (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 Managed Income Fund, Inc. By: /s/ Marc O. Mayer ----------------- Marc O. Mayer President Date: October 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: October 28, 2005 By: /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: October 28, 2005 EX-99.CODE ETH 2 edg11290_ex12a-ethics.txt Exhibit 12(a)(1) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code The AllianceBernstein Mutual Fund Complex's code of ethics (this "Code") for the investment companies within the complex (collectively, the "Funds" and each, a "Company") applies to each Company's Principal Executive Officer, Principal Financial and Accounting Officer and Controller (the "Covered Officers," each of whom is set forth in Exhibit A) for the purpose of promoting: * honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company; * compliance with applicable laws and governmental rules and regulations; * the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and * accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company. For the purposes of this Code, members of the Covered Officer's family include his or her spouse, children, stepchildren, financial dependents, parents and stepparents. Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as "affiliated persons" of the Company. The Company's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Company's Board of Directors or Trustees (the "Directors") that the Covered Officers may also be officers or employees of one or more of the other Funds or of other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. Each Covered Officer must: * not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Company whereby the Covered Officer would benefit personally to the detriment of the Company; * not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Company; * not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; There are some conflict of interest situations, whether involving a Covered Officer directly or a member of his family, that should always be discussed with the General Counsel of Alliance Capital Management L.P.(the "General Counsel"), if material. Examples of these include: * service as a director on the board of directors or trustees of any public or private company (other than a not-for-profit organization); * the receipt of any non-nominal gifts; * the receipt of any entertainment from any company with which the Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; * any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; * a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance * Each Covered Officer should familiarize himself with the disclosure requirements and disclosure controls and procedures generally applicable to the Company; * each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations; * each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and * it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: * upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the General Counsel that he has received, read, and understands the Code; * annually thereafter affirm to the General Counsel that he has complied with the requirements of the Code; * complete at least annually a questionnaire relating to affiliations or other relationships that may give rise to conflicts of interest; * not retaliate against any other Covered Officer or any employee of the Company or their affiliated persons for reports of potential violations that are made in good faith; and * notify the General Counsel promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, waivers sought by a Covered Officer will be considered by the Company's Audit Committee (the "Committee"). The Company will follow these procedures in investigating and enforcing this Code: * the General Counsel will take all appropriate action to investigate any potential violations reported to him; * if, after such investigation, the General Counsel believes that no material violation has occurred, the General Counsel is not required to take any further action; * any matter that the General Counsel believes is a material violation will be reported to the Committee; * if the Committee concurs that a material violation has occurred, it will inform and make a recommendation to the Directors, who will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; * the Committee will be responsible for granting waivers, as appropriate; and * any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Company for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Company, the Company's adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, it is understood that this Code is in all respects separate and apart from, and operates independently of, any such policies and procedures. In particular, the Company's and its investment adviser's and principal underwriter's codes of ethics under Rule 17j-l under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Directors, including a majority of independent directors. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Directors, the investment adviser, their counsel, counsel to the Company and, if deemed appropriate by the Directors of the Company, to the Directors of the other Funds. VIII. Internal Use The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. Date: July 22, 2003, as amended March 17, 2004 Exhibit A Persons Covered by this Code of Ethics Marc O. Mayer, Principal Executive Officer Mark Gersten, Principal Financial and Accounting Officer Vince Noto, Controller EX-99.CERT 3 edg11290_ex12b-302.txt Exhibit 12(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, President of ACM Managed Income Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of ACM Managed Income Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 28, 2005 /s/ Marc O. Mayer ----------------- Marc O. Mayer President Exhibit 12(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Mark D. Gersten, Treasurer and Chief Financial Officer of ACM Managed Income Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of ACM Managed Income Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 28, 2005 /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer EX-99.906 CERT 4 edg11290_ex12c-906.txt EXHIBIT 12(c) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of ACM Managed Income Fund, Inc. (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended August 31, 2005 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: October 28, 2005 By: /s/ Marc O. Mayer ----------------- Marc O. Mayer President By: /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----