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: 811-07964
ACM MANAGED DOLLAR 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: September 30, 2005
Date of reporting period: September 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
ACM Managed Dollar Income Fund
Annual Report
September 30, 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.
November 17, 2005
Annual Report
This report provides management's discussion of fund performance for ACM
Managed Dollar Income Fund (the "Fund") for the annual reporting period ended
September 30, 2005. The Fund is a closed-end fund that trades under the New
York Stock Exchange symbol "ADF".
Investment Objective and Policies
This closed-end fund is designed for investors who seek high current income and
capital appreciation. To achieve this objective, it invests primarily in
high-yielding, U.S. and non-U.S. fixed income securities, denominated in U.S.
dollars, that we expect to benefit from improving economic and credit
fundamentals. For more information regarding the Fund's risks, please see "A
Word About Risk" on pages 4-5 and "Note E --Risks Involved in Investing in the
Fund" of the Notes to Financial Statements on page 34.
Investment Results
The table on page 6 shows the Fund's performance compared to its composite
benchmark, a 65%/35% blend of the J.P. Morgan Emerging Markets Bond Index Plus
(JPM EMBI+) and the Credit Suisse First Boston High Yield (CSFBHY) Index,
respectively, for the six- and 12-month periods ended September 30, 2005. The
JPM EMBI+ is a standard measure of the performance of a basket of unmanaged
emerging market debt securities. The CSFBHY Index is a standard measure of the
performance of a basket of unmanaged U.S. high yield debt securities. The
Fund's performance is compared to a composite benchmark of both indices because
this composite more closely resembles the composition of the Fund's portfolio.
For the 12-month period ended September 30, 2005, the Fund outperformed its
blended benchmark. Contributing positively to performance was the Fund's
ability to leverage during a period of continued strong emerging market debt
and high yield returns. Within the Fund's emerging market allocation, its
overweighted position in Russia contributed positively to performance. Russia,
the Fund's largest emerging market debt holding, posted the best annual country
return within the JPM EMBI+. The return was influenced by Russia's continued
benefit of higher oil revenues, strong fiscal performance and debt pre-payments.
Within the Fund's high yield holdings, industry allocation contributed
positively to performance, while security selection detracted from performance.
The Fund's underweighted position in the automotive industry was one of the
primary positive contributors to relative performance as that sector
underperformed. The automotive industry was pressured by a series of negative
developments, including several downgrades. The Fund's overweighted position in
media/cable detracted from relative performance as that industry also
underperformed. The Fund's performance was hurt by security selection in the
packaging, utilities and building
ACM MANAGED DOLLAR INCOME FUND o 1
products industries, but was helped by security selection in the automotive and
wireless industries.
Market Review and Investment Strategy
During the annual reporting period, high yield and emerging market debt posted
the strongest returns within the fixed-income market. High yield securities
returned 6.31%, as represented by the CSFBHY Index, while emerging market debt
returned a strong 15.15%, according to the JPM EMBI+.
A combination of factors supported the high yield market throughout the year
including a strong investor demand for yield, limited supply and strong
corporate earnings. Liquidity in the high yield market also remained ample with
default rates near all-time lows. In September, however, returns were dampened
somewhat as the sector posted its first negative monthly return since April.
Investor sentiment turned more cautious as the post-Katrina energy price shock
weighed on consumers and equity investors. High yield spreads, according to
CSFB, were 377 basis points over Treasuries at the end of the reporting period,
representing a tightening of 53 basis points during the annual period. Most of
the tightening occurred early in the reporting period. The average yield at the
end of the period was 7.98%.
With the exception of consumer durables and transportation, all high yield
industries posted positive returns. Outperforming industries included
media/telecom at 9.43%, utilities at 8.48%, service at 8.47%, energy at 8.42%
and chemicals at 8.28%. Underperforming industries included consumer durables
at -7.96% and transportation at -2.25%.
Dispersion among high yield industries remained quite narrow, leading to
limited opportunities for outperformance through industry overweights and
underweights. As such, the Fund's portfolio manager (the "manager") continued
to emphasize security selection as the primary means of achieving value,
drawing on extensive fundamental and quantitative research to help identify the
winners and losers. With continued spread compression during the period, the
manager reduced the Fund's risk exposure by focusing on a more neutral risk
profile and adding diversification into the Fund's portfolio holdings.
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 continued to be underpinned by a historic low default
rate.
The emerging market debt class posted the strongest returns within fixed-income
sectors for the annual period. The emerging markets have enjoyed strong
investor demand, a favorable low global interest rate environment, strong
global liquidity and improving individual country fundamentals. Additionally,
many emerging debt countries markedly improved their external debt dynamics and
pre-funded their debt obligations through 2006.
For the annual period, all emerging market countries posted positive returns
with the non-Latin region returning 15.73% and marginally
2 o ACM MANAGED DOLLAR INCOME FUND
outpacing the Latin countries which returned 14.79%. Several Latin countries
benefited from improved export demand and strong commodity prices, particularly
oil. Countries outperforming for the annual period included oil-producing
Russia, which returned 22.76%, Ecuador at 22.32%, Venezuela at 22.32% and
Panama at 20.68%. Underperforming countries for the period included Poland at
4.17%, Bulgaria at 4.56% and Morocco at 5.40%.
During the reporting period, the Fund maintained allocations to its core
emerging market countries (Brazil, Argentina, Russia, Colombia, Mexico, Turkey
and Venezuela). The Fund was also overweight in the Latin American region as
those countries benefited from improving macroeconomic fundamentals and higher
commodity prices. Individual emerging countries favored in the Fund during the
year included Russia, which, as previously mentioned, was the Fund's largest
overweight and the best performing country.
The Fund also favored Argentina based on very strong growth (10.1% GDP growth
in the second quarter of 2005), solid growth in reserves, and improvement in
the political system with the president recently consolidating gains. Argentina
also benefited from a completion of its debt restructuring. The Fund's exposure
to Peru was increased as economic growth continued to outpace most Latin
countries on strong demand for its exports. Exports doubled in Peru during
1999-2004, led by mining, and growth has averaged 5% per annum. The Ukraine,
which experienced strong economic growth and ratings upgrades, was also
favored. Lastly, the Fund's exposure to Ecuador was significantly reduced.
Although credit fundamentals in that country are sound, political volatility
warranted caution.
ACM MANAGED DOLLAR 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 Dollar 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. For additional
shareholder information regarding this Fund, please see page 56.
Benchmark Disclosure
The unmanaged J.P. Morgan Emerging Markets Bond Index Plus (JPM EMBI+) and the
unmanaged Credit Suisse First Boston High Yield (CSFBHY) Index do not reflect
fees and expenses associated with the active management of a mutual fund
portfolio. The JPM EMBI+ is comprised of dollar-denominated restructured
sovereign bonds; a large percentage of the index is made up of Brady bonds. The
CSFBHY Index is a measure of lower-rated, fixed-income, non-convertible U.S.
dollar-denominated securities meeting certain criteria developed by Credit
Suisse designed to enable the index to reflect the high yield market. Investors
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
The Fund may utilize leverage through the investment techniques of reverse
repurchase agreements and dollar rolls. Repurchase agreements involve sales by
the Fund of portfolio assets concurrently with an agreement by the Fund to
repurchase the same assets at a later date at a fixed price. Generally, the
effect of such a transaction is that the Fund can recover all or most of the
cash invested in the portfolio securities involved during the term of the
reverse repurchase agreement, while it will be able to keep the interest income
associated with those portfolio securities. Such transactions are only
advantageous if the interest cost to the Fund of the reverse repurchase
agreement transaction is less than the cost of otherwise obtaining the cash.
The Fund may enter into dollar rolls in which the Fund sells securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type and coupon) securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
the securities. The Fund is compensated by the difference between the current
sales price and the lower forward price for the future purchase (often referred
to as the "drop") as well as by the interest earned on the cash proceeds of the
initial sale.
Reverse repurchase agreements and dollar rolls are speculative techniques and
are considered borrowings by the Fund. The effect of leverage can realize
shareholders higher returns than if the Fund were not leveraged and the use of
leverage techniques can add to net asset value (NAV). However, the risks of
such techniques are potentially a higher volatility of the NAV of the Common
Stock, potentially more volatility in the market value of the Common Stock and
the relatively greater effect on the NAV of the Common Stock caused by
favorable or adverse changes in the currency exchange rates. In addition,
changes in the interest rate environment can increase or decrease shareholder
returns. This leverage will not exceed 33% of the Fund's total assets, less
liabilities.
(Historical Performance continued on next page)
4 o ACM MANAGED DOLLAR INCOME FUND
HISTORICAL PERFORMANCE
(continued from previous page)
To the extent that the current interest rate on the Fund's indebtedness
approaches the net return on the leveraged portion of the Fund's investment
portfolio, then the benefit to the shareholders will be reduced. If the rate on
indebtedness were to exceed the net return on the same portion of the
portfolio, then this would result in a lower rate of return for the
shareholders. Similarly, the use of leverage in a declining market can advance
the decrease of the Fund's NAV more so than if the Fund were not leveraged,
which would likely be reflected in a greater decline in the market price for
shares of Common Stock than if the Fund were not leveraged. In extreme cases,
if the Fund's current investment income were not sufficient to meet interest
payments on indebtedness or if the Fund failed to maintain the asset coverage
required by the 1940 Act, then it could be necessary for the Fund to liquidate
certain investments at a time when it may be disadvantageous to do so, thereby
reducing its NAV.
Part of the Fund's assets will be invested in foreign and emerging markets
fixed-income securities which may magnify asset value fluctuations due to
changes in foreign exchange rates and the possibility of substantial volatility
due to political and economic uncertainties in foreign countries. This may have
a significant effect on the Fund's asset value. Price fluctuations may be
caused by changes in the general level of interest rates or changes in bond
credit quality ratings. Please note, as interest rates rise, existing bond
prices fall and can cause the value of an investment in the Fund to decline.
Changes in interest rates have a greater effect on bonds with longer maturities
than on those with shorter maturities. High yield bonds involve a greater risk
of default and price volatility than other bonds. Investing in non-investment
grade securities presents special risks, including credit risk. While the Fund
invests principally in fixed-income securities, in order to achieve its
investment objectives, the Fund may at times use certain types of investment
derivatives, such as options, 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)
ACM MANAGED DOLLAR INCOME FUND o 5
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARK
PERIODS ENDED SEPTEMBER 30, 2005
Returns
-----------------------
6 Months 12 Months
-----------------------
ACM Managed Dollar Income Fund (NAV) 9.35% 14.57%
Composite: 65% JPM EMBI+ /
35% CSFBHY Index 8.07% 12.06%
JPM EMBI+ 10.89% 15.15%
CSFBHY Index 2.82% 6.31%
The Fund's Market Price per share on September 30, 2005 was $7.74. For
additional Financial Highlights, please see page 40.
GROWTH OF A $10,000 INVESTMENT IN THE FUND
9/30/95 TO 9/30/05
ACM Managed Dollar Income Fund (NAV): $28,354
Composite: $31,593
[THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL]
ACM Managed Dollar
Income Fund (NAV) Composite
-------------------------------------------------------------------------------
9/30/95 $10,000 $10,000
9/30/96 $14,086 $13,095
9/30/97 $18,825 $16,048
9/30/98 $12,006 $13,380
9/30/99 $14,250 $15,565
9/30/00 $15,587 $18,505
9/30/01 $14,016 $18,399
9/30/02 $14,048 $18,447
9/30/03 $21,742 $25,076
9/30/04 $24,669 $28,194
9/30/05 $28,354 $31,593
This chart illustrates the total value of an assumed $10,000 investment in ACM
Managed Dollar Income Fund at net asset value (NAV) (from 9/30/95 to 9/30/05)
as compared to the performance of the Fund's benchmark, a 65%/35% blend of the
J.P. Morgan Emerging Markets Bond Index Plus (JPM EMBI+) and the Credit Suisse
First Boston High Yield (CSFBHY) Index, respectively. The chart assumes the
reinvestment of dividends and capital gains.
See Historical Performance and Benchmark disclosures on pages 4 and 5.
6 o ACM MANAGED DOLLAR INCOME FUND
PORTFOLIO SUMMARY
September 30, 2005
PORTFOLIO STATISTICS
Net Assets ($mil): $178.6
SECURITY TYPE BREAKDOWN*
[ ] 52.0% Sovereign Debt Obligations [PIE CHART OMITTED]
[ ] 46.2% Corporate Debt Obligations
[ ] 0.7% Preferred Stock
[ ] 1.1% Short-Term
* All data are as of September 30, 2005. The Fund's security type breakdown is
expressed as a percentage of total investments (excluding security lending
collateral) and may vary over time.
ACM MANAGED DOLLAR INCOME FUND o 7
PORTFOLIO OF INVESTMENTS
September 30, 2005
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-61.1%
Argentina-4.2%
Republic of Argentina
8.28%, 12/31/33 $ 2,658 $ 2,743,421
Republic of Argentina FRN
4.005%, 8/03/12(a) 5,239 4,795,584
------------
7,539,005
Belize-0.1%
Government of Belize
9.50%, 8/15/12 132 111,540
Brazil-11.1%
Republic of Brazil
8.00%, 1/15/18 2,099 2,214,445
8.25%, 1/20/34 101 101,404
9.25%, 10/22/10 625 702,500
10.50%, 7/14/14 1,238 1,497,980
11.00%, 8/17/40(b) 4,643 5,687,675
12.00%, 4/15/10(b) 1,150 1,408,750
12.75%, 1/15/20(b) 3,069 4,265,910
14.50%, 10/15/09 530 689,000
Republic of Brazil-DCB FRN
Series L
4.313%, 4/15/12(a) 3,292 3,242,314
------------
19,809,978
Bulgaria-0.2%
Republic of Bulgaria
8.25%, 1/15/15(c) 355 438,958
Colombia-1.3%
Republic of Colombia
10.75%, 1/15/13 237 297,790
11.75%, 2/25/20(b) 1,498 2,084,467
------------
2,382,257
Dominican Republic-0.7%
Dominican Republic
9.04%, 1/23/18(c) 20 22,043
9.50%, 9/27/11(c) 1,151 1,266,322
------------
1,288,365
Ecuador-0.2%
Republic of Ecuador
9.00%, 8/15/30(a)(c) 349 329,456
El Salvador-0.7%
Republic of El Salvador
7.625%, 9/21/34(c) 150 166,500
8 o ACM MANAGED DOLLAR INCOME FUND
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
7.65%, 6/15/35(c) $ 574 $ 598,395
8.50%, 7/25/11(c) 400 457,000
------------
1,221,895
Indonesia-0.7%
Republic of Indonesia
6.75%, 3/10/14(c) 945 930,825
7.25%, 4/20/15(c) 376 373,180
------------
1,304,005
Jamaica-0.2%
Government of Jamaica
10.625%, 6/20/17 357 396,270
Lebanon-0.6%
Lebanese Republic
7.875%, 5/20/11(c) 325 327,437
10.125%, 8/06/08(c) 556 594,086
11.625%, 5/11/16(c) 146 170,017
------------
1,091,540
Mexico-8.1%
United Mexican States
7.50%, 1/14/12 875 982,188
8.00%, 9/24/22(b) 4,472 5,433,480
8.125%, 12/30/19(b) 5,135 6,226,188
11.375%, 9/15/16(b) 1,296 1,911,600
------------
14,553,456
Nigeria-0.5%
Central Bank of Nigeria
6.25%, 11/15/20 750 757,500
Panama-1.4%
Republic of Panama
8.875%, 9/30/27 559 690,365
9.375%, 7/23/12 105 127,050
9.375%, 4/01/29 306 388,620
9.625%, 2/08/11 225 268,875
10.75%, 5/15/20 680 947,920
------------
2,422,830
Peru-2.0%
Republic of Peru
7.35%, 7/21/25 631 668,860
8.375%, 5/03/16 345 403,650
8.75%, 11/21/33(b) 2,005 2,421,038
9.875%, 2/06/15 23 29,383
------------
3,522,931
ACM MANAGED DOLLAR INCOME FUND o 9
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Philippines-3.4%
Republic of Philippines
8.875%, 3/17/15(b) $ 1,888 $ 2,010,720
9.00%, 2/15/13 75 80,363
9.50%, 2/02/30 537 573,248
9.875%, 1/15/19(b) 2,600 2,899,000
10.625%, 3/16/25 364 424,970
------------
5,988,301
Russia-16.6%
Ministry Finance of Russia
Series V
3.00%, 5/14/08 2,905 2,763,527
Series VII
3.00%, 5/14/11 1,840 1,644,592
Russian Federation
5.00%, 3/31/30(a)(c) 21,972 25,245,828
------------
29,653,947
Turkey-3.2%
Republic of Turkey
7.375%, 2/05/25 440 439,560
11.00%, 1/14/13 610 780,190
11.50%, 1/23/12(b) 1,447 1,852,160
11.75%, 6/15/10 883 1,100,660
11.875%, 1/15/30(b) 1,019 1,496,911
------------
5,669,481
Ukraine-0.7%
Ukraine Government
6.875%, 3/04/11(c) 526 554,272
7.65%, 6/11/13(c) 21 23,132
11.00%, 3/15/07 658 694,569
------------
1,271,973
Uruguay-1.1%
Republic of Uruguay
7.50%, 3/15/15 93 95,232
7.875%, 1/15/33(g) 1,528 1,505,247
9.25%, 5/17/17 340 381,650
------------
1,982,129
Venezuela-4.1%
Republic of Venezuela
4.64%, 4/20/11(a)(c) 120 117,996
5.375%, 8/07/10(c) 690 672,060
8.50%, 10/08/14 35 38,850
9.25%, 9/15/27(b) 5,314 6,291,776
10.75%, 9/19/13 208 258,440
------------
7,379,122
Total Sovereign Debt Securities
(cost $86,590,342) 109,114,939
10 o ACM MANAGED DOLLAR INCOME FUND
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
U.S. CORPORATE DEBT OBLIGATIONS-48.2%
Aerospace & Defense-0.7%
DRS Technologies, Inc.
6.875%, 11/01/13 $ 330 $ 318,450
L-3 Communications Corp.
5.875%, 1/15/15 345 333,787
Sequa Corp.
9.00%, 8/01/09 235 250,275
TD Funding Corp.
8.375%, 7/15/11 410 429,475
------------
1,331,987
Automotive-1.6%
Asbury Automotive Group, Inc.
8.00%, 3/15/14 211 200,450
Ford Motor Co.
7.45%, 7/16/31 280 218,400
Ford Motor Credit Co.
4.95%, 1/15/08 380 361,622
General Motors Acceptence Corp.
6.875%, 9/15/11 460 418,422
General Motors Corp.
7.75%, 3/15/36(d) 655 167,025
HLI Operating, Inc.
10.50%, 6/15/10* 306 264,690
Keystone Automotive Operations, Inc.
9.75%, 11/01/13 415 412,925
TRW Automotive, Inc.
9.375%, 2/15/13 186 201,810
11.00%, 2/15/13 176 198,440
United Auto Group, Inc.
9.625%, 3/15/12 290 301,600
Visteon Corp.
7.00%, 3/10/14 220 190,850
------------
2,936,234
Broadcasting & Media-0.6%
Albritton Communications Co.
7.75%, 12/15/12 375 372,187
Emmis Communications Corp.
9.745%, 6/15/12 155 156,162
Lamar Media Corp.
6.625%, 8/15/15(c) 230 234,025
LIN Television Corp.
6.50%, 5/15/13(c) 290 274,775
------------
1,037,149
Building & Real Estate-1.9%
Associated Materials, Inc.
11.25%, 3/01/14(d) 650 325,000
D.R. Horton, Inc.
6.875%, 5/01/13 345 361,469
ACM MANAGED DOLLAR INCOME FUND o 11
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
KB HOME
7.75%, 2/01/10 $ 480 $ 494,326
Meritage Homes Corp.
6.25%, 3/15/15 470 430,050
M/I Homes, Inc.
6.875%, 4/01/12 470 439,450
Schuler Homes, Inc.
10.50%, 7/15/11 360 388,800
WCI Communities, Inc.
6.625%, 3/15/15 425 384,625
William Lyon Homes, Inc.
10.75%, 4/01/13 525 565,688
------------
3,389,408
Cable-3.8%
Cablevision Systems Corp.
8.00%, 4/15/12 780 756,600
Charter Communications Operating LLC
8.00%, 4/30/12(c) 1,695 1,707,712
CSC Holdings, Inc.
7.00%, 4/15/12(c) 275 259,875
7.625%, 7/15/18 410 383,350
DirectTV Holdings LLC
6.375%, 6/15/15(c) 430 426,775
Echostar DBS Corp.
6.375%, 10/01/11 325 322,156
Inmarsat Finance PLC (United Kingdom)
7.625%, 6/30/12 372 383,160
Insight Midwest LP
9.75%, 10/01/09 385 393,662
Intelsat Bermuda, Ltd. (Bermuda)
8.625%, 1/15/15(c) 385 392,700
8.695%, 1/15/12(a)(c) 115 117,012
PanAmSat Corp.
9.00%, 8/15/14 313 330,215
10.375%, 11/01/14(d) 1,100 759,000
Rogers Cable, Inc. (Canada)
6.75%, 3/15/15 620 621,550
------------
6,853,767
Chemicals-1.2%
Borden Chemicals, Inc.
9.00%, 7/15/14(c) 395 400,925
Equistar Chemical Funding LP
10.125%, 9/01/08 480 516,000
10.625%, 5/01/11 145 158,050
Huntsman Advanced Materials LLC
11.00%, 7/15/10 305 341,600
Huntsman International LLC
9.875%, 3/01/09 330 348,562
Westlake Chemical Corp.
8.75%, 7/15/11 270 290,925
------------
2,056,062
12 o ACM MANAGED DOLLAR INCOME FUND
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Communications - Fixed-2.2%
Citizens Communications Co.
6.25%, 1/15/13 $ 490 $ 470,400
Eircom Funding (Ireland)
8.25%, 8/15/13 430 466,550
Hawaiian Telecom Communications, Inc.
9.75%, 5/01/13(c)* 450 459,000
MCI, Inc.
7.688%, 5/01/09 270 280,125
Qwest Corp.
8.875%, 3/15/12 1,685 1,840,863
VALOR Telecom Enterprise
7.75%, 2/15/15 430 417,100
------------
3,934,038
Communications - Mobile-1.3%
Cincinnati Bell Inc.
7.00%, 2/15/15 275 265,375
Digicel, Ltd. (Bermuda)
9.25%, 9/01/12(c) 349 361,215
Nextel Communications, Inc.
5.95%, 3/15/14 240 245,680
6.875%, 10/31/13 390 413,967
Rogers Wireless, Inc. (Canada)
7.25%, 12/15/12 335 354,263
7.50%, 3/15/15 368 396,520
Rural Cellular Corp.
8.25%, 3/15/12 270 283,500
------------
2,320,520
Consumer Manufacturing-1.1%
Acco Brands Corp.
7.625%, 8/15/15(c) 470 465,300
Broder Brothers Co.
11.25%, 10/15/10 547 541,530
Jostens, Inc.
7.625%, 10/01/12 425 429,250
Playtex Products, Inc.
8.00%, 3/01/11 320 335,200
Quiksilver, Inc.
6.875%, 4/15/15(c) 220 211,200
------------
1,982,480
Diversified Media-1.7%
Dex Media, Inc.
8.00%, 11/15/13 415 426,412
Dex Media East LLC
9.875%, 11/15/09 125 135,937
12.125%, 11/15/12 220 257,400
Dex Media West LLC
8.50%, 8/15/10 180 190,350
9.875%, 8/15/13 581 641,279
ACM MANAGED DOLLAR INCOME FUND o 13
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
PRIMEDIA, Inc.
8.00%, 5/15/13 $ 350 $ 352,625
8.875%, 5/15/11 305 319,488
Rainbow National Services LLC
8.75%, 9/01/12(c) 720 767,700
------------
3,091,191
Energy-2.3%
Amerada Hess Corp.
7.30%, 8/15/31 440 513,327
Chesapeake Energy Corp.
7.75%, 1/15/15 355 378,075
El Paso Corp.
7.75%, 1/15/32 571 575,282
Grant Prideco, Inc.
6.125%, 8/15/15(c) 245 247,450
Hilcorp Energy
10.50%, 9/01/10(c) 700 770,000
Kerr-McGee Corp.
6.875%, 9/15/11 760 812,425
Premco Refining Group, Inc.
9.50%, 2/01/13 280 315,700
Pride International, Inc.
7.375%, 7/15/14 400 434,500
------------
4,046,759
Entertainment & Leisure-1.3%
Gaylord Entertainment Co.
8.00%, 11/15/13 350 367,500
Intrawest Corp. (Canada)
7.50%, 10/15/13 195 199,631
NCL Corp. (Bermuda)
11.625%, 7/15/14(c) 520 548,600
Royal Caribbean Cruises (Liberia)
8.00%, 5/15/10 635 687,388
Universal City Development Partners
11.75%, 4/01/10 430 485,900
------------
2,289,019
Financial-1.8%
Crum & Foster Holdings Corp.
10.375%, 6/15/13 220 240,350
Fairfax Financial Holdings (Canada)
7.375%, 4/15/18* 465 402,225
7.75%, 4/26/12* 550 528,000
Markel Capital Trust I
Series B
8.71%, 1/01/46(e) 615 653,971
Navistar International Corp.
6.25%, 3/01/12 330 313,500
PXRE Capital Trust I
8.85%, 2/01/27 510 499,800
14 o ACM MANAGED DOLLAR INCOME FUND
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
TRAINS HY-2005-1
7.651%, 6/15/15(a)(c) $ 649 $ 660,949
------------
3,298,795
Food & Beverage-0.3%
Del Monte Food Co.
8.625%, 12/15/12 215 231,125
Dole Food Company, Inc.
8.625%, 5/01/09 270 282,150
8.875%, 3/15/11 92 95,450
------------
608,725
Gaming-3.7%
Ameristar Casinos, Inc.
10.75%, 2/15/09 240 256,500
Argosy Gaming Co.
9.00%, 9/01/11 220 238,715
Boyd Gaming Corp.
7.75%, 12/15/12 255 268,069
Harrah's Operating Company, Inc.
7.875%, 12/15/05 240 242,100
Kerzner International, Ltd. (Bahamas)
6.75%, 10/01/15(c) 405 392,344
Mandalay Resort Group
10.25%, 8/01/07 535 575,125
MGM Mirage, Inc.
6.625%, 7/15/15(c) 455 449,882
8.375%, 2/01/11 620 666,500
Mohegan Tribal Gaming Authority
6.375%, 7/15/09 155 155,000
7.125%, 8/15/14 700 724,500
Penn National Gaming, Inc.
6.875%, 12/01/11 380 381,900
Park Place Entertainment
7.00%, 4/15/13 305 330,793
7.875%, 3/15/10 150 163,125
9.375%, 2/15/07 255 269,663
Riviera Holdings Corp.
11.00%, 6/15/10 385 415,800
Seneca Gaming Corp.
7.25%, 5/01/12 415 425,375
7.25%, 5/01/12(c) 125 128,125
Turning Stone Casino Resort Enterprise
9.125%, 12/15/10(c) 300 312,000
------------
6,395,516
Health Care-3.1%
AmerisourceBergen Corp.
7.25%, 11/15/12 1 620
Concentra Operating Corp.
9.125%, 6/01/12 195 202,800
9.50%, 8/15/10 280 293,300
ACM MANAGED DOLLAR INCOME FUND o 15
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Coventry HealthCare, Inc.
5.875%, 1/15/12 $ 160 $ 162,400
6.125%, 1/15/15 170 174,250
DaVita, Inc.
7.25%, 3/15/15 605 613,319
Extendicare Health Services
9.50%, 7/01/10 160 170,400
Genesis HealthCare Corp.
8.00%, 10/15/13 155 167,012
HCA, Inc.
6.375%, 1/15/15 625 618,344
7.875%, 2/01/11 415 444,809
IASIS Healthcare LLC
8.75%, 6/15/14 445 461,687
PacifiCare Health Systems, Inc.
10.75%, 6/01/09 345 373,463
Select Medical Corp.
7.625%, 2/01/15 750 718,125
Triad Hospitals, Inc.
7.00%, 11/15/13 570 577,125
Universal City Florida Holding, Co.
8.375%, 5/01/10 110 114,125
Universal Hospital Services, Inc.
10.125%, 11/01/11 360 369,000
------------
5,460,779
Hotels & Lodging-0.9%
Host Marriott LP
9.25%, 10/01/07 110 115,912
9.50%, 1/15/07 310 324,337
John Q Hamons Hotels LP
8.875%, 5/15/12 1 596
La Quinta Properties, Inc.
8.875%, 3/15/11 380 406,600
Starwood Hotels & Resorts Worldwide, Inc.
7.875%, 5/01/12 405 441,450
Vail Resorts, Inc.
6.75%, 2/15/14 360 359,100
------------
1,647,995
Index-2.2%
Dow Jones CDX HY
7.75%, 12/29/09(c)* 1,173 1,177,549
8.25%, 6/29/10(c)* 2,717 2,700,565
------------
3,878,114
Industrial-2.0%
AMSTED Industries, Inc.
10.25%, 10/15/11(c) 465 506,850
Case New Holland, Inc.
9.25%, 8/01/11 315 333,112
Dayton Superior Corp.
10.75%, 9/15/08 440 444,400
16 o ACM MANAGED DOLLAR INCOME FUND
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
FastenTech, Inc.
11.50%, 5/01/11 $ 295 $ 305,694
Goodman Global Holdings, Inc.
7.875%, 12/15/12(c)* 430 389,150
NMHG Holding Co.
10.00%, 5/15/09 220 235,400
Terex Corp.
10.375%, 4/01/11 380 406,600
TriMas Corp.
9.875%, 6/15/12 490 401,800
Trinity Industries, Inc.
6.50%, 3/15/14 535 526,975
------------
3,549,981
Insurance-0.4%
Liberty Mutual Group
5.75%, 3/15/14(c) 475 464,134
Royal & Sun Alliance Insurance Group PLC
(United Kingdom)
8.95%, 10/15/29 235 297,042
------------
761,176
Metals & Mining-1.6%
AK Steel Corp.
7.875%, 2/15/09 910 882,700
Chesapeake Energy Corp.
6.625%, 1/15/16 250 253,125
International Steel Group, Inc.
6.50%, 4/15/14 452 447,480
Ispat Inland ULC (Canada)
9.75%, 4/01/14 239 277,240
Peabody Energy Corp.
6.875%, 3/15/13 385 402,325
Southern Peru Copper Corp.
6.375%, 7/27/15(c) 542 546,456
------------
2,809,326
Paper & Packaging-2.8%
Ball Corp.
6.875%, 12/15/12 450 459,000
Berry Plastics Corp.
10.75%, 7/15/12 355 381,625
Crown Euro Holdings S.A. (France)
9.50%, 3/01/11 415 454,425
Georgia-Pacific Corp.
8.875%, 5/15/31 255 301,581
9.375%, 2/01/13 725 808,375
Graphic Packaging Int'l Corp.
9.50%, 8/15/13 470 441,800
Newpage Corp.
10.00%, 5/01/12* 505 474,700
Owens-Brockway Glass Container, Inc.
8.875%, 2/15/09 745 782,250
ACM MANAGED DOLLAR INCOME FUND o 17
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Russell-Stanley Holdings, Inc.
9.00%, 11/30/08(c)(f)(g) $ 913 $ 411,065
Stone Container Corp.
9.25%, 2/01/08 540 553,500
9.75%, 2/01/11 12 12,180
------------
5,080,501
Restaurants-0.2%
Domino's, Inc.
8.25%, 7/01/11 262 275,100
Retail-0.7%
GSC Holdings Corp.
8.00%, 10/01/12(c)* 645 645,000
J.C. Penney Corporation, Inc.
7.625%, 3/01/97 205 210,125
8.00%, 3/01/10 420 458,850
------------
1,313,975
Service-1.6%
Allied Waste North America
6.375%, 4/15/11 610 584,075
8.875%, 4/01/08 305 317,962
H & E Equipment/Finance
11.125%, 6/15/12 600 672,000
Service Corp. International
6.50%, 3/15/08 605 614,075
7.70%, 4/15/09 270 283,500
United Rentals North America, Inc.
6.50%, 2/15/12 404 389,860
7.75%, 11/15/13 8 7,720
------------
2,869,192
Supermarket & Drugstore-0.7%
Couche-Tard, Inc.
7.50%, 12/15/13 333 342,990
Roundy's, Inc.
Series B
8.875%, 6/15/12 250 276,250
Stater Bros. Holdings, Inc.
8.125%, 6/15/12 660 651,750
------------
1,270,990
Technology-1.5%
Celestica, Inc. (Canada)
7.875%, 7/01/11 675 688,500
Lucent Technologies
6.45%, 3/15/29 145 126,875
6.50%, 1/15/28 350 302,750
Nortel Networks Corp. (Canada)
6.875%, 9/01/23 280 260,400
SunGard Data Systems, Inc.
9.125%, 8/15/13(c) 735 761,644
18 o ACM MANAGED DOLLAR INCOME FUND
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Telecordia Technologies, Inc.
10.00%, 3/15/13(c) $ 275 $ 259,875
Unisys Corp.
7.875%, 4/01/08 205 207,050
------------
2,607,094
Utilities - Electric & Gas-5.0%
AES Corporation
8.75%, 5/15/13(c) 75 82,125
9.00%, 5/15/15(c) 115 126,212
Aquila, Inc.
14.875%, 7/01/12 260 354,900
Calpine Corp.
8.50%, 7/15/10(c) 540 386,100
DPL, Inc.
6.875%, 9/01/11 162 174,555
Dynegy Holdings, Inc.
10.125%, 7/15/13(c) 230 256,450
Edison Mission Energy
9.875%, 4/15/11 485 574,725
Enterprise Products Operating L.P.
5.60%, 10/15/14 475 473,328
FirstEnergy Corp.
6.45%, 11/15/11 470 500,439
Northwest Pipelines Corp.
8.125%, 3/01/10 315 336,263
NRG Energy, Inc.
8.00%, 12/15/13 335 357,379
Ormat Funding Corp.
8.25%, 12/30/20 388 390,644
Reliant Energy, Inc.
6.75%, 12/15/14 335 329,138
9.50%, 7/15/13 390 430,950
Southern Natural Gas Co.
7.35%, 2/15/31 405 413,459
8.875%, 3/15/10 325 351,295
TECO Energy, Inc.
6.75%, 5/01/15(c) 445 466,138
7.00%, 5/01/12 425 448,375
TXU Corp.
5.55%, 11/15/14 360 341,758
6.50%, 11/15/24 764 715,699
Williams Cos., Inc.
7.625%, 7/15/19 1,365 1,477,613
------------
8,987,545
Total U.S. Corporate Debt Obligations
(cost $88,885,473) 86,083,418
ACM MANAGED DOLLAR INCOME FUND o 19
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
NON-U.S. CORPORATE DEBT OBLIGATIONS-6.1%
Brazil-0.6%
PF Export Receivables Master Trust
6.436%, 6/01/15(c) $ 1,180 $ 1,186,670
China-0.3%
Chaoda Modern Agriculture
7.75%, 2/08/10(c) 519 503,430
Hong Kong-0.1%
Noble Group, Ltd.
6.625%, 3/17/15(c) 141 130,165
Kazakhstan-0.5%
Hurricane Finance BV
9.625%, 2/12/10(c) 400 457,500
Kazkommerts International BV
8.50%, 4/16/13(c) 350 382,812
------------
840,312
Luxembourg-0.5%
Nell AF S.a.r.l.
8.375%, 8/15/15(c) 875 855,313
Mexico-2.0%
America Movil S.A. de C.V.
6.375%, 3/01/35 312 302,522
Innova S. de R.L.
9.375%, 9/19/13 2,865 3,251,775
------------
3,554,297
Romania-0.3%
Mobifon Holdings BV
12.50%, 7/31/10 425 499,375
Russia-1.5%
Citigroup (JSC Severstal)
9.25%, 4/19/14(c) 464 513,741
Gazprom OAO
9.625%, 3/01/13(c) 890 1,101,123
Mobile Telesystems Finance S.A.
9.75%, 1/30/08(c) 625 673,163
Russian Standard Finance SA
7.50%, 10/07/10(c) 270 270,000
Tyumen Oil Co.
11.00%, 11/06/07(c) 70 77,613
------------
2,635,640
Singapore-0.3%
Flextronics International, Ltd.
6.50%, 5/15/13 535 545,700
20 o ACM MANAGED DOLLAR INCOME FUND
Shares or
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Ukraine-0.0%
Dresdner Bank AG (Kyivstar)
7.75%, 4/27/12(c) $ 100 $ 102,210
Total Non-U.S. Corporate Debt Obligations
(cost $10,121,817) 10,853,112
NON-CONVERTIBLE PREFERRED STOCK-0.8%
Sovereign Real Estate Investment Trust
12.00%(c) 978 1,437,660
Total Non-Convertible Preferred Stock
(cost $973,435) 1,437,660
WARRANTS(h)-0.0%
Central Bank of Nigeria
Warrants, expiring 11/15/20 1,000 22,000
Republic of Venezuela
Warrants, expiring 4/15/20 7,140 -0-
Total Warrants
(cost $0) 22,000
SHORT-TERM INVESTMENT-1.4%
Time Deposit-1.4%
Societe Generale
3.875%, 10/03/05,
(cost $2,400,000) 2,400 2,400,000
Total Investments Before Security
Lending Collateral-117.6%
(cost $188,971,067) 209,911,129
INVESTMENT OF CASH COLLATERAL FOR
SECURITIES LOANED-3.8%
Short-Term Investment
UBS Private Money Market Fund, LLC
3.65%
(cost $6,780,299) 6,780,299 6,780,299
Total Investments-121.4%
(cost $195,751,366) 216,691,428
Other assets less liabilities-(21.4)% (38,131,228)
Net Assets-100.0% $178,560,200
ACM MANAGED DOLLAR INCOME FUND o 21
CREDIT DEFAULT SWAP CONTRACTS (see Note C)
Notional Unrealized
Swap Counterparty & Amount Interest Termination Appreciation/
Reference Obligation (000) Rate Date (Depreciation)
-----------------------------------------------------------------------------------------------
Buy Contracts:
Citigroup Global Markets, Inc.
Federal Republic of Brazil
12.25%, 3/06/30 $ 1,220 4.14% 4/20/10 $ (117,272)
Citigroup Global Markets, Inc
Federal Republic of Hungary
4.50%, 2/06/13 350 .50 11/26/13 (6,376)
Citigroup Global Markets, Inc.
Federal Republic of Philippines
10.625%, 3/16/25 510 5.60 3/20/14 (47,757)
Deutsche Bank Securities Corp.
Federal Republic of Brazil
12.25%, 3/06/30 1,220 4.02 4/20/10 (105,158)
Sale Contracts:
Citigroup Global Markets, Inc.
Federal Republic of Brazil
12.25%, 3/06/30 2,562 1.98 4/20/07 72,312
Citigroup Global Markets, Inc.
Federal Republic of Brazil
12.25%, 3/06/30 900 4.40 5/20/06 37,510
Citigroup Global Markets, Inc.
Federal Republic of Philippines
10.625%, 3/16/25 510 4.95 3/20/09 37,925
Credit Suisse First Boston Int'l.
Federal Republic of Brazil
12.25%, 3/06/30 750 6.90 6/20/07 89,356
Credit Suisse First Boston Int'l.
Federal Republic of Venezuela
9.25%, 9/15/27 730 3.17 10/20/15 15,106
Deutsche Bank Securities Corp.
Federal Republic of Brazil
12.25%, 3/06/30 2,562 1.90 4/20/07 63,345
Morgan Stanley Dean Witter
Federal Republic of Brazil
12.25%, 3/06/30 680 3.80 8/20/06 22,319
22 o ACM MANAGED DOLLAR INCOME FUND
REVERSE REPURCHASE AGREEMENTS (see Note C)
Interest
Broker Rate Maturity Amount
-------------------------------------------------------------------------------
Barclays Securites 1.00% 10/31/05 $ 1,867,170
Barclays Securites 1.80 10/28/05 2,431,979
Barclays Securites 2.80 10/31/05 4,760,537
Barclays Securites 2.95 10/31/05 4,833,433
Chase Manhattan Bank 3.35 10/31/05 2,734,789
Chase Manhattan Bank 3.50 10/31/05 1,250,593
Chase Manhattan Bank 3.55 10/31/05 2,392,121
Chase Manhattan Bank 3.60 10/31/05 1,352,216
Chase Manhattan Bank 3.60 10/31/05 1,775,396
Chase Manhattan Bank 3.65 10/31/05 2,763,519
Chase Manhattan Bank 3.80 10/31/05 1,219,658
Merrill Lynch 0.85 10/31/05 1,337,285
Merrill Lynch 3.15 10/31/05 3,225,867
Santander Investment Securities 3.45 10/31/05 1,509,661
-----------
$33,454,224
* Represents entire or partial securities out on loan.
(a) Coupon changes periodically based upon a predetermined schedule. Stated
interest rate in effect at September 30, 2005.
(b) Positions, or portions thereof, with an aggregate market value of
$43,989,675 have been segregated to collateralize reverse repurchase agreements.
(c) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2005, the aggregate market value of these securities amounted to $58,745,784
or 32.9% of net assets.
(d) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective until
final maturity.
(e) Illiquid security, valued at fair market value (see Note A).
(f) Security is exempt from registration under Rule 144A of the Securites Act
of 1933. This security, which represents 0.23% of net assets as of September
30, 2005, is considered illiquid and restricted. Security is in default and is
non-income producing.
Acquisition Acquisition Market Percentage of
Restricted Security Dates Cost Value Net Assets
-----------------------------------------------------------------------------------------
Russell-Stanley Holdings, Inc. 2/26/99- $5,111,352 $411,065 0.23%
9.00%, 11/30/08 8/31/05
(g) Payment in kind (PIK).
(h) Non-income producing security.
Glossary of Terms:
DCB - Debt Conversion Bond
FRN - Floating Rate Note
Please note: The sector classifications presented herein are based on the
sector categorization methodology of the Adviser.
See notes to financial statements.
ACM MANAGED DOLLAR INCOME FUND o 23
STATEMENT OF ASSETS & LIABILITIES
September 30, 2005
Assets
Investments in securities, at value
(cost $195,751,366--including investment of cash
collateral for securities loaned of $6,780,299) $216,691,428(a)
Cash 940,650
Interest and dividends receivable 3,167,671
Receivable for investment securities sold 1,198,858
Unrealized appreciation on credit default swap contracts 337,873
Paydown receivable 3,704
Prepaid expenses 9,571
Total assets 222,349,755
Liabilities
Reverse repurchase agreements 33,454,224
Payable for collateral received on securities loaned 6,780,299
Payable for investment securities purchased 2,943,530
Unrealized depreciation on credit default swap contracts 276,563
Advisory fee payable 127,967
Tender fees payable 61,981
Administrative fee payable 20,475
Accrued expenses and other liabilities 124,516
Total liabilities 43,789,555
Net Assets $178,560,200
Composition of Net Assets
Common stock, at par $ 215,723
Additional paid-in capital 286,936,045
Distributions in excess of net investment income (186,090)
Accumulated net realized loss on investment transactions (129,406,850)
Net unrealized appreciation of investments 21,001,372
$178,560,200
Net Asset Value Per Share
(based on 21,572,318 shares outstanding) $8.28
(a) Includes securities on loan with a value of $6,444,770 (see Note F).
See notes to financial statements.
24 o ACM MANAGED DOLLAR INCOME FUND
STATEMENT OF OPERATIONS
Year Ended September 30, 2005
Investment Income
Interest $17,158,240
Dividends 134,652 $17,292,892
Expenses
Advisory fee 1,356,862
Administrative fee 217,101
Custodian 94,351
Printing 85,445
Audit 84,159
Legal 59,100
Directors' fees 38,089
Transfer agency 32,425
Registration 29,187
Miscellaneous 51,649
Total expenses before interest 2,048,368
Interest expense 654,680
Total expenses 2,703,048
Net investment income 14,589,844
Realized and Unrealized Gain (Loss) on
Investment Transactions
Net realized gain on:
Investment transactions 3,068,308
Swap contracts 313,961
Written options 182,462
Net change in unrealized
appreciation/depreciation of:
Investments 6,297,366
Swap contracts (274,893)
Net gain on investment transactions 9,587,204
Net Increase in Net Assets from
Operations $24,177,048
See notes to financial statements.
ACM MANAGED DOLLAR INCOME FUND o 25
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, September 30,
2005 2004
------------ ------------
Increase (Decrease) in Net Assets
Resulting from Operations
Net investment income $ 14,589,844 $ 17,179,212
Net realized gain on
investment transactions 3,564,731 14,220,638
Net change in unrealized
appreciation/depreciation
of investments 6,022,473 (9,001,996)
Net increase in net assets
from operations 24,177,048 22,397,854
Dividends and Distributions to
Shareholders from
Net investment income (15,094,355) (18,071,829)
Common Stock Transactions
Reinvestment of dividends resulting in
the issuance of Common Stock 79,572 1,227,800
Tender offer (resulting in the redemption
of 1,135,385 and 0 shares of
common stock, respectively) (9,162,557) -0-
Tender offer costs (175,000) -0-
Total increase (decrease) (175,292) 5,553,825
Net Assets
Beginning of period 178,735,492 173,181,667
End of period (including distributions
in excess of net investment income
of $186,090 and $382,449,
respectively) $178,560,200 $178,735,492
See notes to financial statements.
26 o ACM MANAGED DOLLAR INCOME FUND
STATEMENT OF CASH FLOWS
Year Ended September 30, 2005
Increase (Decrease) in Cash from
Operating Activities:
Interest and dividends received $ 16,750,263
Interest expense paid (512,000)
Operating expenses paid (2,023,637)
Net increase in cash from operating
activities $ 14,214,626
Investing Activities:
Purchases of long-term investments (144,034,272)
Proceeds from disposition of long-term
investments 159,343,271
Purchases of short-term investments, net (2,400,000)
Cash collateral received on securities
loaned 6,780,299
Net premium received on option
transactions 218,125
Net premium received on swaps
transactions 346,400
Net increase in cash from investing
activities 20,253,823
Financing Activities:*
Cash dividends paid (15,094,355)
Reinvestment of dividends 79,572
Proceeds from reverse repurchase
agreements (12,281,054)
Tender offer (9,275,576)
Net decrease in cash from financing
activities (36,571,413)
Net decrease in cash (2,102,964)
Cash at beginning of period 3,043,614
Cash at end of period $ 940,650
-------------------------------------------------------------------------------
Reconciliation of Net Increase in
Net Assets from Operations to Net
Increase in Cash from Operating
Activities:
Net increase in net assets from
operations $ 24,177,048
Adjustments:
Increase in dividends and interest
receivable $ 923,852
Accretion of bond discount and
amortization of bond premium (1,466,481)
Increase in accrued expenses and
other assets 24,731
Decrease in interest payable 142,680
Net realized loss on investment
transactions (3,564,731)
Net change in unrealized appreciation/
depreciation of investments (6,022,473)
Total adjustments (9,962,422)
Net Increase in Cash from
Operating Activities $ 14,214,626
* Non-cash financing activities not included herein consist of reinvestment
of dividends and distributions.
See notes to financial statements.
ACM MANAGED DOLLAR INCOME FUND o 27
NOTES TO FINANCIAL STATEMENTS
September 30, 2005
NOTE A
Significant Accounting Policies
ACM Managed Dollar Income Fund, Inc. (the "Fund") was incorporated under the
laws of the State of Maryland on August 10, 1993 and is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end management
investment company. The financial statements have been prepared in conformity
with U.S. generally accepted accounting principles, which requires management
to make certain estimates and assumptions that affect the reported amounts of
assets and liabilities in the financial statements and amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
followed by the Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities not listed on an exchange but traded on The
NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ
Official Closing Price; listed put or call options are valued at the last sale
price. If there has been no sale on that day, such securities will be valued at
the closing bid prices on that day; open futures contracts and options thereon
are valued using the closing settlement price or, in the absence of such a
price, the most recent quoted bid price. If there are no quotations available
for the day of valuation, the last available closing settlement price is used;
securities traded in the over-the-counter market, (OTC) (but excluding
securities traded on NASDAQ) are valued at the mean of the current bid and
asked prices as reported by the National Quotation Bureau or other comparable
sources; U.S. Government securities and other debt instruments having 60 days
or less remaining until maturity are valued at amortized cost if their original
maturity was 60 days or less; or by amortizing their fair value as of the 61st
day prior to maturity if their original term to maturity exceeded 60 days;
fixed-income securities, including mortgage backed and asset backed securities,
may be valued on the basis of prices provided by a pricing service or at a
price obtained from one or more of the major broker/dealers. In cases where
broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the
"Adviser") may
28 o ACM MANAGED DOLLAR INCOME FUND
establish procedures whereby changes in market yields or spreads are used to
adjust, on a daily basis, a recently obtained quoted price on a security; and
OTC and other derivatives are valued on the basis of a quoted bid price or
spread from a major broker/dealer in such security.
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 required. 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 discounts and amortizes premiums as adjustments to interest
income.
4. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax 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 DOLLAR INCOME FUND o 29
5. Repurchase Agreements
The Fund's custodian or designated subcustodian will take control of securities
as collateral under repurchase agreements and determine on a daily basis that
the value of such securities are sufficient to cover the value of the
repurchase agreements. If the seller defaults and the value of collateral
declines, or if bankruptcy proceedings are commenced with respect to the seller
of the security, realization of collateral by the Fund may be delayed or
limited.
NOTE B
Advisory, Administrative Fees and Other Transactions with Affiliates
Under the terms of an Investment Advisory Agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .75 of 1% of the average adjusted weekly
net assets of the Fund. Such fee is accrued daily and paid monthly.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Global
Investor Services, Inc. (AGIS), a wholly-owned subsidiary of the Adviser, the
Fund reimburses AGIS for costs relating to servicing phone inquiries on behalf
of the Fund. During the year ended September 30, 2005, the Fund reimbursed $440
to AGIS.
Under the terms of an Administration Agreement, the Fund paid Princeton
Administrators, L.P. (the "Administrator") a fee at an annual rate of .15 of 1%
of the 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 1% 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 September 30, 2005, were as follows:
Purchases Sales
-------------- --------------
Investment securities (excluding
U.S. government securities) $131,958,149 $131,665,873
U.S. government securities -0- -0-
30 o ACM MANAGED DOLLAR INCOME FUND
At September 30, 2005, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation and gross unrealized depreciation
(excluding written options and swap contracts) are as follows:
Cost $196,152,717
Gross unrealized appreciation $ 26,780,072
Gross unrealized depreciation (6,241,361)
Net unrealized appreciation $ 20,538,711
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.
ACM MANAGED DOLLAR INCOME FUND o 31
Transactions in written options for the year ended September 30, 2005 were as
follows:
Number of
Contracts Premiums
(000) Received
--------- -----------
Options outstanding at
September 30, 2004 -0- $ -0-
Options written 13,194 182,462
Options exercised -0- -0-
Options terminated in closing purchase
transactions -0- -0-
Options expired (13,194) (182,462)
Options outstanding at
September 30, 2005 -0- $ -0-
2. Swap Agreements
The Fund may enter into swaps on sovereign debt obligations to hedge its
exposure to interest rates and credit risk or for investment purposes. A swap
is an agreement that obligates two parties to exchange a series of cash flows
at specified intervals based upon or calculated by reference to changes in
specified prices or rates for a specified amount of an underlying asset. The
payment flows are usually netted against each other, with the difference being
paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net interest payment
to be received by the Fund, and/or the termination value at the end of the
contract. Therefore the Fund considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the value of the underlying securities.
As of October 1, 2003, the Portfolios have adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. The Fund accrues for the interim payments on
swap contracts on a daily basis, with the net amount recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities. Once the interim payments are settled in cash, the net amount is
recorded as realized gain/loss on swaps, in addition to realized gain/loss
recorded upon the termination of swaps contracts on the statements of
operations. Prior to October 1, 2003, these interim payments were reflected
within interest income in the statement of operations. Fluctuations in the
value of swap contracts are recorded as a component of net change in unrealized
appreciation/depreciation of investments.
32 o ACM MANAGED DOLLAR INCOME FUND
The Fund may enter into credit default swaps. The Fund may purchase credit
protection on the referenced obligation of the credit default swap ("Buy
Contract") or provide credit protection on the referenced obligation of the
credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap
provides upon the occurrence of a credit event, as defined in the swap
agreement, for the Fund to buy/(sell) from/(to) the counterparty at the
notional amount (the "Notional Amount") and receive/(deliver) the principal
amount of the referenced obligation. If a credit event occurs, the maximum
payout amount for a Sale Contract is limited to the Notional Amount of the swap
contract ("Maximum Payout Amount"). During the term of the swap agreement, the
Fund receives/(pays) semi-annual fixed payments from/(to) the respective
counterparty, calculated at the agreed upon interest rate applied to the
Notional Amount. These interim payments are recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities.
Credit default swaps may involve greater risks than if a Fund had invested in
the referenced obligation directly. Credit default swaps are subject to general
market risk, liquidity risk, counterparty risk and credit risk. If the Fund is
a buyer and no credit event occurs, it will lose its investment. In addition,
if the Fund is a seller and a credit event occurs, the value of the referenced
obligation received by the Fund coupled with the periodic payments previously
received, may be less than the Maximum Payout Amount it pays to the buyer,
resulting in a loss to the Fund.
At September 30, 2005, the Fund had Sale Contracts outstanding with Maximum
Payout Amounts aggregating $8,694,000, with net unrealized appreciation of
$337,873 and terms ranging from 1 year to 10 years, as reflected in the
portfolio of investments.
In certain circumstances, the Fund may hold Sale Contracts on the same
referenced obligation and with the same counterparty it has purchased credit
protection, which may reduce its obligation to make payments on Sale Contracts,
if a credit event occurs. The Fund had Buy Contracts outstanding with a
Notional Amount of $2,950,000 with respect to the same referenced obligation
and same counterparty of certain Sale Contracts outstanding, which reduced its
obligation to make payments on Sale Contracts to $5,744,000 as of September 30,
2005.
3. Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account with the custodian containing liquid assets having a value at least
equal to the repurchase price.
ACM MANAGED DOLLAR INCOME FUND o 33
For the year ended September 30, 2005, the average amount of reverse repurchase
agreements outstanding was $32,182,172 and the daily weighted average annual
interest rate was 2.01%.
NOTE D
Capital Stock
There are 300,000,000 shares of $.01 par value common stock authorized of which
21,572,318 shares were issued and outstanding at September 30, 2005. During the
year ended September 30, 2005 and the year ended September 30, 2004, the Fund
issued 9,984 and 157,097 shares, respectively, in connection with the Fund's
dividend reinvestment plan.
On June 10, 2005, the Fund purchased and retired 1,135,385 shares of its
outstanding common stock for $8.07 per share pursuant to a tender offer. The
fund incurred costs of $175,000, which were charged to additional paid in
capital. At June 10, 2005, 21,572,318 shares of common stock were outstanding.
The purpose of the tender offer was to fulfill an undertaking made in
connection with the initial public offering price of the Fund's shares.
NOTE E
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.
Concentration of Risk--Investing in securities of foreign companies and foreign
governments involves special risks which include the possibility of future
political and economic developments which could adversely affect the value of
such securities. Moreover, securities of many foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of comparable U.S. companies and the United States government.
The Fund invests in the Sovereign Debt Obligations of countries that are
considered emerging market countries at the time of purchase. Therefore, the
Fund is susceptible to governmental factors and economic and debt restructuring
developments adversely affecting the economics of these emerging market coun-
34 o ACM MANAGED DOLLAR INCOME FUND
tries. In addition, these debt obligations may be less liquid and subject to
greater volatility than debt obligations of more developed countries.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, theFund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
NOTE F
Securities Lending
The Fund has entered into a securities lending agreement with AG Edwards &
Sons, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending
Agent, on behalf of the Fund, administers the lending of portfolio securities
to certain broker-dealers. In return, the Fund receives fee income from the
lending transactions or it retains a portion of interest on the investment of
any cash received as collateral. The Fund also continues to receive dividends
or interest on the securities loaned. Unrealized gain or loss on the value of
the securities loaned that may occur during the term of the loan will be
reflected in the accounts of the Fund. All loans are continuously secured by
collateral exceeding the value of the securities loaned. All collateral
consists of either cash or U.S. Government securities. The Lending Agent may
invest the cash collateral received in accordance with the investment
restrictions of the Fund in one or more of the following investments: U.S.
Government or U.S. Government agency obligations, bank obligations, corporate
debt obligations, asset-backed securities, structured products, repurchase
agreements and an eligible money market fund. The Lending Agent will indemnify
the Fund for any loss resulting from a borrower's failure to return a loaned
security when due. As of September 30, 2005, the Fund had loaned securities
with a value of $6,444,770 and received cash collateral of $6,780,299, which
was invested in a money market fund as included in the portfolio of
investments. For the year ended September 30, 2005, the Fund earned fee income
of $22,342, which is included in interest income in the accompanying statement
of operations.
NOTE G
Distributions to Shareholders
The tax character of the distributions paid to shareholders during the fiscal
years ended September 30, 2005 and September 30, 2004 were as follows:
2005 2004
------------- -------------
Distributions paid from:
Ordinary income $15,094,355 $18,071,829
Total taxable distributions 15,094,355 18,071,829
Tax return of capital -0- -0-
Total distributions paid $15,094,355 $18,071,829
ACM MANAGED DOLLAR INCOME FUND o 35
As of September 30, 2005, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $(129,072,933)(a)
Unrealized appreciation/(depreciation) 20,481,365(b)
Total accumulated earnings/(deficit) $(108,591,568)
(a) On September 30, 2005, the Fund had a net capital loss carryforward of
$129,072,933 of which $40,065,073 expires in the year 2007, $24,635,181 expires
in the year 2008, $10,899,598 expires in the year 2009, $33,249,705 expires in
2010 and $20,223,376 expires in the year 2011. To the extent future capital
gains are offset by capital loss carryforwards, such gains will not be
distributed. During the fiscal year, the Fund utilized capital loss
carryforwards of $2,967,645.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales, the difference between book and tax amortization methods
for premium and the difference between book and tax treatment of swap income.
During the current fiscal year, permanent differences, primarily due to
distributions in excess of net investment income, the tax character of paydown
gains/losses, tax treatment of swap 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 H
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
36 o ACM MANAGED DOLLAR INCOME FUND
pending in the United States District Court for the District of Maryland
pursuant to a ruling by the Judicial Panel on Multidistrict Litigation
transferring and centralizing all of the mutual funds involving market and late
trading in the District of Maryland (the "Mutual Fund MDL"). Management of the
Adviser believes that these private lawsuits are not likely to have a material
adverse effect on the results of operations or financial condition of the Fund.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of 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 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 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
ACM MANAGED DOLLAR INCOME FUND o 37
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. On
October 19, 2005, the WVAG Complaint was transferred to the Mutual fund MDL.
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 the SEC Order and the NYAG Order. The Adviser intends to vigorously
defend against the allegations in the WVAG Complaint.
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
38 o ACM MANAGED DOLLAR INCOME FUND
of their contracts with the Adviser, including recovery of all fees paid to the
Adviser pursuant to such contracts, an accounting of all fund-related fees,
commissions and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
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).
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 DOLLAR INCOME FUND o 39
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended September 30,
---------------------------------------------------------------
2005 2004(a) 2003 2002(b) 2001
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $ 7.87 $ 7.68 $ 5.58 $ 6.33 $ 8.09
Income From Investment
Operations
Net investment income(c) 0.65 0.76 0.81 0.84 0.98
Net realized and unrealized
gain (loss) on investment
transactions 0.43 0.23 2.10 (0.71) (1.72)
Net increase (decrease) in net
asset value from operations 1.08 0.99 2.91 0.13 (0.74)
Less: Dividends and
Distributions
Dividends from net investment
income (0.67) (0.80) (0.81) (0.85) (0.95)
Tax return of capital -0- -0- -0- (0.03) (0.07)
Total dividends and
distributions (0.67) (0.80) (0.81) (0.88) (1.02)
Net asset value, end of period $ 8.28 $ 7.87 $ 7.68 $ 5.58 $ 6.33
Market value, end of period $ 7.74 $ 7.87 $ 8.15 $ 6.29 $ 7.62
Premium/Discount (0.07%) 0.00% 6.12% 12.72% 20.38%
Total Return
Total investment return
based on:(d)
Market value 7.10% 6.91% 45.71% (6.14)% 3.02%
Net asset value 14.57% 13.45% 54.77% .23% (10.08)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $178,560 $178,735 $173,182 $124,834 $140,110
Ratios to average net assets of:
Expenses 1.49% 1.44% 1.72% 2.12% 2.75%
Expenses, excluding
interest expense(e) 1.13% 1.15% 1.21% 1.15% 1.13%
Net investment income 8.06% 9.76% 11.88% 10.81% 9.90%
Portfolio turnover rate 63% 95% 80% 63% 129%
See footnote summary on page 41.
40 o ACM MANAGED DOLLAR INCOME FUND
(a) As of October 1, 2003, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. These interim payments are reflected within
net realized and unrealized gain (loss) on swap contracts, however, prior to
October 1, 2003, these interim payments were reflected within interest
income/expense on the statement of operations. The effect of this change for
the fiscal year ended September 30, 2005, was to decrease net investment income
per share by $0.01 and increase net realized and unrealized gain (loss) on
investment transactions per share by $0.01 and decrease the ratio of net
investment income to average net assets by 0.14%.
(b) As required, effective October 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 end
September 30, 2002 was to decrease net investment income per share by $0.01,
decrease net realized and unrealized loss on investment by $0.01 and decrease
the ratio of net investment income to average net assets from 10.91% to 10.81%.
Per share, ratios and supplemental data for periods prior to October 1, 2001
have not been restated to reflect this change in presentation.
(c) Based on average shares outstanding.
(d) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the premium of the market value to the net asset value from the beginning to
the end of such periods. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
periods where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such periods. Total investment return calculated for a period of less than one
year is not annualized.
(e) Excludes net interest expense of .36%, .29%, .51%, .97%, 1.62% and 1.61%,
respectively, on borrowings.
ACM MANAGED DOLLAR INCOME FUND o 41
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of ACM Managed Dollar Income Fund,
Inc.
We have audited the accompanying statement of assets and liabilities of ACM
Managed Dollar Income Fund, Inc. (the "Fund"), including the portfolio of
investments, as of September 30, 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 audits 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 also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of September 30, 2005 by correspondence
with the custodian and others or by other appropriate auditing procedures where
replies from others were not received. 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 Dollar Income Fund, Inc. at September 30, 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
November 16, 2005
42 o ACM MANAGED DOLLAR INCOME FUND
ADDITIONAL INFORMATION
(unaudited)
ACM Managed Dollar Income Fund
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment 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 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 DOLLAR INCOME FUND o 43
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
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, and (iii) no material changes in the principal risk
factors associated with investment in the Fund. Mr. Gershon M. Distenfeld has
replaced Ms. Sheryl Rothman as one of the persons primarily responsible for the
day-to-day management of the Fund's investment portfolio.
44 o ACM MANAGED DOLLAR INCOME FUND
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 & Independent Compliance Officer
Paul J. DeNoon(2), Vice President
Mark A. Hamilton, Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer and Chief Financial Officer
Vincent 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
Dividend Paying Agent, Transfer Agent and Registrar
Equiserve Trust Company, N.A.
P.O. Box 43011
Providence, RI 02940-3011
Independent Registered Public Accounting Firm
Ernst& Young LLP
5 Times Square
New York,NY 10036
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee, the Governance and Nominating Committee,
and the Independent Directors Committee.
(2) The day-to-day management of, and investment decisions for, the Fund's
portfolio are made by the Global Fixed Income Team. While all members of the
team work jointly to determine the majority of the investment stategy including
stock selection for the Fund, Mr. Paul J. DeNoon and Mr. Gershon M. Distenfeld,
members of the Global Fixed Income Emerging Market Investment Team, is
primarily responsible for the day-to-day management of the Fund's 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 Dollar Income Fund for their information. The
financial information included herein is taken from the records of the Fund.
This is not a prospectus, circular or representation intended for use in the
purchase of shares of the Fund or any securities mentioned in this report.
Annual Certifications - As required, on April 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.
ACM MANAGED DOLLAR INCOME FUND o 45
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.
NAME, PORTFOLIOS
ADDRESS, PRINCIPAL IN FUND OTHER
DATE OF BIRTH OCCUPATION(S) COMPLEX DIRECTORSHIP
OF DIRECTOR DURING PAST OVERSEEN BY HELD BY
(YEAR ELECTED*) 5 YEARS DIRECTOR DIRECTOR
---------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
Marc O. Mayer, ++ Executive Vice President of 81 None
1345 Avenue of the ACMC since 2001; prior thereto,
Americas Chief Executive Officer of
New York, NY 10105 Sanford C. Bernstein & Co., LLC
10/2/57 and its predecessor since prior to
(2003) 1999.
DISINTERESTED DIRECTORS
William H. Foulk, Jr.,# Investment adviser and an 108 None
2 Sound View Drive independent consultant. He
Suite 100 was formerly Senior Manager
Greenwich, CT 06830 of Barrett Associates, Inc., a
9/7/32 registered investment adviser,
(1993) with which he had been
Chairman of the Board associated since prior to 1999. He
was formerly Deputy Comptroller and
Chief Investment Officer of the
State of New York and, prior thereto,
Chief Investment Officer of the New
York Bank for Savings.
Ruth Block,#+++ Formerly Executive Vice President 105 None
500 SE Mizner Blvd., and Chief Insurance Officer of
Boca Raton, FL 33432 The Equitable Life Assurance
11/7/30 Society of the United States;
(1993) Chairman and Chief Executive
Officer of Evlico; Director of Avon,
BP (oil and gas), Ecolab Incorporated
(specialty chemicals), Tandem
Financial Group and Donaldson,
Lufkin & Jenrette Securities
Corporation; former Governor at
Large National Association of
Securities Dealers, Inc.
David H. Dievler,# Independent consultant. Until 107 None
P.O. Box 167 December 1994 he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
10/23/29 Management Corporation
(1993) ("ACMC") responsible for mutual
fund administration. Prior to joining
ACMC in 1984 he was Chief Financial
Officer of Eberstadt Asset Management
since 1968. Prior to that he was a
Senior Manager at Price Waterhouse & Co.
Member of American Institute of
Certified Public Accountants since 1953.
46 o ACM MANAGED DOLLAR INCOME FUND
NAME, PORTFOLIOS
ADDRESS, PRINCIPAL IN FUND OTHER
DATE OF BIRTH OCCUPATION(S) COMPLEX DIRECTORSHIP
OF DIRECTOR DURING PAST OVERSEEN BY HELD BY
(YEAR ELECTED*) 5 YEARS DIRECTOR DIRECTOR
---------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
John H. Dobkin,# Consultant. Formerly President of 105 None
P.O. Box 12 Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002, a
2/19/42 Senior Advisor from June 1999-
(1993) June 2000 and President of
Historic Hudson Valley (historic
preservation) from December
1989-May 1999. Previously,
Director of the National Academy
of Design and during 1988-1992,
he was Director and Chairman of
the Audit Committee of ACMC.
Michael J. Downey, # Consultant since 2004. 80 Asia Pacific
c/o Alliance Capital Formerly managing partner of Fund, Inc.
Management L.P. Lexington Capital, LLC (investment and The
1345 Avenue of the advisory firm) from 1997 until Merger Fund
Americas December 2003. Prior thereto,
Attn: Philip L. Kirstein Chairman and CEO of Prudential
New York, NY 10105 Mutual Fund Management
1/26/44 (1987-1993).
(2005)
Dr. James M. Hester, # Formerly President of the Harry Frank 11 None
25 Cleveland Lane Guggenheim Foundation, New York
Princeton, NJ 08540 University and the New York
4/19/24 Botanical Garden. Formerly Rector
(1993) of the United Nations University
and Vice Chairman of the Board of
the Federal Reserve Bank of New York.
* There is no stated term of office for the Fund's directors.
# Member of the Audit Committee, the Governance and Nominating Committee,
and the Independent Directors Committee.
++ Mr. Mayer is an "interested person", as defined in the 1940 Act, due to
his position as Executive Vice President of ACMC.
+++ Ms. Block was an "interested person" as defined in the 1940 Act, until
October 21, 2004 by reason of her ownership of 116 American Depositary Shares
of AXA, having a value of approximately $2,396. AXA is a controlling person of
ACMC. Ms. Block received shares of The Equitable Companies Incorporated as part
of the demutualization of The Equitable Life Assurance Society of the United
States, which was subsequently converted through a corporate action into 116
American Depositary Shares of AXA.
ACM MANAGED DOLLAR INCOME FUND o 47
Officers of the Fund
Certain information concerning the Fund's Officers is listed below.
NAME,
ADDRESS* AND 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 Senior Vice President and Independent
5/29/45 and Independent Compliance Officer--Mutual Funds of
Compliance Officer ACMC** with which he has been
associated since October 2004. Prior
thereto, he was Counsel of Kirkpatrick
& Lockhart, LLP from 2003 to October
2004, and General Counsel and First
Vice President of Merrill Lynch
Investment Managers 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 Sanford C.
Bernstein & Co.'s European and Global
fixed-income portfolios for institutional
and retail clients in London 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.
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.
48 o ACM MANAGED DOLLAR INCOME FUND
Information Regarding the Review and Approval of the Fund's Advisory Agreement
The Fund's disinterested directors (the "directors") unanimously approved the
continuance of the Advisory Agreement between the Fund and the Adviser at a
meeting held on September 14 and 16, 2005.
In preparation for the meeting, the directors had requested from the Adviser
and evaluated extensive materials, including performance and expense
information for other investment companies with similar investment objectives
derived from data compiled by Lipper Inc. ("Lipper"). Prior to voting, the
directors reviewed the proposed continuance of the Advisory Agreement with
management and with experienced counsel who are independent of the Adviser and
received a memorandum from such counsel discussing the legal standards for
their consideration of the proposed continuance. The directors also discussed
the proposed continuance in four private sessions at which only the directors,
their independent counsel and the Fund's Independent Compliance Officer were
present. In reaching their determinations relating to continuance of the
Advisory Agreement, the directors considered all factors they believed
relevant, including the following:
1. information comparing the performance of the Fund to other investment
companies with similar investment objectives and to an index;
2. the nature, extent and quality of investment, compliance,
administrative and other services rendered by the Adviser;
3. payments received by the Adviser from all sources in respect of the
Fund and all investment companies in the AllianceBernstein Funds complex;
4. the costs borne by, and profitability of, the Adviser and its
affiliates in providing services to the Fund and to all investment companies in
the AllianceBernstein Funds complex;
5. comparative fee and expense data for the Fund and other investment
companies with similar investment objectives;
6. the extent to which economies of scale would be realized to the
extent the Fund grows and whether fee levels reflect these economies of scale
for the benefit of investors;
7. the Adviser's policies and practices regarding allocation of
portfolio transactions of the Fund;
ACM MANAGED DOLLAR INCOME FUND o 49
8. portfolio turnover rates for the Fund;
9. fall-out benefits which the Adviser and its affiliates receive from
their relationships with the Fund;
10. the Adviser's representation that it does not advise other clients
with substantially similar investment objectives and strategies as the Fund;
11. the professional experience and qualifications of the Fund's
portfolio management team and other senior personnel of the Adviser; and
12. the terms of the Advisory Agreement.
The directors also considered their knowledge of the nature and quality of the
services provided by the Adviser to the Fund gained from their experience as
directors or trustees of most of the funds advised by the Adviser, their
overall confidence in the Adviser's integrity and competence they have gained
from that experience and the Adviser's responsiveness to concerns raised by
them in the past, including the Adviser's willingness to consider and implement
organizational and operational changes designed to improve investment results
and the services provided to the AllianceBernstein Funds.
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and each director attributed
different weights to the various factors.
The directors determined that the overall arrangements between the Fund and the
Adviser, as provided in the Advisory Agreement, were fair and reasonable in
light of the services performed, expenses incurred and such other matters as
the directors considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the directors
reaching their determinations to approve the continuance of the Advisory
Agreement (including their determinations that the Adviser should continue to
be the investment adviser for the Fund, and that the fees payable to the
Adviser pursuant to the Advisory Agreement are appropriate) were separately
discussed by the directors.
Nature, extent and quality of services provided by the Adviser
The directors noted that, under the Advisory Agreement, the Adviser, subject to
the control of the directors, administers the Fund's business and other
affairs. The Adviser manages the investment of the assets of the Fund,
including making purchases and sales of portfolio securities consistent with
the Fund's investment objective and policies. The Adviser also provides the
Fund with such office space, administrative and other services (exclusive of,
and in addition to, any such ser-
50 o ACM MANAGED DOLLAR INCOME FUND
vices provided by any others retained by the Fund) and executive and other
personnel as are necessary for the Fund's operations. The Adviser pays all of
the compensation of directors of the Fund who are affiliated persons of the
Adviser and of the officers of the Fund.
The directors noted that the Advisory Agreement for the Fund does not contain a
reimbursement provision for the cost of certain administrative and other
services provided by the Adviser. The directors noted that the Fund has a
separate administration agreement and pays separate administration fees to its
administrator.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided by advisers and administrators of funds had expanded over time as a
result of regulatory and other developments. The directors noted that, for
example, the Adviser is responsible for maintaining and monitoring its own and,
to varying degrees, the Fund's compliance programs, and these compliance
programs have recently been refined and enhanced in light of new regulatory
requirements. The directors considered the quality of the in-house investment
research capabilities of the Adviser and the other resources it has dedicated
to performing services for the Fund. The quality of administrative and other
services, including the Adviser's role in coordinating the activities of the
Fund's other service providers, also were considered. The directors also
considered the Adviser's response to recent regulatory compliance issues
affecting a number of the investment companies in the AllianceBernstein Funds
complex. The directors concluded that, overall, they were satisfied with the
nature, extent and quality of services provided to the Fund under the Advisory
Agreement.
Costs of Services Provided and Profitability to the Adviser
The directors reviewed a schedule of the revenues, expenses and related notes
indicating the profitability of the Fund to the Adviser for calendar years 2003
and 2004. The directors reviewed the assumptions and methods of allocation used
by the Adviser in preparing fund-specific profitability data, and noted the
Adviser's representation to them that it believed that the methods of
allocation used in preparing the profitability information were reasonable and
appropriate and that the Adviser had previously discussed with the directors
that there is no generally accepted allocation methodology for information of
this type. The directors also noted that the methodology for preparing
fund-by-fund profitability information was being reviewed and that it was
expected that an updated methodology would be used in 2005, and that it would
differ in various respects from the methodology used in 2004 and in prior years.
The directors recognized that it is difficult to make comparisons of
profitability from fund management contracts because comparative information is
not gener-
ACM MANAGED DOLLAR INCOME FUND o 51
ally publicly available and is affected by numerous factors, including the
structure of the particular adviser, the types of funds it manages, its
business mix, numerous assumptions regarding allocations and the adviser's
capital structure and cost of capital. In considering profitability
information, the directors considered the effect of fall-out benefits on the
Adviser's expenses. The directors focused on the profitability of the Adviser's
relationship with the Fund before taxes. The directors recognized that the
Adviser should generally be entitled to earn a reasonable level of profits for
the services it provides to the Fund and, based on their review, concluded that
they were satisfied that the Adviser's level of profitability from its
relationship with the Fund was not excessive.
Fall-Out Benefits
The directors considered that the Adviser benefits from soft dollar
arrangements whereby it receives brokerage and research services from many of
the brokers and dealers that execute purchases and sales of securities on
behalf of its clients on an agency basis. Since the Fund does not normally
engage in brokerage transactions, the Adviser does not receive soft dollar
benefits in respect of portfolio transactions of the Fund.
The directors also noted that a subsidiary of the Adviser provides certain
shareholder services to the Fund and receives compensation from the Fund for
such services.
The directors recognized that the Adviser's profitability would be somewhat
lower if the Adviser's subsidiary did not receive the benefits described above.
The directors also believe that the Adviser derives reputational and other
benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the
meeting, the directors receive detailed comparative performance information for
the Fund at each regular Board meeting during the year. At the meeting, the
directors reviewed information prepared by the Adviser based on information
obtained from Lipper showing performance of the Fund compared to other funds in
the Lipper Flexible Income Funds Average (the "Lipper Average") for periods
ending May 31, 2005 over the year to date ("YTD"), 1-, 3-, 5- and 10-year and
since inception periods (inception October 1993) and for each of the last ten
calendar years, and compared to the JP Morgan Emerging Markets Bond Index Plus
(the "Index") for periods ending May 31, 2005 for the YTD, 1-, 3-, 5- and
10-year periods. The directors noted that in the Lipper Average comparison, the
Fund's performance was significantly above the Lipper medians in all periods
reviewed and that the Fund's calendar year performance was also significantly
above the Lipper medians every year except 2002 when it was somewhat below the
Lipper median and 1994, 1998 and 2000 when it was significantly below the
Lipper medians. The directors further noted that the Fund underper-
52 o ACM MANAGED DOLLAR INCOME FUND
formed the Index in all periods reviewed except in the 3-year period when it
outperformed the Index. Based on their review, the directors concluded that the
Fund's relative performance over time was satisfactory.
Advisory Fees and Other Expenses
The directors considered the latest fiscal period actual management fees paid
by the Fund (advisory fees paid to the Adviser and administration fees paid to
an entity that is not affiliated with the Adviser for administrative services)
and information prepared by Lipper concerning fee rates paid by other funds in
the same Lipper category as the Fund. They compared the combined advisory and
administration fees paid by the Fund to the advisory fees of other funds where
there is no separate administrator. The directors recognized that it is
difficult to make comparisons of advisory fees because there are variations in
the services that are included in the fees paid by other funds.
The directors noted that in connection with the settlement of the market timing
matter with the New York Attorney General ("NYAG"), the Adviser agreed to
material reductions (averaging 20%) in the fee schedules of most of the
open-end funds sponsored by the Adviser (other than money market funds). The
directors noted that the Fund's contractual advisory fee rate was the same as
the rate charged to comparable open-end funds managed by the Adviser prior to
the reductions made as a result of the settlement with the NYAG. The directors
had previously requested a reduction in the advisory fees of the Fund to the
levels charged to comparable open-end funds managed by the Adviser. At their
September 14 and 16, 2005 meeting, the directors considered the Adviser's
position that no fee adjustments were warranted in the Fund's particular
circumstances.
The directors also considered the total expense ratio of the Fund in comparison
to the fees and expenses of funds within a comparison group created by Lipper
(an Expense Group, which Lipper described as a small, hand-selected group of
"peer funds"). Comparison information for an Expense Universe (described by
Lipper as a broader array of funds) was not provided by Lipper in light of the
relatively small number of funds in the Fund's Lipper category. The expense
ratio of the Fund was based on the Fund's latest fiscal year expense ratio. The
directors recognized that the expense ratio information for the Fund
potentially reflected on the Adviser's provision of services, as the Adviser is
responsible for coordinating services provided to the Fund by others. The
directors noted that the expense ratios of some funds in the Fund's Lipper
category also were lowered by waivers or reimbursements by those funds'
investment advisers, which in some cases were voluntary and perhaps temporary.
The information reviewed by the directors showed that the Fund's latest fiscal
period actual management fees of 89.3 basis points (combined advisory fee paid
ACM MANAGED DOLLAR INCOME FUND o 53
under the Advisory Agreement and an administration fee paid to an entity that
is not affiliated with the Adviser) were the same as the median for the Expense
Group. The directors noted that the Fund's total expense ratio was materially
lower than the median for the Expense Group. The directors concluded that the
Fund's expense ratio was satisfactory.
Economies of Scale
The directors considered that the Fund is a closed-end Fund and that it was not
expected to have meaningful asset growth as a result. In such circumstances,
the directors did not view the potential for realization of economies of scale
as the Fund's assets grow to be a material factor in their deliberations. The
directors noted that if the Fund's net assets were to increase materially as a
result of, e.g., an acquisition or rights offering, they would review whether
potential economies of scale would be realized by the Adviser.
54 o ACM MANAGED DOLLAR 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 DOLLAR INCOME FUND o 55
SUMMARY OF GENERAL INFORMATION
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 each day. The Fund's NYSE trading symbol is
"ADF." Weekly comparative net asset value (NAV) and market price information
about the Fund is published each Monday in The Wall Street Journal, each Sunday
in The New York Times and each Saturday in Barron's and other newspapers in a
table called "Closed-End Funds."
Dividend Reinvestment Plan
Pursuant to the Fund's Dividend Reinvestment Plan shareholders whose shares are
registered in their own names may elect to have all distributions reinvested
automatically in additional shares of the Fund by Equiserve Trust Company,
N.A., as agent under the Plan. Shareholders whose shares are held in the name
of a broker or nominee should contact the broker or nominee for details. All
distributions to investors who elect not to participate in the Plan will be
paid by check mailed directly to the record holder by or under the direction of
Equiserve Trust Company, N.A. 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.
56 o ACM MANAGED DOLLAR 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 DOLLAR INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
MDIAR0905
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 (for those Funds that issue quarterly press
releases), and preferred stock maintenance testing (for those Funds that issue
preferred stock); and (iii) tax compliance, tax advice and tax return
preparation.
Audit-Related
Audit Fees Fees Tax Fees
---------- ------------- --------
2004 $51,000 $9,785 $24,804
2005 $53,000 $8,355 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, which include conducting an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of
Foregoing Column
Pre-approved by the
All Fees for Audit 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 $1,236,321 [ $284,589 ]
( $259,785 )
( $24,804 )
2005 $903,852 [ $196,659 ]
( $178,355 )
( $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.
October 2005
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.
Except as set forth below, there have been no purchases of equity securities by
the Fund or by affiliated parties for the reporting period.
REGISTRANT PURCHASES OF EQUITY SECURITIES(1)
Maximum Number
Total Number of (or Approximate
Shares (or Units) Dollar Value) of
Purchased as part Shares (or Units)
Total Number of of Publicly that May Yet Be
Shares (or Units Average Price Paid Announced Plans Purchased Under the
Period Purchased) per Share (or Unit) or Programs Plans or Programs
-------------------------------------------------------------------------------------------------------
June 1, 2005 -
June 30, 2005 1,135,385 $8.07 1,135,385 Not Applicable
(1) The Fund announced on May 10, 2005 the terms of a tender offer in
fulfillment of an undertaking, in connection with the initial public offering
of shares, stated in the Fund's prospectus dated October 22, 1993. The Fund
commenced the tender offer on May 13, 2005 for 1,135,385 shares of its common
stock representing approximately 5% of the Fund's outstanding shares. The
offer was for cash at a price equal to the net asset value per share determined
as of the close of the regular trading session of the New York Stock Exchange
on the date after the date the offer expired. The offer expired at 12:00
Midnight Eastern Time on June 10, 2005.
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 changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
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 Dollar Income Fund, Inc.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: November 29, 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: November 29, 2005
By: /s/ Mark D. Gersten
-------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: November 29, 2005