N-CSRS 1 edg10986_sr.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-7964 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: March 31, 2005 ITEM 1. REPORTS TO STOCKHOLDERS. [LOGO] ALLIANCEBERNSTEIN (SM) Investment Research and Management ACM Managed Dollar Income Fund ------------------------------------------------------------------------------- Semi-Annual Report--March 31, 2005 ------------------------------------------------------------------------------- Closed End 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. May 25, 2005 Semi-Annual Report This report provides management's discussion of fund performance for ACM Managed Dollar Income Fund (the "Fund") for the semi-annual reporting period ended March 31, 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 page 4 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 the 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 March 31, 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 it more closely resembles the composition of the Fund's portfolio. For the six-month period ended March 31, 2005, the Fund outperformed its blended composite benchmark. The primary contribution to outperformance was the Fund's use of leverage in both its emerging-market and high yield holdings. Within the emerging-market allocation, the Fund's sector weightings were generally positive while security selection was generally negative. Contributing positively to performance within the high yield allocation was the Fund's underweighted position in the automotive sector and its overweighted positions in property and casualty insurance holdings. Although the Fund's property and casualty insurance overweight helped, security selection within the sector detracted as some of the Fund's insurance holdings were negatively impacted by news of accounting irregularities within the industry. Also contributing positively to relative performance was the Fund's security selection within the cable, diversified media and wireless industries. During the reporting period, the Fund held some of the best performing cable issuers. Detracting from performance within the Fund's high yield allocation was an underweighted position in the chemicals industry which outperformed, in addition to an overweighted position in the cable sectors which underperformed. The Fund's security selection within the airline and telecommunications industries also detracted from performance during the period under review. ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 1 Market Review and Investment Strategy During the semi-annual reporting period, emerging market debt and high yield posted the strongest returns within the fixed-income market despite some volatility and a broad fixed-income market sell-off in March 2005. Both sectors provided relatively strong monthly returns in the months leading up to March. The earlier strong gains in emerging market debt were a result of relatively low global interest rates, ample global liquidity, higher commodity prices and improved economic fundamentals in emerging countries. Between September 2004 and the end of February 2005, emerging market debt posted a strong 6.66%, as measured by the JPM EMBI+. The high yield market continued to benefit early in the period as well from an expanding economy and resulting corporate profits. Consequently, credit quality improved and the default rate remained low. As with emerging-market debt, high yield posted strong returns until the sell-off in March, returning 5.92% in the first five months of the reporting period, according to the CSFBHY Index. Late in the reporting period, however, market sentiment abruptly changed. Unlike the second half of 2004 and beginning of 2005, when the market's mood had been uncharacteristically sanguine in the context of rising rates, market sentiment soured late in the first quarter of 2005 and bond prices fell. Fixed-income markets were rattled primarily by two concerns: the fear that official rate hikes could become more aggressive this year and fallout from General Motors' profit warning. Late in the period, yields jumped after the U.S. Federal Reserve (the "Fed") stated that inflation pressures had increased in recent months. Inflation fears were further stoked by sharply higher oil and commodities prices. At the end of the reporting period, crude oil hit a new high of $57. The strong returns posted by both emerging market debt and high yield, were partially offset by March's decline. For the month of March, emerging market debt lost 2.65% while high yield fell 2.39%. During the semi-annual reporting period, the average emerging market and high-yield spread reached lows of 330 and 250 basis points versus Treasuries, respectively. In mid-March, spreads widened sharply on the heels of the General Motors news and increased event risk. At the end of the period, the high yield market, as measured by the CSFBHY Index, yielded 7.84%, for a spread of 373 basis points over Treasuries. By industry, airlines, telecommunications and wireless communications outperformed. Underperforming industries for the period included autos, retail, transportation and consumer durables. In the emerging markets, the JPM EMBI+ ended the period yielding 8.31% with a spread of 384 basis points over Treasuries. By country, outperformers included Ecuador at 11.86%, Russia at 8.57% and the Ukraine at 7.33%. Underperforming for the period were Poland at 0.36%, South Africa at 0.43% and Morocco at 1.47%. Within the Fund's emerging market holdings, allocations to its core emerging market countries (Russia, Colombia, Brazil, Ecuador, Venezuela, Mexico and Turkey), were maintained but individual country weightings were ------------------------------------------------------------------------------- 2 o ACM MANAGED DOLLAR INCOME FUND adjusted during the period. The Fund maintained its overweight position in Latin America as these countries benefited from improving macroeconomic fundamentals and higher commodity prices. The Fund was overweighted in Russia as liquidity and debt levels in that country continued to improve, and there were expectations of a ratings upgrade. On January 31, 2005, Standard & Poor's raised Russia's credit rating to investment-grade from BB+ to BBB-. The team also maintained its overweight position in the Ukraine based on a promising economic outlook despite political noise. Industrial production in the Ukraine continued to grow, buoyed by metal prices, increased transit revenue and concessions on fuel prices received from Russia. Although it was believed that industry selection would be less critical within the Fund's high yield allocation, the Fund continued to over- and underweight industries based on research. The Fund was overweight in those industries that, based on research and analysis, had favorable fundamental outlooks and attractive valuations, such as manufacturing and cable. In general, the industrial-oriented sectors were preferred to the consumer-oriented sectors. Corporations had healthy cash balances to deploy, while the consumer began to feel increased pressure due to high energy prices. The Fund was underweight in industries with uncertain or poor credit trends, such as automotive suppliers and utilities. In fact, the Fund has been underweight in the auto sector for some time. This was due to concern about the ability of the suppliers to pass increases in raw-materials prices through to the original-equipment manufacturers (OEMs), as well as an expectation that the OEMs will cut production levels this year. ------------------------------------------------------------------------------- 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 44. 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 additional leverage through the investment techniques of reverse repurchase agreements and dollar rolls. Repurchase agreements involve sales by the Fund of portfolio assets concurrently with an agreement by the Fund to repurchase the same assets at a later date at a fixed price. Generally, the effect of such a transaction is that the Fund can recover all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement, while it will be able to keep the interest income associated with those portfolio securities. Such transactions are only advantageous if the interest cost to the Fund of the reverse repurchase agreement transaction is less than the cost of otherwise obtaining the cash. The Fund may enter into dollar rolls in which the Fund sells securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type and coupon) securities on a specified future date. During the roll period, the Fund forgoes principal and interest paid on the securities. The Fund is compensated by the difference between the current sales price and the lower forward price for the future purchase (often referred to as the "drop") as well as by the interest earned on the cash proceeds of the initial sale. Reverse repurchase agreements and dollar rolls are speculative techniques and are considered borrowings by the Fund. The effect of leverage can realize shareholders higher returns than if the Fund were not leveraged and the use of leverage techniques can add to net asset value (NAV). However, the risks of such techniques are potentially a higher volatility of the NAV of the Common Stock, potentially more volatility in the market (Historical Performance continued on next page) ------------------------------------------------------------------------------- 4 o ACM MANAGED DOLLAR INCOME FUND HISTORICAL PERFORMANCE (continued from previous page) value of the Common Stock and the relatively greater effect on the NAV of the Common Stock caused by favorable or adverse changes in the currency exchange rates. In addition, changes in the interest rate environment can increase or decrease shareholder returns. This additional leverage will not exceed 33% of the Fund's total assets, less liabilities. 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. 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 Returns PERIODS ENDED MARCH 31, 2005 6 Months 12 Months ------------------------------------------------------------------------------- ACM Managed Dollar Income Fund (NAV) 4.77% 6.25% Composite: 65% JPM EMBI+ / 35% CSFBHY Index 3.69% 7.26% JPM EMBI+ 3.84% 6.94% CSFBHY Index 3.40% 7.84% The Fund's Market Price per share on March 31, 2005 was $7.67. For additional Financial Highlights, please see page 39. See Historical Performance and Benchmark disclosures on pages 4-5. ------------------------------------------------------------------------------- 6 o ACM MANAGED DOLLAR INCOME FUND PORTFOLIO SUMMARY March 31, 2005 (unaudited) PORTFOLIO STATISTICS Net Assets ($mil): $179.4 SECURITY TYPE BREAKDOWN* o 52.5% Sovereign Debt Obligations o 45.1% Corporate Debt Obligations o 0.6% Preferred Stock o 1.8% Short-Term * All data are as of March 31, 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 March 31, 2005 (unaudited) Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- SOVEREIGN DEBT OBLIGATIONS-61.5% Argentina-3.5% Republic of Argentina FRN 3.01%, 8/03/12(a) $ 4,782 $ 4,036,008 11.375%, 3/15/10(b) 190 53,200 11.75%, 6/15/15(b) 350 107,625 12.00%, 6/19/31(b) 1,171 357,246 12.25%, 6/19/18(b) 2,781 834,142 15.50%, 12/19/08(a)(b) 2,788 836,400 ----------- 6,224,621 Brazil-11.8% Republic of Brazil 9.25%, 10/22/10 625 656,250 10.50%, 7/14/14 1,750 1,929,375 11.00%, 8/17/40(c) 6,007 6,676,781 12.00%, 4/15/10 1,150 1,338,599 12.75%, 1/15/20 1,965 2,416,950 14.50%, 10/15/09 530 665,945 Republic of Brazil-DCB FRN Series L 3.125%, 4/15/12(a) 1,041 977,464 C-Bonds 8.00%, 4/15/14(c) 6,504 6,447,704 ----------- 21,109,068 Bulgaria-0.3% Republic of Bulgaria 8.25%, 1/15/15(d) 355 434,520 Colombia-1.8% Republic of Colombia 10.75%, 1/15/13 237 264,847 11.75%, 2/25/20(c) 2,545 3,028,550 ----------- 3,293,397 Ecuador-3.1% Ecuador Structured Note 6.50%, 10/11/05 591 573,382 Republic of Ecuador 8.00%, 8/15/30(a)(c)(d) 5,554 4,984,715 8.00%, 8/15/30(a)(d) 75 67,313 ----------- 5,625,410 El Salvador-0.3% Republic of El Salvador 7.625%, 9/21/34(d) 150 153,750 8.50%, 7/25/11(d) 400 443,800 ----------- 597,550 ------------------------------------------------------------------------------- 8 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Indonesia-0.5% Republic of Indonesia 6.75%, 3/10/14(d) $ 945 $ 936,731 Jamaica-0.4% Government of Jamaica 10.625%, 6/20/17 662 695,100 12.75%, 9/01/07(d) 65 74,262 ----------- 769,362 Lebanon-0.5% Lebanese Republic 7.875%, 5/20/11(d) 325 315,250 10.125%, 8/06/08(d) 325 354,900 11.625%, 5/11/16(d) 146 161,111 ----------- 831,261 Mexico-7.7% United Mexican States 7.50%, 1/14/12 875 966,000 8.00%, 9/24/22(c) 4,472 5,075,720 8.125%, 12/30/19(c) 5,135 5,874,440 11.375%, 9/15/16 1,296 1,845,504 ----------- 13,761,664 Panama-1.3% Republic of Panama 3.75%, 7/17/14(a) 554 528,875 8.875%, 9/30/27 100 107,500 9.375%, 7/23/12 170 191,505 9.375%, 4/01/29 306 348,840 9.625%, 2/08/11 225 254,250 10.75%, 5/15/20 680 873,800 ----------- 2,304,770 Peru-1.2% Republic of Peru 8.375%, 5/03/16 345 360,525 8.75%, 11/21/33 355 369,200 9.125%, 2/21/12 290 324,800 9.875%, 2/06/15 876 1,011,780 ----------- 2,066,305 Philippines-2.1% Republic of Philippines 9.00%, 2/15/13 75 77,250 9.50%, 2/02/30 537 524,918 9.875%, 1/15/19(c) 2,600 2,707,900 10.625%, 3/16/25 464 496,480 ----------- 3,806,548 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 9 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Russia-20.7% Ministry Finance of Russia Series V 3.00%, 5/14/08 $ 2,905 $2,672,600 Series VII 3.00%, 5/14/11 1,420 1,180,446 Russian Federation 5.00%, 3/31/30(a)(d) 32,410 33,301,275 ------------ 37,154,321 Turkey-2.6% Republic of Turkey 7.375%, 2/05/25 440 413,600 11.00%, 1/14/13 610 739,015 11.50%, 1/23/12 1,054 1,284,826 11.75%, 6/15/10 750 909,375 11.875%, 1/15/30(c) 1,019 1,370,555 ------------ 4,717,371 Ukraine-1.4% Ukraine Government 6.875%, 3/04/11(d) 925 950,437 7.65%, 6/11/13(d) 604 646,280 11.00%, 3/15/07(d) 877 942,035 ------------ 2,538,752 Uruguay-0.7% Republic of Uruguay 7.875%, 1/15/33 1,506 1,302,332 Venezuela-1.6% Republic of Venezuela 3.6925%, 4/20/11(a)(d) 120 106,500 5.375%, 8/07/10(d) 690 614,099 8.50%, 10/08/14 35 34,387 9.25%, 9/15/27 2,053 2,035,549 ------------ 2,790,535 Total Sovereign Debt Securities (cost $89,291,693) 110,264,518 U.S. CORPORATE DEBT OBLIGATIONS-48.1% Aerospace/Defense-0.9% Bombardier, Inc. (Canada) 6.30%, 5/01/14(d) 400 336,000 DRS Technologies, Inc. 6.875%, 11/01/13 325 325,000 L-3 Communications Corp. 5.875%, 1/15/15 340 326,400 Sequa Corp. 9.00%, 8/01/09 210 225,750 TD Funding Corp. 8.375%, 7/15/11 450 461,812 ------------ 1,674,962 ------------------------------------------------------------------------------- 10 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Automotive-0.9% Asbury Automotive Group, Inc. 8.00%, 3/15/14 $ 191 $ 185,270 Cooper Standard Auto 7.00%, 12/15/12(d) 295 274,350 HLI Operating, Inc. 10.50%, 6/15/10* 306 284,580 Keystone Automotive Operations, Inc. 9.75%, 11/01/13 405 407,025 TRW Automotive, Inc. 9.375%, 2/15/13 91 97,825 11.00%, 2/15/13 156 174,720 United Auto Group, Inc. 9.625%, 3/15/12 260 274,300 ------------ 1,698,070 Broadcasting & Media-0.4% Albritton Communications Co. 7.75%, 12/15/12 385 379,225 Radio One, Inc. 8.875%, 7/01/11 235 251,450 ------------ 630,675 Building & Real Estate-2.0% Associated Materials, Inc. 11.25%, 3/01/14(e) 650 451,750 Dayton Superior Corp. 10.75%, 9/15/08 180 176,400 D.R. Horton, Inc. 6.875%, 5/01/13 340 352,750 KB HOME 7.75%, 2/01/10 520 546,753 M/I Homes, Inc. 6.875%, 4/01/12(d) 355 351,450 Meritage Homes Corp. 6.25%, 3/15/15(d) 475 446,500 Schuler Homes, Inc. 10.50%, 7/15/11 360 398,150 WCI Communities, Inc. 6.625%, 3/15/15(d) 280 266,000 William Lyon Homes, Inc. 10.75%, 4/01/13 510 561,000 ------------ 3,550,753 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 11 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Cable-3.5% Cablevision Systems Corp. 8.00%, 4/15/12(d) $ 670 $ 688,425 Charter Communications Operating LLC 8.00%, 4/30/12(d) 1,560 1,552,200 CSC Holdings, Inc. 6.75%, 4/15/12(d) 270 267,975 7.625%, 7/15/18 405 421,200 DirectTV Holdings LLC 8.375%, 3/15/13 285 308,513 Echostar DBS Corp. 6.375%, 10/01/11 220 215,600 Insight Midwest LP 9.75%, 10/01/09 380 397,100 Intelsat Bermuda Ltd. (Bermuda) 7.805%, 1/15/12(a)(d) 105 106,575 8.625%, 1/15/15(d) 425 433,500 PanAmsat Corp. 9.00%, 8/15/14 905 954,775 Rogers Cable, Inc. 6.75%, 3/15/15 885 871,725 ------------ 6,217,588 Chemicals-0.9% Equistar Chemical Funding LP 10.125%, 9/01/08 520 574,600 10.625%, 5/01/11 130 145,925 Huntsman Advanced Materials LLC 11.00%, 7/15/10(d) 275 315,563 Huntsman International LLC 9.875%, 3/01/09 325 351,000 Westlake Chemical Corp. 8.75%, 7/15/11 270 295,312 ------------ 1,682,400 Communications - Fixed-2.5% Cincinnati Bell, Inc. 8.375%, 1/15/14* 635 625,475 Citizens Communications Co. 6.25%, 1/15/13 485 455,900 Eircom Funding (Ireland) 8.25%, 8/15/13 430 467,625 MCI, Inc. 7.688%, 5/01/09 265 275,600 Qwest Communications International, Inc. 8.00%, 2/15/14(a)(d) 205 200,388 Qwest Corp. 9.125%, 3/15/12(d) 1,420 1,544,250 Time Warner Telecom, Inc. 9.25%, 2/15/14 460 441,600 VALOR Telecom Enterprise 7.75%, 2/15/15(d) 475 472,625 ------------ 4,483,463 ------------------------------------------------------------------------------- 12 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Communications - Mobile-1.8% Inmarsat Finance PLC (United Kingdom) 7.625%, 6/30/12 $ 560 $ 557,200 Iridium LLC Capital Corp. Series B 14.00%, 7/15/05(b) 5,000 850,000 Nextel Communications, Inc. 5.95%, 3/15/14 240 238,800 6.875%, 10/31/13 480 500,400 Rogers Wireless Inc. (Canada) 7.25%, 12/15/12 330 336,600 Rural Cellular Corp. 8.25%, 3/15/12 240 244,800 TeleCorp PCS, Inc. 10.625%, 7/15/10 203 217,508 UBS Luxem (Vimpelcom) (Luxembourg) 8.00%, 2/11/10(d) 215 211,775 ------------ 3,157,083 Consumer Manufacturing-1.7% Broder Brothers Co. 11.25%, 10/15/10 500 547,500 11.25%, 10/15/10(d) 132 144,540 Jostens, Inc. 7.625%, 10/01/12 335 331,650 12.75%, 5/01/10 605 650,375 Playtex Products, Inc. 8.00%, 3/01/11 315 339,413 Rayovac Corp. 7.375, 2/01/15(d) 795 761,212 St. John Knits International, Inc. 12.50%, 7/01/09 200 213,250 ------------ 2,987,940 Energy-2.8% Amerada Hess Corp. 7.30%, 8/15/31 435 490,538 Chesapeake Energy Corp. 7.75%, 1/15/15 350 370,125 Enterprise Products Operating L.P. 5.60%, 10/15/14 465 458,922 Grant Prideco, Inc. 9.00%, 12/15/09 360 388,800 Hilcorp Energy 10.50%, 9/01/10(d) 770 854,700 Premco Refining Group, Inc. 9.50%, 2/01/13 250 279,375 Pride International, Inc. 7.375%, 7/15/14 395 418,700 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 13 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Universal Compression, Inc. 7.25%, 5/15/10 $ 220 $ 224,950 Williams Cos, Inc. 7.625%, 7/15/19 1,345 1,455,962 ------------ 4,942,072 Entertainment & Leisure-1.5% Gaylord Entertainment Co. 8.00%, 11/15/13 315 326,025 Intrawest Corp. (Canada) 7.50%, 10/15/13 195 195,488 K2, Inc. 7.375%, 7/01/14 355 367,425 NCL Corp. LTD (Bermuda) 10.625%, 7/15/14(d) 465 480,694 Royal Caribbean Cruises, Ltd. (Liberia) 8.00%, 5/15/10 625 686,719 Universal City Development Partners 11.75%, 4/01/10 425 484,500 Universal City Florida Holdings 8.375%, 5/01/10(d) 110 112,200 ------------ 2,653,051 Financial-2.2% Crum & Foster Holdings Corp. 10.375%, 6/15/13 195 218,400 Fairfax Financial Holdings (Canada) 7.375%, 4/15/18 505 449,450 7.75%, 4/26/12 510 492,150 Markel Capital Trust I Series B 8.71%, 1/01/46(f) 615 656,571 Navistar International 6.25%, 3/01/12(d) 325 308,750 PXRE Capital Trust I 8.85%, 2/01/27 510 530,400 Western Financial Bank 9.625%, 5/15/12 420 466,200 Williams Scotsman, Inc. 9.875%, 6/01/07 765 761,175 ------------ 3,883,096 Food/Beverage-0.6% Del Monte Food Co. 8.625%, 12/15/12 145 156,963 DIMON, Inc. 7.75%, 6/01/13 110 123,200 Series B 9.625%, 10/15/11 395 445,856 ------------------------------------------------------------------------------- 14 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Dole Food Company, Inc. 8.625%, 5/01/09 $ 240 $ 252,000 8.875%, 3/15/11 145 155,875 ------------ 1,133,894 Gaming-2.9% Ameristar Casinos, Inc. 10.75%, 2/15/09 215 234,887 Argosy Gaming Co. 9.00%, 9/01/11 220 240,625 Boyd Gaming Corp. 7.75%, 12/15/12 255 267,112 Harrah's Operating Company, Inc. 7.875%, 12/15/05 215 219,838 MGM Mirage, Inc. 8.375%, 2/01/11 575 621,000 Mandalay Resort Group 10.25%, 8/01/07 530 576,375 Mohegan Tribal Gaming 6.375%, 7/15/09 140 138,950 7.125%, 8/15/14 695 696,738 Penn National Gaming, Inc. 6.875%, 12/01/11 375 375,938 Park Place Entertainment 7.00%, 4/15/13 305 327,113 7.875%, 3/15/10 135 147,150 9.375%, 2/15/07 230 245,238 Riviera Holdings Corp. 11.00%, 6/15/10 385 425,425 Seneca Gaming Corp. 7.25%, 5/01/12 450 447,750 Turning Stone Casino Resort Enterprise 9.125%, 12/15/10(d) 270 280,462 ------------ 5,244,601 Healthcare-3.1% Concentra Operating Corp. 9.125%, 6/01/12 175 185,500 9.50%, 8/15/10 200 214,000 Coventry HealthCare, Inc. 5.875%, 1/15/12(d) 160 160,000 6.125%, 1/15/15(d) 170 169,788 Davita, Inc. 7.25%, 3/15/15(d) 470 460,600 Extendicare Health Services 9.50%, 7/01/10 315 344,531 Genesis HealthCare Corp. 8.00%, 10/15/13 330 359,700 HCA, Inc. 6.375%, 1/15/15 625 620,401 7.875%, 2/01/11 455 492,266 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 15 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- IASIS Healthcare LLC 8.75%, 6/15/14 $ 490 $ 510,825 PacifiCare Health Systems, Inc. 10.75%, 6/01/09 380 419,900 Select Medical Corp. 7.625%, 2/01/15(d) 685 685,000 Triad Hospitals, Inc. 7.00%, 11/15/13 520 510,900 Universal Hospital Services, Inc. 10.125%, 11/01/11 440 451,000 ------------ 5,584,411 Hotels & Lodging-0.9% Corrections Corp. of America 7.50%, 5/01/11 40 40,500 Host Marriott LP 9.25%, 10/01/07 100 107,000 9.50%, 1/15/07 310 327,050 La Quinta Corp. 8.875%, 3/15/11 375 405,000 Starwood Hotels & Resorts Worldwide, Inc. 7.875%, 5/01/12 400 437,000 Vail Resorts, Inc. 6.75%, 2/15/14 355 347,900 ------------ 1,664,450 Index-2.4% Dow Jones CDX HY 7.75%, 12/29/09(d)* 4,500 4,393,125 Industrial-2.6% AMSTED Industries, Inc. 10.25%, 10/15/11(d) 465 506,850 Case New Holland, Inc. 9.25%, 8/01/11(d) 645 686,925 FastenTech, Inc. 12.50%, 5/01/11(d) 325 349,375 Flowserve Corp. 12.25%, 8/15/10 370 404,225 Goodman Global Holdings, Inc. 7.875%, 12/15/12(d) 475 434,625 H & E Equipment/Finance 11.125%, 6/15/12 600 675,000 NMHG Holding Co. 10.00%, 5/15/09 220 237,050 Terex Corp. 10.375%, 4/01/11 375 407,812 TriMas Corp. 9.875%, 6/15/12 470 479,400 Trinity Industries, Inc. 6.50%, 3/15/14 530 511,450 ------------ 4,692,712 ------------------------------------------------------------------------------- 16 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Insurance-0.6% Liberty Mutual Group 5.75%, 3/15/14(d) $ 475 $ 466,852 Royal & Sun Alliance Insurance Group PLC (United Kingdom) 8.95%, 10/15/29 420 534,835 ------------ 1,001,687 Metals/Mining-0.9% AK Steel Corp. 7.875%, 2/15/09 355 347,900 International Steel Group, Inc. 6.50%, 4/15/14 437 445,740 Ispat Inland ULC (Canada) 9.75%, 4/01/14 114 133,380 Peabody Energy Corp. 6.875%, 3/15/13 380 391,400 Russel Metals, Inc. (Canada) 6.375%, 3/01/14 345 334,650 ------------ 1,653,070 Paper & Packaging-3.1% Ball Corp. 6.875%, 12/15/12 1,000 1,031,250 Berry Plastics Corp. 10.75%, 7/15/12 390 439,725 Crown Euro Holdings S.A. (France) 9.50%, 3/01/11 405 444,488 Georgia-Pacific Corp. 8.875%, 5/15/31 230 277,150 9.375%, 2/01/13 715 799,013 Graphic Packaging Int'l Corp. 9.50%, 8/15/13 655 694,300 Greif Bros. Corp. 8.875%, 8/01/12 260 280,800 Owens-Brockway Glass Container, Inc. 8.875%, 2/15/09 735 784,613 Russell-Stanley Holdings, Inc. 9.00%, 11/30/08(d)(g)(h) 894 151,874 Stone Container Corp. 9.25%, 2/01/08 535 572,450 9.75%, 2/01/11 12 12,840 ------------ 5,488,503 Petroleum Products-0.2% Kerr-McGee Corp. 6.875%, 9/15/11 260 278,054 Publishing-1.3% American Media, Inc. 8.875%, 1/15/11 105 108,150 10.25%, 5/01/09 475 490,437 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 17 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Dex Media East LLC 9.875%, 11/15/09 $ 110 $ 121,000 12.125%, 11/15/12 195 231,075 Dex Media West LLC 8.50%, 8/15/10 160 170,800 9.875%, 8/15/13 571 636,665 PRIMEDIA, Inc. 8.00%, 5/15/13 315 321,300 8.875%, 5/15/11 305 317,963 ------------ 2,397,390 Restaurants-0.1% Domino's, Inc. 8.25%, 7/01/11 237 247,665 Retail-0.4% J.C. Penney Corporation, Inc. 8.00%, 3/01/10 455 455,000 Petro Stopping Centers LP 9.00%, 2/15/12 250 257,500 ------------ 712,500 Service-1.5% Allied Waste North America 6.375%, 4/15/11 400 372,000 8.875%, 4/01/08 305 315,294 National Waterworks, Inc. 10.50%, 12/01/12 235 261,438 Service Corp. International 6.50%, 3/15/08 595 596,487 7.70%, 4/15/09 240 247,200 Stewart Enterprises, Inc. 6.25% 2/15/13(d) 385 373,450 United Rentals North America, Inc. 6.50%, 2/15/12 494 480,415 ------------ 2,646,284 Supermarket & Drugstore-1.0% Couche-Tard, Inc. 7.50%, 12/15/13 298 312,900 Rite Aid Corp. 9.50%, 2/15/11 615 651,900 Roundy's, Inc. Series B 8.875%, 6/15/12 250 267,500 Stater Bros. Holdings, Inc. 8.125%, 6/15/12 595 574,175 ------------ 1,806,475 Technology-1.8% Amkor Technologies, Inc. 7.75%, 5/15/13 775 651,000 Celestica, Inc. (Canada) 7.875%, 7/01/11 610 617,625 ------------------------------------------------------------------------------- 18 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- Lucent Technologies 6.45%, 3/15/29 $ 100 $ 86,250 6.50%, 1/15/28 145 124,338 Nortel Networks Corp. (Canada) 6.875%, 9/01/23 245 226,625 Telecordia Technologies, Inc. 10.00%, 3/15/13(d) 245 243,163 Unisys Corp. 6.875%, 3/15/10 1,000 997,500 7.875%, 4/01/08 185 185,925 ------------ 3,132,426 Utilities - Electric & Gas-3.6% Aquila, Inc 14.875%, 7/01/12(a) 235 321,950 AES Corporation 8.75%, 5/15/13(d) 65 70,850 9.00%, 5/15/15(d) 105 115,500 Calpine Corp. 8.50%, 7/15/10(d) 715 561,275 DPL, Inc. 6.875%, 9/01/11 225 239,056 DPL Capital Trust II 8.125%, 9/01/31 405 466,730 Dynegy Holdings, Inc. 10.125%, 7/15/13(d) 610 664,900 FirstEnergy Corp. 6.45%, 11/15/11 515 543,348 Northwest Pipelines Corp. 8.125%, 3/01/10 310 331,700 NRG Energy, Inc. 8.00%, 12/15/13(d) 383 405,023 Ormat Funding Corp. 8.25%, 12/30/20 394 395,907 Reliant Energy, Inc. 6.75%, 12/15/14 330 307,725 9.50%, 7/15/13 430 467,625 SEMCO Energy, Inc. 7.125%, 5/15/08 125 127,234 7.75%, 5/15/13 235 242,795 Southern Natural Gas Co. 7.35%, 2/15/31 365 372,807 8.875%, 3/15/10 290 314,447 TECO Energy, Inc. 7.00%, 5/01/12 305 318,344 Texas Genco LLC 6.875%, 12/15/14(d) 285 285,712 ------------ 6,552,928 Total U.S. Corporate Debt Obligations (cost $92,336,621) 86,191,328 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 19 Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- NON-U.S. CORPORATE DEBT OBLIGATIONS-4.7% Bahamas-0.2% Sun International Hotels, Ltd. 8.875%, 8/15/11 $ 245 $ 262,762 Brazil-0.7% PF Export Receivables Master Trust 6.436%, 6/01/15(d) 1,241 1,248,554 China-0.1% Chaoda Modern Agriculture 7.75%, 2/08/10(d) 200 183,000 Kazakhstan-0.4% Hurricane Finance BV 9.625%, 2/12/10(d) 400 436,000 Kazkommerts International BV 8.50%, 4/16/13(d) 350 353,500 ------------ 789,500 Mexico-2.0% Innova S. de R.L. 9.375%, 9/19/13 2,865 3,172,988 Vitro Envases 10.75%, 7/23/11(d) 420 428,400 ------------ 3,601,388 Romania-0.3% Mobifon Holdings BV 12.50%, 7/31/10 425 519,031 Russia-0.8% Citigroup (JSC Severstal) 9.25%, 4/19/14(d) 464 476,064 Gazprom OAO 9.625%, 3/01/13(d) 150 171,375 Mobile Telesystems Finance S.A. 9.75%, 1/30/08(d) 625 666,412 Tyumen Oil Co. 11.00%, 11/06/07(d) 70 78,155 ------------ 1,392,006 Singapore-0.2% Flextronics International, Ltd. 6.50%, 5/15/13 420 416,850 Total Non-U.S. Corporate Debt Obligations (cost $7,883,886) 8,413,091 ------------------------------------------------------------------------------- 20 o ACM MANAGED DOLLAR INCOME FUND Shares or Principal Amount (000) U.S. $ Value ------------------------------------------------------------------------------- NON-CONVERTIBLE PREFERRED STOCK-0.7% Sovereign Real Estate Investment Trust 12.00%(d) $ 870 $1,331,100 Total Non-Convertible Preferred Stock (cost $818,725) 1,331,100 WARRANTS(i)-0.0% Central Bank of Nigeria Warrants, expiring 11/15/20 1,000 -0- Republic of Venezuela Warrants, expiring 4/15/20 7,140 -0- Total Warrants (cost $0) -0- SHORT-TERM INVESTMENT-0.5% Time Deposit-0.5% Societe Generale 2.875%, 4/01/05, (cost $900,000) 900 900,000 Total Investments Before Security Lending Collateral-115.5% (cost $191,230,925) 207,100,037 INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-1.6% Short-Term Investment UBS Private Money Market Fund, LLC 2.66% (cost $2,799,990) 2,799,900 2,799,990 Total Investments-117.1% (cost $194,030,915) 209,900,027 Other assets less liabilities-(17.1)% (30,592,839) Net Assets-100.0% $179,307,188 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 21 CREDIT DEFAULT SWAP CONTRACTS (see Note C) Notional Unrealized Swap Counterparty & Amount Interest Termination Appreciation/ Referenced Obligation (000) Rate Date (Depreciation) ------------------------------------------------------------------------------- Buy Contracts: Citigroup Global Markets, Inc Federal Republic of Hungary 4.50%, 2/06/13 350 0.50% 11/26/13 $ (7,371) Citigroup Global Markets, Inc. Federal Republic of Philippines 10.625%, 3/16/25 510 5.60 3/20/14 (23,241) Sale Contracts: Citigroup Global Markets, Inc. Federal Republic of Brazil 12.25%, 3/06/30 900 4.40 5/20/06 48,680 Citigroup Global Markets, Inc. Federal Republic of Brazil 12.25%, 3/06/30 1,000 6.35 8/20/05 30,003 Credit Suisse First Boston Int'l. Federal Republic of Brazil 12.25%, 3/06/30 750 6.90 6/20/07 84,637 Morgan Stanley Dean Witter Federal Republic of Brazil 12.25%, 3/06/30 680 3.80 8/20/06 21,563 Citigroup Global Markets, Inc. Federal Republic of Philippines 10.625%, 3/16/25 510 4.95 3/20/09 25,114 REVERSE REPURCHASE AGREEMENTS (see Note C) Interest Broker Rate Maturity Amount ------------------------------------------------------------------------- Barclays Securites 0.10% 4/04/05 $ 5,191,301 Barclays Securites 2.45 12/30/05 4,434,302 Barclays Securites 2.45 12/30/05 4,548,310 Barclays Securites 2.65 12/30/05 4,410,325 Chase Manhattan Bank 1.25 12/30/05 2,587,590 Chase Manhattan Bank 2.65 12/30/05 2,968,969 Merrill Lynch 0.85 12/30/05 1,331,531 Merrill Lynch 1.40 12/30/05 6,702,261 $32,174,589 ------------------------------------------------------------------------------- 22 o ACM MANAGED DOLLAR INCOME FUND * Represents entire or partial securities out on loan. (a) Coupon changes periodically based upon a predetermined schedule. Stated interest rate in effect at March 31, 2005. (b) Security is in default and is non-income producing. (c) Positions, or portions thereof, with an aggregate market value of $36,166,365 have been segregated to collateralize reverse repurchase agreements. (d) 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 March 31, 2005, the aggregate market value of these securities amounted to $71,454,559 or 39.9% of net assets. (e) 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. (f) Illiquid security, valued at fair market value (see Note A). (g) Security exempt from registration under Rule 144A of the Securites Act of 1933. This security, which represents 0.09% of net assets as of March 31, 2005, is considered illiquid and restricted. Acquisition Acquisition Market Percentage of Restricted Security Date Cost Value Net Assets ------------------------------------------------------------------------------- Russell-Stanley Holdings, Inc. 2/26/99- $5,085,494 $151,874 0.08% 9.00%, 11/30/08 2/28/05 (h) Payment in kind (PIK) semi-annual coupon payment. (i) 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 March 31, 2005 (unaudited) Assets Investments in securities, at value (cost $191,230,925--including investment of cash collateral for securities loaned of $2,799,990) $209,900,027(a) Cash 94,318 Interest and dividends receivable 4,196,935 Receivable for investment securities sold 411,776 Unrealized appreciation on credit default swap contracts 209,997 Paydown receivable 3,704 Prepaid expenses 9,570 Total assets 214,826,327 Liabilities Reverse repurchase agreements 32,174,497 Payable for collateral received on securities loaned 2,799,990 Due to broker 196,682 Advisory fee payable 128,518 Unrealized depreciation on credit default swap contracts 30,612 Payable for investment securities purchased 25,788 Administrative fee payable 20,567 Accrued expenses and other liabilities 142,485 Total liabilities 35,519,139 Net Assets $179,307,188 Composition of Net Assets Common stock, at par $ 227,077 Additional paid-in capital 296,853,985 Distributions in excess of net investment income (655,125) Accumulated net realized loss on investment transactions (133,167,246) Net unrealized appreciation of investments 16,048,497 $179,307,188 Net Asset Value Per Share (based on 22,707,703 shares outstanding) $7.90 (a) Includes securities on loan with a value of $2,678,545 (see Note F). See notes to financial statements. ------------------------------------------------------------------------------- 24 o ACM MANAGED DOLLAR INCOME FUND STATEMENT OF OPERATIONS Six Months Ended March 31, 2005 (unaudited) Investment Income Interest $ 8,678,208 Dividends 52,299 $ 8,730,507 Expenses Advisory fee 686,672 Administrative fee 109,869 Custodian 50,840 Printing 42,507 Audit 42,062 Legal 22,046 Transfer agency 16,828 Directors' fees 16,411 Registration 12,167 Miscellaneous 19,770 Total expenses before interest 1,019,172 Interest expense 286,965 Total expenses 1,306,137 Net investment income 7,424,370 Realized and Unrealized Gain (Loss) on Investment Transactions Net realized gain (loss) on: Investment transactions (686,266) Swap contracts 218,633 Written options 162,835 Net change in unrealized appreciation/depreciation of: Investments 1,226,416 Swap contracts (156,818) Net gain on investment transactions 764,800 Net Increase in Net Assets from Operations $8,189,170 See notes to financial statements. ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 25 STATEMENTS OF CHANGES IN NET ASSETS Six Months Ended Year Ended March 31, 2005 September 30, (unaudited) 2004 ------------- -------------- Increase (Decrease) in Net Assets Resulting from Operations Net investment income $7,424,370 $17,179,212 Net realized gain (loss) on investment transactions (304,798) 14,220,638 Net change in unrealized appeciation/depreciation of investments 1,069,598 (9,001,996) Net increase in net assets from operations 8,189,170 22,397,854 Dividends to Shareholders from Net investment income (7,697,046) (18,071,829) Common Stock Transactions Reinvestment of dividends resulting in the issuance of Common Stock 79,572 1,227,800 Total increase 571,696 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 $655,125 and $382,449, respectively) $179,307,188 $178,735,492 See notes to financial statements. ------------------------------------------------------------------------------- 26 o ACM MANAGED DOLLAR INCOME FUND STATEMENT OF CASH FLOWS Six Months Ended March 31, 2005 (unaudited) Increase (Decrease) in Cash from Operation Activities: Interest and dividends received $ 7,807,402 Interest expense paid (287,949) Operating expenses paid (975,828) Net increase in cash from operating activities $ 6,543,625 Investing Activities: Purchases of long-term investments (73,202,303) Proceeds from disposition of long-term investments 82,236,972 Purchases of short-term investments (900,000) Cash collateral received on securities loaned 2,799,900 Net premium received on option transactions 191,786 Net premium received on swaps transactions 218,633 Net increase in cash from investing activities 11,344,988 Financing Activities:* Cash dividends paid (7,617,474) Proceeds from reverse repurchase agreements (13,220,435) Net decrease in cash from financing activities (20,837,909) Net decrease in cash (2,949,296) Cash at beginning of period 3,043,614 Cash at end of period $ 94,318 Reconciliation of Net Increase in Net Assets from Operations to Net Increase in Cash from Operating Activities: Net increase in net assets from operations $ 8,189,170 Adjustments: Increase in dividends and interest receivable $ (105,412) Accretion of bond discount and amortization of bond premium (817,693) Increase in accrued expenses and other assets 43,344 Decrease in interest payable (984) Net realized loss on investment transactions 304,798 Net change in unrealized appreciation/ depreciation of investments (1,069,598) Total adjustments (1,645,545) Net Increase in Cash from Operating Activities $ 6,543,625 * 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 March 31, 2005 (unaudited) 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 six months ended March 31, 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 six months ended March 31, 2005, were as follows: Purchases Sales ----------- ----------- Investment securities (excluding U.S. government securities) $69,098,198 $75,204,484 U.S. government securities -0- -0- ------------------------------------------------------------------------------- 30 o ACM MANAGED DOLLAR INCOME FUND At March 31, 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 $191,230,925 Gross unrealized appreciation $ 26,607,025 Gross unrealized depreciation (10,737,913) Net unrealized appreciation $ 15,869,112 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 six months ended March 31, 2005 were as follows: Number of Contracts Premiums (000) Received --------- -------- Options outstanding at September 30, 2004 -0- $ -0- Options written 11,657 162,835 Options exercised -0- -0- Options terminated in closing purchase transactions -0- -0- Options expired (11,657) (162,835) Options outstanding at March 31, 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 March 31, 2005, the Fund had Sale Contracts outstanding with Maximum Payout Amounts aggregating $3,840,000, with net unrealized appreciation of $209,997 and terms ranging from 1 year to 9 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 $510,000 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 $3,330,000 as of March 31, 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 six months ended March 31, 2005, the average amount of reverse repurchase agreements outstanding was $33,829,813 and the daily weighted average annual interest rate was 1.68%. NOTE D Capital Stock There are 300,000,000 shares of $.01 par value common stock authorized of which 22,707,703 shares were issued and outstanding at March 31, 2005. During the six months ended March 31, 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. 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 countries. In addition, these debt obligations may be less liquid and subject to greater volatility than debt obligations of more developed countries. Indemnification Risk--In the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, theFund has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. ------------------------------------------------------------------------------- 34 o ACM MANAGED DOLLAR INCOME FUND 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 March 31, 2005, the Fund had loaned securities with a value of $2,678,545 and received cash collateral of $2,799,900, which was invested in a money market fund as included in the portfolio of investments. For the six months ended March 31, 2005, the Fund earned fee income of $14,699, which is included in interest income in the accompanying statement of operations. NOTE G Distributions to Shareholders The tax character of distributions to be paid for the year ended September 30, 2005 will be determined at the end of the current fiscal year. The tax character of the distributions paid to shareholders during the fiscal years ended September 30, 2004 and September 30, 2003 were as follows: 2004 2003 ----------- ----------- Distributions paid from: Ordinary income $18,071,829 $18,177,141 Total taxable distributions 18,071,829 18,177,141 Tax return of capital -0- -0- Total distributions paid $18,071,829 $18,177,141 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 35 As of September 30, 2004, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses $(132,040,578)(a) Unrealized appreciation/(depreciation) 13,774,580(b) Total accumulated earnings/(deficit) $(118,265,998) (a) On September 30, 2004, the Fund had a net capital loss carryforward of $132,040,578 of which $43,032,718 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 $14,423,021 (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. Management of the Adviser believes that these private lawsuits are not likely to have a material adverse effect on the results of operations or financial condition of the Fund. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized in an Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. The shares of the Fund are not redeemable by the Fund, but are traded on an exchange at prices established by the market. Accordingly, the Fund and its shareholders are not subject to the market timing practices described in the SEC Order and are not expected to participate in the Reimbursement Fund. Since the Fund is a closed-end fund, it will not have its advisory fee reduced pursuant to the terms of the agreements mentioned above. The Adviser and approximately twelve other investment management firms were publicly mentioned in connection with the settlement by the SEC of charges that an unaffiliated broker/dealer violated federal securities laws relating to its receipt of compensation for selling specific mutual funds and the disclosure of such compensation. The SEC has indicated publicly that, among other things, it is consid- ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 37 ering enforcement action in connection with mutual funds' disclosure of such arrangements and in connection with the practice of considering mutual fund sales in the direction of brokerage commissions from fund portfolio transactions. The SEC has issued subpoenas to the Adviser, and the NASD has issued requests for information, in connection with this matter and the Adviser has provided documents and other information to the SEC and NASD and is cooperating fully with the investigations. On March 11, 2005, discussions commenced with the NASD that management believes will conclude these investigations. On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P., Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein mutual funds as nominal defendants. The Fund was not named as a nominal defendant in the Aucoin Complaint The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by an alleged shareholder of an AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages and punitive damages, rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. Since June 22, 2004, numerous additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants, and others may be filed. The Adviser believes that these matters are not likely to have a material adverse effect on the Fund or the Adviser's ability to perform advisory services relating to the Fund. ------------------------------------------------------------------------------- 38 o ACM MANAGED DOLLAR INCOME FUND FINANCIAL HIGHLIGHTS Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Six Months Ended March 31, Year Ended September 30, 2005 --------------------------------------------------------------- (unaudited) 2004(a) 2003 2002(b) 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $7.87 $7.68 $5.58 $6.33 $8.09 $8.39 Income From Investment Operations Net investment income(c) .33 0.76 0.81 0.84 0.98 1.08 Net realized and unrealized gain (loss) on investment transactions .04 0.23 2.10 (0.71) (1.72) (0.22) Net increase (decrease) in net asset value from operations .37 0.99 2.91 0.13 (0.74) 0.86 Less: Dividends and Distributions Dividends from net investment income (.34) (0.80) (0.81) (0.85) (0.95) (1.02) Tax return of capital -0- -0- -0- (0.03) (0.07) (0.14) Total dividends and distributions (.34) (0.80) (0.81) (0.88) (1.02) (1.16) Net asset value, end of period $7.90 $7.87 $7.68 $5.58 $6.33 $8.09 Market value, end of period $7.67 $7.87 $8.15 $6.29 $7.62 $8.50 Premium/Discount (2.91)% 0.00% 6.12% 12.72% 20.38% 5.07% Total Return Total investment return based on:(d) Market value 1.72% 6.91% 45.71% (6.14)% 3.02% (5.41)% Net asset value 4.77% 13.45% 54.77% .23% (10.08)% 9.99% Ratios/Supplemental Data Net assets, end of period (000's omitted) $179,307 $178,735 $173,182 $124,834 $140,110 $179,653 Ratios to average net assets of: Expenses 1.48% 1.44% 1.72% 2.12% 2.75% 2.70% Expenses, excluding interest expense(e) 1.16% 1.15% 1.21% 1.15% 1.13% 1.09% Net investment income 8.42% 9.76% 11.88% 10.81% 9.90% 9.55% Portfolio turnover rate 33% 95% 80% 63% 129% 134%
See footnote summary on page 40. ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 39 (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, 2004, 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 0.17%. (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 .32%, .29%, .51%, .97%, 1.62% and 1.61%, respectively, on borrowings. ------------------------------------------------------------------------------- 40 o ACM MANAGED DOLLAR INCOME FUND SUPPLEMENTAL PROXY INFORMATION (unaudited) A Special Meeting of Shareholders of ACM Managed Dollar Income Fund, Inc. was held on March 24, 2005. A description of the proposal and number of shares voted at the meeting are as follows: Authority Voted For Withheld ------------------------------------------------------------------------------- 1. Election of Directors. Class One Nominee (term expires 2007): Director Nominee Michael J.Downey 20,141,518 567,534 Class Two Nominees (terms expire 2008): Director Nominee William H.Foulk, Jr. 20,166,330 542,722 John H.Dobkin 20,176,231 532,821 James M.Hester 20,157,942 551,110 ------------------------------------------------------------------------------- ACM MANAGED DOLLAR INCOME FUND o 41 BOARD OF DIRECTORS William H.Foulk, Jr.,(1) Chairman Marc O.Mayer, President Ruth Block(1) David H. Dievler(1) John H. Dobkin(1) Michael J. Downey(1) Dr. James M. Hester(1) OFFICERS Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Paul J. DeNoon(2), 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 and Governance and Nominating Committee. (2) Mr. DeNoon is the person primarily responsible for the day-to-day management of the Fund's investment portfolio. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase at market prices from time to time shares of its Common Stock in the open market. This report, including the financial statements therein, is transmitted to the shareholders of ACMManaged 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. ------------------------------------------------------------------------------- 42 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 All-Asia Investment Fund Global Health Care Fund* Global Research Growth Fund Global Technology Fund* Greater China '97 Fund International Growth Fund* International Research Growth Fund* New Europe 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. ** 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 43 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. ------------------------------------------------------------------------------- 44 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 (SM) Investment Research and Management (SM) This service mark used under license from the owner, Alliance Capital Management L.P. MDISR0305 ITEM 2. CODE OF ETHICS. Not applicable when filing a semi-annual report to shareholders. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable when filing a semi-annual report to shareholders. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable when filing a semi-annual report to shareholders ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable when filing a semi-annual report to shareholders 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. Not applicable when filing a semi-annual report to shareholders ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. There have been no purchases of equity securities by the Fund or by affiliated parties for the reporting period. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund's Board of Directors since the Fund last provided disclosure in response to this item. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no significant changes in the registrant's internal controls over financial reporting during the second fiscal quarter of the period that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 11. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT ----------- ---------------------- 11 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 11 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 11 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): ACM Managed Dollar Income Fund, Inc. By: /s/ Marc O. Mayer ------------------- Marc O. Mayer President Date: May 27, 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: May 27, 2005 By: /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: May 27, 2005