-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QbJFG3DAptBKG9YWNUCuPmH/sxO72GUv6u5qRpe7WX+d43b3rfPVQ64LPxi/F0t3 L8j8zXqrtq0RzmBLcAH29A== 0000936772-06-000236.txt : 20061211 0000936772-06-000236.hdr.sgml : 20061211 20061211155441 ACCESSION NUMBER: 0000936772-06-000236 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061211 DATE AS OF CHANGE: 20061211 EFFECTIVENESS DATE: 20061211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACM MANAGED DOLLAR INCOME FUND INC CENTRAL INDEX KEY: 0000910524 IRS NUMBER: 223256305 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07964 FILM NUMBER: 061268489 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL ROAD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 2129692124 MAIL ADDRESS: STREET 1: C/O ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 N-CSR 1 edg12049_ar.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-07964 ACM MANAGED DOLLAR INCOME FUND, INC. (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley AllianceBernstein 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, 2006 Date of reporting period: September 30, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. - ------------------------------------------------------------------------------- ANNUAL REPORT - ------------------------------------------------------------------------------- ACM Managed Dollar Income Fund Annual Report September 30, 2006 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS 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(R) 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 Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the AllianceBernstein funds, and is a member of the NASD. AllianceBernstein(R) and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P. November 14, 2006 Annual Report This report provides management's discussion of fund performance for ACM Managed Dollar Income Fund (the "Fund") for the annual reporting period ended September 30, 2006. 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 over a period of years. The Fund normally invests at least 35% of its assets in U.S. corporate fixed-income securities. The balance of the Fund's investment portfolio will be invested in fixed-income securities issued or guaranteed by foreign governments and non-U.S. corporate fixed-income securities. Substantially all of the Fund's assets will be invested in high-yield, high-risk securities rated below investment-grade and considered to be predominantly speculative. For more information regarding the Fund's risks, please see "A Word About Risk" on pages 4-5 and "Note E--Risks Involved in Investing in the Fund" of the Notes to Financial Statements on page 35. Investment Results The table on page 6 shows the Fund's performance compared to its new composite benchmark, a 65%/35% blend of the J.P. Morgan Emerging Markets Bond Index Global (JPM EMBI Global) and the Credit Suisse First Boston High Yield (CSFBHY) Index, respectively, for the six- and 12-month periods ended September 30, 2006. In addition, performance for the Fund's old 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 same time periods is also included. The JPM EMBI Global is a more appropriate index for the Fund because it contains a broader representation of the emerging market debt universe than the JPM EMBI+. The JPM EMBI Global tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds. The JPM EMBI+ is a standard measure of the performance of a basket of unmanaged emerging market debt securities. The CSFBHY Index is a standard measure of the performance of a basket of unmanaged U.S. high yield debt securities. The Fund's performance is compared to a composite benchmark of both indices because this new composite more closely resembles the composition of the Fund's portfolio. The Fund underperformed its new composite benchmark for both the six- and 12-month periods ended September 30, 2006. Within the Fund's high yield allocation, underweights to the automotive and airline industries, both of which outperformed during the annual period, detracted from relative performance. Security selection within the lodging/leisure and financial industries, as well as regional homebuilders within the housing industry, also detracted from performance. Contributing positively to relative performance within high yield was security selection within ACM MANAGED DOLLAR INCOME FUND o 1 the automotive industry as well as the Fund's pipeline subsidiary holdings within the utilities industry. Within the Fund's emerging market allocation, contributing positively to performance for both the six- and 12-month periods were overweight positions in Latin America, particularly Brazil and Argentina. Brazil's stable growth, central bank easing and debt buy backs helped support its bond prices. Argentina benefited during the year from a completion of its debt restructuring and very strong economic growth. Both Brazil and Argentina were top performing countries within the Fund's benchmark. Detracting from performance within the Fund's emerging market allocation for both the six- and 12-month periods was security selection in Argentina. Although the Fund's country selection of Argentina contributed positively to performance, its shorter-maturity bond selection in the country detracted from performance as Argentina's longer-duration bonds vastly outperformed. Leverage had a minimal impact on the Fund's overall performance relative to its new composite benchmark during both the six and 12-month periods ended September 30, 2006. Market Review and Investment Strategy U.S. dollar denominated emerging market debt posted the strongest returns within fixed-income sectors for the 12-month reporting period, returning 7.81%, according to the JPM EMBI Global. Dollar reserve accumulation in major emerging market countries as well as positive supply-demand technicals continued to support that sector. Performance during the annual period was not even, however. Emerging market debt, along with high yield and the equity market, suffered periods of negative performance in the first half of 2006 due to the cumulative effects of U.S. interest rate hikes. During the year, the U.S. Federal Reserve (the "Fed") continued to raise official rates an additional 1.5% in quarter point increments. Emerging market debt, along with other asset classes, bounced back strongly in the third quarter of 2006, sparked by evidence of a cooling U.S. economy led by a slowdown in the housing market, fading inflation concerns and the first U.S. monetary-policy shift in more than two years. The Fed left the Fed funds rate unchanged at 5.25% in August and September, following 425 basis points of consecutive rate hikes. All 31 emerging countries represented within the JPM EMBI Global posted positive returns for the 12-month period ended September 30, 2006 with Latin countries, returning 9.59%, outperforming the non-Latin region which returned 5.46%. Outperforming countries for the year included Argentina at 22.53%, the Philippines at 16.64% and Brazil at 14.59%. Underperforming countries included Hungary at 1.04%, the Ukraine at 2.25% and Russia at 2.28%. Emerging market spreads tightened 27 basis points during the 12-month period to end the period at 208 basis points. 2 o ACM MANAGED DOLLAR INCOME FUND Countries favored within the Fund during the annual period included Brazil, Argentina, Russia, Peru and Panama. Brazil's creditworthiness was enhanced by extensive dollar reserve accumulation and a reduction of its debt-to-gross domestic product (GDP) ratio through the scheduled repurchase of approximately $24 billion in bonds (in U.S. dollar terms). Moody's Investors Service recently upgraded Brazil's sovereign credit rating from Ba3 to Ba2, placing the country two steps below investment grade. Russia continued to amass tremendous reserves and repaid its entire Paris Club debt. (The Paris Club is an informal group of financial officials from 19 of the world's wealthiest nations which provide financial concessions such as debt restructuring, debt relief, and debt cancellation to indebted countries). Argentina continued to post strong growth during the period with GDP at 7.9% in the second quarter. Exports in Argentina remained solid with its economy benefiting from soft commodity prices. Peru was favored due to continued strong growth, low debt and low inflation. Ecuador was underweighted in the Fund's portfolio due to rising political risk. Bond prices declined sharply late in the period as the less market friendly presidential candidate, Rafael Correa, showed strength in pre-election polls. Correa rattled bond markets with statements that he would renegotiate Ecuador's $11 billion in (U.S. dollar terms) in outstanding debt. The high yield market outperformed investment-grade fixed-income assets which are more sensitive to the negative effects of rising interest rates. As represented by the CSFBHY Index, high yield posted a return of 7.76% for the 12-month period ended September 30, 2006. On an industry level, top performers included telecommunications at 14.29%, aerospace at 12.93% and manufacturing at 12.56%. Airlines helped the aerospace industry as fare prices increased while capacity was reduced. Underperforming industries included housing at 3.77% and health care at 5.26%. Housing was negatively impacted by higher mortgage rates and a slowdown in the real estate market, while health care was dragged down by Hospital Corporation of America (HCA) after it became a target for a leveraged buyout. Within the Fund's high yield allocation, a defensive posture was maintained given perceived insufficient compensation for assuming risk and a lack of specific credit opportunities. Quantitative analysis indicated that the reward for assuming incremental risk is greatly diminished in times of a flat or inverted yield curve. At the same time, strong corporate profits and a low default rate have allowed high yield spreads to remain well below their long term average even as market and leveraged buy out risks increased. In this environment, therefore, the Fund is modestly underweighted in more volatile credits and thoroughly diversified to minimize risk. 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. 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 800.219.4218. The Fund also distributes its daily net asset value to various financial publications or independent organizations such as Lipper Inc., Morningstar, Inc. and Bloomberg. 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." For additional shareholder information regarding this Fund, please see page 59. Benchmark Disclosure The unmanaged J.P. Morgan Emerging Markets Bond Index Global (JPM EMBI Global), 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 Global tracks total returns for U.S.-dollar denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds. The JPM EMBI+ is composed of dollar-denominated restructured sovereign bonds; a large percentage of the index is made up of Brady bonds. The CSFBHY Index is a standard 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. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Fund. A Word About Risk The Fund may use certain investment techniques that have increased risks. For example, the Fund may use leverage, through borrowings, to enhance its returns. For this purpose, the Fund may use reverse repurchase agreements and dollar rolls, which are considered borrowings, as part of its investment strategy. Borrowings allow the Fund to increase the amount of money available to invest in debt securities. As long as the income from the securities financed is greater than the interest cost of the borrowings, the Fund's investors benefit from higher returns than if the Fund were not leveraged. Reverse repurchase agreements involve sales by a fund of portfolio assets concurrently with an agreement by the fund to repurchase the same assets at a later date at a fixed price. During the reverse repurchase agreement period, the fund continues to receive principal and interest payments on these securities. Generally, the effect of such a transaction is that a 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 advantageous only if the interest cost to a fund of the reverse repurchase transaction is less than the cost of otherwise obtaining the cash. (Historical Performance continued on next page) 4 o ACM MANAGED DOLLAR INCOME FUND HISTORICAL PERFORMANCE (continued from previous page) 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. The use of leverage, which is usually considered speculative, involves certain risks to stockholders. These include a higher volatility of the NAV of the common stock caused by favorable or adverse changes in interest rates. In addition, fluctuations in the interest rates on a fund's borrowings will affect the return to stockholders, with increases in interest rates decreasing the fund's return. To the extent that the current interest rate on a fund's borrowings approaches the net return on the leveraged portion of the fund's investment portfolio, the benefit of leverage to stockholders will be reduced. If the current interest rate on the borrowings were to exceed the net return on that portion of the fund's portfolio, the fund's leverage would result in a lower rate of return to stockholders and in a lower NAV than if a fund were not leveraged. Part of the Fund's assets will be invested in foreign and emerging markets fixed-income securities which may magnify asset value fluctuations due to changes in foreign exchange rates and the possibility of substantial volatility due to political and economic uncertainties in foreign countries. This may have a significant effect on the Fund's asset value. Price fluctuations may be caused by changes in the general level of interest rates or changes in bond credit quality ratings. Please note, as interest rates rise, existing bond prices fall and can cause the value of an investment in the Fund to decline. Changes in interest rates have a greater effect on bonds with longer maturities than on those with shorter maturities. High yield bonds (i.e., "junk bonds") involve a greater risk of default and price volatility than other bonds. Investing in non-investment grade securities presents special risks, including credit risk. While the Fund invests principally in fixed-income securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. (Historical Performance continued on next page) ACM MANAGED DOLLAR INCOME FUND o 5 HISTORICAL PERFORMANCE (continued from previous page) THE FUND VS. ITS BENCHMARK PERIODS ENDED SEPTEMBER 30, 2006 Returns ------------------------ 6 Months 12 Months ------------------------ ACM Managed Dollar Income Fund (NAV) 4.02% 7.46% New Composite: 65% JPM EMBI Global / 35% CSFBHY Index 4.16% 7.79% Old Composite: 65% JPM EMBI+ / 35% CSFBHY Index 4.20% 8.14% JPM EMBI Global 4.28% 7.81% JPM EMBI+ 4.34% 8.35% CSFBHY Index 3.93% 7.76% The Fund's Market Price per share on September 30, 2006 was $7.37. The Fund's Net Asset Value Price per share on September 30, 2006 was $8.22. For additional Financial Highlights, please see page 42. GROWTH OF A $10,000 INVESTMENT IN THE FUND 9/30/96 TO 9/30/06 ACM Managed Dollar Income Fund (NAV): $21,630 Old Composite: $26,093 New Composite: $25,518 [THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] ACM Managed Dollar Income Fund (NAV) New Composite Old Composite - ------------------------------------------------------------------------------- 9/30/96 $10,000 $10,000 $10,000 9/30/97 $13,364 $12,201 $12,255 9/30/98 $ 8,514 $10,255 $10,218 9/30/99 $10,092 $12,027 $11,887 9/30/00 $11,100 $14,055 $14,133 9/30/01 $ 9,981 $14,116 $14,052 9/30/02 $10,004 $14,301 $14,088 9/30/03 $15,484 $18,961 $19,151 9/30/04 $17,567 $21,268 $21,532 9/30/05 $20,127 $23,673 $24,128 9/30/06 $21,630 $25,518 $26,093 This chart illustrates the total value of an assumed $10,000 investment in ACM Managed Dollar Income Fund at net asset value (NAV) (from 9/30/96 to 9/30/06) as compared to the performance of the Fund's new composite benchmark, a 65%/35% blend of the J.P. Morgan (JPM) Emerging Markets Bond Index (EMBI) Global and the Credit Suisse First Boston High Yield (CSFBHY) Index, respectively, and its old composite benchmark, a 65%/35% blend of the J.P. Morgan (JPM) Emerging Markets Bond Index (EMBI) Plus and the CSFBHY Index, respectively. The chart assumes the reinvestment of dividends and capital gains distributions at prices obtained pursuant to the Fund's dividend reinvestment plan. See Historical Performance and Benchmark disclosures on pages 4-5. 6 o ACM MANAGED DOLLAR INCOME FUND PORTFOLIO SUMMARY September 30, 2006 PORTFOLIO STATISTICS Net Assets ($mil): $168.4 SECURITY TYPE BREAKDOWN* [ ] 47.9% Sovereign Debt Obligations [PIE CHART OMITTED] [ ] 43.3% Corporate Debt Obligations [ ] 3.9% Emerging Market-Corporate Debt Obligation [ ] 2.3% Structured Note [ ] 0.3% Preferred Stock & Warrants [ ] 2.3% Short-Term * All data are as of September 30, 2006. The Fund's security type breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. ACM MANAGED DOLLAR INCOME FUND o 7 PORTFOLIO OF INVESTMENTS September 30, 2006 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- SOVEREIGN DEBT OBLIGATIONS-51.9% Argentina-4.6% Republic of Argentina 7.00%, 3/28/11 $ 275 $ 264,642 8.28%, 12/31/33 2,969 2,862,165 Republic of Argentina FRN 5.59%, 8/03/12(a) 5,051 4,659,465 ---------- 7,786,272 Brazil-8.2% Republic of Brazil 7.125%, 1/20/37(b) 3,776 3,857,184 8.00%, 1/15/18 2,099 2,303,653 8.25%, 1/20/34 4,247 4,852,198 8.875%, 10/14/19 2,329 2,769,181 ---------- 13,782,216 Bulgaria-0.3% Republic of Bulgaria 8.25%, 1/15/15(c) 355 417,657 Colombia-1.1% Republic of Colombia 7.375%, 9/18/37 160 162,000 10.75%, 1/15/13 237 289,496 11.75%, 2/25/20 1,028 1,434,060 ---------- 1,885,556 Costa Rica-0.2% Republic of Costa Rica 8.05%, 1/31/13(c) 181 194,394 8.11%, 2/01/12(c) 188 201,630 ---------- 396,024 Dominican Republic-0.2% Dominican Republic 8.625%, 4/20/27(c) 270 285,795 9.50%, 9/27/11(c) 100 107,046 ---------- 392,841 Ecuador-0.4% Republic of Ecuador 9.00%, 8/15/30(a)(c) 645 590,175 9.375%, 12/15/15(c) 87 84,390 ---------- 674,565 8 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- El Salvador-0.6% Republic of El Salvador 7.625%, 9/21/34(c) $ 150 $ 163,875 7.65%, 6/15/35(c) 441 472,973 8.50%, 7/25/11(c) 400 441,000 ---------- 1,077,848 Indonesia-1.1% Republic of Indonesia 6.75%, 3/10/14(c) 945 958,230 6.875%, 3/09/17(c) 378 386,505 7.25%, 4/20/15(c) 476 494,564 ---------- 1,839,299 Jamaica-0.3% Government of Jamaica 9.25%, 10/17/25 100 106,600 10.625%, 6/20/17 270 314,550 ---------- 421,150 Lebanon-0.6% Lebanese Republic 7.875%, 5/20/11(c) 325 317,362 10.125%, 8/06/08(c) 556 582,410 11.625%, 5/11/16(c) 146 172,937 ---------- 1,072,709 Mexico-6.5% United Mexican States 8.00%, 9/24/22(b) 2,472 2,960,220 8.125%, 12/30/19(b) 5,135 6,162,000 11.375%, 9/15/16 1,296 1,858,464 ---------- 10,980,684 Nigeria-0.9% Central Bank of Nigeria 6.25%, 11/15/20(a) 1,500 1,500,000 Panama-3.0% Republic of Panama 6.70%, 1/26/36 433 433,000 7.125%, 1/29/26 927 977,985 7.25%, 3/15/15 2,050 2,188,375 8.875%, 9/30/27 559 691,763 9.375%, 7/23/12-4/01/29 541 683,267 9.625%, 2/08/11 135 153,562 ---------- 5,127,952 ACM MANAGED DOLLAR INCOME FUND o 9 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Peru-3.3% Republic of Peru 7.35%, 7/21/25 $ 2,611 $2,787,243 8.375%, 5/03/16 996 1,145,400 8.75%, 11/21/33(b) 1,299 1,591,275 9.875%, 2/06/15 23 28,462 ---------- 5,552,380 Philippines-4.0% Republic of Philippines 7.75%, 1/14/31 340 354,450 8.25%, 1/15/14(b) 226 246,340 8.375%, 2/15/11 31 33,294 8.875%, 3/17/15 1,888 2,147,600 9.00%, 2/15/13 44 49,456 9.50%, 2/02/30 431 531,207 9.875%, 1/15/19 2,628 3,242,952 10.625%, 3/16/25 130 173,095 ---------- 6,778,394 Russia-6.5% Ministry Finance of Russia 3.00%, 5/14/08-5/14/11 2,380 2,260,100 Russian Federation 5.00%, 3/31/30(a)(c) 7,191 8,010,774 11.00%, 7/24/18(c) 435 624,007 ---------- 10,894,881 Turkey-4.1% Republic of Turkey 6.875%, 3/17/36 1,161 1,053,608 7.00%, 6/05/20 1,150 1,114,350 7.375%, 2/05/25 680 671,500 9.50%, 1/15/14 151 171,762 11.00%, 1/14/13 610 734,440 11.50%, 1/23/12 1,447 1,745,806 11.75%, 6/15/10 883 1,033,110 11.875%, 1/15/30(b) 254 374,650 ---------- 6,899,226 Ukraine-0.6% Government of Ukraine 6.875%, 3/04/11(c) 526 531,260 7.65%, 6/11/13(c) 191 201,982 11.00%, 3/15/07(c) 219 224,003 ---------- 957,245 Uruguay-1.1% Republic of Uruguay 7.50%, 3/15/15 93 97,092 7.875%, 1/15/33(d) 1,072 1,109,829 9.25%, 5/17/17 505 590,345 ---------- 1,797,266 10 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Venezuela-4.3% Republic of Venezuela 5.75%, 2/26/16 $ 733 $ 672,069 6.511%, 4/20/11 FRN(a)(c) 120 118,704 7.00%, 12/01/18(c) 315 311,062 8.50%, 10/08/14 1,102 1,220,465 9.25%, 9/15/27(b) 2,339 2,847,732 10.75%, 9/19/13 1,659 2,028,127 13.625%, 8/15/18 35 51,625 ---------- 7,249,784 Total Sovereign Debt Obligations (cost $77,935,380) 87,483,949 CORPORATE DEBT OBLIGATIONS-47.0% Aerospace & Defense-0.4% DRS Technologies, Inc. 6.875%, 11/01/13 150 148,125 L-3 Communications Corp. 5.875%, 1/15/15 345 327,750 Sequa Corp. 9.00%, 8/01/09 235 250,569 ---------- 726,444 Automotive-2.7% Autonation Inc. 7.507%, 4/15/13 FRN(a)(c) 55 55,688 Ford Motor Co. 7.45%, 7/16/31* 561 433,373 Ford Motor Credit Co. 4.95%, 1/15/08 380 369,525 7.00%, 10/01/13 533 494,538 General Motors Acceptance Corp. 6.875%, 9/15/11 765 760,947 8.375%, 7/15/33 580 501,700 Keystone Automotive Operations, Inc. 9.75%, 11/01/13 310 291,400 Lear Corp. 8.11%, 5/15/09* 205 197,825 Tenneco Inc. 8.625%, 11/15/14 130 128,375 TRW Automotive, Inc. 9.375%, 2/15/13 186 198,090 11.00%, 2/15/13 176 191,840 United Auto Group, Inc. 9.625%, 3/15/12 290 307,400 Visteon Corp. 7.00%, 3/10/14* 635 568,325 ---------- 4,499,026 ACM MANAGED DOLLAR INCOME FUND o 11 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Broadcasting & Media-0.5% Allbritton Communications Co. 7.75%, 12/15/12 $ 375 $ 377,813 Sirius Satellite Radio, Inc. 9.625%, 8/01/13 190 185,725 XM Satellite Radio Inc. 9.75%, 5/01/14 245 233,975 ---------- 797,513 Building & Real Estate-1.1% Associated Materials, Inc. 11.25%, 3/01/14(a) 530 291,500 D.R. Horton, Inc. 6.875%, 5/01/13 345 352,407 Goodman Global Holdings Company, Inc. 7.875%, 12/15/12* 280 266,700 KB HOME 7.75%, 2/01/10 480 480,000 William Lyon Homes, Inc. 10.75%, 4/01/13 525 483,000 ---------- 1,873,607 Cable-3.7% Cablevision Systems Corp. 8.00%, 4/15/12 435 440,437 Charter Communications Operating LLC 8.00%, 4/30/12(c) 890 896,675 CSC Holdings, Inc. 6.75%, 4/15/12 325 323,781 7.625%, 7/15/18 410 419,737 DirectTV Holdings LLC 6.375%, 6/15/15 480 451,200 Echostar DBS Corp. 6.375%, 10/01/11 325 316,469 7.125%, 2/1/16(c) 160 154,600 Inmarsat Finance PLC 7.625%, 6/30/12 372 383,160 Insight Midwest LP 9.75%, 10/01/09 295 300,162 Intelsat Bermuda, Ltd. 8.625%, 1/15/15 285 291,412 10.484%, 1/15/12 FRN(a) 115 116,581 11.25%, 6/15/16(c) 702 745,875 PanAmSat Corp. 9.00%, 8/15/14 313 323,172 Quebecor Media 7.75%, 3/15/16 520 520,650 Rogers Cable, Inc. 6.75%, 3/15/15 620 626,200 ---------- 6,310,111 12 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Chemicals-1.7% Equistar Chemical Funding LP 10.125%, 9/01/08 $ 480 $ 508,200 10.625%, 5/01/11 145 155,513 Hexion Nova Scotia Finance, ULC 9.00%, 7/15/14 290 295,800 Huntsman International LLC 9.875%, 3/01/09 203 211,628 Ineos Group Holdings 8.50%, 2/15/16(c) 385 366,712 Lyondell Chemical Co. 8.00%, 9/15/14 155 156,937 8.25%, 9/15/16 95 96,425 Nell AF S.a.r.l. 8.375%, 8/15/15(c)* 369 366,232 Rhodia S.A. 8.875%, 6/01/11 625 645,312 ---------- 2,802,759 Communications - Fixed-2.5% Citizens Communications Co. 6.25%, 1/15/13 490 476,525 Hawaiian Telcom Communications, Inc. 9.75%, 5/01/13* 285 292,838 L-3 Financing Inc. 11.50%, 3/01/10 135 138,712 12.25%, 3/15/13* 906 1,010,190 Qwest Corp. 8.875%, 3/15/12 1,610 1,756,913 Time Warner Telecommunications Holdings 9.25%, 2/15/14 205 215,762 Windstream Corp. 8.125%, 8/01/13(c) 198 210,127 8.625%, 8/01/16(c) 156 166,920 ---------- 4,267,987 Communications - Mobile-1.5% American Tower Corp. 7.125%, 10/15/12 627 642,675 Digicel, Ltd. 9.25%, 9/01/12(c) 349 362,087 Dobson Communications Corp. 8.375%, 11/01/11(c) 143 148,541 8.875%, 10/01/13* 185 183,381 Rogers Wireless, Inc. 7.25%, 12/15/12 335 350,494 7.50%, 3/15/15 508 542,290 Rural Cellular Corp. 8.25%, 3/15/12 255 262,650 ---------- 2,492,118 ACM MANAGED DOLLAR INCOME FUND o 13 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Consumer Manufacturing-0.7% ACCO Brands Corp. 7.625%, 8/15/15 $ 470 $ 454,725 Broder Brothers Co. 11.25%, 10/15/10 292 284,700 Jostens, Inc. 7.625%, 10/01/12 210 211,050 Levi Strauss & Co. 8.875%, 4/01/16 225 223,875 ---------- 1,174,350 Diversified Media-1.0% Dex Media East LLC 9.875%, 11/15/09 125 131,719 12.125%, 11/15/12 220 245,575 Dex Media West LLC 8.50%, 8/15/10 180 185,850 Lamar Media Corp. 6.625%, 8/15/15 100 95,875 Liberty Media Corp. 5.70%, 5/15/13 150 141,543 7.875%, 7/15/09 120 125,630 8.25%, 2/01/30 150 149,725 Rainbow National Services LLC 8.75%, 9/01/12(c) 205 219,350 R.H. Donnelley Corp. 6.875%, 1/15/13 387 353,137 ---------- 1,648,404 Energy-3.0% Chesapeake Energy Corp. 6.625%, 1/15/16 655 632,075 7.50%, 9/15/13 185 187,775 7.75%, 1/15/15 485 494,700 El Paso Corp. 7.75%, 6/01/13-1/15/32 956 978,938 Grant Prideco, Inc. 6.125%, 8/15/15 245 233,975 Hilcorp Energy 10.50%, 9/01/10(c) 266 286,283 Kerr-McGee Corp. 6.875%, 9/15/11 420 444,905 6.95%, 7/01/24 260 278,559 Kinder Morgan Finance Co. 5.35%, 1/05/11 190 184,789 Newfield Exploration Co. 6.625%, 4/15/16 110 106,975 Petrohawk Energy Corp. 9.125%, 7/15/13(c) 217 218,085 Pride International, Inc. 7.375%, 7/15/14 400 412,000 14 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Range Resources Corp. 7.50%, 5/15/16 $ 265 $ 266,325 Tesoro Corp. 6.25%, 11/01/12(c) 400 385,500 ---------- 5,110,884 Entertainment & Leisure-1.3% Gaylord Entertainment Co. 8.00%, 11/15/13 350 356,125 Intrawest Corp. 7.50%, 10/15/13 195 209,381 NCL Corp. 10.625%, 7/15/14 250 241,875 Royal Caribbean Cruises 8.00%, 5/15/10 385 407,996 Six Flags Inc. 9.625%, 6/01/14* 290 258,100 Universal City Development 11.75%, 4/01/10 335 360,962 Universal City Florida Holding, Co. 8.375%, 5/01/10 110 110,412 Univision Communmications Inc. 7.85%, 7/15/11 190 188,924 ---------- 2,133,775 Financial-1.9% C&M Finance Ltd. 8.10%, 2/01/16(c) 250 245,000 Crum & Foster Holdings Corp. 10.375%, 6/15/13 220 225,500 E*Trade Financial Corp. 7.375%, 9/15/13 200 204,500 7.875%, 12/01/15 643 676,758 8.00%, 6/15/11 190 196,650 Iirsa Norte Finance LTD. 8.75%, 5/30/24(c) 150 154,875 Liberty Mutual Group 5.75%, 3/15/14(c) 280 275,354 TNK-BP Financial SA 7.50%, 7/18/16(c) 575 599,763 TRAINS HY-1-2006 7.548%, 5/01/16(c) 595 595,268 ---------- 3,173,668 Food & Beverage-1.8% Altria Group, Inc. 7.75%, 1/15/27 415 502,487 Dean Foods Co. 7.00%, 6/01/16 360 360,000 Del Monte Food Co. 8.625%, 12/15/12 125 131,094 ACM MANAGED DOLLAR INCOME FUND o 15 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Dole Food Company, Inc. 8.625%, 5/01/09 $ 180 $ 175,950 8.875%, 3/15/11 92 88,090 Domino's, Inc. 8.25%, 7/01/11 262 275,100 Reynolds American, Inc. 7.25%, 6/01/12-6/01/13(c) 825 848,723 7.625%, 6/01/16(c) 190 197,089 Rite Aid Corp. 6.875%, 8/15/13 230 193,200 9.25%, 6/01/13 210 205,800 ---------- 2,977,533 Gaming-3.3% Boyd Gaming Corp. 7.75%, 12/15/12 255 261,694 Greektown Holdings LLC 10.75%, 12/01/13(c) 240 253,200 Mandalay Resort Group 10.25%, 8/01/07 535 552,387 MGM Mirage, Inc. 6.625%, 7/15/15 455 436,800 8.375%, 2/01/11 620 646,381 Mohegan Tribal Gaming Authority 6.375%, 7/15/09 155 153,837 7.125%, 8/15/14 150 149,250 Park Place Entertainment 7.00%, 4/15/13 305 313,551 7.875%, 3/15/10 150 156,000 9.375%, 2/15/07 255 258,187 Penn National Gaming, Inc. 6.875%, 12/01/11 430 432,150 Riviera Holdings Corp. 11.00%, 6/15/10 385 406,175 Seneca Gaming Corp. 7.25%, 5/01/12 305 305,000 Station Casinos, Inc. 6.625%, 3/15/18 235 212,087 Turning Stone Casino Resort Enterprise 9.125%, 12/15/10(c) 300 303,750 Wynn Las Vegas LLC 6.625%, 12/01/14 695 674,150 ---------- 5,514,599 Health Care-2.4% Concentra Operating Corp. 9.125%, 6/01/12 5 5,200 9.50%, 8/15/10 280 291,200 Coventry HealthCare, Inc. 5.875%, 1/15/12 160 158,747 6.125%, 1/15/15 170 168,698 16 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- DaVita, Inc. 7.25%, 3/15/15 $ 350 $ 343,875 Extendicare Health Services 9.50%, 7/01/10 160 167,800 Hanger Orthopedic Group 10.25%, 6/01/14 190 192,850 HCA, Inc. 6.375%, 1/15/15 905 730,788 6.50%, 2/15/16 395 316,000 6.75%, 7/15/13 10 8,463 7.875%, 2/01/11 415 396,844 Healthsouth Corp. 10.75%, 6/15/16(c) 250 255,313 IASIS Healthcare/CAP CRP Healthcare 8.75%, 6/15/14 270 261,225 Select Medical Corp. 7.625%, 2/01/15 285 240,112 Universal Hospital Services, Inc. 10.125%, 11/01/11 260 273,000 Ventas Realty LP 6.75%, 4/01/17 157 157,981 ---------- 3,968,096 Hotels & Lodging-0.8% Host Marriott LP 6.75%, 6/01/16 225 221,906 9.25%, 10/01/07 110 113,437 9.50%, 1/15/07 310 312,712 Starwood Hotels & Resorts Worldwide, Inc. 7.875%, 5/01/12 405 425,250 Vail Resorts, Inc. 6.75%, 2/15/14 360 351,900 ---------- 1,425,205 Index-1.4% Dow Jones CDX HY 8.25%, 6/29/10(c)* 955 959,976 8.375%, 12/29/11(c) 454 454,284 8.625%, 6/29/11(c)* 983 995,287 ---------- 2,409,547 Industrial-1.3% AMSTED Industries, Inc. 10.25%, 10/15/11(c) 265 283,550 Case New Holland, Inc. 9.25%, 8/01/11 315 333,900 FastenTech, Inc. 11.50%, 5/01/11 170 176,800 Invensys PLC 9.875%, 3/15/11(c) 221 238,680 RBS Global & Rexnord Corp. 9.50%, 8/01/14(c) 250 255,000 11.75%, 8/01/16(c) 115 119,025 ACM MANAGED DOLLAR INCOME FUND o 17 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Trinity Industries, Inc. 6.50%, 3/15/14 $ 535 $ 522,962 Tyco International Group SA 6.875%, 1/15/29 188 209,289 ---------- 2,139,206 Metals & Mining-1.3% AK Steel Corp. 7.875%, 2/15/09 430 428,387 Arch Western Finance 6.75%, 7/01/13 165 158,400 International Steel Group, Inc. 6.50%, 4/15/14 272 268,600 Ispat Inland ULC 9.75%, 4/01/14 239 269,174 Massey Energy Co. 6.875%, 12/15/13 165 149,325 Peabody Energy Corp. 6.875%, 3/15/13 660 650,100 Southern Peru Copper Corp. 7.50%, 7/27/35 300 313,984 ---------- 2,237,970 Paper & Packaging-1.5% Ball Corp. 6.875%, 12/15/12 450 453,375 Berry Plastics Corp. 8.875%, 9/15/14(c) 275 276,375 Covalence Specialty Materials Corp. 10.25%, 3/01/16(c) 130 126,100 Crown Americas, Inc. 7.625%, 11/15/13 375 379,687 Jefferson Smurfit Corp. 8.25%, 10/01/12 8 7,660 Newpage Corp. 10.00%, 5/01/12 285 294,262 Owens-Brockway Glass Container, Inc. 8.875%, 2/15/09 655 673,012 Plastipak Holdings, Inc. 8.50%, 12/15/15(c) 135 136,350 Russell-Stanley Holdings, Inc. 9.00%, 11/30/08(c)(d)(f) 913 240,757 Stone Container Corp. 9.75%, 2/01/11 10 10,300 ---------- 2,597,878 Retail-0.6% Burlington Coat Factory 11.125%, 4/15/14(c) 130 125,450 GSC Holdings Corp. 8.00%, 10/01/12 610 628,300 18 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- J.C. Penney Corporation, Inc. 7.625%, 3/01/97 $ 205 $ 210,635 ---------- 964,385 Service-2.2% Allied Waste North America 6.375%, 4/15/11 610 594,750 7.125%, 5/15/16 545 537,506 7.375%, 4/15/14* 185 182,225 Gallery Capital SA 10.125%, 5/15/13(c) 149 145,767 Iron Mountain Inc. 6.625%, 1/01/16 335 314,900 Service Corp. International 6.50%, 3/15/08 605 605,000 7.70%, 4/15/09 270 277,087 United Rentals North America, Inc. 6.50%, 2/15/12 454 438,110 7.00%, 2/15/14 85 79,900 7.75%, 11/15/13 538 529,930 ---------- 3,705,175 Supermarket & Drugstore-0.5% Couche-Tard, Inc. 7.50%, 12/15/13 333 337,995 Elan Finance Corp. 7.75%, 11/15/11 355 345,681 Stater Bros. Holdings, Inc. 8.125%, 6/15/12 165 165,825 ---------- 849,501 Technology-2.2% Amkor Technologies Inc. 9.25%, 6/01/16 175 164,063 Avago Technologies Finance 10.125%, 12/01/13(c) 230 243,800 Computer Associates Inc. 5.25%, 12/01/09(c) 200 194,569 Electronic Data Systems Corp 6.50%, 8/01/13 178 180,568 Flextronics International, Ltd. 6.50%, 5/15/13 535 529,650 Freescale Semiconductor 7.125%, 7/15/14 220 235,950 Nortel Networks Corp. 6.875%, 9/01/23 280 231,000 Seagate Technology 6.375%, 10/01/11 443 440,785 6.80%, 10/01/16 221 219,895 Serena Software, Inc. 10.375%, 3/15/16 270 282,825 ACM MANAGED DOLLAR INCOME FUND o 19 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- SunGard Data Systems, Inc. 9.125%, 8/15/13 $ 735 $ 760,725 Xerox Corp. 6.40%, 3/15/16 240 238,800 ---------- 3,722,630 Transportation-0.9% AMR Corp. 9.00%, 8/01/12* 232 233,160 Avis Budget Car Rental 7.75%, 5/15/16(c) 315 304,762 BNSF Funding Trust 6.613%, 12/15/55 VRN(a) 555 557,824 Hertz Corp. 8.875%, 1/01/14(c) 205 214,738 10.50%, 1/01/16(c)* 235 258,500 ---------- 1,568,984 Utilities - Electric & Gas-4.8% AES Corporation 7.75%, 3/01/14 490 509,600 8.75%, 5/15/13(c) 75 80,438 9.00%, 5/15/15(c) 115 123,913 Allegheny Energy Supply 7.80%, 3/15/11 280 298,900 8.25%, 4/15/12(c) 495 539,550 Aquila, Inc. 14.875%, 7/01/12 260 341,250 CMS Energy Corp. 8.50%, 4/15/11 215 232,200 Edison Mission Energy 7.50%, 6/15/13(c)* 500 505,000 7.75%, 6/15/16(c) 170 172,125 FirstEnergy Corp. 6.45%, 11/15/11 205 213,851 Northwest Pipeline Corp. 8.125%, 3/01/10 315 327,600 NRG Energy, Inc. 7.25%, 2/01/14 85 84,362 7.375%, 2/01/16 475 472,031 Reliant Energy, Inc. 6.75%, 12/15/14 65 61,831 9.50%, 7/15/13 390 404,625 Sierra Pacific Resources 8.625%, 3/15/14 260 280,726 Southern Natural Gas Co. 7.35%, 2/15/31 405 419,671 8.875%, 3/15/10 325 340,816 TECO Energy, Inc. 7.00%, 5/01/12 425 439,875 20 o ACM MANAGED DOLLAR INCOME FUND Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- The Williams Companies, Inc. 7.625%, 7/15/19 $ 1,365 $1,419,600 TXU Corp. 5.55%, 11/15/14 475 448,770 6.50%, 11/15/24 379 359,082 ---------- 8,075,816 Total Corporate Debt Obligations (cost $82,945,436) 79,167,171 EMERGING MARKET - CORPORATE DEBT OBLIGATIONS-4.2% Brazil-0.8% Banco BMG SA 9.15%, 1/15/16(c) 350 350,875 PF Export Receivables Master Trust 6.436%, 6/01/15(c) 1,059 1,069,687 ---------- 1,420,562 China-0.3% Chaoda Modern Agriculture 7.75%, 2/08/10(c) 519 499,538 El Salvador-0.2% AES El Salvador Trust 6.75%, 2/01/16(c) 270 266,613 Hong Kong-0.2% Noble Group, Ltd. 6.625%, 3/17/15(c) 401 354,896 Kazakhstan-0.3% ALB Finance BV 9.25%, 9/25/13(c) 173 171,139 Kazkommerts International BV 8.50%, 4/16/13(c) 350 368,375 ---------- 539,514 Romania-0.3% Mobifon Holdings BV 12.50%, 7/31/10 425 476,531 Russia-2.0% Alfa Bond ISS (Alpha Bank) 8.625%, 12/09/15 VRN(a) 225 223,821 Citigroup (JSC Severstal) 9.25%, 4/19/14(c) 464 493,130 Evraz Group SA 8.25%, 11/10/15(c) 665 666,663 ACM MANAGED DOLLAR INCOME FUND o 21 Shares or Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Gazprom OAO 9.625%, 3/01/13(c) $ 890 $1,052,021 Mobile Telesystems Finance S.A. 9.75%, 1/30/08(c) 625 648,037 Russian Standard Finance SA 7.50%, 10/07/10(c) 270 261,900 Tyumen Oil Co. 11.00%, 11/06/07(c) 70 73,500 ---------- 3,419,072 Ukraine-0.1% Dresdner Bank AG (Kyivstar) 7.75%, 4/27/12(c) 100 101,250 Total Emerging Market - Corporate Debt Obligations (cost $6,898,580) 7,077,976 STRUCTURED NOTE-2.5% RACERS Series 06-6-T 5.429%, 5/01/07 FRN(a)(c) (cost $4,200,000) 4,200 4,246,137 NON-CONVERTIBLE PREFERRED STOCK-0.2% Sovereign Real Estate Investment Trust 12.00%(c) (cost $168,350) 185 260,850 WARRANTS-0.1% Central Bank of Nigeria Warrants, expiring 11/15/20(g) 1,000 200,000 Republic of Venezuela Warrants, expiring 4/15/20(g) 7,140 -0- Total Warrants (cost $0) 200,000 SHORT-TERM INVESTMENT-2.5% Time Deposit-2.5% Societe Generale 5.32%, 10/02/06 (cost $4,200,000) 4,200 4,200,000 Total Investments Before Security Lending Collateral-108.4% (cost $176,347,746) 182,636,083 22 o ACM MANAGED DOLLAR INCOME FUND Shares U.S. $ Value - ------------------------------------------------------------------------------- INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-2.2% Short-Term Investment UBS Private Money Market Fund, LLC (cost $3,725,518) 3,725,518 $ 3,725,518 Total Investments-110.6% (cost $180,073,264) 186,361,601 Other assets less liabilities-(10.6)% (17,912,316) Net Assets-100.0% $168,449,285 CREDIT DEFAULT SWAP CONTRACTS (see Note C)
Notional Unrealized Swap Counterparty & Amount Interest Termination Appreciation/ Referenced Obligation (000) Rate Date (Depreciation) - -------------------------------------------------------------------------------------------- Buy Contracts: Citigroup Global Markets, Inc. Republic of Hungary 4.50%, 2/06/13 $350 0.50% 11/26/13 $ 396 JP Morgan Chase Republic of Hungary 4.75%, 2/03/15 1,380 0.30 10/20/15 30,349 Sale Contracts:s Citigroup Global Markets, Inc. Republic of Brazil 12.25%, 3/06/30 2,562 1.98 4/20/07 45,098 Citigroup Global Markets, Inc. Republic of Philippines 10.625%, 3/16/25 510 4.95 3/20/09 48,508 Credit Suisse First Boston Republic of Brazil 12.25%, 3/06/30 750 6.90 6/20/07 50,281 Credit Suisse First Boston Republic of Venezuela 9.25%, 9/15/27 730 3.17 10/20/15 47,845 Deutsche Bank AG Republic of Brazil 12.25%, 3/06/30 2,562 1.90 4/20/07 47,307 JP Morgan Chase Gazprom OAO 10.50%, 10/21/09 1,490 1.04 10/20/10 12,721
ACM MANAGED DOLLAR INCOME FUND o 23 REVERSE REPURCHASE AGREEMENTS (see Note C) Interest Broker Rate Maturity Amount - ------------------------------------------------------------------------------- Barclays Securties 5.00% 12/29/06 $6,138,699 Barclays Securties 5.00 12/29/06 3,043,061 Chase Manhattan Bank 1.85 12/29/06 378,672 Chase Manhattan Bank 3.05 12/29/06 243,526 Chase Manhattan Bank 4.65 12/29/06 2,879,013 Chase Manhattan Bank 5.00 12/29/06 1,421,114 Chase Manhattan Bank 5.00 12/29/06 1,747,233 Chase Manhattan Bank 5.00 12/29/06 1,885,781 ------------ $17,737,099 * Represents entire or partial securities out on loan. See Note F for securities lending information. (a) Variable rate coupon, rate shown as of September 30, 2006. (b) Positions, or portions thereof, with an aggregate market value of $18,039,402 have been segregated to collateralize reverse repurchase agreements. (c) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2006, the aggregate market value of these securities amounted to $42,082,352 or 25.0% of net assets. (d) Payment in kind (PIK) quarterly coupon payment. (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) Security is exempt from registration under Rule 144A of the Securites Act of 1933. This security, which represents 0.14% of net assets as of September 30, 2006, is considered illiquid and restricted. Security is in default, is non-income producing, and valued at fair value. Percentage Acquisition Acquisition Market of Net Restricted Security Date Cost Value Assets - ------------------------------------------------------------------------------- Russell-Stanley Holdings, Inc. 2/26/99 $4,895,369 $240,757 0.14% 9.00%, 11/30/08 (g) Non-income producing security. Glossary of Terms: FRN - Floating Rate Note VRN - Variable Rate Note Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. See notes to financial statements. 24 o ACM MANAGED DOLLAR INCOME FUND STATEMENT OF ASSETS & LIABILITIES September 30, 2006 Assets Investments in securities, at value (cost $180,073,264--including investment of cash collateral for securities loaned of $3,725,518) $186,361,601(a) Cash 640,352 Interest receivable 3,217,367 Receivable for investment securities sold 1,207,196 Unrealized appreciation on credit default swap contracts 282,505 Total assets 191,709,021 Liabilities Reverse repurchase agreements 17,737,099 Payable for collateral received on securities loaned 3,725,518 Payable for investment securities purchased 1,424,048 Advisory fee payable 123,861 Tender fees payable 121,949 Administrative fee payable 19,818 Accrued expenses and other liabilities 107,443 Total liabilities 23,259,736 Net Assets $168,449,285 Composition of Net Assets Common stock, at par $ 204,937 Additional paid-in capital 278,179,061 Distributions in excess of net investment income (384,956) Accumulated net realized loss on investment transactions (116,120,599) Net unrealized appreciation of investments 6,570,842 $168,449,285 Net Asset Value Per Share--300 million shares of capital stock authorized, $.01 par value (based on 20,493,702 shares outstanding) $8.22 (a) Includes securities on loan with a value of $3,551,583 (see Note F). See notes to financial statements. ACM MANAGED DOLLAR INCOME FUND o 25 STATEMENT OF OPERATIONS Year Ended September 30, 2006 Investment Income Interest $15,118,438 Dividends 147,360 $15,265,798 Expenses Advisory fee 1,299,642 Administrative fee 207,928 Printing 97,897 Legal 83,922 Audit 78,945 Custodian 60,918 Directors' fees 41,432 Transfer agency 13,806 Registration 23,750 Miscellaneous 45,973 Total expenses before interest expense 1,954,213 Interest expense 1,005,993 Total expenses 2,960,206 Net investment income 12,305,592 Realized and Unrealized Gain (Loss) on Investment Transactions Net realized gain (loss) on: Investment transactions 13,257,982 Swap contracts (126,352) Written options 10,802 Net change in unrealized appreciation/depreciation of: Investments (14,651,725) Swap contracts 221,195 Net loss on investment transactions (1,288,098) Net Increase in Net Assets from Operations $11,017,494 See notes to financial statements. 26 o ACM MANAGED DOLLAR INCOME FUND STATEMENT OF CHANGES IN NET ASSETS Year Ended Year Ended September 30, September 30, 2006 2005 Increase (Decrease) in Net Assets Resulting from Operations Net investment income $12,305,592 $14,589,844 Net realized gain on investment transactions 13,142,432 3,564,731 Net change in unrealized appreciation/depreciation of investments (14,430,530) 6,022,473 Net increase in net assets from operations 11,017,494 24,177,048 Dividends and Distributions to Shareholders from Net investment income (12,533,183) (15,094,355) Common Stock Transactions Reinvestment of dividends resulting in the issuance of Common Stock -0- 79,572 Tender offer (resulting in the redemption of 1,078,616 and 1,135,385 shares of common stock, respectively) (8,434,777) (9,162,557) Tender offer costs (160,449) (175,000) Total decrease (10,110,915) (175,292) Net Assets Beginning of period 178,560,200 178,735,492 End of period (including distributions in excess of net investment income of $384,956 and $186,090, respectively) $168,449,285 $178,560,200 See notes to financial statements. ACM MANAGED DOLLAR INCOME FUND o 27 STATEMENT OF CASH FLOWS Year Ended September 30, 2006 Increase (Decrease) in Cash from Operation Activities: Interest and dividends received $14,624,467 Interest expense paid (1,061,669) Operating expenses paid (1,966,478) Net increase in cash from operating activities $11,596,320 Investing Activities: Purchases of long-term investments (112,365,095) Proceeds from disposition of long-term investments 139,113,918 Purchases of short-term investments, net (1,800,000) Premiums received on option transactions 10,802 Proceeds from swap contracts (126,352) Net increase in cash from investing activities 24,833,273 Financing Activities:* Cash dividends paid (12,533,183) Proceeds from reverse repurchase agreements (15,661,449) Tender offer (8,535,259) Net decrease in cash from financing activities (36,729,891) Net decrease in cash (300,298) Cash at beginning of period 940,650 Cash at end of period $640,352 Reconciliation of Net Increase in Net Assets from Operations to Net Increase in Cash from Operating Activities: Net increase in net assets from operations $11,017,494 Adjustments: Increase in interest and dividends receivable $ (49,696) Accretion of bond discount and amortization of bond premium (591,635) Decrease in accrued expenses (12,265) Decrease in interest payable (55,676) Net realized gain on investment transactions (13,142,432) Net change in unrealized appreciation/depreciation of investments 14,430,530 Total adjustments 578,826 Net Increase in Cash from Operating Activities $11,596,320 * Non-cash financing activities not included herein consist of reinvestment of dividends and distributions. See notes to financial statements. 28 o ACM MANAGED DOLLAR INCOME FUND NOTES TO FINANCIAL STATEMENTS September 30, 2006 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 (other than securities listed on the NASDAQ Stock Market, Inc. ("NASDAQ")) 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 listed only on 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) 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, AllianceBernstein L.P. (prior to February 24, 2006 known ACM MANAGED DOLLAR INCOME FUND o 29 as Alliance Capital Management L.P.) (the "Adviser") may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. 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 amortizes premiums and accretes discounts as adjustments to interest income. 4. Dividends and Distributions Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions are determined in accordance with federal tax 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. 30 o ACM MANAGED DOLLAR INCOME FUND 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 the Investment Advisory Agreement, the Fund pays AllianceBernstein, L.P. an advisory fee at an annual rate of .75 of 1% of the average weekly adjusted net assets of the Fund. Such fee is accrued daily and paid monthly. Under the terms of the Shareholder Inquiry Agency Agreement with AllianceBernstein Investor Services, Inc. (prior to February 24, 2006 known as Alliance Global Investor Services, Inc.) ("ABIS"), a wholly-owned subsidiary of the Adviser, the Fund reimburses ABIS for costs relating to servicing phone inquiries on behalf of the Fund. During the year ended September 30, 2006, the Fund reimbursed $335 to ABIS. Under the terms of the Administration Agreement, the Fund pays Princeton Administrators, LLC (the "Administrator") a fee at an annual rate of .12 of 1% of the average weekly adjusted net assets of the Fund, but in no event less than $12,500 per month. Such fee is accrued daily and paid monthly. The Administrator prepares certain financial and regulatory reports for the Fund and provides clerical and other services. NOTE C Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the year ended September 30, 2006, were as follows: Purchases Sales Investment securities (excluding U.S. government securities) $104,935,409 $113,118,337 U.S. government securities -0- -0- ACM MANAGED DOLLAR INCOME FUND o 31 At September 30, 2006, the cost of investments for federal income tax purposes, gross unrealized appreciation and gross unrealized depreciation (excluding written options and swap contracts) are as follows: Cost $180,426,372 Gross unrealized appreciation $11,974,709 Gross unrealized depreciation (6,039,480) Net unrealized appreciation $5,935,229 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. 32 o ACM MANAGED DOLLAR INCOME FUND Transactions in written options for the year ended September 30, 2006 were as follows: Number of Contracts Premiums (000) Received Options outstanding at September 30, 2005 -0- $ -0- Options written 950 10,802 Options exercised -0- -0- Options terminated in closing purchase transactions (360) (4,280) Options expired (590) (6,522) Options outstanding at September 30, 2006 -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. 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. Fluctuations in the value of swap contracts are recorded as a component of net change in unrealized appreciation/depreciation of investments. The Fund may enter into credit default swaps. The Fund may purchase credit protection on the referenced obligation of the credit default swap ("Buy Contract") or provide credit protection on the referenced obligation of the credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap pro- ACM MANAGED DOLLAR INCOME FUND o 33 vides 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) interim fixed payments from/(to) the respective counterparty, calculated at the agreed upon interest rate applied to the Notional Amount. These interim payments are recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Credit default swaps may involve greater risks than if a Fund had invested in the referenced obligation directly. Credit default swaps are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Fund is a buyer and no credit event occurs, it will lose its investment. In addition, if the Fund is a seller and a credit event occurs, the value of the referenced obligation received by the Fund coupled with the periodic payments previously received, may be less than the Maximum Payout Amount it pays to the buyer, resulting in a loss to the Fund. At September 30, 2006, the Fund had Sale Contracts outstanding with Maximum Payout Amounts aggregating $8,604,000, with net unrealized appreciation of $251,760 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. As of September 30, 2006, the Fund did not have Buy Contracts outstanding with respect to the same referenced obligation and same counterparty of certain Sale Contracts outstanding. 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. For the year ended September 30, 2006, the average amount of reverse repurchase agreements outstanding was $25,287,925 and the daily weighted average annual interest rate was 3.92%. 34 o ACM MANAGED DOLLAR INCOME FUND NOTE D Capital Stock During the year ended September 30, 2006, the Fund did not issue any shares in connection with the Fund's dividend reinvestment plan. During the year ended September 30, 2005, the Fund issued 9,984 shares in connection with the Fund's dividend reinvestment plan. On July 5, 2006, the Fund purchased and retired 1,078,616 shares of its outstanding common stock for $7.82 per share pursuant to a tender offer. The Fund incurred costs of $170,000, which were charged to additional paid in capital. At July 5, 2006, 20,493,702 shares of common stock were outstanding. The purpose of the tender offer was to fulfill an undertaking made in connection with the initial public offering price of the Fund's shares. NOTE E Risks Involved in Investing in the Fund Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes in interest rates will affect the value of the Fund's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Fund's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. Concentration of Risk--Investing in securities of foreign companies and foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the U.S. 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. Leverage Risk--The Fund may use certain investment techniques that have increased risks. For example, the Fund may use leverage, through borrowings, to ACM MANAGED DOLLAR INCOME FUND o 35 enhance its returns. For this purpose, the Fund may use reverse repurchase agreements and dollar rolls, which are considered borrowings, as part of its investment strategy. Borrowings allow the Fund to increase the amount of money available to invest in debt securities. As long as the income from the securities financed is greater than the interest cost of the borrowings, the Fund's investors benefit from higher returns than if the Fund were not leveraged. The use of leverage, which is usually considered speculative, involves certain risks to stockholders. These include a higher volatility of the NAV of the common stock caused by favorable or adverse changes in interest rates. In addition, fluctuations in the interest rates on a fund's borrowings will affect the return to stockholders, with increases in interest rates decreasing the fund's return. To the extent that the current interest rate on a fund's borrowings approaches the net return on the leveraged portion of the fund's investment portfolio, the benefit of leverage to stockholders will be reduced. If the current interest rate on the borrowings were to exceed the net return on that portion of the fund's portfolio, the fund's leverage would result in a lower rate of return to stockholders and in a lower NAV than if a fund were not leveraged. Indemnification Risk--In the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, theFund has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE F Securities Lending The Fund has entered into a securities lending agreement with AG Edwards & Sons, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent, on behalf of the Fund, administers the lending of portfolio securities to certain broker-dealers. In return, the Fund receives fee income from the lending transactions or it retains a portion of interest on the investment of any cash received as collateral. The Fund also continues to receive dividends or interest on the securities loaned. Unrealized gain or loss on the value of the securities loaned that may occur during the term of the loan will be reflected in the accounts of the Fund. All loans are continuously secured by collateral exceeding the value of the securities loaned. All collateral consists of either cash or U.S. Government securities. The Lending Agent may invest the cash collateral received in accordance with the investment restrictions of the Fund in one or more of the following investments: U.S. Government or U.S. Government agency obligations, bank obligations, corporate debt obligations, asset-backed securities, structured products, repurchase agreements and an eligible money 36 o ACM MANAGED DOLLAR INCOME FUND market fund. The Lending Agent will indemnify the Fund for any loss resulting from a borrower's failure to return a loaned security when due. As of September 30, 2006, the Fund had loaned securities with a value of $3,551,583 and received cash collateral of $3,725,518, which was invested in a money market fund as included in the portfolio of investments. For the year ended September 30, 2006, the Fund earned fee income of $44,443, which is included in interest income in the accompanying statement of operations. NOTE G Distributions to Shareholders The tax character of the distributions paid to shareholders during the fiscal years ended September 30, 2006 and September 30, 2005 were as follows: 2006 2005 Distributions paid from: Ordinary income $12,533,183 $15,094,355 Total taxable distributions 12,533,183 15,094,355 Tax return of capital -0- -0- Total distributions paid $12,533,183 $15,094,355 As of September 30, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses $(115,812,596)(a) Unrealized appreciation/(depreciation) 5,877,883(b) Total accumulated earnings/(deficit) $(109,934,713) (a) On September 30, 2006, the Fund had a net capital loss carryforward of $115,812,596 of which $26,804,736 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 $13,260,337. (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 decrease in accumulated net realized loss on investments and a decrease in additional paid-in capital. This reclassification had no effect on net assets. ACM MANAGED DOLLAR INCOME FUND o 37 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 pending in the United States District Court for the District of Maryland pursuant to a ruling by the Judicial Panel on Multidistrict Litigation transferring and centralizing all of the mutual funds involving market and late trading in the District of Maryland (the "Mutual Fund MDL"). Management of the Adviser believes that these private lawsuits are not likely to have a material adverse effect on the results of operations or financial condition of the Fund. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized in an Assurance of Discontinuation dated September 1, 2004 ("NYAGOrder"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; 38 o ACM MANAGED DOLLAR INCOME FUND (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. The shares of the Fund are not redeemable by the Fund, but are traded on an exchange at prices established by the market. Accordingly, the Fund and its shareholders are not subject to the market timing practices described in the SEC Order and are not expected to participate in the Reimbursement Fund. Since the Fund is a closed-end fund, it will not have its advisory fee reduced pursuant to the terms of the agreements mentioned above. On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the Office of the Attorney General of the State of West Virginia and (ii) a request for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commissioner") (together, the "Information Requests"). Both Information Requests require the Adviser to produce documents concerning, among other things, any market timing or late trading in the Adviser's sponsored mutual funds. The Adviser responded to the Information Requests and has been cooperating fully with the investigation. On April 11, 2005, a complaint entitled The Attorney General of the State of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P. ("Alliance Holding"), and various other defendants not affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia by the Attorney General of the State of West Virginia. The WVAG Complaint makes factual allegations generally similar to those in certain of the complaints related to the lawsuits discussed above. On October 19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL. On August 30, 2005, the West Virginia Securities Commissioner signed a Summary Order to Cease and Desist, and Notice of Right to Hearing addressed to the Adviser and Alliance Holding. The Summary Order claims that the Adviser and Alliance Holding violated the West Virginia Uniform Securities Act, and makes factual allegations generally similar to those in the SEC Order and the NYAG Order. On January 26, 2006, the Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition for Writ of Prohibition and Order Suspending Proceedings in West Virginia state court seeking to vacate the Summary Order and for other relief. The court denied the writ and in September 2006 the Supreme Court of Appeals declined the defendants' petition for appeal. ACM MANAGED DOLLAR INCOME FUND o 39 On September 22, 2006, Alliance and Alliance Holding filed an answer and motion to dismiss the Summary Order with the Securities Commissioner. On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P., Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein mutual funds as nominal defendants. The Fund was not named as a defendant in the Aucoin Complaint. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders 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, nine additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants. All nine of the lawsuits (i) were brought as class actions filed in the United States District Court for the Southern District of New York, (ii) assert claims substantially identical to the Aucoin Complaint, and (iii) are brought on behalf of shareholders of the Funds. On February 2, 2005, plaintiffs filed a consolidated amended class action complaint ("Aucoin Consolidated Amended Complaint") that asserts claims substantially similar to the Aucoin Complaint and the nine additional lawsuits referenced above. On October 19, 2005, the District Court dismissed each of the claims set forth in the Aucoin Consolidated Amended Complaint, except for plaintiffs' claim under Section 36(b) of the Investment Company Act. On January 11, 2006, the District Court granted defendants' motion for reconsideration and dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court denied plaintiffs' motion for leave to file an amended complaint. On 40 o ACM MANAGED DOLLAR INCOME FUND July 5, 2006, plaintiffs filed a notice of appeal. On October 4, 2006 the appeal was withdrawn by stipulation, with plaintiffs reserving the right to reinstate it at a later date. The Adviser believes that these matters are not likely to have a material adverse effect on the Fund or the Adviser's ability to perform advisory services relating to the Fund. NOTE I Recent Accounting Pronouncements On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded in the current period. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact on the financial statements has not yet been determined. On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined. ACM MANAGED DOLLAR INCOME FUND o 41 FINANCIAL HIGHLIGHTS Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended September 30, --------------------------------------------------------------------------- 2006 2005 2004(a) 2003 2002(b) --------------------------------------------------------------------------- Net asset value, beginning of period $8.28 $7.87 $7.68 $5.58 $6.33 Income From Investment Operations Net investment income(c) 0.58 0.65 0.76 0.81 0.84 Net realized and unrealized gain (loss) on investment transactions (0.05) 0.43 0.23 2.10 (0.71) Net increase (decrease) in net asset value from operations 0.53 1.08 0.99 2.91 0.13 Less: Dividends and Distributions Dividends from net investment income (0.59) (0.67) (0.80) (0.81) (0.85) Tax return of capital -0- -0- -0- -0- (0.03) Total dividends and distributions (0.59) (0.67) (0.80) (0.81) (0.88) Net asset value, end of period $8.22 $8.28 $7.87 $7.68 $5.58 Market value, end of period $7.37 $7.74 $7.87 $8.15 $6.29 Premium/(Discount) (10.34)% (6.52)% 0.00% 6.12% 12.72% Total Return Total investment return based on:(d) Market value 3.07% 7.10% 6.91% 45.71% (6.14)% Net asset value 7.46% 14.57% 13.45% 54.77% .23% Ratios/Supplemental Data Net assets, end of period (000's omitted) $168,449 $178,560 $178,735 $173,182 $124,834 Ratios to average net assets of: Expenses 1.71% 1.49% 1.44% 1.72% 2.12% Expenses, excluding interest expense(e) 1.13% 1.13% 1.15% 1.21% 1.15% Net investment income 7.10% 8.06% 9.76% 11.88% 10.81% Portfolio turnover rate 55% 63% 95% 80% 63%
See footnote summary on page 43. 42 o ACM MANAGED DOLLAR INCOME FUND (a) As of October 1, 2003, the Fund has adopted the method of accounting for interim payments on swap contracts in accordance with Financial Accounting Standards Board Statement No. 133. These interim payments are reflected within net realized and unrealized gain (loss) on swap contracts, however, prior to October 1, 2003, these interim payments were reflected within interest income/expense on the statement of operations. The effect of this change for the fiscal year ended September 30, 2006, 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 0.15%. (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 .61%, .36%, .29%, .51%, .97% and 1.62%, respectively, on borrowings. ACM MANAGED DOLLAR INCOME FUND o 43 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of ACM Managed Dollar Income Fund, Inc. We have audited the accompanying statement of assets and liabilities of ACM Managed Dollar Income Fund, Inc. (the "Fund"), including the portfolio of investments, as of September 30, 2006, and the related statement of operations and cash flows for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2006 by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of ACM Managed Dollar Income Fund, Inc. at September 30, 2006, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP New York, New York November 17, 2006 44 o ACM MANAGED DOLLAR INCOME FUND TAX INFORMATION (unaudited) 57.2% of the ordinary income dividends paid by the Fund during the fiscal year ended September, 2006, qualify as "interest related dividends" for non-U.S. shareholders. ACM MANAGED DOLLAR INCOME FUND o 45 ADDITIONAL INFORMATION (unaudited) ACM Managed Dollar Income Fund Shareholders whose shares are registered in their own names may elect to be participants in the Dividend Reinvestment Plan (the "Plan"), pursuant to which distributions to shareholders will be paid in or reinvested in additional shares of the Fund. Computershare Trust Company N.A. (the "Agent") will act as agent for participants under the Plan. Shareholders whose shares are held in the name of a broker or nominee should contact such broker or nominee to determine whether or how they may participate in the Plan. If the Board declares a distribution payable either in shares or in cash, as holders of the Common Stock may have elected, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in shares of Common Stock of the Fund valued as follows: (i) If the shares of Common Stock are trading at net asset value or at a premium above net asset value at the time of valuation, the Fund will issue new shares at the greater of net asset value or 95% of the then current market price. (ii) If the shares of Common Stock are trading at a discount from net asset value at the time of valuation, the Agent will receive the distribution in cash and apply it to the purchase of the Fund's shares of Common Stock in the open market on the New York Stock Exchange or elsewhere, for the participants' accounts. Such purchases will be made on or shortly after the payment date for such distribution and in no event more than 30 days after such date except where temporary curtailment or suspension of purchase is necessary to comply with Federal securities laws. If, before the Agent has completed its purchases, the market price exceeds the net asset value of a share of Common Stock, the average purchase price per share paid by the Agent may exceed the net asset value of the Fund's shares of Common Stock, resulting in the acquisition of fewer shares than if the distribution had been paid in shares issued by the Fund. The Agent will maintain all shareholders' accounts in the Plan and furnish written confirmation of all transactions in the account, including information needed by shareholders for tax records. Shares in the account of each Plan participant will be held by the Agent in non-certificate form in the name of the participant, and each shareholder's proxy will include those shares purchased or received pursuant to the Plan. There will be no charges with respect to shares issued directly by the Fund to satisfy the dividend reinvestment requirements. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Agent's open market purchases of shares. In each case, the cost per share of shares purchased for each shareholder's account will be the average cost, including brokerage commissions, of any shares purchased in the open market plus the cost of any shares issued by the Fund. 46 o ACM MANAGED DOLLAR INCOME FUND The automatic reinvestment of distributions will not relieve participants of any income taxes that may be payable (or required to be withheld) on distributions. Experience under the Plan may indicate that changes are desirable. Accordingly, the Fund reserves the right to amend or terminate the Plan as applied to any distribution paid subsequent to written notice of the change sent to participants in the Plan at least 90 days before the record date for such distribution. The Plan may also be amended or terminated by the Agent on at least 90 days' written notice to participants in the Plan. All correspondence concerning the Plan should be directed to the Agent at Computershare Trust Company N.A., P.O. Box 43010, Providence, RI 02940-3010. ACM MANAGED DOLLAR INCOME FUND o 47 BOARD OF DIRECTORS William H. Foulk, Jr.,(1) Chairman Marc O. Mayer, President David H. Dievler(1) John H. Dobkin(1) Michael J. Downey(1) D. James Guzy(1) Nancy P. Jacklin(1) Marshall C. Turner, Jr.(1) OFFICERS Philip L. Kirstein, Senior Vice President & Independent Compliance Officer Paul J. DeNoon(2), Vice President Gershon Distenfeld(2), Vice President Emilie D. Wrapp, Secretary Joseph J. Mantineo, Treasurer and Chief Financial Officer Vincent S. Noto, Controller Administrator Princeton Administrators, LLC P.O.Box 9095 Princeton, NJ 08543-9095 Custodian State Street Bank and Trust Company One Lincoln Street Boston, MA 02111 Dividend Paying Agent, Transfer Agent and Registrar ComputerShare Trust Company, N.A. P.O. Box 43010 Providence, RI 02940-3010 Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York,NY 10036 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 (1) Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. (2) The day-to-day management of, and investment decisions for, the Fund's portfolio are made by the Global Fixed Income and Global Credit Teams. While all members of the team work jointly to determine the majority of the investment stategy including security selection for the Fund, Messrs. Paul J. DeNoon and Gershon M. Distenfeld, members of the Global Fixed Income Emerging Market Investment Team and Global Credit Team, respectively, are primarily responsible for the day-to-day management of the Fund's portfolio. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase at market prices from time to time shares of its Common Stock in the open market. This report, including the financial statements therein, is transmitted to the shareholders of ACM Managed Dollar Income Fund for their information. The financial information included hserein 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 20, 2006, 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. 48 o ACM MANAGED DOLLAR INCOME FUND MANAGEMENT OF THE FUND Board of Directors Information The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund's Directors is set forth below.
NAME, PORTFOLIOS ADDRESS, PRINCIPAL IN FUND OTHER AGE OCCUPATION(S) COMPLEX DIRECTORSHIP OF DIRECTOR DURING PAST OVERSEEN BY HELD BY (YEAR ELECTED*) 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------- INTERESTED DIRECTOR Marc O. Mayer, + Executive Vice President of 111 SCB Partners, 1345 Avenue of the the Adviser since 2001 and Inc. and Americas Executive Managing Director SCB, Inc. New York, NY 10105 of AllianceBernstein Investments, 49 Inc. ("ABI") since 2003; prior thereto (2003) he was head of AllianceBernstein Institutional Investments, a unit of the Adviser, from 2001-2003. Prior thereto, Chief Executive Officer of Sanford C. Bernstein & Co., LLC (institutional research and broker- age arm of Bernstein & Co. LLC) and its predecessor since prior to 2001. DISINTERESTED DIRECTORS William H. Foulk, Jr.,# Investment adviser and an 113 None P.O. Box 5060 independent consultant. He Greenwich, CT 06831-0505 was formerly Senior Manager 74 of Barrett Associates, Inc., a (1993) registered investment adviser, Chairman of the Board with which he had been associated since prior to 2001. He was formerly Deputy Comptroller and Chief Investment Officer of the State of New York and, prior thereto, Chief Investment Officer of the New York Bank for Savings. David H. Dievler,# Independent consultant. Until 112 None P.O. Box 167 December 1994 he was Senior Spring Lake, NJ 07762 Vice President of AllianceBernstein 77 Corporation ("AB Corp") (formerly (1993) Alliance Capital Management Corporation ("ACMC")) responsible for mutual fund administration. Prior to joining AB Corp in 1984 he was Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that, he was a Senior Manager at Price Waterhouse & Co. Member of American Institute of Certified Public Accountants since 1953.
ACM MANAGED DOLLAR INCOME FUND o 49
NAME, PORTFOLIOS ADDRESS, PRINCIPAL IN FUND OTHER AGE OCCUPATION(S) COMPLEX DIRECTORSHIP OF DIRECTOR DURING PAST OVERSEEN BY HELD BY (YEAR ELECTED*) 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) John H. Dobkin,# Consultant. Formerly President of 111 None P.O. Box 12 Save Venice, Inc. (preservation Annandale, NY 12504 organization) from 2001-2002, a 64 Senior Advisor from June 1999- (1993) June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989-May 1999. Previously, Director of the National Academy of Design and during 1988-1992, he was Director and Chairman of the Audit Committee of AB Corp (formerly ACMC). Michael J. Downey, # Consultant since 2004. 111 Asia Pacific c/o AllianceBernstein L.P. Formerly managing partner of Fund, Inc. 1345 Avenue of the Lexington Capital, LLC (investment and The Americas advisory firm) from December 1997 Merger Fund Attn: Philip L. Kirstein until December 2003. Prior thereto, New York, NY 10105 Chairman and CEO of Prudential 62 Mutual Fund Management (2005) (1987-1993). D. James Guzy, # Chairman of the Board of PLX 111 Intel P.O. Box 128 Technology (semi-conductors) and Corporation Glenbrook, NV 89413 of SRC Computers Inc., with which (semi- 70 he has been associated since prior conductors); (2005) to 2001. He is also President of the Cirrus Logic Arbor Company (private family Corporation investments). (semi- conductors); and the Davis Selected Advisors Group of Mutual Funds
50 o ACM MANAGED DOLLAR INCOME FUND
NAME, PORTFOLIOS ADDRESS, PRINCIPAL IN FUND OTHER AGE OCCUPATION(S) COMPLEX DIRECTORSHIP OF DIRECTOR DURING PAST OVERSEEN BY HELD BY (YEAR ELECTED*) 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) Nancy P. Jacklin, # Formerly US Executive Director of 111 None 4046 Chancery Court NW the International Monetary Fund Washington, DC 20007 (December 2002-May 2006); partner, 58 Clifford Chance (1992-2002); Senior (2006) Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985-1992); Assistant General Counsel (International), Federal Reserve Board of Govenors (1982-1985); and Attorney Advisor, US Department of the Treasury (1973- 1982). Member of the Bar of the District of Columbia and of New York; member of the Council on Foreign Relations. Marshall C. Turner, Jr., # Principal of Turner Venture Associates 111 The George 220 Montgomery Street (venture capital and consulting) since Lucas Penthouse 10 prior to 2001. From 2003 until May 31, Educational San Francisco, CA 94104 2006, he was CEO of DuPont Foundation 65 Photomasks, Inc., Austin, Texas and National (2005) (semi-conductor manufacturing Datacast, Inc. services).
* There is no stated term of office for the Fund's directors. # Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. + Mr. Mayer is an "interested person", as defined in the 1940 Act, due to his position as an Executive Vice President of the Adviser. ACM MANAGED DOLLAR INCOME FUND o 51 Officers of the Fund Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* AND POSITION(S) PRINCIPAL OCCUPATION AGE HELD WITH FUND DURING PAST 5 YEARS** - ------------------------------------------------------------------------------- Marc O. Mayer, President See biography above. 49 Philip L. Kirstein, Senior Vice President Senior Vice President and Independent 61 and Independent Compliance Officer of the Compliance Officer AllianceBernstein Funds with which he has been associated since October 2004. Prior thereto, he was Of Counsel to Kirkpatrick & Lockhart, LLP from October 2003 to October 2004, and General Counsel of Merrill Lynch Investment Managers, L.P. since prior to 2001 until March 2003. Paul J. DeNoon, Vice President Senior Vice President of the Adviser**, 44 with which he has been associated since prior to 2001. Gershon Distenfeld, Vice President Vice President of the Adviser**, with 30 which he has been associated since prior to 2001. Emilie D. Wrapp, Secretary Senior Vice President, Assistant 51 General Counsel and Assistant Secretary of ABI**, with which she has been associated since prior to 2001. Joseph J. Mantineo Treasurer and Chief Senior Vice President of 47 Financial Officer AllianceBernstein Investor Services, Inc. ("ABIS")** with which he has been associated since prior to 2001. Vincent S. Noto, Controller Vice President of ABIS**, with which 41 he has been associated since prior to 2001.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas, New York, NY 10105. ** The Adviser, ABI and ABIS are affiliates of the Fund. 52 o ACM MANAGED DOLLAR INCOME FUND Information Regarding the Review and Approval of the Fund's Advisory Agreement The Fund's disinterested directors (the "directors") unanimously approved the continuance of the Advisory Agreement between the Fund and the Adviser at a meeting held on September 13, 2006. In preparation for the meeting, the directors had requested from the Adviser and received and evaluated extensive materials, including performance and expense information for other investment companies with similar investment objectives derived from data compiled by Lipper Inc. ("Lipper"), which is not affiliated with the Adviser. Prior to voting, the directors reviewed the proposed continuance of the Advisory Agreement with management and with experienced counsel who are independent of the Adviser and received a memorandum from such counsel discussing the legal standards for their consideration of the proposed continuance. The directors also discussed the proposed continuance in a private session at which only the directors, their independent counsel and the Fund's Independent Compliance Officer were present. In reaching their determinations relating to continuance of the Advisory Agreement, the directors considered all factors they believed relevant, including the following: 1. information comparing the performance of the Fund to other investment companies with similar investment objectives and to an index; 2. the nature, extent and quality of investment, compliance, administrative and other services rendered by the Adviser; 3. payments received by the Adviser from all sources in respect of the Fund and all investment companies in the AllianceBernstein Funds complex; 4. the costs borne by, and profitability of, the Adviser and its affiliates in providing services to the Fund and to all investment companies in the AllianceBernstein Funds complex; 5. comparative fee and expense data for the Fund and other investment companies with similar investment objectives; 6. the extent to which economies of scale would be realized to the extent the Fund grows and whether fee levels reflect any economies of scale for the benefit of investors; 7. the Adviser's policies and practices regarding allocation of portfolio transactions of the Fund; 8. portfolio turnover rates for the Fund compared to other investment companies with similar investment objectives; 9. fall-out benefits which the Adviser and its affiliates receive from their relationships with the Fund; ACM MANAGED DOLLAR INCOME FUND o 53 10. the Adviser's representation that there are no institutional products managed by the Adviser which have a substantially similar investment style as the Fund; 11. the professional experience and qualifications of the Fund's portfolio management team and other senior personnel of the Adviser; and 12. the terms of the Advisory Agreement. The directors also considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser's integrity and competence they have gained from that experience and the Adviser's responsiveness to concerns raised by them in the past, including the Adviser's willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. In their deliberations, the directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors reaching their determinations to approve the continuance of the Advisory Agreement (including their determinations that the Adviser should continue to be the investment adviser for the Fund, and that the fees payable to the Adviser pursuant to the Advisory Agreement are appropriate) were separately discussed by the directors. Nature, Extent and Quality of Services Provided by the Adviser The directors noted that, under the Advisory Agreement, the Adviser, subject to the oversight of the directors, administers the Fund's business and other affairs. The Adviser manages the investment of the assets of the Fund, including making purchases and sales of portfolio securities consistent with the Fund's investment objective and policies. The Adviser also provides the Fund with such office space, administrative and other services (exclusive of, and in addition to, any such services provided by any others retained by the Fund) and executive and other personnel as are necessary for the Fund's operations. The Adviser pays all of the compensation of directors of the Fund who are affiliated persons of the Adviser and of the officers of the Fund. 54 o ACM MANAGED DOLLAR INCOME FUND The directors noted that the Advisory Agreement for the Fund does not contain a reimbursement provision for the cost of certain administrative and other services provided by the Adviser. The directors noted that the Fund has a separate administration agreement and pays separate administration fees to its administrator. The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement and noted that the scope of services provided by advisers and administrators of funds had expanded over time as a result of regulatory and other developments. The directors noted that, for example, the Adviser is responsible for maintaining and monitoring its own and, to varying degrees, the Fund's compliance programs, and these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The directors considered the quality of the in-house investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The quality of administrative and other services, including the Adviser's role in coordinating the activities of the Fund's other service providers, also were considered. The directors also considered the Adviser's response to recent regulatory compliance issues affecting a number of the investment companies in the AllianceBernstein Funds complex. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement. Costs of Services Provided and Profitability to the Adviser The directors reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2004 and 2005 that had been prepared with an updated expense allocation methodology. The directors noted that the updated methodology differed in various respects from the methodology used in prior years. The directors reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data, and noted the Adviser's representation to them that it believed that the methods of allocation used in preparing the profitability information were reasonable and appropriate and that the Adviser had previously discussed with the directors that there is no generally accepted allocation methodology for information of this type. The directors recognized that it is difficult to make comparisons of profitability from fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser's capital structure and cost of capital. In considering profitability information, the directors considered the effect of fall-out benefits on the Adviser's expenses. The directors focused on the profitability of the Adviser's relationship with the Fund before taxes. The directors recognized that the Adviser should generally be entitled to earn a reasonable ACM MANAGED DOLLAR INCOME FUND o 55 level of profits for the services it provides to the Fund and, based on their review, concluded that they were satisfied that the Adviser's level of profitability from its relationship with the Fund was not excessive. Fall-Out Benefits The directors considered that the Adviser benefits from soft dollar arrangements whereby it receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis. The directors noted that since the Fund does not engage in brokerage transactions, the Adviser does not receive soft dollar benefits in respect of portfolio transactions of the Fund. The directors also noted that a subsidiary of the Adviser provides certain shareholder services to the Fund and receives compensation from the Fund for such services. The directors recognized that the Adviser's profitability would be somewhat lower if the Adviser's subsidiary did not receive the benefits described above. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund. Investment Results In addition to the information reviewed by the directors in connection with the meeting, the directors receive detailed comparative performance information for the Fund at each regular Board meeting during the year. At the meeting, the directors reviewed information prepared by the Adviser based on information obtained from Lipper showing performance of the Fund as compared to other funds in the Lipper Flexible Income Funds Average (the "Lipper Average") for periods ended June 30, 2006 over the year to date ("YTD"), 1-, 3-, 5- and 10-year and since inception periods (inception October 1993) and for each of the last ten calendar years, and as compared to the JP Morgan Emerging Markets Bond Index Plus (the "Index") for periods ended June 30, 2006 for the YTD, 1-, 3-, 5- and 10-year periods (information was not available for the since inception period). The directors noted that in the Lipper Average comparison (seven funds in the YTD period, including the Fund and ACM Managed Income Fund, Inc., another closed-end fund advised by the Adviser), the Fund's performance was significantly above the Lipper median in all periods reviewed except in the YTD period when it was materially below the Lipper median and that the Fund's calendar year performance was also significantly above the Lipper median in every year except 2002 when it was materially below the Lipper median and 1998 and 2000 when it was significantly below the Lipper median. The directors further noted that the Fund outperformed the Index in the YTD, 3- and 5-year periods and underperformed the Index in the 1- and 10-year periods. Based on their review, the directors concluded that the Fund's relative performance over time was satisfactory. 56 o ACM MANAGED DOLLAR INCOME FUND Advisory Fees and Other Expenses The directors considered the latest fiscal period actual management fees paid by the Fund (advisory fees paid to the Adviser and administration fees paid to an entity that is not affiliated with the Adviser for administrative services) and information prepared by Lipper concerning fee rates paid by other funds in the same Lipper category as the Fund. They compared the combined advisory and administration fees paid by the Fund to the advisory fees of other funds where there is no separate administrator. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors noted that in connection with the settlement of the market timing matter with the New York Attorney General ("NYAG"), the Adviser agreed to material reductions (averaging 20%) in the fee schedules of most of the open-end funds sponsored by the Adviser (other than money market funds) and that the open-end funds had benefited from such reductions since 2004. The directors noted that the Fund's contractual advisory fee rate was the same as the rate charged to comparable open-end funds managed by the Adviser prior to the reductions made as a result of the settlement with the NYAG. The directors had previously requested a reduction in the advisory fees of the Fund to the levels charged to comparable open-end funds managed by the Adviser, and had considered the Adviser's position that no fee adjustments were warranted in the Fund's particular circumstances on several occasions. The Adviser informed the directors that there are no institutional products managed by it that have a substantially similar investment style as the Fund. The directors reviewed information in the Adviser's Form ADV and noted that it charges institutional clients lower fees for advising comparably sized accounts using strategies that differ from those of the Fund but which involve investments in securities of the same type that the Fund invests in (i.e., fixed income). They had previously received an oral presentation from the Adviser that supplemented such information. The Adviser reviewed with the directors the significant differences in the scope of services it provides to institutional clients and to the Fund. For example, the Advisory Agreement requires the Adviser to provide, in addition to investment advice, office facilities and officers (including officers to provide required certifications). The Adviser also coordinates the provision of services to the Fund by non-affiliated service providers and is responsible for the compensation of the Fund's Independent Compliance Officer and certain related expenses. The provision of these non-advisory services involves costs and exposure to liability. The Adviser explained that many of these services normally are not provided to non-investment company clients and that fees charged to the Fund reflect the costs and risks of the additional obligations. In light of these facts, the directors did not place significant weight on these fee comparisons. ACM MANAGED DOLLAR INCOME FUND o 57 The directors also considered the total expense ratio of the Fund in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of comparable funds and an Expense Universe as a broader group, consisting of all funds in the Fund's investment classification/ objective with a similar load type as the Fund. The directors noted that because of the small number of funds in the Fund's Lipper category, at the request of the Adviser and the Fund's Senior Officer, Lipper expanded the Expense Group and Expense Universe of the Fund to include funds that are allowed to utilize leverage but do not do so. The expense ratio of the Fund was based on the Fund's latest fiscal year expense ratio. The directors recognized that the expense ratio information for the Fund potentially reflected on the Adviser's provision of services, as the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that the expense ratios of some funds in the Fund's Lipper category also were lowered by waivers or reimbursements by those funds' investment advisers, which in some cases were voluntary and perhaps temporary. The information reviewed by the directors showed that the Fund's latest fiscal period actual management fees of 87 basis points (combined advisory fee paid under the Advisory Agreement and an administration fee paid to an entity that is not affiliated with the Adviser) were significantly higher than the Expense Group median and slightly higher than the Expense Universe median. The directors also noted that the Fund's total expense ratio was the same as the Expense Group median and significantly higher than the Expense Universe median. The directors also noted that the Adviser had recently reviewed with them steps being taken that are intended to reduce expenses of the AllianceBernstein Funds. The directors concluded that the Fund's expense ratio was acceptable. Economies of Scale The directors considered that the Fund is a closed-end Fund and that it was not expected to have meaningful asset growth as a result. In such circumstances, the directors did not view the potential for realization of economies of scale as the Fund's assets grow to be a material factor in their deliberations. The directors noted that if the Fund's net assets were to increase materially as a result of, e.g., an acquisition or rights offering, they would review whether potential economies of scale would be realized by the Adviser. 58 o ACM MANAGED DOLLAR INCOME FUND 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) 219-4218. The Fund also distributes its daily net asset value to various financial publications or independent organizations such as Lipper, Inc., Morningstar, Inc. and Bloomberg. 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." Information Regarding New or Amended Investment Policies The Fund's Board of Directors recently approved a broader investment policy that permits the Fund to invest in other investment companies to the full extent permitted by the Investment Company Act of 1940 (the "1940 Act") and the rules thereunder. The Board of Directors also approved the Fund's investments of uninvested cash balances in an affiliated money market fund as permitted by Rule 12d1-1 under the 1940 Act. 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 ComputerShare 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 ComputerShare Trust Company, N.A. For questions concerning Shareholder account information, or if you would like a brochure describing the Dividend Reinvestment Plan, please call ComputerShare Trust Company, N.A. at (800) 219-4218. ACM MANAGED DOLLAR INCOME FUND o 59 THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS ALLIANCEBERNSTEIN FAMILY OF FUNDS - -------------------------------------------- Wealth Strategies Funds - -------------------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy - -------------------------------------------- Blended Style Funds - -------------------------------------------- U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio - -------------------------------------------- Growth Funds - -------------------------------------------- Domestic Growth Fund Mid-Cap Growth Fund Large Cap Growth Fund Small Cap Growth Portfolio Global & International Global Health Care Fund Global Research Growth Fund Global Technology Fund Greater China '97 Fund International Growth Fund International Research Growth Fund - -------------------------------------------- Value Funds - -------------------------------------------- Domestic Balanced Shares Focused Growth & Income Fund Growth & Income Fund Real Estate Investment Fund Small/Mid-Cap Value Fund Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund - -------------------------------------------- Taxable Bond Funds - -------------------------------------------- Global Government Income Trust* Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Intermediate Bond Portfolio* Short Duration Portfolio U.S. Government Portfolio - -------------------------------------------- Municipal Bond Funds - -------------------------------------------- National Michigan Insured National Minnesota Arizona New Jersey California New York Insured California Ohio Florida Pennsylvania Massachusetts 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 - -------------------------------------------- Retirement Strategies Funds - -------------------------------------------- 2000 Retirement Strategy 2005 Retirement Strategy 2010 Retirement Strategy 2015 Retirement Strategy 2020 Retirement Strategy 2025 Retirement Strategy 2030 Retirement Strategy 2035 Retirement Strategy 2040 Retirement Strategy 2045 Retirement Strategy 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 website 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 February 1, 2006, Global Government Income Trust was named Americas Government Income Trust and Intermediate Bond Portfolio was named Quality Bond Portfolio. ** 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. 60 o ACM MANAGED DOLLAR INCOME FUND Privacy Notice AllianceBernstein, the AllianceBernstein Family of Funds and AllianceBernstein Investments, Inc. (collectively, "AllianceBernstein" 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, AllianceBernstein 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 AllianceBernstein'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 INVESTMENTS ACMV-0151-0906 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant's code of ethics is filed herewith as Exhibit 12(a)(1). (b) During the period covered by this report, no material amendments were made to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors has determined that independent directors David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial experts. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) - (c) The following table sets forth the aggregate fees billed by the independent registered public accounting firm Ernst & Young LLP, for the Fund's last two fiscal years for professional services rendered for: (i) the audit of the Fund's annual financial statements included in the Fund's annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Fund's financial statements and are not reported under (i), which include advice and education related to accounting and auditing issues and quarterly press release review (for those Funds that issue quarterly press releases), and preferred stock maintenance testing (for those Funds that issue preferred stock); and (iii) tax compliance, tax advice and tax return preparation. Audit-Related Audit Fees Fees Tax Fees ---------- ------------- -------- 2005 $53,000 $8,355 $18,304 2006 $56,000 $8,460 $19,375 (d) Not applicable. (e) (1) Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Fund's Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Fund's independent registered public accounting firm. The Fund's Audit Committee policies and procedures also require pre-approval of all audit and non-audit services provided to the Adviser and Service Affiliates to the extent that these services are directly related to the operations or financial reporting of the Fund. (e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in the table under Item 4 (a) - (c) are for services pre-approved by the Fund's Audit Committee. (f) Not applicable. (g) The following table sets forth the aggregate non-audit services provided to the Fund, the Fund's Adviser and entities that control, are controlled by or under common control with the Adviser that provide ongoing services to the Fund, which include conducting an annual internal control report pursuant to Statement on Auditing Standards No. 70 ("Service Affiliates"): Total Amount of Foregoing Column Pre-approved by the All Fees for Audit Committee Non-Audit Services (Portion Comprised of Provided to the Audit Related Fees) Portfolio, the Adviser (Portion Comprised of and Service Affiliates Tax Fees) ---------------------- --------------------- 2005 $903,852 [ $196,659 ] ( $178,355 ) ( $18,304 ) 2006 $691,479 [ $161,506 ] ( $142,131 ) ( $19,375 ) (h) The Audit Committee of the Fund has considered whether the provision of any non-audit services not pre-approved by the Audit Committee provided by the Fund's independent auditor to the Adviser and Service Affiliates is compatible with maintaining the auditor's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The audit committee members are as follows: David H. Dievler William H. Foulk, Jr John H. Dobkin D. James Guzy Michael J. Downey Nancy P. Jacklin Marshall C. Turner, Jr. 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. Statement of Policies and Procedures for Proxy Voting October 2006 1. Introduction As a registered investment adviser, AllianceBernstein L.P. ("AllianceBernstein", "we" or "us") has a fiduciary duty to act solely in the best interests of our clients. We recognize that this duty requires us to vote client securities in a timely manner and make voting decisions that are in the best interests of our clients. Consistent with these obligations, we will disclose our clients' voting records only to them and as required by mutual fund vote disclosure regulations. In addition, the proxy committees may, after careful consideration, choose to respond to surveys regarding past votes. This statement is intended to comply with Rule 206(4)-6 of the Investment Advisers Act of 1940. It sets forth our policies and procedures for voting proxies for our discretionary investment advisory clients, including investment companies registered under the Investment Company Act of 1940. This statement applies to AllianceBernstein's growth, value and blend investment groups investing on behalf of clients in both US and non-US securities. 2. Proxy Policies This statement is designed to be responsive to the wide range of proxy voting subjects that can have a significant effect on the investment value of the securities held in our clients' accounts. These policies are not exhaustive due to the variety of proxy voting issues that we may be required to consider. AllianceBernstein reserves the right to depart from these guidelines in order to avoid voting decisions that we believe may be contrary to our clients' best interests. In reviewing proxy issues, we will apply the following general policies: 2.1 Corporate Governance AllianceBernstein's proxy voting policies recognize the importance of good corporate governance in ensuring that management and the board of directors fulfill their obligations to the shareholders. We favor proposals promoting transparency and accountability within a company. We will vote for proposals providing for equal access to the proxy materials so that shareholders can express their views on various proxy issues. We also support the appointment of a majority of independent directors on key committees and separating the positions of chairman and chief executive officer. Finally, because we believe that good corporate governance requires shareholders to have a meaningful voice in the affairs of the company, we will support shareholder proposals that request that companies amend their by-laws to provide that director nominees be elected by an affirmative vote of a majority of the votes cast. 2.2 Elections of Directors Unless there is a proxy fight for seats on the Board or we determine that there are other compelling reasons for withholding votes for directors, we will vote in favor of the management proposed slate of directors. That said, we believe that directors have a duty to respond to shareholder actions that have received significant shareholder support. We may withhold votes for directors (or vote against in non-US markets) that fail to act on key issues such as failure to implement proposals to declassify boards, failure to implement a majority vote requirement, failure to submit a rights plan to a shareholder vote or failure to act on tender offers where a majority of shareholders have tendered their shares. In addition, we will withhold votes for directors who fail to attend at least seventy-five percent of board meetings within a given year without a reasonable excuse. Finally, we may abstain or vote against directors of non-U.S. issuers where there is insufficient information about the nominees disclosed in the proxy statement. 2.3 Appointment of Auditors AllianceBernstein believes that the company remains in the best position to choose the auditors and will generally support management's recommendation. However, we recognize that there may be inherent conflicts when a company's independent auditor performs substantial non-audit related services for the company. The Sarbanes-Oxley Act of 2002 prohibited certain categories of services by auditors to US issuers, making this issue less prevalent in the US. Nevertheless, in reviewing a proposed auditor, we will consider the fees paid for non-audit services relative to total fees as well as if there are other reasons to question the independence of the auditors. 2.4 Changes in Legal and Capital Structure Changes in a company's charter, articles of incorporation or by-laws are often technical and administrative in nature. Absent a compelling reason to the contrary, AllianceBernstein will cast its votes in accordance with the company's management on such proposals. However, we will review and analyze on a case-by-case basis any non-routine proposals that are likely to affect the structure and operation of the company or have a material economic effect on the company. For example, we will generally support proposals to increase authorized common stock when it is necessary to implement a stock split, aid in a restructuring or acquisition or provide a sufficient number of shares for an employee savings plan, stock option or executive compensation plan. However, a satisfactory explanation of a company's intentions must be disclosed in the proxy statement for proposals requesting an increase of greater than one hundred percent of the shares outstanding. We will oppose increases in authorized common stock where there is evidence that the shares will be used to implement a poison pill or another form of anti-takeover device. We will support shareholder proposals that seek to eliminate dual class voting structures. 2.5 Corporate Restructurings, Mergers and Acquisitions AllianceBernstein believes proxy votes dealing with corporate reorganizations are an extension of the investment decision. Accordingly, we will analyze such proposals on a case-by-case basis, weighing heavily the views of our research analysts that cover the company and our investment professionals managing the portfolios in which the stock is held. 2.6 Proposals Affecting Shareholder Rights AllianceBernstein believes that certain fundamental rights of shareholders must be protected. We will generally vote in favor of proposals that give shareholders a greater voice in the affairs of the company and oppose any measure that seeks to limit those rights. However, when analyzing such proposals we will weigh the financial impact of the proposal against the impairment of shareholder rights. 2.7 Anti-Takeover Measures AllianceBernstein believes that measures that impede corporate transactions such as takeovers or entrench management not only infringe on the rights of shareholders but may also have a detrimental effect on the value of the company. We will generally oppose proposals, regardless of whether they are advanced by management or shareholders, the purpose or effect of which is to entrench management or excessively or inappropriately dilute shareholder ownership. Conversely, we support proposals that would restrict or otherwise eliminate anti-takeover or anti-shareholder measures that have already been adopted by corporate issuers. For example, we will support shareholder proposals that seek to require the company to submit a shareholder rights plan to a shareholder vote. We will evaluate, on a case-by-case basis, proposals to completely redeem or eliminate such plans. Furthermore, we will generally oppose proposals put forward by management (including the authorization of blank check preferred stock, classified boards and supermajority vote requirements) that appear to be anti-shareholder or intended as management entrenchment mechanisms. 2.8 Executive Compensation AllianceBernstein believes that company management and the compensation committee of the board of directors should, within reason, be given latitude to determine the types and mix of compensation and benefit awards offered to company employees. Whether proposed by a shareholder or management, we will review proposals relating to executive compensation plans on a case-by-case basis to ensure that the long-term interests of management and shareholders are properly aligned. In general, we will analyze the proposed plan to ensure that shareholder equity will not be excessively diluted taking into account shares available for grant under the proposed plan as well as other existing plans. We generally will oppose plans that have below market value grant or exercise prices on the date of issuance or permit repricing of underwater stock options without shareholder approval. Other factors such as the company's performance and industry practice will generally be factored into our analysis. We generally will support shareholder proposals seeking additional disclosure of executive and director compensation. This policy includes proposals that seek to specify the measurement of performance based compensation. In addition, we will support proposals requiring managements to submit severance packages that exceed 2.99 times the sum of an executive officer's base salary plus bonus that are triggered by a change in control to a shareholder vote. Finally, we will support shareholder proposals requiring companies to expense stock options because we view them as a large corporate expense that should be appropriately accounted for. 2.9 Social and Corporate Responsibility AllianceBernstein will review and analyze on a case-by-case basis proposals relating to social, political and environmental issues to determine whether they will have a financial impact on shareholder value. We will vote against proposals that are unduly burdensome or result in unnecessary and excessive costs to the company. We may abstain from voting on social proposals that do not have a readily determinable financial impact on shareholder value. 3. Proxy Voting Procedures 3.1 Proxy Voting Committees Our growth and value investment groups have formed separate proxy voting committees to establish general proxy policies for AllianceBernstein and consider specific proxy voting matters as necessary. These committees periodically review these policies and new types of corporate governance issues, and decide how we should vote on proposals not covered by these policies. When a proxy vote cannot be clearly decided by an application of our stated policy, the proxy committee will evaluate the proposal. In addition, the committees, in conjunction with the analyst that covers the company, may contact corporate management and interested shareholder groups and others as necessary to discuss proxy issues. Members of the committee include senior investment personnel and representatives of the Legal and Compliance Department. The committees may also evaluate proxies where we face a potential conflict of interest (as discussed below). Finally, the committees monitor adherence to these policies. 3.2 Conflicts of Interest AllianceBernstein recognizes that there may be a potential conflict of interest when we vote a proxy solicited by an issuer whose retirement plan we manage, or we administer, who distributes AllianceBernstein sponsored mutual funds, or with whom we or an employee has another business or personal relationship that may affect how we vote on the issuer's proxy. Similarly, AllianceBernstein may have a potential material conflict of interest when deciding how to vote on a proposal sponsored or supported by a shareholder group that is a client. We believe that centralized management of proxy voting, oversight by the proxy voting committees and adherence to these policies ensures that proxies are voted with only our clients' best interests in mind. Additionally, we have implemented procedures to ensure that our votes are not the product of a material conflict of interests, including: (i) on an annual basis, the proxy committees will take reasonable steps to evaluate the nature of AllianceBernstein's and our employees' material business and personal relationships (and those of our affiliates) with any company whose equity securities are held in client accounts and any client that has sponsored or has material interest in a proposal upon which we will be eligible to vote; (ii) requiring anyone involved in the decision making process to disclose to the chairman of the appropriate proxy committee any potential conflict that they are aware of (including personal relationships) and any contact that they have had with any interested party regarding a proxy vote; (iii) prohibiting employees involved in the decision making process or vote administration from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties; and (iv) where a material conflict of interests exists, reviewing our proposed vote by applying a series of objective tests and, where necessary, considering the views of third party research services to ensure that our voting decision is consistent with our clients' best interests. Because under certain circumstances AllianceBernstein considers the recommendation of third party research services, the proxy committees will take reasonable steps to verify that any third party research service is in fact independent based on all of the relevant facts and circumstances. This includes reviewing the third party research service's conflict management procedures and ascertaining, among other things, whether the third party research service (i) has the capacity and competency to adequately analyze proxy issues; and (ii) can make such recommendations in an impartial manner and in the best interests of our clients. 3.3 Proxies of Certain Non-US Issuers Proxy voting in certain countries requires "share blocking." Shareholders wishing to vote their proxies must deposit their shares shortly before the date of the meeting with a designated depositary. During this blocking period, shares that will be voted at the meeting cannot be sold until the meeting has taken place and the shares are returned to the clients' custodian banks. Absent compelling reasons to the contrary, AllianceBernstein believes that the benefit to the client of exercising the vote does not outweigh the cost of voting (i.e. not being able to sell the shares during this period). Accordingly, if share blocking is required we generally abstain from voting those shares. In addition, voting proxies of issuers in non-US markets may give rise to a number of administrative issues that may prevent AllianceBernstein from voting such proxies. For example, AllianceBernstein may receive meeting notices without enough time to fully consider the proxy or after the cut-off date for voting. Other markets require AllianceBernstein to provide local agents with power of attorney prior to implementing AllianceBernstein's voting instructions. Although it is AllianceBernstein's policy to seek to vote all proxies for securities held in client accounts for which we have proxy voting authority, in the case of non-US issuers, we vote proxies on a best efforts basis. 3.4 Loanned Securities Many clients of AllianceBernstein have entered into securities lending arrangements with agent lenders to generate additional revenue. AllianceBernstein will not be able to vote securities that are on loan under these types of arrangements. However, under rare circumstances, for voting issues that may have a significant impact on the investment, we may request that clients recall securities that are on loan if we determine that the benefit of voting outweighs the costs and lost revenue to the client or fund and the administrative burden of retrieving the securities. 3.5 Proxy Voting Records You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein's web site at www.alliancebernstein.com, go to the Securities and Exchange Commission's web site at www.sec.gov or call AllianceBernstein at (800) 227-4618. ITEM 8 PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The day-to-day management of, and investment decisions for, the Fund's portfolio are made by the Global Fixed Income Team and Global Credit Team. While all members of the teams work jointly to determine the majority of the investment strategy including security selection for the Fund, Messrs. Paul J. DeNoon and Gershon M. Distenfeld, members of the Global Fixed Income Emerging Market Investment Team and Global Credit Team, respectively, are primarily responsible for the day-to-day management of the Fund's portfolio. The following table sets forth when each person became involved in the management of the Fund, and each person's principal occupation during the past five years: Employee; Year; Title Principal Occupation During the Past Five (5) Years - ---------------------------------------------------------------- Gershon Distenfeld; since Vice President of AB with which May 2005-Vice President of he has been associated in a AllianceBernstein L.P. ("AB") substantially similar capacity to his current position since prior to 2001. - ---------------------------------------------------------------- Paul DeNoon; since 2001-Senior Senior Vice President of AB, Vice President of AB with which he has been associated in a substantially similar capacity to his current position since prior to 2001 and Director of Emerging Market Debt. (a) (2) The following tables provide information regarding registered investment companies other than the Fund, other pooled investment vehicles and other accounts over which the Fund's portfolio managers also have day-to-day management responsibilities. The tables provide the numbers of such accounts, the total assets in such accounts and the number of accounts and total assets whose fees are based on performance. The information is provided as of the Fund's fiscal year ended September 30, 2006. REGISTERED INVESTMENT COMPANIES (excluding the Fund) - ---------------------------------------------------------------------------- Number of Total Assets Registered of Registered Total Number Total Assets Investment Investment of Registered of Registered Companies Companies Investment Investment Managed with Managed with Portfolio Companies Companies Performance- Performance- Manager Managed Managed based Fees based Fees - --------------------------------------------------------------------------- Paul DeNoon 9 $5,070,000,000 NONE NONE - --------------------------------------------------------------------------- Gershon Distenfeld 3 $ 867,000,000 NONE NONE - --------------------------------------------------------------------------- POOLED INVESTMENT VEHICLES - ---------------------------------------------------------------------------- Number of Total Assets Pooled of Pooled Total Number Total Assets Investment Investment of Pooled of Pooled Vehicles Vehicles Investment Investment Managed with Managed with Portfolio Vehicles Vehicles Performance- Performance- Managed Managed Managed based Fees based Fees - --------------------------------------------------------------------------- Paul DeNoon NONE $12,214,000,000 NONE NONE - --------------------------------------------------------------------------- Gershon Distenfeld 1 NONE NONE NONE - --------------------------------------------------------------------------- OTHER ACCOUNTS - ---------------------------------------------------------------------------- Number of Other Total Assets Total Number Total Assets Accounts of Other of Other of Other Managed with Accounts with Portfolio Accounts Accounts Performance- Performance- Managed Managed Managed based Fees based Fees - --------------------------------------------------------------------------- Paul DeNoon NONE NONE NONE NONE - --------------------------------------------------------------------------- Gershon Distenfeld 1 $57,000,000 NONE NONE - --------------------------------------------------------------------------- Investment Professional Conflict of Interest Disclosure As an investment adviser and fiduciary, Alliance owes its clients and shareholders an undivided duty of loyalty. We recognize that conflicts of interest are inherent in our business and accordingly have developed policies and procedures (including oversight monitoring) reasonably designed to detect, manage and mitigate the effects of actual or potential conflicts of interest in the area of employee personal trading, managing multiple accounts for multiple clients, including AllianceBernstein Mutual Funds, and allocating investment opportunities. Investment professionals, including portfolio managers and research analysts, are subject to the above-mentioned policies and oversight monitoring to ensure that all clients are treated equitably. We place the interests of our clients first and expect all of our employees to meet their fiduciary duties. Employee Personal Trading. Alliance has adopted a Code of Business Conduct and Ethics that is designed to detect and prevent conflicts of interest when investment professionals and other personnel of Alliance own, buy or sell securities which may be owned by, or bought or sold for, clients. Personal securities transactions by an employee may raise a potential conflict of interest when an employee owns or trades in a security that is owned or considered for purchase or sale by a client, or recommended for purchase or sale by an employee to a client. Subject to the reporting requirements and other limitations of its Code of Business Conduct and Ethics, Alliance permits its employees to engage in personal securities transactions, and also allows them to acquire investments in the AllianceBernstein Mutual Funds through direct purchase, 401K/profit sharing plan investment and/or notionally in connection with deferred incentive compensation awards. Alliance's Code of Ethics and Business Conduct requires disclosure of all personal accounts and maintenance of brokerage accounts with designated broker-dealers approved by Alliance. The Code also requires preclearance of all securities transactions and imposes a one-year holding period for securities purchased by employees to discourage short-term trading. Managing Multiple Accounts for Multiple Clients. Alliance has compliance policies and oversight monitoring in place to address conflicts of interest relating to the management of multiple accounts for multiple clients. Conflicts of interest may arise when an investment professional has responsibilities for the investments of more than one account because the investment professional may be unable to devote equal time and attention to each account. The investment professional or investment professional teams for each client may have responsibilities for managing all or a portion of the investments of multiple accounts with a common investment strategy, including other registered investment companies, unregistered investment vehicles, such as hedge funds, pension plans, separate accounts, collective trusts and charitable foundations. Among other things, Alliance's policies and procedures provide for the prompt dissemination to investment professionals of initial or changed investment recommendations by analysts so that investment professionals are better able to develop investment strategies for all accounts they manage. In addition, investment decisions by investment professionals are reviewed for the purpose of maintaining uniformity among similar accounts and ensuring that accounts are treated equitably. No investment professional that manages client accounts carrying performance fees is compensated directly or specifically for the performance of those accounts. Investment professional compensation reflects a broad contribution in multiple dimensions to long-term investment success for our clients and is not tied specifically to the performance of any particular client's account, nor is it directly tied to the level or change in level of assets under management. Allocating Investment Opportunities. Alliance has policies and procedures intended to address conflicts of interest relating to the allocation of investment opportunities. These policies and procedures are designed to ensure that information relevant to investment decisions is disseminated promptly within its portfolio management teams and investment opportunities are allocated equitably among different clients. The investment professionals at Alliance routinely are required to select and allocate investment opportunities among accounts. Portfolio holdings, position sizes, and industry and sector exposures tend to be similar across similar accounts, which minimizes the potential for conflicts of interest relating to the allocation of investment opportunities. Nevertheless, investment opportunities may be allocated differently among accounts due to the particular characteristics of an account, such as size of the account, cash position, tax status, risk tolerance and investment restrictions or for other reasons. Alliance's procedures are also designed to prevent potential conflicts of interest that may arise when Alliance has a particular financial incentive, such as a performance-based management fee, relating to an account. An investment professional may perceive that he or she has an incentive to devote more time to developing and analyzing investment strategies and opportunities or allocating securities preferentially to accounts for which Alliance could share in investment gains. To address these conflicts of interest, Alliance's policies and procedures require, among other things, the prompt dissemination to investment professionals of any initial or changed investment recommendations by analysts; the aggregation of orders to facilitate best execution for all accounts; price averaging for all aggregated orders; objective allocation for limited investment opportunities (e.g., on a rotational basis) to ensure fair and equitable allocation among accounts; and limitations on short sales of securities. These procedures also require documentation and review of justifications for any decisions to make investments only for select accounts or in a manner disproportionate to the size of the account. (a) (3) Portfolio Manager Compensation Alliance's compensation program for investment professionals is designed to be competitive and effective in order to attract and retain the highest caliber employees. The compensation program for investment professionals is designed to reflect their ability to generate long-term investment success for our clients, including shareholders of the AllianceBernstein Mutual Funds. Investment professionals do not receive any direct compensation based upon the investment returns of any individual client account, nor is compensation tied directly to the level or change in level of assets under management. Investment professionals' annual compensation is comprised of the following: (i) Fixed base salary: This is generally the smallest portion of compensation. The base salary is a relatively low, fixed salary within a similar range for all investment professionals. The base salary is determined at the outset of employment based on level of experience, does not change significantly from year-to-year and hence, is not particularly sensitive to performance. (ii) Discretionary incentive compensation in the form of an annual cash bonus: Alliance's overall profitability determines the total amount of incentive compensation available to investment professionals. This portion of compensation is determined subjectively based on qualitative and quantitative factors. In evaluating this component of an investment professional's compensation, Alliance considers the contribution to his/her team or discipline as it relates to that team's overall contribution to the long-term investment success, business results and strategy of Alliance. Quantitative factors considered include, among other things, relative investment performance (e.g., by comparison to competitor or peer group funds or similar styles of investments, and appropriate, broad-based or specific market indices), and consistency of performance. There are no specific formulas used to determine this part of an investment professional's compensation and the compensation is not tied to any pre-determined or specified level of performance. Alliance also considers qualitative factors such as the complexity and risk of investment strategies involved in the style or type of assets managed by the investment professional; success of marketing/business development efforts and client servicing; seniority/length of service with the firm; management and supervisory responsibilities; and fulfillment of Alliance's leadership criteria. (iii) Discretionary incentive compensation in the form of awards under Alliance's Partners Compensation Plan ("deferred awards"): Alliance's overall profitability determines the total amount of deferred awards available to investment professionals. The deferred awards are allocated among investment professionals based on criteria similar to those used to determine the annual cash bonus. There is no fixed formula for determining these amounts. Deferred awards, for which there are various investment options, vest over a four-year period and are generally forfeited if the employee resigns or Alliance terminates his/her employment. Investment options under the deferred awards plan include many of the same AllianceBernstein Mutual Funds offered to mutual fund investors, thereby creating a close alignment between the financial interests of the investment professionals and those of Alliance's clients and mutual fund shareholders with respect to the performance of those mutual funds. Alliance also permits deferred award recipients to allocate up to 50% of their award to investments in Alliance's publicly traded equity securities.(1) (iv) Contributions under Alliance's Profit Sharing/401(k) Plan: The contributions are based on Alliance's overall profitability. The amount and allocation of the contributions are determined at the sole discretion of Alliance. (a) (4) The dollar range of the Fund's equity securities owned directly or beneficially by the Fund's portfolio managers as of the Fund's fiscal year ended September 31, 2006 is set forth below: DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND - --------------------------------------------------------- Gershon Distenfeld None Paul DeNoon None ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. REGISTRANT PURCHASES OF EQUITY SECURITIES
(d) (c) * Maximum Total Number Number (or of Shares Approximate (or Units) Dollar Value) Purchased of Shares (a) as Part (or Units) Total Number (b) of Publicly that May Yet of Shares Average Price Announced Be Purchased (or Units) Paid per Share Plans or Under the Plans Period Purchased (or Unit) Programs or Programs - ------------------------------------------------------------------------------------------------------- June 1, 2006 - June 30, 2006 1,078,616 $ 7.82 1,078,616 None
* On May 23, 2006, ACM Managed Dollar Income Fund, Inc. (the "Fund") announced the basic terms of a tender offer conducted during the second quarter of 2006. Under the terms approved by the Fund's Board of Directors, the Fund, pursuant to due notification, commenced a tender offer on May 26, 2006 for 1,078,616 shares of its common stock representing approximately 5% of the Fund's outstanding shares. The offer was for cash at a price equal to the net asset value per share determined as of the close of the regular trading session of the New York Stock Exchange on the date after the date the offer expired. The offer expired at 12:00 Midnight Eastern Time on June 23, 2006. A total of 4,144,486 shares were properly tendered and not withdrawn prior to 5:00 p.m. Eastern Time on June 27, 2006, the final date for withdrawals. The Fund accepted 1,078,616 shares for payment at $7.82 per share. On a pro rated basis, in accordance with the terms of the tender offer, 26% of the shares so tendered by each tendering stockholder were accepted for payment. The offer was in fulfillment of an undertaking in connection with the initial public offering of shares stated in the Fund's prospectus dated October 22, 1993. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund's Board of Directors since the Fund last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no changes in the registrant's internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT ---------- ------------------------ 12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2 hereof 12 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): ACM Managed Income Fund, Inc. By: /s/ Marc O. Mayer ----------------------- Marc O. Mayer President Date: November 28, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Marc O. Mayer ----------------------- Marc O. Mayer President Date: November 28, 2006 By: /s/ Joseph J. Mantineo ----------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer Date: October 27, 2006 (1) Prior to 2002, investment professional compensation also included discretionary long-term incentive in the form of restricted grants of Alliance Capital's Master Limited Partnership Units. EX-99.CODE ETH 2 edg12049-ethics.txt Exhibit 12(a)(1) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code The AllianceBernstein Mutual Fund Complex's code of ethics (this "Code") for the investment companies within the complex (collectively, the "Funds" and each, a "Company") applies to each Company's Principal Executive Officer, Principal Financial and Accounting Officer and Controller (the "Covered Officers," each of whom is set forth in Exhibit A) for the purpose of promoting: * honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company; * compliance with applicable laws and governmental rules and regulations; * the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and * accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company. For the purposes of this Code, members of the Covered Officer's family include his or her spouse, children, stepchildren, financial dependents, parents and stepparents. Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as "affiliated persons" of the Company. The Company's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Company's Board of Directors or Trustees (the "Directors") that the Covered Officers may also be officers or employees of one or more of the other Funds or of other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. Each Covered Officer must: * not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Company whereby the Covered Officer would benefit personally to the detriment of the Company; * not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Company; * not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; There are some conflict of interest situations, whether involving a Covered Officer directly or a member of his family, that should always be discussed with the General Counsel of Alliance Capital Management L.P.(the "General Counsel"), if material. Examples of these include: * service as a director on the board of directors or trustees of any public or private company (other than a not-for-profit organization); * the receipt of any non-nominal gifts; * the receipt of any entertainment from any company with which the Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; * any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; * a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance * Each Covered Officer should familiarize himself with the disclosure requirements and disclosure controls and procedures generally applicable to the Company; * each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations; * each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and * it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: * upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the General Counsel that he has received, read, and understands the Code; * annually thereafter affirm to the General Counsel that he has complied with the requirements of the Code; * complete at least annually a questionnaire relating to affiliations or other relationships that may give rise to conflicts of interest; * not retaliate against any other Covered Officer or any employee of the Company or their affiliated persons for reports of potential violations that are made in good faith; and * notify the General Counsel promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, waivers sought by a Covered Officer will be considered by the Company's Audit Committee (the "Committee"). The Company will follow these procedures in investigating and enforcing this Code: * the General Counsel will take all appropriate action to investigate any potential violations reported to him; * if, after such investigation, the General Counsel believes that no material violation has occurred, the General Counsel is not required to take any further action; * any matter that the General Counsel believes is a material violation will be reported to the Committee; * if the Committee concurs that a material violation has occurred, it will inform and make a recommendation to the Directors, who will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; * the Committee will be responsible for granting waivers, as appropriate; and * any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Company for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Company, the Company's adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, it is understood that this Code is in all respects separate and apart from, and operates independently of, any such policies and procedures. In particular, the Company's and its investment adviser's and principal underwriter's codes of ethics under Rule 17j-l under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Directors, including a majority of independent directors. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Directors, the investment adviser, their counsel, counsel to the Company and, if deemed appropriate by the Directors of the Company, to the Directors of the other Funds. VIII. Internal Use The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. Date: July 22, 2003, as amended March 17, 2004 Exhibit A Persons Covered by this Code of Ethics Principal Executive Officer Principal Financial and Accounting Officer Controller EX-99.CERT 3 edg12049_ex302.txt Exhibit 12(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, President of ACM Managed Dollar Income Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of ACM Managed Dollar Income Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 28, 2006 /s/ Marc O. Mayer ----------------------- Marc O. Mayer President Exhibit 12(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Joseph J. Mantineo, Treasurer and Chief Financial Officer of ACM Managed Dollar Income Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of ACM Managed Dollar Income Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 28, 2006 /s/ Joseph J. Mantineo ----------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer EX-99.906 CERT 4 edg12049_ex906.txt EXHIBIT 12(c) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of ACM Managed Dollar Income Fund, Inc. (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended September 30, 2006 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: November 28, 2006 By: /s/ Marc O. Mayer ------------------------ Marc O. Mayer President By: /s/ Joseph J. Mantineo ------------------------ Joseph J. Mantineo Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----