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CLOSED END
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ACM Managed
Dollar Income Fund
Annual Report
September 30, 2001
[GRAPHIC OMITTED]
Alliance Capital [LOGO](R)
The Investment Professional's Choice
Investment Products Offered
---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
---------------------------
----------------------
LETTER TO SHAREHOLDERS
----------------------
LETTER TO SHAREHOLDERS
November 8, 2001
Dear Shareholder:
This report provides investment results, performance information and market
outlook for ACM Managed Dollar Income Fund (the "Fund") for the annual reporting
period ended September 30, 2001.
Investment Objective and Policies
This closed-end fund is designed for investors who seek high current income and
capital appreciation. To achieve this objective, it invests primarily in
high-yielding, high-risk U.S. and non-U.S. fixed income securities, denominated
in U.S. dollars, that we expect to benefit from improving economic and credit
fundamentals.
Investment Results
The following table shows how the Fund performed over the six- and 12-month
periods ended September 30, 2001. For comparison, we have included a composite
benchmark consisting of 65% of the J.P. Morgan Emerging Markets Bond Index Plus
(JPM EMBI+)--a standard measure of the performance of a basket of unmanaged
emerging market debt securities--and 35% of the Credit Suisse First Boston High
Yield Index (CSFB HYI)--a standard measure of the performance of a basket of
unmanaged U.S. high yield debt securities. We compare the Fund's performance to
this composite benchmark because it more closely resembles the composition of
the Fund's portfolio.
INVESTMENT RESULTS*
Periods Ended September 30, 2001
--------------------
Total Returns
--------------------
6 Months 12 Months
--------------------------------------------------------------------------------
ACM Managed
Dollar Income
Fund (NAV) -7.10% -10.08%
--------------------------------------------------------------------------------
J.P. Morgan
Emerging
Markets Bond
Index Plus -1.92% 1.77%
--------------------------------------------------------------------------------
Credit Suisse
First Boston
High Yield
Index -4.57% -4.92%
--------------------------------------------------------------------------------
Composite:
65%/35%
(65% JPM
EMBI+
35% CSFB
HYI) -2.85% -0.57%
--------------------------------------------------------------------------------
* The Fund's investment results represent total returns for the periods
shown and are based on the net asset value (NAV) of the Fund as of
September 30, 2001. All fees and expenses related to the operation of the
Fund have been deducted. Returns for the Fund include the reinvestment of
any distributions paid during the period. Past performance is no guarantee
of future results.
The unmanaged J.P. Morgan Emerging Markets Bond Index Plus is composed of
dollar-denominated restructured sovereign bonds; a large percentage of the
index is made up of Brady bonds. The unmanaged Credit Suisse First Boston
High Yield Index is a measure of lower-
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ACM MANAGED DOLLAR INCOME FUND o 1
----------------------
LETTER TO SHAREHOLDERS
----------------------
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. The composite is from inception of
the JPM EMBI+, which was 12/31/93. The indices are unmanaged and reflect
no fees or expenses. An investor cannot invest directly in an index, and
its results are not indicative of any specific investment, including ACM
Managed Dollar Income Fund.
Additional investment results appear on pages 6 - 8.
The Fund underperformed relative to its composite benchmark for both the six-
and 12-month periods ended September 30, 2001 primarily due to our emerging
market security selection. Additionally, the Fund's use of leverage, during a
time when asset prices declined, also contributed to the Fund's
underperformance.
As discussed in more detail in the market overview section, within the Fund's
emerging market allocation, our overweight position in Argentina significantly
hurt performance as concerns about the country's economic viability increased.
Contributing positively to performance was our underweight position in Brazil
and our overweight position in Russia.
Within the Fund's high yield allocation, our weighting in the telecommunication
and cable sectors detracted from performance, but this was more than offset by
our strong security selection. Over the past six-months, we have focused the
Fund on defensive sectors such as utilities, domestic cable and gaming.
Traditional cyclical sectors such as automotive, steel and metals have been
underweighted.
Market Overview
Global economic growth continued to decelerate since the last reporting period
six months ago. In the U.S., restrained capital spending, inventory reductions,
shrinking investment and weaker export performance significantly slowed the
economy. The events of September 11 had a severe impact on U.S. consumer and
investor confidence, key ingredients that were required for recovery. With the
economy slowing and underlying inflationary pressures subdued, the U.S. Federal
Reserve lowered interest rates 200 basis points from 5.00% to 3.00% and in late
May Congress passed a stimulative tax package. (On October 2 and November 6, the
Federal Reserve again reduced interest rates a total of 100 basis points to
2.00%--the lowest in four decades.) Growth for the second quarter of 2001 slowed
to 0.3%, and reported preliminary growth for the third quarter contracted to
-0.4%.
The emerging-market sector, as measured by the J.P. Morgan Emerging Markets Bond
Index Plus, produced a return of -1.92% during the six-month period due to poor
performance in Argentina and spillover weakness in Brazil. Although other
emerging market regions posted positive returns, Argentina and Brazil
significantly dampened the overall composite return as together they represent a
40% weight within the composite. The reporting period saw a wide divergence
between
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2 o ACM MANAGED DOLLAR INCOME FUND
----------------------
LETTER TO SHAREHOLDERS
----------------------
Latin countries which returned -7.10% and non-Latin countries which returned
11.77%.
Concern about Argentina's ability to continue servicing its debt caused the
country's bond prices to decline and resulted in the poorest individual country
return within the index, -19.81%. The country's credit rating was lowered twice
in the month of July. However, Argentina recouped some of its losses and was the
best monthly performer in August with the announcement of an International
Monetary Fund (IMF) bailout package and indication that the U.S. Treasury would
support Argentina.
However, at the time of this report, Argentina announced that the government
will seek to reduce financing costs on $95 billion of debt in an effort to avoid
outright default. Investors remain concerned, however, that Argentina's debt
proposal effectively constitutes a default. The country's economic officials
announced they would need to reduce annual debt interest payments between $3-$4
billion a year to free up resources to restart the country's ailing economy, now
in its fourth year of recession. To help spur the economy, the government is
implementing a range of tax cuts and other measures to spark spending, while
also pressing the 23 provinces to accept a cut in their guaranteed monthly
transfers.
Weakness in neighboring Brazil also dampened overall returns in the emerging
markets resulting in the second-worst individual country return at -8.03%.
Political uncertainty caused by recently held elections, coupled with prospects
for tighter and more expensive financing conditions, weakened the Brazilian real
(Brazil's currency) and renewed concerns about the country's large financing
needs. Turkey, which had posted weak results early in the year amidst a
financial crisis in February, rebounded, up 14.23%, as the IMF and World Bank
provided a favorable financing package. Other individual countries posting
positive returns included Russia at 18.73%, which continues to benefit from
economic reforms, positive growth and friendlier ties to the U.S.; Colombia at
11.67%; and Qatar at 6.16%.
The high-yield market, as represented by the Credit Suisse First Boston High
Yield Index, returned -4.57% for the six-month period. Market sentiment improved
dramatically after the Federal Reserve lowered interest rates in January and
issuers took advantage of the funding window. However, weakness in the equity
markets and the troubled telecommunications sector dampened overall returns
throughout the year.
Investors reacted to the September 11 attacks by selling high yield securities.
High yield securities reached 1000 basis points in yield over Treasuries by the
end of the reporting period.
Non-cyclical sectors outperformed cyclicals. The best performing industries for
the period included finance, food & drug, food/tobacco, health care,
pharmaceutical, housing, service and utility. The telecommunications and
wireless communications sectors, as well as the consumer durable sectors,
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ACM MANAGED DOLLAR INCOME FUND o 3
----------------------
LETTER TO SHAREHOLDERS
----------------------
underperformed the broader market. Inflows into high yield improved in 2001 and
high yield issuance rebounded from a five-year low of $41.6 billion in 2000 to
$60 billion during the first half of 2001. However, default rates remained high,
reflecting the low financial flexibility of highly leveraged companies.
Outlook
The events of September 11 have triggered a change in the risk profile of the
U.S. economy, with a recession now imminent. We believe the unemployment rate
will climb over the next several months, weakening consumer confidence further.
We also believe that the Federal Reserve may ease rates further, keeping the
yield curve steep. Further fiscal stimulus in the form of additional tax cuts
and increased government spending is also anticipated. While the economic
recovery will be delayed until the spring of 2002, we believe it will be more
robust as a result of the increased monetary and fiscal stimulus.
With these short-term difficulties ahead of us, in the high yield sector we will
remain relatively defensive, emphasizing sectors such as domestic cable,
utilities and health care, which have historically outperformed in down markets.
We will move aggressively into cyclical industry sectors such as automotive,
paper and chemicals, once we see evidence of a recovery on the horizon. We will
maintain our hotel and airline holdings, given their current valuations. We will
also maintain our holdings in the gaming industry, as we believe this sector
will rebound in the long-term, especially given its historic ability to generate
cash flows.
The slowing global economy and increased risk aversion will present challenges
to the emerging market sector. We believe, however, that near-term deterioration
in economic conditions will in time be supplanted by the effects of a massive
fiscal stimulus and extremely accommodative monetary policy. While the recent
attacks in the U.S. will have a negative effect on global growth and the
emerging markets, the strengthening of relations between the U.S. and its
allies may have a positive effect. The attacks have also increased the
likelihood of continued G7 support for emerging economies. We are also
encouraged by recent signs that the emerging market class has shown signs of
de-coupling from the problems in Argentina as the effects in other countries
have so far been muted.
We are currently reducing the Fund's exposure to Argentina due to the increased
risk of default. We are, however, increasing our exposure to neighboring Brazil
and maintaining our holdings in Mexico. We are also maintaining our overweight
position in Russia due to its positive economic outlook and increased
geopolitical stature, but do remain concerned about the potential impact that a
drop in oil prices could have on the country's near-term cash flow. We are
reducing our exposure to Venezuela, which is particularly dependent on higher
oil prices. We will continue to monitor troubled regions closely while looking
for opportunities.
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4 o ACM MANAGED DOLLAR INCOME FUND
----------------------
LETTER TO SHAREHOLDERS
----------------------
Thank you for your continued interest and investment in ACM Managed Dollar
Income Fund. We look forward to reporting to you on market activity and the
Fund's investment results in the coming periods.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Wayne D. Lyski
Wayne D. Lyski
President
/s/ Paul J. De Noon
Paul J. De Noon
Vice President
/s/ George D. Caffrey
George D. Caffrey
Vice President
[PHOTO] John D. Carifa
[PHOTO] Wayne D. Lyski
[PHOTO] Paul J. De Noon
[PHOTO] George D. Caffrey
Wayne D. Lyski, Paul J. De Noon and George D. Caffrey, portfolio managers, have
over 50 years of combined investment experience. Wayne D. Lyski oversees fixed
income investments at Alliance Capital and manages assets in both domestic and
international markets.
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ACM MANAGED DOLLAR INCOME FUND o 5
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ACM MANAGED DOLLAR INCOME FUND (NAV)
GROWTH OF A $10,000 INVESTMENT
10/31/93* TO 9/30/01
ACM Managed Dollar Income Fund (NAV) $13,107
Composite $19,166
[The following table was depicted as a mountain chart in the printed material.]
ACM Managed Dollar Income Fund Composite
---------------------------------------------------------------------
10/31/93 $10,000 $10,000
9/30/94 $ 8,836 $ 9,617
9/30/95 $ 9,375 $10,416
9/30/96 $13,206 $13,640
9/30/97 $17,648 $16,715
9/30/98 $11,257 $13,937
9/30/99 $13,345 $16,214
9/30/00 $14,576 $19,277
9/30/01 $13,107 $19,166
This chart illustrates the total value of an assumed $10,000 investment in ACM
Managed Dollar Income Fund at net asset value (NAV) (from 10/31/93 to 9/30/01)
as compared to the performance of an appropriate composite. The composite
represents 65% of the J.P. Morgan Emerging Markets Bond Index Plus (JPM EMBI+)
and 35% of the Credit Suisse First Boston High Yield Index (CSFB HYI). The
composite is from inception of the JPM EMBI+, which was 12/31/93. For the period
10/31/93 through 9/30/94, the J.P. Morgan Emerging Markets Bond Index was used
in place of the JPM EMBI+. All other periods used the composite benchmark. The
chart assumes the reinvestment of dividends and capital gains. Past performance
is not indicative of future results, and is not representative of future gain or
loss in capital value or dividend income.
The JPM EMBI+ is composed of dollar-denominated restructured sovereign bonds; a
large percentage of the index is made up of Brady bonds. The CSFB HYI is a
measure of lower-rated, fixed income, non convertible U.S. dollar-denominated
securities meeting certain criteria developed by Credit Suisse designed to
enable the index to reflect the high yield market. The indices are unmanaged and
reflect no fees or expenses. When comparing ACM Managed Dollar Income Fund to
the composite shown above, you should note that no charges or expenses are
reflected in the performance of the composite. An investor cannot invest
directly in an index, and its results are not indicative of any specific
investment, including ACM Managed Dollar Income Fund.
* Closest month-end after Fund's inception date of 10/22/93.
--------------------------------------------------------------------------------
6 o ACM MANAGED DOLLAR INCOME FUND
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PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ACM MANAGED DOLLAR INCOME FUND (NAV)
HISTORY OF RETURNS
YEARLY PERIODS ENDED 9/30
[BAR CHART OMITTED]
ACM Managed Dollar Income Fund (NAV)--Yearly Periods Ended 9/30
--------------------------------------------------------------------------------
ACM Managed Dollar
Income Fund (NAV) Composite*
--------------------------------------------------------------------------------
9/30/94** -11.64% N/A
9/30/95 6.11% 8.31%
9/30/96 40.86% 30.95%
9/30/97 33.64% 22.55%
9/30/98 -36.22% -16.62%
9/30/99 18.69% 16.33%
9/30/00 9.99% 18.89%
9/30/01 -10.08% -0.57%
Past performance is no guarantee of future results. The Fund's investment
results represent total returns and are based on the Fund's net asset value
(NAV). All fees and expenses related to the operation of the Fund have been
deducted. Returns for the Fund include the reinvestment of any distribution paid
during the period.
* The composite represents 65% of the J.P. Morgan Emerging Markets Bond
Index Plus (JPM EMBI+) and 35% of the Credit Suisse First Boston High
Yield Index (CSFB HYI). The unmanaged JPM EMBI+ is composed of
dollar-denominated restructured sovereign bonds; a large percentage of the
index is made up of Brady bonds. The unmanaged CSFB HYI is a measure of
lower-rated, fixed income, non-convertible U.S. dollar-denominated
securities meeting certain criteria developed by Credit Suisse designed to
enable the index to reflect the high yield market. The indices are
unmanaged and reflect no fees or expenses. An investor cannot invest
directly in an index, and its results are not indicative of any specific
investment, including ACM Managed Dollar Income Fund.
** Fund returns for the period ended 9/30/94 are from the Fund's inception
date of 10/22/93 through 9/30/94. The JPM EMBI+ was not available (N/A)
until 12/31/93. Therefore, returns for the benchmark are unavailable for
the period ended 9/30/94. The benchmark's returns for the period ended
9/30/94 is from 10/31/93 through 9/30/94.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 7
-----------------
PORTFOLIO SUMMARY
-----------------
PORTFOLIO SUMMARY
September 30, 2001
INCEPTION DATE PORTFOLIO STATISTICS
10/22/93 Net Assets ($mil): $140.1
SECURITY TYPE
45.3% Sovereign
37.2% Corporate
5.9% Brady Bonds
5.8% Yankee Bonds [PIE CHART OMITTED]
2.7% Non-Convertible
Preferred Stock
3.1% Short-term
COUNTRY BREAKDOWN
43.0% United States
12.5% Russia
11.9% Brazil
11.2% Mexico
8.4% Argentina
2.5% Canada
2.0% Bulgaria [PIE CHART OMITTED]
1.8% Philippines
1.8% Venezuela
1.3% Ecuador
1.0% Ukraine
0.9% Turkey
0.6% Colombia
0.6% Peru
0.5% Panama
All data as of September 30, 2001. The Fund's security type and country
breakdowns are expressed as a percentage of total investments and may vary over
time.
--------------------------------------------------------------------------------
8 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
PORTFOLIO OF INVESTMENTS
September 30, 2001
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-70.4%
Sovereign Debt Securities-62.2%
Argentina-10.4% Republic of Argentina
7.00%, 12/19/08(a) ........................... $ 8,107 $ 4,874,503
11.75%, 4/07/09 .............................. 3,000 1,773,900
12.00%, 6/19/31(b) ........................... 4,023 2,142,051
12.25%, 6/19/18(b) ........................... 10,751 5,725,101
------------
14,515,555
------------
Brazil-12.5%
Republic of Brazil
11.00%, 8/17/40 .............................. 26,900 17,485,000
------------
Colombia-0.9%
Republic of Colombia
8.375%, 2/15/27 .............................. 625 429,687
11.75%, 2/25/20 .............................. 835 797,425
------------
1,227,112
------------
Ecuador-1.8%
Republic of Ecuador
5.00%, 8/15/30(a)(c) ......................... 6,250 2,515,625
------------
Mexico-12.7%
United Mexican States
8.375%, 1/14/11 .............................. 2,750 2,722,500
11.375%, 9/15/16 ............................. 13,025 15,060,808
------------
17,783,308
------------
Panama-0.7%
Republic of Panama
10.75%, 5/15/20 .............................. 1,000 1,023,800
------------
Philippines-2.4%
Republic of Philippines
9.875%, 1/15/19 .............................. 3,500 2,852,500
10.625%, 3/16/25 ............................. 700 576,660
------------
3,429,160
------------
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ACM MANAGED DOLLAR INCOME FUND o 9
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Russia-17.2%
Ministry Finance of Russia
Series IV
3.00%, 5/14/03 ............................... $ 2,150 $ 1,835,670
Series V
3.00%, 5/14/08 ............................... 1,500 731,250
Series VI
3.00%, 5/14/06 ............................... 1,550 914,500
Russian Federation
5.00%, 3/31/30(a)(c) ......................... 45,150 20,629,035
------------
24,110,455
------------
Turkey-0.6%
Republic of Turkey
11.875%, 1/15/30 ............................. 1,000 808,800
------------
Ukraine-1.3%
Government of Ukraine
11.00%, 3/15/07 .............................. 2,256 1,881,504
------------
Venezuela-1.7%
Republic of Venezuela
9.25%, 9/15/27 ............................... 3,525 2,361,750
------------
Total Sovereign Debt Securities
(cost $94,579,039) ........................... 87,142,069
------------
Collateralized Brady Bonds-6.9%
Brazil-3.4%
Republic of Brazil
Discount FRN
5.44%, 4/15/24 ............................... 3,500 2,244,550
6.00%, 4/15/24 ............................... 3,850 2,435,125
------------
4,679,675
------------
Bulgaria-2.7%
Republic of Bulgaria
Discount FRN
Series A
4.56%, 7/28/24 ............................... 5,000 3,837,500
------------
Venezuela-0.8%
Republic of Venezuela
Discount FRN
Series W-A
5.125%, 3/31/20 .............................. 1,500 1,155,000
------------
Total Collateralized Brady Bonds
(cost $10,280,954) ........................... 9,672,175
------------
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10 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Non-Collateralized Brady Bonds-1.3%
Brazil-0.5%
Republic of Brazil - C Bonds
8.00%, 4/15/14 ............................... $ 985 $ 662,499
------------
Peru-0.8%
Republic of Peru FLIRB
4.00%, 3/07/17(a) ............................ 1,850 1,186,405
------------
Total Non-Collateralized Brady Bonds
(cost $1,765,557) ............................ 1,848,904
------------
Total Sovereign Debt Obligations
(cost $106,625,550) .......................... 98,663,148
------------
U.S. CORPORATE DEBT OBLIGATIONS-51.1%
Air Transport-0.1%
US Airways, Inc.
Series 93A3
10.375%, 3/01/13 ............................. 190 168,321
------------
Aerospace/Defense-0.3%
Sequa Corp.
9.00%, 8/01/09 ............................... 540 464,400
------------
Automotive-0.9%
Collins & Aikman Products Co.
11.50%, 4/15/06 .............................. 290 259,550
Dura Operating Corp.
Series D
9.00%, 5/01/09 ............................... 657 548,595
Hayes Lemmerz International, Inc.
11.875, 6/15/06(c) ........................... 775 426,250
------------
1,234,395
------------
Broadcasting & Media-2.5%
@Entertainment, Inc.
Series B
14.50%, 2/01/09(d) ........................... 2,500 337,500
Allbritton Communications Co.
Series B
8.875%, 2/01/08 .............................. 680 676,600
Fox Family Worldwide, Inc.
10.25%, 11/01/07(d) .......................... 1,000 955,000
Lin Holdings Corp.
10.00%, 3/01/08(d) ........................... 1,050 708,750
Paxson Communications Corp.
10.75%, 7/15/08(c) ........................... 480 478,200
PRIMEDIA, Inc.
8.875%, 5/15/11(c) ........................... 415 313,325
------------
3,469,375
------------
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 11
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Building/Real Estate-2.2%
D.R. Horton, Inc.
8.00%, 2/01/09 ............................... $ 730 $ 682,550
LNR Property Corp.
10.50%, 1/15/09 .............................. 1,200 1,170,000
Meritage Corp.
9.75%, 6/01/11 ............................... 535 497,550
Schuler Homes, Inc.
10.50%, 7/15/11(c) ........................... 805 768,775
------------
3,118,875
------------
Cable-7.8%
Adelphia Communications Corp.
10.25%, 6/15/11 .............................. 835 730,625
10.875%, 10/01/10 ............................ 935 836,825
Charter Communication Holdings
9.625%, 11/15/09 ............................. 310 296,050
10.00%, 5/15/11 .............................. 725 696,000
10.75%, 10/01/09 ............................. 2,600 2,600,000
11.75%, 5/15/11(d) ........................... 1,985 1,101,675
CSC Holdings, Inc.
9.25%, 11/01/05 .............................. 1,000 1,025,000
Echostar DBS Corp.
9.25%, 2/01/06 ............................... 1,500 1,481,250
9.375%, 2/01/09 .............................. 1,585 1,557,263
Mediacom Broadband
11.00%, 7/15/13(c) ........................... 550 563,750
------------
10,888,438
------------
Chemicals-3.0%
Airgas, Inc.
9.125%, 10/01/11(c) .......................... 275 279,125
Georgia Gulf Corp.
10.375%, 11/01/07 ............................ 770 762,300
Huntsman ICI Chemicals
10.125%, 7/01/09 ............................. 1,110 960,150
Lyondell Chemical Co.
Series B
10.875%, 5/01/09 ............................. 2,365 1,945,213
Resolution Performance Products
13.50%, 11/15/10 ............................. 200 207,000
------------
4,153,788
------------
Communications-Fixed-0.7% Econophone, Inc.
13.50%, 7/15/07(e)(f) ........................ 3,000 0
Level 3 Communications
11.00%, 3/15/08 .............................. 510 229,500
McLeodUSA, Inc.
11.375%, 1/01/09 ............................. 225 66,375
--------------------------------------------------------------------------------
12 o ACM MANAGED DOLLAR INCOME FUND
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PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Time Warner Telecom, Inc.
10.125%, 2/01/11 ............................. $ 335 $ 219,425
Williams Communications Group, Inc.
11.70%, 8/01/08 .............................. 680 285,600
11.875%, 8/01/10 ............................. 295 123,900
------------
924,800
------------
Communications-Mobile-5.3%
American Cellular Corp.
9.50%, 10/15/09 .............................. 490 458,150
Dobson/Sygnet Communications
12.25%, 12/15/08 ............................. 750 778,125
Iridium LLC Capital Corp.
Series B
14.00%, 7/15/05(f) ........................... 5,000 225,000
Nextel Communications, Inc.
5.25%, 1/15/10 ............................... 920 470,350
9.375%, 11/15/09 ............................. 595 370,388
10.65%, 9/15/07(d) ........................... 305 183,763
Nextel International, Inc.
12.75%, 8/01/10 .............................. 200 40,000
Nextel Partners, Inc.
11.00%, 3/15/10 .............................. 600 397,500
Price Communications Wire
Series B
9.125%, 12/15/06 ............................. 375 384,375
TeleCorp PCS, Inc.
10.625%, 7/15/10 ............................. 820 725,700
11.625%, 4/15/09(d) .......................... 1,235 722,475
Tritel PCS, Inc.
10.375%, 1/15/11 ............................. 590 504,450
12.75%, 5/15/09(d) ........................... 430 240,800
Triton PCS, Inc.
11.00%, 5/01/08(d) ........................... 990 834,075
Voicestream Wire
10.375%, 11/15/09 ............................ 1,000 1,130,000
------------
7,465,151
------------
Consumer Manufacturing-1.2%
Armkel LLC
9.50%, 8/15/09(c) ............................ 105 106,837
Jostens, Inc.
12.75%, 5/01/10 .............................. 815 819,075
Playtex Products, Inc.
9.375%, 6/01/11 .............................. 275 279,125
Sealy Mattress Co.
9.875%, 12/15/07(c) .......................... 550 514,250
------------
1,719,287
------------
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 13
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Energy-1.3%
Chesapeake Energy Corp.
8.125%, 4/01/11 .............................. $ 565 $ 533,925
Dresser, Inc.
9.375%, 4/15/11(c) ........................... 275 275,000
Lomak Petroleum
8.75%, 1/15/07 ............................... 280 261,800
Lone Star Technologies, Inc.
9.00%, 6/01/11(c) ............................ 575 451,375
Pride International, Inc.
9.375%, 5/01/07 .............................. 270 278,775
------------
1,800,875
------------
Entertainment & Leisure-0.8%
Premier Parks
9.75%, 6/15/07 ............................... 400 380,000
10.00%, 4/01/08(d) ........................... 320 248,800
Six Flags, Inc.
9.50%, 2/01/09 ............................... 600 561,000
------------
1,189,800
------------
Financial-0.7%
Conseco, Inc.
8.75%, 2/09/04 ............................... 515 430,025
iStar Financial, Inc.
8.75%, 8/15/08 ............................... 550 532,209
------------
962,234
------------
Food/Beverage-0.1%
Del Monte Corp.
9.25%, 5/15/11(c) ............................ 165 165,825
------------
Gaming-4.2%
Ameristar Casinos, Inc.
10.75%, 2/15/09 .............................. 350 357,000
Argosy Gaming Co.
9.00%, 9/01/11 ............................... 315 315,000
Boyd Gaming Corp.
9.25%, 8/01/09(c) ............................ 570 541,500
MGM Mirage
8.375%, 2/01/11 .............................. 790 714,950
Mandalay Resort Group
10.25%, 8/01/07 .............................. 1,350 1,248,750
Mohegan Tribal Gaming
8.375%, 7/01/11(c) ........................... 590 595,900
8.75%, 1/01/09 ............................... 1,000 1,015,000
Park Place Entertainment
9.375%, 2/15/07 .............................. 1,100 1,100,000
------------
5,888,100
------------
--------------------------------------------------------------------------------
14 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Healthcare-3.8%
AmerisourceBergen Corp.
8.125%, 9/01/08(c) ........................... $ 275 $ 285,312
Concentra Operating Corp.
13.00%, 8/15/09 .............................. 720 759,600
HCA - The Healthcare Co.
7.875%, 2/01/11 .............................. 1,750 1,802,500
Iasis Healthcare Corp.
13.00%, 10/15/09 ............................. 1,085 1,068,725
Tenet Healthcare Corp.
8.125%, 12/01/08 ............................. 200 214,500
Triad Hospitals, Inc.
Series B
8.75%, 5/01/09 ............................... 95 97,850
11.00%, 5/15/09 .............................. 750 811,875
Vanguard Health Systems, Inc.
9.75%, 8/01/11(c) ............................ 275 281,875
------------
5,322,237
------------
Hotels & Lodging-1.6%
Extended Stay America, Inc.
9.875%, 6/15/11(c) ........................... 585 520,650
Felcor Lodging, LP
8.50%, 6/01/11(c) ............................ 395 357,475
9.50%, 9/15/08 ............................... 350 301,000
9.50%, 9/15/08(c) ............................ 275 236,500
Host Marriott, LP
9.25%, 10/01/07 .............................. 850 760,750
------------
2,176,375
------------
Industrial-2.4%
Applied Extrusion Technologies, Inc.
10.75%, 7/01/11(c) ........................... 555 555,000
Flowserve Corp.
12.25%, 8/15/10 .............................. 1,000 1,040,000
Grey Wolf, Inc.
8.875%, 7/01/07 .............................. 265 239,825
Hexcel Corp.
9.75%, 1/15/09 ............................... 550 277,750
Russell-Stanley Holdings, Inc.
10.875%, 2/15/09(f) .......................... 5,000 575,000
Universal Compression, Inc.
9.875%, 2/15/08(d) ........................... 750 671,250
------------
3,358,825
------------
Metals/Mining-0.4%
Commonwealth Industries, Inc.
10.75%, 10/01/06 ............................. 30 27,900
United States Steel LLC
10.75%, 8/01/08(c) ........................... 540 496,800
------------
524,700
------------
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 15
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Paper/Packaging-3.4%
Crown Paper Co.
11.00%, 9/01/05(f) ........................... $ 5,000 $ 125,000
Owens-Illinois, Inc.
7.80%, 5/15/18 ............................... 385 257,950
7.85%, 5/15/04 ............................... 230 194,350
Plastipak Holdings, Inc.
10.75%, 9/01/11(c) ........................... 550 552,750
Riverwood International Corp.
10.625%, 8/01/07 ............................. 1,200 1,218,000
Stone Container
9.25%, 2/01/08 ............................... 1,300 1,316,250
9.75%, 2/01/11 ............................... 1,085 1,101,275
------------
4,765,575
------------
Petroleum Products-0.5%
Frontier Oil Corp.
11.75%, 11/15/09 ............................. 700 745,500
------------
Service-3.7%
Allied Waste North America
8.875%, 4/01/08(c) ........................... 810 830,250
10.00%, 8/01/09 .............................. 2,580 2,592,900
Iron Mountain, Inc.
8.625%, 4/01/13 .............................. 410 416,150
Service Corp. International
6.00%, 12/15/05 .............................. 455 385,613
6.30%, 3/15/03(g) ............................ 45 42,525
6.50%, 3/15/08 ............................... 240 193,200
7.70%, 4/15/09 ............................... 575 488,750
Stewart Enterprises, Inc.
10.75%, 7/01/08(c) ........................... 230 244,950
------------
5,194,338
------------
Supermarket/Drug-0.2%
Rite Aid Corp.
11.25%, 7/01/08(c) ........................... 300 304,500
------------
Technology-0.9%
Fairchild Semiconductor
10.125%, 3/15/07 ............................. 350 330,750
10.50%, 2/01/09 .............................. 780 756,600
Ingram Micro, Inc.
9.875%, 8/15/08(c) ........................... 25 23,000
Viasystems, Inc.
9.75%, 6/01/07 ............................... 835 167,000
------------
1,277,350
------------
--------------------------------------------------------------------------------
16 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Utilities-Electric & Gas-3.1%
AES Corp.
8.875%. 2/15/11 .............................. $ 870 $ 704,700
9.375%, 9/15/10 .............................. 695 601,175
Calpine Corp.
8.625%, 8/15/10 .............................. 400 391,674
CMS Energy Corp.
8.50%, 4/15/11 ............................... 275 269,187
Misson Energy Holding Co.
13.50%, 7/15/08(c) ........................... 520 527,800
PG&E National Energy Group, Inc.
10.375%, 5/16/11(c) .......................... 670 721,438
PSEG Energy Holdings
9.125%, 2/10/04 .............................. 1,000 1,065,542
------------
4,281,516
------------
Total U.S. Corporate Debt Obligations
(cost $93,677,476) ........................... 71,564,580
------------
NON-U.S. CORPORATE DEBT
OBLIGATIONS-8.0%
Argentina-1.3%
Supercanal Holdings, SA
10.75%, 11/07/02(e)(f) ....................... 3,478 1,738,812
------------
Canada-3.4%
Calpine Canada Energy Finance
8.50%, 5/01/08 ............................... 2,230 2,180,148
Microcell Telecommunications
14.00%, 6/01/06(d) ........................... 735 363,825
Pierce Leahy Command Co.
8.125%, 5/15/08 .............................. 1,500 1,492,500
Quebecor Media, Inc.
11.125%, 7/15/11(c) .......................... 515 512,425
Rogers Wireless, Inc.
9.625%, 5/01/11(c) ........................... 275 265,375
------------
4,814,273
------------
Mexico-2.7%
Innova S. de R.L
12.875%, 4/01/07 ............................. 4,500 3,791,250
------------
Netherlands-0.0%
Netia Holdings BV
Series B
11.25%, 11/01/07(d) .......................... 475 35,625
------------
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 17
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Shares or
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Turkey-0.6%
Cellco Finance
15.00%, 8/01/05 .............................. $ 1,350 $ 840,375
------------
Total Non-U.S. Corporate Debt Obligations
(cost $14,273,648) ........................... 11,220,335
------------
CONVERTIBLE PREFERRED STOCK-0.0%
PSINet, Inc.
7.00%(c)(f)
(cost $600,000) .............................. 15,000 15
------------
NON-CONVERTIBLE PREFERRED
STOCKS-3.7%
CSC Holdings, Inc.
Series M
11.125%(h) ................................... 26,009 2,659,420
Intermedia Communication
Series B
13.50%(h) .................................... 883 927,150
Nextel Communications
Series E
11.125%(h) ................................... 1,490 655,600
Sovereign REIT
Series A
12.00%(c) .................................... 870 878,700
XO Communications
14.00%(h) .................................... 7 51
------------
Total Non-Convertible Preferred Stocks
(cost $5,905,420) ............................ 5,120,921
------------
COMMON STOCK AND OTHER
INVESTMENTS-0.0%
Jostens, Inc. Cl. E
Warrants, expiring 5/01/10(i)(j) ............. 655 9,907
OpTel, Inc.(i)(k) ............................... 8,500 85
United Mexican States Recovery Rights(i) ........ 1,538,000 11,150
Republic of Venezuela
Warrants, expiring 4/15/20(i) ................ 10,710 0
------------
Total Common Stock and Other Investments
(cost $13,100) ............................... 21,142
------------
SHORT-TERM INVESTMENT-4.3%
Time Deposit-4.3%
State Street Bank
2.50%, 10/01/01
(cost $6,036,000) ............................ $ 6,036 6,036,000
------------
--------------------------------------------------------------------------------
18 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
U.S. $ Value
-------------------------------------------------------------------------------
Total Investments-137.5%
(cost $227,131,194) .......................... $192,626,141
Other assets less liabilities-(37.5%) ........... (52,516,591)
------------
Net Assets-100.0% ............................... $140,109,550
============
(a) Coupon changes periodically based upon a predetermined schedule. Stated
interest rate in effect at September 30, 2001.
(b) Coupon is paid-in-kind.
(c) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2001, the market value of these securities aggregated $36,219,587 or 25.9%
of net assets.
(d) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective
until final maturity.
(e) Illiquid security, valued at fair value (See Note A.)
(f) Security is in default and is non-income producing.
(g) Coupon is fixed until March 15, 2003. At that time, the security may then
be remarketed at a new fixed rate.
(h) Paid-in-kind preferred, quarterly stock payments.
(i) Non-income producing security.
(j) Each warrant entitles the holder to purchase 1.889 shares of common stock
at $.01 per share. The warrants are exercisable until 5/01/10.
(k) Common stock, par value is $0.01 per share.
Glossary of Terms:
FLIRB - Front Loaded Interest Reduction Bond.
FRN - Floating Rate Note.
See notes to financial statements.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 19
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
September 30, 2001
Assets
Investments in securities, at value
(cost $227,131,194) ....................................... $ 192,626,141
Cash ......................................................... 54
Receivable for investment securities sold .................... 5,588,598
Interest receivable .......................................... 5,332,299
Dividend receivable .......................................... 101,737
-------------
Total assets ................................................. 203,648,829
-------------
Liabilities
Loan payable ................................................. 62,500,000
Interest payable ............................................. 523,438
Tender fees payable .......................................... 176,682
Advisory fee payable ......................................... 129,660
Payable for investment securities purchased .................. 29,400
Administrative fee payable ................................... 25,940
Accrued expenses and other liabilities ....................... 154,159
-------------
Total liabilities ............................................ 63,539,279
-------------
Net Assets ................................................... $ 140,109,550
-------------
Composition of Net Assets
Common stock, at par ......................................... $ 221,343
Additional paid-in capital ................................... 294,052,011
Accumulated net realized loss on investment transactions ..... (119,658,751)
Net unrealized depreciation of investments ................... (34,505,053)
-------------
$ 140,109,550
=============
Net Asset Value Per Share
(based on 22,134,290 shares outstanding) .................. $ 6.33
======
See notes to financial statements.
--------------------------------------------------------------------------------
20 o ACM MANAGED DOLLAR INCOME FUND
-----------------------
STATEMENT OF OPERATIONS
-----------------------
STATEMENT OF OPERATIONS
Year Ended September 30, 2001
Investment Income
Interest ........................................ $ 27,307,422
Dividends ....................................... 518,131
------------
$ 27,825,553
Expenses
Advisory fee .................................... 1,650,182
Administrative fee .............................. 330,050
Printing ........................................ 96,082
Audit and legal ................................. 95,972
Custodian ....................................... 88,943
Transfer agency ................................. 52,327
Loan fees ....................................... 51,385
Directors' fees and expenses .................... 38,320
Registration fees ............................... 8,129
Miscellaneous ................................... 65,011
------------
Total expenses before interest expense .......... 2,476,401
Interest expense ................................ 3,573,109
------------
Total expenses .................................. 6,049,510
------------
Net investment income ........................... 21,776,043
------------
Realized and Unrealized Gain (Loss)
on Investments
Net realized loss on investment
transactions ................................. (27,137,698)
Net change in unrealized
appreciation/depreciation
of investments ............................... (10,959,081)
------------
Net loss on investments ......................... (38,096,779)
------------
Net Decrease in Net Assets from
Operations ................................... $(16,320,736)
============
See notes to financial statements.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 21
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
STATEMENT OF CHANGES
IN NET ASSETS
Year Ended Year Ended
September 30, September 30,
2001 2000
============= =============
Increase (Decrease) in Net Assets
from Operations
Net investment income ........................ $ 21,776,043 $ 23,840,072
Net realized loss on investment
transactions .............................. (27,137,698) (503,912)
Net change in unrealized
appreciation/depreciation
of investments ............................ (10,959,081) (4,322,036)
------------- -------------
Net increase (decrease) in net assets
from operations ........................... (16,320,736) 19,014,124
Dividends and Distributions to
Shareholders from:
Net investment income ........................ (21,047,520) (22,550,509)
Tax return of capital ........................ (1,562,731) (3,123,919)
------------- -------------
Net decrease in net assets resulting from
dividends and distributions to
shareholders .............................. (22,610,251) (25,674,428)
Common Stock Transactions
Reinvestment of dividends resulting in the
issuance of Common Stock .................. 1,365,636 1,695,549
Tender offer (resulting in the redemption
of 248,723 and 0 shares of
common stock, respectively) ............... (1,766,095) -0-
Tender offer costs ........................... (212,169) -0-
------------- -------------
Total decrease ............................... (39,543,615) (4,964,755)
Net Assets
Beginning of period .......................... 179,653,165 184,617,920
------------- -------------
End of period ................................ $ 140,109,550 $ 179,653,165
============= =============
See notes to financial statements.
--------------------------------------------------------------------------------
22 o ACM MANAGED DOLLAR INCOME FUND
-----------------------
STATEMENT OF CASH FLOWS
-----------------------
STATEMENT OF CASH FLOWS
Year Ended September 30, 2001
Increase (Decrease) in Cash from
Operating Activities:
Interest and dividends received .............. $ 25,392,862
Interest expense paid ........................ (3,339,775)
Operating expenses paid ...................... (2,517,974)
-------------
Net increase in cash from operating
activities ................................ $ 19,535,113
Investing Activities:
Purchases of long-term investments ........... (276,952,036)
Proceeds from disposition of
long-term investments ..................... 277,017,871
Purchases of short-term investments, net ..... (1,636,000)
-------------
Net decrease in cash from investing
activities ................................ (1,570,165)
Financing Activities:(a)
Cash dividends paid .......................... (21,244,615)
Tender offer ................................. (1,801,582)
Proceeds from bank loan ...................... 5,000,000
-------------
Net decrease in cash from financing
activities ................................ (18,046,197)
-------------
Net decrease in cash ......................... (81,249)
Cash at beginning of period .................. 81,303
-------------
Cash at end of period ........................ $ 54
=============
--------------------------------------------------------------------------------
Reconciliation of Net Decrease in
Net Assets from Operations to
Net Increase in Cash from
Operating Activities
Net decrease in net assets from
operations ................................ $ (16,320,736)
Adjustments
Decrease in dividends and interest
receivable ................................ $ 1,900,345
Accretion of bond discount ................... (4,333,036)
Decrease in accrued expenses and
other assets .............................. (41,573)
Increase in interest payable ................. 233,334
Net loss on investments ...................... 38,096,779
-------------
Total adjustments ............................ 35,855,849
-------------
Net Increase in Cash from
Operating Activities ...................... $ 19,535,113
=============
(a) Non-cash financing activities not included herein consist of reinvestment
of dividends and distributions.
See notes to financial statements.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 23
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
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 accounting principles generally accepted in the United States 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 traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sale price or, if there was no sale on such day, the
last bid price quoted on such day. If no bid prices are quoted, then the
security is valued at the mean of the bid and asked prices as obtained on that
day from one or more dealers regularly making a market in that security.
Securities traded on the over-the-counter market, and securities listed on a
foreign securities exchange whose operations are similar to the United States
over-the-counter market and securities listed on a national securities exchange
whose primary market is believed to be over-the-counter are valued at the mean
of the closing bid and asked price provided by two or more dealers regularly
making a market in such securities. U.S. government securities and other debt
securities which mature in 60 days or less are valued at amortized cost unless
this method does not represent fair value. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith by, or in accordance with procedures approved by, the Board of
Directors. Fixed income securities may be valued on the basis of prices provided
by a pricing service when such prices are believed to reflect the fair market
value of such securities. Listed put and call options purchased by the Fund 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.
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 applicable,
to shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Dividend income is recorded on the ex-dividend
date. Investment transactions are accounted for on the date the investments are
purchased or sold. Investment gains and losses are deter-
--------------------------------------------------------------------------------
24 o ACM MANAGED DOLLAR INCOME FUND
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
mined on the identified cost basis. The Fund 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 accordance with
accounting principles generally accepted in the United States. 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.
During the current fiscal year, permanent differences, primarily due to a tax
return of capital, resulted in a net decrease in distributions in excess of net
investment income and a corresponding decrease in additional paid-in-capital.
This reclassification had no effect on net assets.
5. Change in Accounting Principle
In November 2000, the American Institute of Certified Public Account ants
(AICPA) issued a revised version of its Audit and Accounting Guide for
Investment Companies (the "Guide"), which is effective for fiscal years
beginning after December 15, 2000. The Guide will require the Fund to amortize
premium and discount on fixed-income securities. Upon adoption, the Fund will be
required to record a cumulative effect adjustment to reflect the amortization of
premiums. The adjustment will reduce net investment income and increase
unrealized appreciation on securities by the same amount, and therefore will not
impact total net assets. At this time, the analysis of adjustment has not been
completed. Although this adjustment affects the financial statements, adoption
of this principle will not effect the amount of distributions paid to
shareholders, because the Fund determines its required distributions under
Federal income tax laws.
NOTE B
Advisory and Administrative Fees and Other Transactions with Affiliates
Under the terms of the Investment Advisory Agreement, the Fund pays Alliance
Capital Management, L.P. (the "Adviser") an advisory fee equal to an annualized
rate of .75 of 1% of the average adjusted weekly net assets of the Fund during
the month.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Global
Investor Services, Inc. (AGIS) (formerly Alliance Fund Services, Inc.), an
affiliate of the Adviser, the Fund reimburses AGIS for costs relating to
servicing phone inquiries for the Fund. The Fund reimbursed AGIS $2,000 during
the year ended September 30, 2001.
Under the terms of an Administration Agreement, the Fund pays Princeton
Administrators, L.P. (the "Administrator") a monthly fee equal to the
annualized rate of .15 of 1% of the Fund's average adjusted weekly net assets of
the Fund during the month. The Administrator prepares financial
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 25
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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,
options and U.S. government securities) aggregated $273,400,402 and
$280,647,671, respectively, for the year ended September 30, 2001. There were no
purchases or sales of U.S. government or government agency obligations for the
year ended September 30, 2001.
At September 30, 2001, the cost of investments for federal income tax purposes
was $227,881,880. Accordingly, gross unrealized appreciation of investments was
$4,591,653 and gross unrealized depreciation of investments was $39,847,392,
resulting in net unrealized depreciation of $35,255,739.
At September 30, 2001, the Fund had a capital loss carryforward of $92,990,518
of which $57,455,739 expires in the year 2007, $24,635,181 expires in the year
2008 and $10,899,598 expires in the year 2009.
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
$25,917,547 during fiscal year 2001. To the extent they are so used, future
capital gains will not be distributed to shareholders until they exceed
available capital loss carryovers.
1. Options Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) put
and call options on U.S. and foreign government securities 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 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 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 writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from options
written. The difference between the premium and the amount paid on effecting a
closing purchase transaction, including brokerage commissions, is also treated
as a realized gain, or if the premium is less than the amount paid for the
closing purchase transaction, as a realized loss. If a call option is exercised,
the premium is added to the proceeds from the sale of the underlying security in
determining whether the Fund has realized a gain or loss. If a put option is
exercised, the premium reduces the cost basis of the security purchased by the
Fund. In
--------------------------------------------------------------------------------
26 o ACM MANAGED DOLLAR INCOME FUND
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
writing an option, the Fund bears the market risk of an unfavorable
change in the price of the security underlying the written option. Exercise of
an option written by the Fund could result in the Fund selling or buying a
security at a price different from the current market value.
There were no transactions in options written for the year ended September 30,
2001.
2. Interest Rate Swap Agreements
The Fund may enter into interest rate swaps on sovereign debt obligations to
protect itself from interest rate fluctuations on the underlying debt
instruments and 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 another party 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 records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as interest
income (or as an offset to interest income). Fluctuations in the value of swap
contracts are recorded for financial statement purposes as net unrealized
appreciation or depreciation on interest rate swap contracts.
At September 30, 2001, the Fund had no outstanding interest rate swap contracts.
NOTE D
Capital Stock
There are 300,000,000 shares of $.01 par value capital stock authorized. During
the year ended September 30, 2001 and for the year ended September 30, 2000, the
Fund issued 186,638 and 193,135 shares, respectively, in connection with the
dividend reinvestment plan.
On May 7, 2001, the Fund purchased and retired 248,723 shares of its outstanding
common stock for $7.13 per share pursuant to a tender offer. The Fund incurred
costs of $212,169, which were charged to additional paid in capital. At May 7,
2001, 22,019,479 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
Bank Borrowing
The Fund entered into a Revolving Credit Agreement with Citibank, N.A.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 27
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
which was renewed on March 23, 2001. The maximum credit available is $85,000,000
and the amount outstanding as of September 30, 2001 was $62,500,000 with an
average interest rate of 6.18%. Interest payments on current borrowings are
based on the London Interbank Offered Rate plus a premium. The average daily
amount of the loan outstanding during the year ended September 30, 2001 was
approximately $58,689,041 with a related weighted average annualized interest
rate of 6.09%. The Fund is also obligated to pay Citibank, N.A. a facility fee
computed at the rate of .125 of 1% per annum on the average daily unused portion
of the revolving credit.
NOTE F
Concentration of Risk
Investing in securities of foreign companies and foreign governments involves
special risks, which include the possibility of future political and economic
development, which could adversely affect the value of such securities.
Moreover, securities of many foreign companies and foreign governments and their
markets may be less liquid and their prices more volatile than those of
comparable U.S. companies and the United States Government. The Fund invests in
the sovereign debt obligations of countries that are considered emerging market
countries at the time of purchase. Therefore, the Fund is susceptible to
governmental factors and economic and debt restructuring developments adversely
affecting the economies of these emerging market countries. In addition, these
debt obligations may be less liquid and subject to greater volatility than debt
obligations of more developed countries.
--------------------------------------------------------------------------------
28 o ACM MANAGED DOLLAR INCOME FUND
--------------------
FINANCIAL HIGHLIGHTS
--------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended September 30,
2001 2000 1999 1998 1997
------------------------------------------------------------
Net asset value,
beginning of period .............. $ 8.09 $ 8.39 $ 8.18 $ 15.84 $ 13.08
------------------------------------------------------------
Income From Investment
Operations
Net investment income(a) ........... .98 1.08 1.25 1.41 1.45
Net realized and unrealized
gain (loss) on investment
and option transactions .......... (1.72) (.22) .34 (6.30) 2.62
------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ....................... (.74) .86 1.59 (4.89) 4.07
------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income ................ (.95) (1.02) (1.25) (1.56) (1.31)
Distributions in excess of
net investment income ............ -0- -0- (.13) -0- -0-
Distributions in excess of
net realized gain on
investments ...................... -0- -0- -0- (1.21) -0-
Tax return of capital .............. (.07) (.14) -0- -0- -0-
------------------------------------------------------------
Total dividends and
distributions .................... (1.02) (1.16) (1.38) (2.77) (1.31)
------------------------------------------------------------
Net assets value, end of period .... $ 6.33 $ 8.09 $ 8.39 $ 8.18 $ 15.84
============================================================
Market value, end of period ........ $ 7.62 $ 8.50 $ 10.25 $ 9.31 $ 15.00
============================================================
Total Return
Total investment return
based on:(b)
Market value ..................... 3.02% (5.41)% 27.06% (23.44)% 40.87%
Net asset value .................. (10.08)% 9.99% 18.69% (36.22)% 33.64%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .................. $140,110 $179,653 $184,618 $176,920 $336,514
Ratio of expenses to average
net assets ....................... 2.75% 2.70% 2.46% 2.56% 2.36%
Ratio of expenses to average
net assets excluding
interest expense(c) .............. 1.13% 1.09% 1.11% 1.03% 1.01%
Ratio of net investment
income to average
net assets ....................... 9.90% 9.55% 11.27% 8.19% 8.00%
Portfolio turnover rate ............ 129% 134% 223% 208% 274%
See footnote summary on page 30.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 29
--------------------
FINANCIAL HIGHLIGHTS
--------------------
(a) Based on average shares outstanding.
(b) 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 the 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 the 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.
(c) Net interest expense of 1.62%, 1.61%, 1.35%, 1.53%, and 1.35%,
respectively, on loan agreements (See Note E).
--------------------------------------------------------------------------------
30 o ACM MANAGED DOLLAR INCOME FUND
------------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
------------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
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, 2001, and the related statements of operations
and cash flows for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein. 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 auditing standards generally accepted
in the 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 2001, by correspondence
with the custodian and others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of ACM
Managed Dollar Income Fund, Inc. at September 30, 2001, 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 indicated periods, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
November 9, 2001
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 31
----------------------
ADDITIONAL INFORMATION
----------------------
ADDITIONAL INFORMATION
(unaudited)
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
pursuant to which dividends and capital gain distributions to shareholders will
be paid in or reinvested in additional shares of the Fund. State Street Bank and
Trust Company (the "Agent") will act as agent for participants under the Plan.
Shareholders whose shares are held in the name of a broker or nominee should
contact such broker or nominee to determine whether or how they may participate
in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will
issue new shares at the greater of net asset value or 95% of the then
current market price.
(ii) If the shares of Common Stock are trading at a discount from net
asset value at the time of valuation, the Plan Agent will receive the
dividend or distribution in cash and apply it to the purchase of the
Fund's shares of Common Stock in the open market on the New York Stock
Exchange or elsewhere, for the participants' accounts. Such purchases will
be made on or shortly after the payment date for such dividend or
distribution and in no event more than 30 days after such date except
where temporary curtailment or suspension of purchase is necessary to
comply with Federal securities laws. If, before the Plan 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
Plan agent may exceed the net asset value of the Fund's shares of Common
Stock, resulting in the acquisition of fewer shares than if the dividend
or distribution had been paid in shares issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of the
participant, and each shareholder's proxy will include those shares purchased or
received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro-rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's account will be the average cost,
including brokerage commissions,
--------------------------------------------------------------------------------
32 o ACM MANAGED DOLLAR INCOME FUND
----------------------
ADDITIONAL INFORMATION
----------------------
of any shares purchased in the open market plus the cost of any shares issued by
the Fund.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent to
written notice of the change sent to participants in the Plan at least 90 days
before the record date for such dividend or distribution. The Plan may also be
amended or terminated by the Agent on at least 90 days written notice to
participants in the Plan. All correspondence concerning the Plan should be
directed to the Agent at State Street Bank and Trust Company, P.O. Box 366,
Boston, Massachusetts 02101.
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change of
control of the Fund, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv) no change in the person
primarily responsible for the day-to-day management of the Fund's portfolio, who
is Wayne D. Lyski, the President of the Fund.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 33
----------------------------
GLOSSARY OF INVESTMENT TERMS
----------------------------
GLOSSARY OF INVESTMENT TERMS
benchmark
A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.
bond
Governments or corporations issue bonds when they need to raise cash. Bonds are
sold, or issued, to investors and have a maturity date, which is the date the
issuer is obligated to repay the investor for the principal, or face amount, of
the bond. Bonds also pay interest until maturity. Bonds are also called
fixed-income securities.
Consumer Price Index (CPI)
An index that measures the cost of living. The CPI is published by the U.S.
Bureau of Labor Statistics.
credit rating
Credit ratings are issued by independent organizations, such as the Standard &
Poor's Ratings group or Moody's Investors Service. These groups attempt to
assess the likelihood that the issuer of the bond will be able to make timely
payments of principal and interest on the bond, based on such factors as the
issuer's financial condition and any collateral securing these obligations.
Ratings typically range from AAA, which is the highest rating, to D, which is
the lowest rating.
Federal Reserve Board
The seven-member board that oversees Federal Reserve Banks, establishes monetary
policy and monitors the country's economic state.
G-7 Nations
A group of seven industrialized nations, including Canada, France, Germany,
Italy, Japan, the United Kingdom and the United States.
index
A compilation of securities of similar types of companies that is used to
measure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.
net asset value (NAV)
The value of a mutual fund's total assets, minus its liabilities, divided by the
number of shares outstanding.
portfolio
The collection of securities that make up a fund's or an investor's investments.
sector
Refers to a distinct part of the economy, for example, the technology sector.
Treasuries
Negotiable U.S. government debt obligations, backed by the full faith and
credit of the U.S. government. Treasuries are issued either as bills, notes or
bonds depending on the maturity. Treasuries are exempt from state and local
taxes.
--------------------------------------------------------------------------------
34 o ACM MANAGED DOLLAR INCOME FUND
----------------
ALLIANCE CAPITAL
----------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with
approximately $421 billion in assets under management. In recognition of our
far-reaching investment capabilities, Alliance Capital has been selected by
employee benefit plans for 37 of the FORTUNE 100 companies and public retirement
funds in 44 states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by 646 investment
professionals in 36 cities and 19 countries. Our commitment to this process
means that our mutual fund shareholders have their portfolios managed by the
same experienced analysts and portfolio managers who manage the pension funds of
some of America's largest institutional investors.
All information on Alliance Capital is as of 9/30/01.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 35
------------------
BOARD OF DIRECTORS
------------------
BOARD OF DIRECTORS
John D. Carifa, Chairman
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
William H. Foulk, Jr.(1)
Dr. James M. Hester(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
Wayne D. Lyski, President
Kathleen A. Corbet, Senior Vice President
Gregory Dube, Senior Vice President
Paul J. DeNoon, Vice President
George D. Caffrey, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Administrator
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
Custodian, Dividend Paying Agent, Transfer Agent And Registrar
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Independent Auditors
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee
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.
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.
--------------------------------------------------------------------------------
36 o ACM MANAGED DOLLAR INCOME FUND
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Growth & Income Fund
Growth Fund
Health Care Fund
Premier Growth Fund
Quasar Fund
Technology Fund
The Alliance Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
AllianceBernstein Value Funds
Disciplined Value Fund
Global Value Fund
International Value Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Small Cap Growth Portfolio
Technology Portfolio
Asset Allocation Funds
Balanced Shares
Conservative Investors Fund
Growth Investors Fund
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Closed-End Funds
All-Market Advantage Fund
The Austria Fund
ACM Income Fund
ACM Government Opportunity Fund
The Korean Investment Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
The Southern Africa Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 37
------------------------------
SUMMARY OF GENERAL INFORMATION
------------------------------
SUMMARY OF GENERAL INFORMATION
Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 426-5523. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper Analytical Services, Inc., Morningstar, Inc. and Bloomberg. Daily
market prices for the Fund's shares are published in the New York Stock Exchange
Composite Transaction section of newspapers each day. The Fund's NYSE trading
symbol is "ADF." Weekly comparative net asset value (NAV) and market price
information about the Fund is published each Monday in The Wall Street Journal,
each Sunday in The New York Times and each Saturday in Barron's and other
newspapers in a table called "Closed-End Funds."
Dividend Reinvestment Plan
Pursuant to the Fund's Dividend Reinvestment Plan shareholders whose shares are
registered in their own names may elect to have all distributions reinvested
automatically in additional shares of the Fund by State Street Bank & Trust
Company, 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 aid
by check mailed directly to the record holder by or under the direction of State
Street Bank & Trust Company. For questions concerning Shareholder account
information, or if you would like a brochure describing the Dividend
Reinvestment Plan, please call State Street Bank and Trust Company at (800)
219-4218.
--------------------------------------------------------------------------------
38 o ACM MANAGED DOLLAR INCOME FUND
NOTES
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 39
NOTES
--------------------------------------------------------------------------------
40 o ACM MANAGED DOLLAR INCOME FUND
ACM Managed Dollar Income Fund
1345 Avenue of the Americas
New York, NY 10105
Alliance Capital [LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
MDIAR901