<PAGE>
Letter To Shareholders ACM Managed Dollar Income Fund, Inc.
================================================================================
November 6, 1995
Dear Shareholder:
The U.S. bond market continued its impressive, broad-based rally over the
past six months. The rally was supported by a slower U.S. economy, restrained
inflationary pressures and a shift in Federal Reserve monetary policy. Outside
the U.S., emerging market and other foreign debt prices also rose sharply as
positive developments in Mexico and Argentina encouraged foreign investors.
FUND PERFORMANCE
We are pleased to report that ACM Managed Dollar Income Fund (New York Stock
Exchange symbol: "ADF") benefited from this favorable investment environment.
For the six months ended September 30, 1995, the Fund posted a return of
+32.54% on a net asset value basis. Over the same period, the unmanaged J.P.
Morgan Emerging Markets Bond Index returned +30.16%. Twelve-month performance
was restrained by the difficult market conditions that existed in 1994 and
early 1995; ADF's total return was +6.11% on a net asset value basis which
compared with +6.04% for the Index over the same period. The Fund paid
dividends totaling $0.63 per share during the previous six months, or $0.105
per month.
ECONOMIC REVIEW
While the U.S. economy slowed in the first half of 1995, growth
reaccelerated in the third quarter due to larger than expected increases in
residential housing, government spending and business inventories. For the
quarter, gross domestic product rose 4.2%, up from 1.3% in the second quarter.
Growth in consumer spending, excluding housing, was moderate. For economic
growth to continue, consumer spending, which represents two-thirds of the U.S.
economy, must increase from its third quarter pace of 0.7%. Currently, support
for higher consumer spending remains weak. Real disposable income has risen
very modestly in 1995 and personal debt levels continue to escalate.
Despite the strong third quarter growth, concerns regarding inflation have
largely subsided. Broad price indices such as the Consumer Price Index and
Producer Price Index have risen very modestly and labor costs remain under
control. The favorable inflation outlook and the chance of a significant
federal government deficit reduction package may allow the Federal Reserve to
cut interest rates in the period ahead.
BOND MARKET REVIEW
Since we last reported, the U.S. bond market continued to post significant gains
across nearly all fixed income sectors. The rally was fueled largely by the
aforementioned economic developments. Investment grade and high yield corporate
securities offered the highest total return (income plus price appreciation).
Treasury and mortgage obligations also performed well, though mortgage returns
were tempered by higher prepayment activity. Across all major sectors of the
U.S. fixed income market, longer-duration securities outperformed shorter-
duration securities as interest rates for all maturities declined.
Outside the U.S., emerging market and other foreign debt prices have rebounded
sharply since March. The rebound is due, in part, to the favorable U.S. interest
rate environment and some improvement in the Mexican and Argentine economic
outlook.
INVESTMENT OUTLOOK
It is our view that U.S. economic growth will moderate in the fourth quarter, to
an annual growth rate of approximately 2.7%. This projected growth rate is not
expected to add significantly to inflationary pressures, and if our forecast
proves correct the result should be further gains in U.S. bond prices.
High yield securities should continue to outperform in the months ahead. In
particular, we expect issues rated high B and low BB to benefit from the
favorable investment environment of low interest rates and modest economic
growth. We currently
1
<PAGE>
ACM Managed Dollar Income Fund, Inc.
================================================================================
favor the communication and technology sectors as opposed to cyclicals. Select
issues in these two sectors are expected to continue to benefit from the
industry consolidation that is occurring at attractive valuation multiples.
Longer term, we expect the high yield market to continue to benefit from strong
mutual fund and pension asset inflows.
In emerging markets, Brazil and Poland may offer good investment opportunities
over the next six months. It is our expectation that Brazilian debt will
outperform obligations of other Latin American countries as a result of
improving economic conditions and a possible debt buy-back program that would
help boost bond prices over the near term. Similarly, Polish debt obligations
should outperform other non-Latin debt as the country continues its impressive
economic growth.
We continue to believe that ADF's strategy will provide superior relative
investment results for long-term shareholders. We appreciate your continued
investment in the Fund and look forward to reporting to you again in the coming
months.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Wayne D. Lyski
Wayne D. Lyski
President
2
<PAGE>
Portfolio Of Investments
September 30, 1995 ACM Managed Dollar Income Fund, Inc.
================================================================================
<TABLE>
<CAPTION> Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SOVEREIGN DEBT
OBLIGATIONS--66.2%
COLLATERALIZED
BRADY BONDS*--38.6%
BRAZIL--9.6%
Republic of Brazil
Par Bonds (a)
YL3, 4.25%, 4/15/24........ $11,000 $ 5,355,625
YL4, 4.25%, 4/15/24........ 47,300 23,029,188
------------
Total Brazilian Securities
(cost $27,552,655)......... 28,384,813
------------
MEXICO--6.2%
United Mexican States
Euro Par Bonds
6.25%, 12/31/19
Series A................... 15,000 9,140,625
Series B................... 15,000 9,140,625
------------
Total Mexican Securities
(cost $18,078,489)......... 18,281,250
------------
JORDAN--6.0%
The Kingdom of Jordan
Par Bonds
4.00%, 12/23/23 (a)
(cost $21,369,821)......... 39,670 17,752,325
------------
ECUADOR--4.8%
Republic of Ecuador
Discount Bonds FRN
6.8125%, 2/28/25 (b)
(cost $14,754,341)......... 28,850 14,244,688
------------
VENEZUELA--4.4%
Republic of Venezuela
Par Bonds
6.75%, 3/31/20
Series A................... 15,000 7,696,875
Series B................... 10,500 5,387,813
------------
Total Venezuelan Securities
(cost $13,081,805)......... 13,084,688
------------
NIGERIA--3.4%
Central Bank of Nigeria
Par Bonds VRN
6.25%, 11/15/20 (b)
(cost $9,578,289).......... 22,000 9,872,500
------------
PHILIPPINES--2.8%
Central Bank of Philippines
Par Bonds
5.75%, 12/01/17 (a)
(cost $8,105,544).......... 10,900 8,089,844
------------
ARGENTINA--1.4%
Republic of Argentina
Euro Par Bonds
5.00%, 3/31/23 (a)
(cost $3,981,548).......... 8,300 4,033,260
------------
Total Collateralized
Brady Bonds
(cost $116,502,492)........ 113,743,368
------------
LOAN PARTICIPATIONS &
ASSIGNMENTS--4.4%
ALGERIA--1.9%
Algeria Refinanced Trust
Tranche B
Loan Assignment FRN
3/04/97 (b)
8.1875%.................... 12,000 4,440,000
7.3125%.................... 3,000 1,110,000
------------
Total Algerian Securities
(cost $13,272,173)......... 5,550,000
------------
RUSSIA--1.1%
Vneshekonombank
Loan Assignment (c)
(cost $3,193,750).......... 10,000 3,281,250
------------
MOROCCO--1.0%
Republic of Morocco
Loan Participation FRN
6.6875%, 1/01/09 (b)
(cost $3,254,571).......... 5,000 3,126,550
------------
NICARAGUA--0.4%
Republic of Nicaragua
Loan Assignment (c)
(cost $1,740,000).......... 13,000 1,056,250
------------
Total Loan Participations &
Assignments
(cost $21,460,494)......... 13,014,050
------------
</TABLE>
3
<PAGE>
Portfolio Of Investments (continued) ACM Managed Dollar Income Fund, Inc.
================================================================================
<TABLE>
<CAPTION> Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
OTHER SOVEREIGN
DEBT OBLIGATIONS--23.2%
BULGARIA--9.1%
Republic of Bulgaria
IAB FRN
6.75%, 7/28/11 (b)
(cost $24,329,693)......... $59,384 $ 26,778,447
-------------
POLAND--6.2%
Republic of Poland
PDI Bonds (a)
3.25%, 10/27/14
(cost $18,181,346)......... 29,000 18,369,615
-------------
VENEZUELA--3.1%
Republic of Venezuela
DCB FRN
6.8125%, 12/18/07 (b)
(cost $9,138,883).......... 18,000 9,106,875
-------------
BRAZIL--3.0%
Republic of Brazil C Bonds
8.00%, 4/15/14 (d)......... 10,300 5,487,973
Republic of Brazil
DCB FRN
7.3125%, 4/15/12 (b)....... 6,000 3,472,470
-------------
Total Brazilian Securities
(cost $8,552,124).......... 8,960,443
-------------
ECUADOR--1.8%
Republic of Ecuador
PDI Bonds
6.8125%, 2/27/15 (e)....... 13,785 4,273,336
Republic of Ecuador
IEB FRN
6.75%, 12/21/04 (b)........ 1,720 1,014,741
-------------
Total Ecuadorian Securities
(cost $4,850,060).......... 5,288,077
-------------
Total Other Sovereign Debt
Obligations (cost $65,052,106) 68,503,457
-------------
Total Sovereign
Debt Obligations
(cost $203,015,092)........ 195,260,875
-------------
U.S. CORPORATE FIXED
INCOME OBLIGATIONS--51.6%
Acetex Corp.
9.75%, 10/01/03 (f)........ 2,840 2,864,850
Algoma Steel, Inc.
12.375%, 7/15/05........... 7,000 6,440,000
Bruno's, Inc.
10.50%, 8/01/05............ 4,000 3,920,000
CAI Wireless Systems, Inc.
12.25%, 9/15/02............ 5,000 5,212,500
Calmar, Inc.
11.50%, 8/15/05 (f)........ 5,000 5,075,000
Crain Industries, Inc.
13.50%, 8/15/05 (f)........ 5,000 5,175,000
Crown Paper Co.
11.00%, 9/01/05............ 6,000 5,970,000
Dictaphone Corp.
11.75%, 8/01/05............ 5,000 5,025,000
GNF Corp.
10.625%, 4/01/03........... 5,000 4,375,000
Galaxy Telecom L.P.
12.375%, 10/01/05.......... 4,540 4,534,325
Gearbulk Holding, Ltd.
11.25%, 12/01/04........... 7,000 7,455,000
Graphic Controls Corp.
12.00%, 9/15/05 (f)........ 4,000 4,060,000
Harvard Industries, Inc.
11.125%, 8/01/05 (f)....... 5,000 5,112,500
International Wire Group, Inc.
11.75%, 6/01/05 (f)........ 6,000 6,090,000
Johnstown America Industries, Inc.
11.75%, 8/15/05............ 5,000 4,987,500
Mohegan Tribal
Gaming Authority
13.50%, 11/15/02 (f)....... 3,000 3,112,500
Peoples Telephone
Company, Inc.
12.25%, 7/15/02 (f)........ 5,000 5,175,000
Premier Parks, Inc.
12.00%, 8/15/03 (f)........ 5,000 5,100,000
Primeco, Inc.
12.75%, 3/01/05............ 8,000 8,280,000
Ralphs Grocery Co.
10.45%, 6/15/04............ 5,000 4,912,500
</TABLE>
4
<PAGE>
ACM Managed Dollar Income Fund, Inc.
================================================================================
<TABLE> Shares or
<CAPTION> Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Renaissance Cosmetics, Inc.
13.75%, 8/15/01.............. $ 4,000 $ 3,980,000
warrants (c)(g).............. 8 140,000
SC International Services, Inc.
13.00%, 10/01/05............. 2,000 2,020,000
Sullivan Graphics, Inc.
12.75%, 8/01/05 (f).......... 5,000 4,981,250
Tembec Finance Corp.
9.875%, 9/30/05.............. 4,000 3,980,000
Terex Corp.
13.75%, 5/15/02 (f).......... 4,300 3,547,500
Terra Industries, Inc.
10.50%, 6/15/05.............. 7,000 7,385,000
Trans-Resources, Inc.
11.875%, 7/01/02 (f)......... 5,000 4,725,000
TransTexas Gas Corp.
11.50%, 6/15/02.............. 6,000 6,300,000
Trump Plaza Funding, Inc.
10.875%, 6/15/01............. 6,000 5,565,000
Tultex Corp.
10.625%, 3/15/05............. 6,500 6,816,875
------------
Total U.S. Corporate Fixed
Income Obligations
(cost $150,500,021).......... 152,317,300
------------
NON-U.S. FIXED
INCOME SECURITIES--3.1%
ARGENTINA--2.6%
Acindar Industries FRN
11.875%, 11/12/98 (b)........ 7,000 5,005,000
MetroGas, S.A.
12.00%, 8/15/00 (f).......... 2,750 2,701,875
------------
Total Argentinian Securities
(cost $9,087,857)............ 7,706,875
------------
MEXICO--0.5%
Tribasa Toll Road
Euro-Dollar Trust 1
10.50%, 12/01/11 (f)
(cost $1,961,317)............ 2,000 1,530,000
------------
Total Non-U.S. Fixed
Income Securities
(cost $11,049,174)........... 9,236,875
------------
<CAPTION>
Contracts or
Principal
Amount
(000)
<S> <C> <C>
OTHER SOVEREIGN
DEBT RELATED--4.9%
Bayerische Landesbank
Spread Notes--U.S.
Treasury Bonds 7.625%,
2/15/25 versus Brazil
Par Bonds 4.00%, 4/15/24
9.125%, 3/28/96 (h).......... 3,000 2,806,800
Morgan Guaranty Trust Co. (i)
Linked to U.S. $
Restructured Ivory Coast
9.00%, 12/19/95............. 1,699 1,789,709
Linked to U.S. $
Unrestructured Ivory Coast
9.00%, 12/19/95............. 1,773 1,754,765
Linked to Vneshekonombank
10.00%, 1/23/96............. 7,520 8,189,503
------------
Total Other Sovereign Debt
Related (cost $13,991,696)... 14,540,777
------------
TIME DEPOSIT--4.1%
State Street Bank & Trust Co.,
5.50%, 10/02/95
(cost $12,000,000)........... 12,000 12,000,000
------------
CALL OPTIONS
PURCHASED--0.2%
Vneshekonombank
Loan Assignment
expiring October '95
@ $31.25..................... 200 469,200
Republic of Argentina
Euro Par Bonds
5.00%, 3/31/23
expiring December '95
@ $72.50..................... 165 38,527
------------
Total Call Options Purchased
(cost $361,650).............. 507,727
------------
TOTAL INVESTMENTS--130.1%
(cost $390,917,633).......... $383,863,554
------------
</TABLE>
5
<PAGE>
Portfolio Of Investments (continued) ACM Managed Dollar Income Fund, Inc.
================================================================================
<TABLE>
<CAPTION> Contracts U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
OUTSTANDING PUT
OPTION WRITTEN--(0.4%)
Republic of Argentina
Euro Par Bonds
5.00%, 3/31/23
expiring December '95
@ $68.50 (premium
received $1,441,276)...... 165 $ (1,240,553)
------------
TOTAL INVESTMENTS, NET
OF OUTSTANDING OPTION
WRITTEN--129.7% 382,623,001
Other assets less liabilities--(29.7%) (87,610,034)
------------
NET ASSETS--100% $295,012,967
============
- --------------------------------------------------------------------------------
</TABLE>
* Sovereign debt obligations issued as part of debt restructurings that are
collateralized in full as to principal due at maturity by U.S. Treasury zero
coupon obligations which have the same maturity as the Brady Bond.
(a) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at September 30, 1995.
(b) Coupon will fluctuate based upon an interest rate index. Stated interest
rate in effect at September 30, 1995.
(c) Non-income producing security.
(d) Coupon consists of 4.00% cash payment and 4.00% paid-in-kind.
(e) Coupon consists of 3.00% cash payment and 3.8125% paid-in-kind.
(f) 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,
1995, these securities amounted to $59,250,475 or 20.1% of net assets.
(g) Each warrant entitles the holder to purchase a share of common stock at an
exercise price of $0.01 per share. The warrants are exerciseable until
August 15, 2001.
(h) The redemption value of this security is indexed to the spread between the
referenced treasury yield and the referenced emerging market debt yield.
(i) The redemption value of these securities is linked to the change in the bid
price of the referenced emerging market debt.
Glossary of terms:
DCB - Debt Conversion Bonds.
FRN - Floating Rate Note.
IAB - Interest Arrears Bonds.
IEB - Interest Equalization Bonds.
PDI - Past Due Interest.
VRN - Variable Rate Note.
See notes to financial statements.
6
<PAGE>
Statement Of Assets And Liabilities
September 30, 1995 ACM Managed Dollar Income Fund, Inc.
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $390,917,633).................................. $383,863,554
Cash..................................................................................... 617,456
Receivable for investment securities sold................................................ 11,459,537
Interest receivable...................................................................... 10,233,419
Deferred organization expenses and other assets.......................................... 32,573
------------
Total assets............................................................................. 406,206,539
------------
LIABILITIES
Outstanding option written, at value (premium received $1,441,276)....................... 1,240,553
Loan payable............................................................................. 80,500,000
Payable for investment securities purchased.............................................. 25,687,387
Net unrealized depreciation of swap contracts............................................ 2,797,250
Interest payable......................................................................... 540,034
Advisory fee payable..................................................................... 238,814
Administrative fee payable............................................................... 47,762
Accrued expenses and other liabilities................................................... 141,772
------------
Total liabilities........................................................................ 111,193,572
------------
NET ASSETS (equivalent to $10.42 per share, based on 28,325,009 shares outstanding)....... $295,012,967
============
COMPOSITION OF NET ASSETS
Common stock, at par..................................................................... $ 283,250
Additional paid-in capital............................................................... 391,817,637
Accumulated net realized loss............................................................ (87,437,314)
Net unrealized depreciation of investments, options and swap contracts................... (9,650,606)
------------
$295,012,967
============
NET ASSET VALUE PER SHARE................................................................. $10.42
======
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
7
<PAGE>
Statement Of Operations
Year Ended September 30, 1995 ACM Managed Dollar Income Fund, Inc.
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest..................................................................................... $46,896,994
Dividends.................................................................................... 478,515 $ 47,375,509
-----------
EXPENSES
Advisory fee................................................................................. 2,662,568
Administrative fee........................................................................... 532,520
Loan origination fee and loan expenses....................................................... 348,792
Audit and legal.............................................................................. 174,332
Custodian.................................................................................... 170,643
Transfer agency.............................................................................. 104,407
Reports and notices to shareholders.......................................................... 66,222
Directors' fees.............................................................................. 27,376
Amortization of organization expenses........................................................ 7,997
Miscellaneous................................................................................ 61,178
-----------
Total expenses before interest............................................................... 4,156,035
Interest expense............................................................................. 5,871,499
-----------
Total expenses............................................................................... 10,027,534
-------------
Net investment income........................................................................ 37,347,975
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND OPTIONS
Net realized loss on investment transactions................................................. (46,041,439)
Net realized loss on option transactions..................................................... (2,849,452)
Net change in unrealized depreciation of investments, options and swap contracts............. 25,563,387
-------------
Net loss on investments...................................................................... (23,327,504)
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................................... $ 14,020,471
=============
</TABLE>
Statement Of Changes In Net Assets
================================================================================
<TABLE>
<CAPTION>
For The October 22, 1993*
Year Ended to
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income........................................................... $ 37,347,975 $ 31,168,079
Net realized loss on investment and option transactions......................... (48,890,891) (38,165,107)
Net change in unrealized depreciation of investments, options and swap contracts 25,563,387 (35,213,993)
------------ ------------
Net increase (decrease) in net assets from operations........................... 14,020,471 (42,211,021)
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income............................................ (37,303,113) (31,168,079)
Distributions in excess of net investment income................................ -0- (448,110)
Tax return of capital distribution.............................................. (465,363) (1,884,838)
COMMON STOCK TRANSACTIONS
Net proceeds from sale of common stock.......................................... -0- 383,097,000
Offering costs charged to additional paid-in capital............................ -0- (1,390,000)
Reinvestment of dividends resulting in the issuance of Common Stock............. 4,941,844 7,724,066
------------ ------------
Total increase (decrease)....................................................... (18,806,161) 313,719,018
NET ASSETS
Beginning of period............................................................. 313,819,128 100,110
------------ ------------
End of period................................................................... $295,012,967 $313,819,128
============ ============
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
See notes to financial statements.
8
<PAGE>
Statement Of Cash Flows
Year Ended September 30, 1995 ACM Managed Dollar Income Fund, Inc.
================================================================================
<TABLE>
<S> <C> <C>
INCREASE (DECREASE) IN CASH FROM OPERATING ACTIVITIES:
Interest and dividends received.......................................... $ 43,699,992
Interest expense paid.................................................... (6,438,582)
Operating expenses paid.................................................. (5,488,128)
---------------
Net increase in cash from operating activities........................... $ 31,773,282
INVESTING ACTIVITIES:
Purchases of long-term portfolio investments............................. (1,233,426,261)
Proceeds from disposition of long-term portfolio investments............. 1,274,321,487
Purchases of short-term portfolio investments, net....................... (28,467,052)
---------------
Net increase in cash from investing activities........................... 12,428,174
FINANCING ACTIVITIES*:
Cash dividends and distributions paid.................................... (33,084,000)
Proceeds from borrowings................................................. 15,000,000
Repayment of borrowings.................................................. (25,500,000)
---------------
Net decrease in cash from financing activities........................... (43,584,000)
------------
Net increase in cash..................................................... 617,456
Cash at beginning of year................................................ -0-
------------
Cash at end of year...................................................... $ 617,456
============
- ----------------------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM
OPERATIONS TO NET INCREASE IN CASH FROM OPERATING
ACTIVITIES:
Net increase in net assets from operations............................... $14,020,471
ADJUSTMENTS:
Decrease in interest receivable.......................................... $ 108,294
Accretion of bond discount............................................... (3,783,811)
Decrease in accrued expenses............................................. (1,332,093)
Decrease in interest payable............................................. (567,083)
Net loss on investments.................................................. 23,327,504
-----------
Total adjustments........................................................ 17,752,811
-----------
NET INCREASE IN CASH FROM OPERATING ACTIVITIES............................ $31,773,282
===========
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-cash financing activities not included herein consist of reinvestment
of dividends and distributions.
See notes to financial statements.
9
<PAGE>
Notes To Financial Statements
September 30, 1995 ACM Managed Dollar Income Fund, Inc.
================================================================================
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. On October 19, 1993, the Fund sold 7,100 shares of common
stock for $100,110 to Alliance Capital Management, L.P. (the "Adviser"). The
Fund commenced operations on October 22, 1993. The following is a summary of
significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Listed securities not
traded and securities traded in the over-the-counter market, including listed
debt securities whose primary market is believed to be over-the-counter, are
valued at the mean between the most recent quoted bid and asked prices provided
by the principal market makers. Publicly traded sovereign debt obligations are
typically traded internationally on the over-the-counter market. Due to the
nature of the markets for sovereign debt obligations, quotations from several
sources are obtained so that the Fund's portfolio investments are not generally
priced by a single source. Readily marketable sovereign debt obligations and
fixed income securities may be valued on the basis of prices provided by a
pricing service when such prices are believed by the Adviser to reflect the fair
value of such securities. Options are valued at market value or fair value using
methods determined by the Board of Directors. Securities for which market
quotations are not readily available are valued in good faith at fair value
using methods determined by the Board of Directors. Securities which mature in
60 days or less are valued at amortized cost, which approximates market value,
unless this method does not represent fair value.
2. Organization Expenses
Organization expenses of approximately $40,000 were deferred and are being
amortized on a straight-line basis through October 1998.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute 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.
4. 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 determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend date
and are determined in accordance with income tax regulations.
6. Reclassification of Components of Net Assets
During the year, the Fund reclassified certain components of net assets. The
reclassifications were the result of permanent book to tax differences as well
as a reclassification of the tax return of capital. The reclassifications
resulted in a net decrease to distributions in excess of net investment income
and a corresponding decrease to additional paid-in capital of $465,363. Net
assets were not affected by the reclassifications.
10
<PAGE>
ACM Managed Dollar Income Fund, Inc.
================================================================================
NOTE B: Advisory and Administrative Fees
Under the terms of an Investment Advisory Agreement, the Fund pays 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 an
Administration Agreement, the Fund pays Middlesex 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. The Administrator prepares 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
and options) aggregated $1,241,439,273 and $1,293,778,077, respectively, for the
year ended September 30, 1995. At September 30, 1995, the cost of securities for
federal income tax purposes was $394,441,636. Accordingly, gross unrealized
appreciation of investments was $8,783,582 and gross unrealized depreciation of
investments was $19,361,664, resulting in net unrealized depreciation of
$10,578,082.
For federal income tax purposes, the Fund had a capital loss carryforward at
September 30, 1995 of approximately $48,700,000 which will expire in 2003.
Options Transactions
For hedging purposes, the Fund purchases and writes (sells) 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 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 premium
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 option
transactions. 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 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 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.
Transactions in options written for the year ended September 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Number of Premiums
Options Written Contracts Received
--------- -----------
<S> <C> <C>
Options outstanding at
beginning of year............. 950 $ 2,495,000
Options written................. 2,237 11,438,564
Options expired................. (1,050) (1,492,500)
Options exercised............... (655) (5,541,750)
Options terminated in
closing transactions.......... (1,317) (5,458,038)
------ -----------
Options outstanding at
September 30, 1995............ 165 $ 1,441,276
====== ===========
</TABLE>
11
<PAGE>
Notes To Financial Statements (continued) ACM Managed Dollar Income Fund, Inc.
================================================================================
NOTE D: Interest Rate Swap Agreements
The Fund enters into interest rate swaps on sovereign debt obligations to
protect itself from interest rate fluctuations on the underlying floating rate
debt instruments. An interest rate 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 unrealized
appreciation or depreciation on interest rate swap contracts.
The Fund has entered into Interest Rate Swap Agreements with Morgan Guaranty
Trust Company of New York ("Morgan").
At September 30, 1995, the Fund had outstanding interest rate swaps as follows:
<TABLE>
<CAPTION>
Rate Type
-----------------------------------
Unrealized
Swap Notional Termination Payments Made Payments Received Appreciation
Counterparty Amount Date by the Fund by the Fund (Depreciation)
------------ ------------ ----------- --------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Morgan $25,000,000* 2/09/96 Floating-LIBOR+ Floating-LIBOR
plus 1.000% plus .8125% $ 132,750
Morgan 50,000,000 1/01/09 Floating-LIBOR
plus .8125% Fixed-6.6100% (2,930,000)
-----------
$(2,797,250)
===========
</TABLE>
* The payments made by the Fund are based on a
notional amount of $15,653,255.
+ LIBOR--London Interbank Offered Rate.
- --------------------------------------------------------------------------------
NOTE E: Capital Stock
There are 300,000,000 shares of $.01 par value capital stock authorized. Of the
28,325,009 shares of Common Stock outstanding at September 30, 1995, the Adviser
owned 7,100 shares. In addition to the shares issued to the Adviser, an initial
public offering of the Fund's shares resulted in the issuance of 27,170,000
shares of the Fund's common stock, for net proceeds of $383,097,000 after
deducting underwriting discounts and commissions. Offering costs of $1,390,000
relating to the initial public offering have been charged to additional paid-in
capital. During the year ended September 30, 1995, and for the period from
October 22, 1993 to September 30, 1994, the Fund issued 530,592 and 617,317
shares, respectively, in connection with the Fund's Dividend Reinvestment Plan.
12
<PAGE>
ACM Managed Dollar Income Fund, Inc.
================================================================================
NOTE F: Bank Borrowing
The Fund entered into a Revolving Credit Agreement with Citibank, N.A. on March
31, 1994. The maximum credit available is $100,000,000 and the amount
outstanding as of September 30, 1995 was $80,500,000 with an average interest
rate of 7.30%. 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, 1995 was approximately
$81,200,000 with a related weighted average annualized interest rate of 7.13%.
The Fund is also obligated to pay Citibank, N.A. a commitment fee computed at
the rate of .25 of 1% per annum on the average daily unused portion of the
revolving credit.
- --------------------------------------------------------------------------------
NOTE G: Concentration of Risk
Investing in securities of foreign companies and foreign governments involves
special risks which include revaluation of currencies and future adverse
political and economic developments. 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.
- --------------------------------------------------------------------------------
NOTE H: Quarterly Results of Operations (unaudited)
<TABLE>
<CAPTION>
Net Change
Net Realized and In Net Assets
Net Investment Unrealized Gain (Loss) Resulting from Market Price
Income on Investments Operations on NYSE
----------------- ---------------------- ---------------- --------------
Total Per Total Per Total Per
Quarter Ended (000) Share (000) Share (000) Share High Low
- ------------- ------- ------ -------- --------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
September 30, 1995..... $ 9,199 $ .32 $ 13,397 $ .47 $ 22,596 $ .79 $ 10.000 $ 9.250
June 30, 1995.......... 9,489 .34 42,762 1.52 52,251 1.86 $ 10.125 $ 8.250
March 31, 1995......... 9,697 .34 (36,750) (1.31) (27,053) (.97) $ 10.500 $ 7.625
December 30, 1994...... 8,963 .32 (42,737) (1.53) (33,774) (1.21) $ 11.125 $ 9.500
------- ----- -------- ------ -------- ------
$37,348 $1.32 $(23,328) $ (.85) $ 14,020 $ .47
======= ===== ======== ====== ======== ======
September 30, 1994..... $ 8,633 $ .31 $ 13,422 $ .48 $ 22,055 $ .79 $ 12.125 $10.500
June 30, 1994.......... 8,550 .31 (11,729) (.42) (3,179) (.11) $ 13.250 $11.000
March 31, 1994......... 7,855 .29 (85,763) (3.12) (77,908) (2.83) $ 15.125 $12.125
December 31, 1993*..... 6,130 .22 10,691 .40 16,821 .62 $ 15.125 $14.000
------- ----- -------- ------ -------- ------
$31,168 $1.13 $(73,379) $(2.66) $(42,211) $(1.53)
======= ===== ======== ====== ======== ======
</TABLE>
* From October 22, 1993 (commencement of operations).
13
<PAGE>
Financial Highlights ACM Managed Dollar Income Fund, Inc.
================================================================================
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
October 22, 1993*
Year Ended to
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period................................. $11.29 $14.04(a)
------ ------
Income From Investment Operations
- ---------------------------------
Net investment income................................................ 1.32 1.13
Net realized and unrealized loss on investment and option
transactions........................................................ (.85) (2.66)
------ ------
Net increase (decrease) in net asset value from operations........... .47 (1.53)
------ ------
Less: Distributions
- -------------------
Dividends from net investment income................................. (1.32) (1.13)
Distributions in excess of net investment income..................... -0- (.02)
Tax return of capital distribution................................... (.02) (.07)
------ ------
Total distributions.................................................. (1.34) (1.22)
------ ------
Net asset value, end of period....................................... $10.42 $11.29
====== ======
Market value, end of period.......................................... $9.875 $11.25
====== ======
Total Return (b)
- ----------------
Total investment return based on:
Market value........................................................ 0.92% (11.94)%
Net asset value..................................................... 6.11% (11.62)%
Ratios/Supplemental Data
- ------------------------
Net assets, end of period (000's omitted)............................ $295,013 $313,819
Ratio of expenses to average net assets.............................. 2.83% 1.78%(c)
Ratio of expenses to average net assets excluding interest expense... 1.17% 1.07%(c)
Ratio of net investment income to average net assets................. 10.56% 8.54%(c)
Portfolio turnover rate.............................................. 344% 225%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
(a) Net of offering costs of $.06.
(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 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) Annualized.
14
<PAGE>
Report Of Ernst & Young LLP
Independent Auditors ACM Managed Dollar Income Fund, Inc.
================================================================================
To the Shareholders and Board of Directors
ACM Managed Dollar Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of ACM
Managed Dollar Income Fund, Inc., including the portfolio of investments, as of
September 30, 1995, and the related statement of operations and cash flows for
the year then ended and the statement of changes in net assets and financial
highlights for the year ended September 30, 1995 and for the period from October
22, 1993 (commencement of operations) to September 30, 1994. 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 generally accepted auditing
standards. 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. Our procedures included confirmation of securities owned as of
September 30, 1995, by correspondence with the custodian and brokers. 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, 1995, the results of its
operations and its cash flows for the year then ended, and the changes in its
net assets and the financial highlights for the year ended September 30, 1995,
and for the period from October 22, 1993 to September 30, 1994, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
November 3, 1995
15
<PAGE>
Additional Information ACM Managed Dollar Income Fund, Inc.
================================================================================
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, 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 a 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.
16
<PAGE>
ACM Managed Dollar Income Fund, Inc.
================================================================================
Supplemental Proxy Information
The Annual Meeting of Shareholders of The ACM Managed Dollar Income Fund, Inc.
was held on Friday, March 3, 1995. The description of each proposal and number
of shares voted at the meeting are as follows:
<TABLE>
<CAPTION>
Shares Shares Voted
Voted For Without Authority
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect directors: Class One Directors
(term expires in 1998)
David H. Dievler 26,475,320 909,118
Clifford L. Michel 26,480,651 903,787
Class Two Directors
(term expires in 1996)
John H. Dobkin 26,485,615 898,823
William H. Foulk 26,516,556 867,882
James M. Hester 26,517,521 866,917
Class Three Directors
(term expires in 1997)
Ruth Block 26,506,976 877,462
John D. Carifa 26,512,905 871,533
Robert C. White 26,516,747 867,691
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of
Ernst & Young LLP as the Fund's
independent auditors for the
Fund's fiscal year ending
September 30, 1995: 26,468,593 218,698 697,147
- --------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
ACM Managed Dollar Income Fund, Inc.
================================================================================
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)/
Robert C. White/(1)/
Officers
Wayne D. Lyski, President
Kathleen A. Corbet, Senior Vice President
Paul J. DeNoon, Vice President
Vicki L. Fuller, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Joseph J. Mantineo, Controller
ADMINISTRATOR
Middlesex Administrators L.P.
P.O. Box 9011
Princeton, NJ 08543
CUSTODIAN, DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
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 herein, is transmitted to the
shareholders of ACM Managed Dollar Income Fund, Inc. 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.
18
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ACM Managed Dollar Income Fund, Inc.
Summary of General Information
The Fund
ACM Managed Dollar Income Fund, Inc. is a closed-end management investment
company investing substantially all of its assets in U.S. and non-U.S. fixed
income securities denominated in U.S. dollars. The Fund is designed for
investors who seek high current income and capital appreciation over a period of
years from investing in a portfolio of high yield, high risk U.S. and non-U.S.
fixed income securities which the Fund's investment adviser expects to benefit
from improving economic and credit fundamentals.
Shareholder Information
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 and each Saturday in The New York Times and Barron's and other
newspapers in a table called "Closed-End Funds." Additional information about
the Fund is available by calling 1-800-221-5672.
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 paid
by check mailed directly to the record holder by or under the direction of State
Street Bank & Trust Company. For a copy of the Plan Brochure, please call State
Street Bank and Trust Company at 800-219-4218.
ACM Managed Dollar Income Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
[LOGO OF ALLIANCE CAPITAL APPEARS HERE]
*These registered service marks used under license from the owner,
Alliance Capital Management L.P.
MDIAR
ACM
-----------------
Managed
-----------------
Dollar
-----------------
Income Fund
-----------------
Annual Report
September 30, 1995
[LOGO OF ALLIANCE APPEARS HERE]
