<PAGE>
LETTER TO SHAREHOLDERS ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
May 9, 1995
Dear Shareholder:
ACM Managed Dollar Income Fund's six-month reporting period, through March 31,
1995, can be divided into two distinct periods. From October through December,
the U.S. bond markets continued to be negatively affected by higher interest
rates. Though the impact of stricter monetary policy was less dramatic in the
last three months of 1994 than earlier in the year, prices for most domestic
fixed income sectors continued to suffer during this period. Moreover, high
yield securities, which are generally less sensitive to changes in interest
rates than other fixed income securities, also declined. Beginning in January,
however, the bond markets rebounded, staging an impressive rally across nearly
all domestic fixed income sectors. This recent rally was sparked, in part, by
the belief of many market participants that the Federal Reserve may be at, or
near, the end of its tightening cycle. Unfortunately, gains from the domestic
bond market rally were offset by sharp price declines in emerging markets as a
result of the economic crisis in Mexico.
For the six months ended March 31, 1995, ACM Managed Dollar Income Fund had a
total return of -19.88% on a net asset value basis. Over the same period, the
unmanaged J.P. Morgan Emerging Markets Bond Index returned -18.53%. For the
twelve months ended March 31, 1995, the Fund had a total return of -14.89% on a
net asset value basis, compared with the Index's return of -11.18% in the same
period. The Fund paid dividends totaling $0.82 per share during the previous six
months.
A SOFT LANDING FOR THE ECONOMY?
The long awaited slowdown in the U.S. economy materialized in the first quarter
of 1995. Gross Domestic Product (GDP) rose 2.8% in the period, down from the
previous quarter's torrid pace of 5.1%. Final sales growth moderated to 1.8% due
to weaker than expected consumer spending and a further deterioration of the
U.S. trade balance. Inventories rose sharply in the first quarter with
particular weakness in the manufacturing sector. Despite this recent slowdown,
the U.S. economy remains fundamentally strong and the economy should continue to
expand in 1995, albeit at a slower pace. Supporting economic growth will likely
be continued high levels of consumer and business spending. Real gains in
personal income, strong corporate earnings and easier access to credit are
expected to keep aggregate U.S. consumption at solid levels in the months ahead.
While an increase in overall price levels is expected this year, the inflation
outlook appears generally favorable. Broad price indices such as the Consumer
Price Index (CPI) and Producer Price Index (PPI) have shown few signs of
acceleration and labor costs remain under control. However, with the U.S.
economy believed to be near full capacity utilization, concern regarding
inflation is still warranted. If the economy continues to moderate, the upward
pressure on prices should ease somewhat due to less demand for resources.
EMERGING MARKETS UPDATE
Emerging market debt suffered steep price declines over the past six months. In
December, the Mexican government's decision to float the peso led to a
significant devaluation in its currency versus the U.S. dollar and sparked an
economic crisis that spilled over to other emerging markets. Prices for all
emerging market debt fell in sympathy with Mexican bond markets, in many cases
adding to declines registered earlier in the year. To halt the devaluation of
its currency, the Mexican government implemented an economic recovery plan
designed to rein in the current account deficit and combat inflation. While the
Mexican economic recovery plan is bitter medicine for the country's economic
ills,
1
<PAGE>
ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
preliminary results have been encouraging. From March 9 to April 28, 1995, the
Mexican peso gained 26% versus the U.S. dollar and volatility declined. In
addition, Brady bonds staged an impressive rally with the J.P. Morgan Emerging
Markets Bond Index increasing 27% over the same period. Investors also reacted
favorably to the Argentine government's broad economic reforms and international
financing agreements that strengthen the country's banking system and reaffirmed
the Government's commitment to its currency convertibility system.
BOND MARKET OUTLOOK
The U.S. economic expansion should continue throughout 1995 with GDP moderating
to 2.5% for the year. While inflation momentum may be building, it is our view
that prices will not spiral ahead dramatically. We expect CPI inflation to rise
to 3.5% by the end of 1995. If inflation or inflationary expectations exceed
3.5%, we expect the Federal Reserve to raise the Federal Funds rate an
additional 0.50%, to 6.50%.
Favorable economic data and strong demand relative to supply continue to boost
returns in the U.S. corporate and high yield markets. In the near term, a
slowdown in the U.S. economy should reduce the need for additional tightening by
the Federal Reserve. Since higher interest rates negatively affect most
corporate bond prices, a more neutral monetary policy is viewed very favorably
by participants in the market. In addition, the relatively low supply of
corporate securities should help support current price levels. Inflation remains
the principal variable in bond market forecasts. If, as we anticipate, inflation
and inflationary expectations remain low, we expect corporate and high yield
securities to be positive contributors to the Fund's performance.
Mexico's recent relative political and economic stability has encouraged foreign
investors and modestly improved the outlook for emerging markets. We continue to
believe that emerging market debt offers an attractive total return profile with
the ability to diversify into a variety of credits. Since the end of 1993, the
size of the Brady bond market has nearly doubled and the number of countries
issuing Bradys has grown. In the past twelve months, Brazil, Poland, Bulgaria
and Ecuador issued their first Brady bonds, increasing the total number of
issuing countries to fourteen. ACM Managed Dollar Income Fund's portfolio
reflects this expanding diversity.
We appreciate your investment in ACM Managed Dollar Income Fund and look forward
to reporting to you again later in the year.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Wayne D. Lyski
Wayne D. Lyski
President
2
<PAGE>
PORTFOLIO OF INVESTMENTS
MARCH 31, 1995 (UNAUDITED) ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
SOVEREIGN DEBT OBLIGATIONS -- 59.6%
COLLATERALIZED BRADY BONDS* -- 39.9%
BRAZIL -- 10.5%
Republic of Brazil
Discount Bonds
6.6875%, 4/15/24
(cost $30,477,490)...................... $48,500 $ 24,553,125
------------
NIGERIA -- 7.4%
Central Bank of Nigeria
Par Bonds VRN
6.25%, 11/15/20
(cost $17,479,693)...................... 45,500 17,346,875
------------
JORDAN -- 6.7%
The Kingdom of Jordan
Par Bonds VRN
4.00%, 12/23/23
(cost $24,499,382)...................... 44,670 15,634,500
------------
ECUADOR -- 5.3%
Republic of Ecuador
Discount Bonds
7.25%, 2/28/25.......................... 21,750 9,678,750
Par Bonds
3.00%, 2/28/25.......................... 10,000 2,675,000
------------
Total Ecuadorian Securities
(cost $12,889,272)...................... 12,353,750
------------
ARGENTINA -- 4.3%
Republic of Argentina
Discount Bonds
7.125%, 3/31/23
(cost $13,278,201)...................... 19,000 10,010,625
------------
VENEZUELA -- 2.9%
Republic of Venezuela
Par Bonds
6.75%, 3/31/20
Series A.............................. 12,000 5,182,500
Series B.............................. 4,000 1,727,500
------------
Total Venezuelan Securities
(cost $7,679,349)....................... 6,910,000
------------
BULGARIA -- 2.8%
Republic of Bulgaria
Discount Bonds FRN
7.5625%, 7/28/24
(cost $7,099,980)....................... 15,342 6,453,213
------------
Total Collateralized
Brady Bonds
(cost $113,403,367)..................... $ 93,262,088
------------
LOAN PARTICIPATIONS &
ASSIGNMENTS -- 4.4%
PANAMA -- 1.7%
Republic of Panama
3.718%, 12/28/99
(cost $5,343,750)....................... $10,000 3,975,000
------------
ALGERIA -- 1.7%
Algeria Refinanced Trust
Tranche B
Loan Assignment FRN
7.75%, 3/04/97
(cost $12,760,148)...................... 15,000 3,900,000
------------
RUSSIA -- 0.7%
Vnesheconombank
Loan Assignment (a)
(cost $3,290,625)....................... 7,500 1,696,875
------------
NICARAGUA -- 0.3%
Republic of Nicaragua
Loan Assignment (a)
(cost $1,740,000)....................... 13,000 650,000
------------
Total Loan Participations &
Assignments
(cost $23,134,523)...................... 10,221,875
------------
OTHER SOVEREIGN
DEBT OBLIGATIONS -- 15.3%
BULGARIA -- 8.1%
Republic of Bulgaria
IAB Bonds
7.5625%, 7/28/11
(cost $23,823,126)...................... 55,384 18,899,883
------------
BRAZIL -- 5.5%
Republic of Brazil
IDU Bonds FRN
7.8125%, 1/01/01........................ 11,640 8,566,312
DCB Bonds FRN
6.75%, 4/15/12.......................... 10,250 4,433,125
------------
Total Brazilian Securities
(cost $15,285,455)...................... 12,999,437
------------
</TABLE>
3
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED) ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
ECUADOR -- 1.7%
Republic of Ecuador
PDI Bonds
7.25%, 2/27/15 (b)...................... $13,495 $ 3,070,113
IE Bonds
7.6875%, 12/21/04....................... 1,764 873,180
------------
Total Ecuadorian Securities
(cost $4,723,384)....................... 3,943,293
------------
Total Other Sovereign Debt
Obligations (cost $43,831,965).......... 35,842,613
------------
Total Sovereign
Debt Obligations
(cost $180,369,855)..................... 139,326,576
------------
U.S. CORPORATE FIXED
INCOME OBLIGATIONS -- 63.6%
A.K Steel Corp
10.75%, 4/01/04......................... 8,000 8,080,000
Alliant Techsystems, Inc.
11.75%, 3/01/03......................... 9,000 9,213,750
American Media Operation, Inc.
11.625%, 11/15/04....................... 4,000 4,220,000
CF Cable TV, Inc.
11.625%, 2/15/05........................ 7,500 7,800,000
Chancellor Broadcasting Co.
12.50%, 10/01/04........................ 3,500 3,535,000
Container Corp. of America
9.75%, 4/01/03.......................... 1,000 980,000
11.25%, 5/01/04......................... 4,000 4,200,000
Fort Howard Corp.
9.00%, 2/01/06.......................... 8,000 7,020,000
Gearbulk Holding, Ltd.
11.25%, 12/01/04........................ 7,000 7,367,500
Harvard Industries, Inc.
12.00%, 7/15/04 ........................ 3,000 3,127,500
MDC Holdings, Inc.
11.125%, 12/15/03....................... 3,000 2,565,000
Mobile Telecommunications
Technologies Corp.
13.50%, 12/15/02........................ 7,000 7,315,000
NL Industries, Inc.
11.75%, 10/15/03........................ 7,000 7,192,500
National Medical Enterprises
10.125%, 3/01/05........................ 10,000 10,325,000
Primeco, Inc.
12.75%, 3/01/05......................... 7,000 7,122,500
Renaissance Cosmetics, Inc.
13.75%, 8/15/01......................... $ 4,000 $ 3,780,000
warrants (c)............................ 8,000 120,000
Repap Wisconson, Inc.
9.25%, 2/01/02.......................... 9,500 8,977,500
Rogers Cable Systems, Ltd.
10.00%, 3/15/05......................... 4,000 4,010,000
Specialty Equipment
Companies, Inc.
11.375%, 12/01/03....................... 3,000 2,962,500
Spectravision, Inc.
11.50%, 10/01/01 (d).................... 9,000 4,117,500
Stone Container Corp.
9.875%, 2/01/01......................... 5,000 4,875,000
Thrifty Payless Holdings Units
12.250%, 4/15/04........................ 5,000 5,400,000
Trans-Resources, Inc.
11.875%, 7/01/02 (e).................... 10,000 9,000,000
Tultex Corp.
10.625%, 3/15/05........................ 6,000 6,015,000
UCAR Global Enterprises, Inc.
12.00%, 1/15/05......................... 7,000 7,332,500
Young Broadcasting Corp.
11.75%, 11/15/04........................ 2,000 2,165,000
------------
Total U.S. Corporate Fixed
Income Obligations
(cost $151,004,931)..................... 148,818,750
------------
NON-U.S. FIXED
INCOME SECURITIES -- 7.5%
MEXICO -- 4.6%
Tribasa Toll Road
Euro-Dollar Trust 1
10.50%, 12/01/11 (e).................... 5,000 2,250,000
Cemex SA, ADR
8.875%, 6/10/98......................... 1,760 1,232,000
Grupo Embotellador Mexico
10.75%, 11/19/97........................ 6,000 4,440,000
Grupo Mexicano De Dessarrollo
8.250%, 2/17/01......................... 11,895 2,914,275
------------
Total Mexican Securities
(cost $15,787,283)...................... 10,836,275
------------
ARGENTINA -- 2.9%
Acindar Industries
11.875%, 11/12/98
(cost $8,940,123)....................... 10,000 6,650,000
------------
</TABLE>
4
<PAGE>
ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTRACTS OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Total Non-U.S. Fixed
Income Securities
(cost $24,727,406)...................... $ 17,486,275
------------
OTHER SOVEREIGN DEBT
RELATED -- 3.8%
Bayerische Landesbank Spread
Notes - US Treasury Bonds
6.25%, 8/15/23 verus Brazil
Par Bonds 4.00%, 4/15/24
9.125%, 9/28/95 (f)..................... $3,000 527,400
Morgan Guaranty Trust Co. (g)
Linked to U.S. $
Restructured Ivory Coast
9.00%, 6/19/95.......................... 1,944 1,354,348
------------
Linked to U.S. $
Unrestructured Ivory Coast
9.00%, 6/19/95.......................... 1,971 1,294,952
Linked to Vnesheconombank
9.00%, 7/27/95.......................... 5,355 5,639,886
------------
Total Other Soverign Debt
Related
(cost $12,270,534)...................... 8,816,586
------------
CALL OPTIONS
PURCHASED -- 0.0%
Republic of Argentina
Euro Par Bonds VRN
4.25%, 3/31/23
expiring April '95
@ $72.50................................ 165 -0-
Republic of Philippines
Par Bonds
4.25%, 12/01/17
expiring May '95
@ $63.75................................ 112 30,240
United Mexican States
Euro Par Bonds
6.25%, 12/31/19
expiring June '95
@ $63.3125.............................. 240 $ 13,344
------------
Total Call Options Purchased
(cost $474,900)......................... 43,584
------------
TOTAL INVESTMENTS -- 134.5%
(cost $368,847,626)..................... 314,491,771
------------
OUTSTANDING PUT
OPTIONS WRITTEN -- (2.6%)
Republic of Argentina
Euro Par Bonds VRN
4.25%, 3/31/23
expiring April '95
@ $68.50................................ 165 (2,532,750)
Republic of Philippines
Par Bonds
4.25%, 12/01/17
expiring May '95
@ $57.75................................ 112 (76,160)
United Mexican States
Euro Par Bonds
6.25%, 12/31/19
expiring June '95
@ $60.3125.............................. 240 (3,368,472)
------------
Total Put Options Written
(premium received
$4,290,850)............................... (5,977,382)
------------
TOTAL INVESTMENTS, NET
OF OUTSTANDING OPTIONS
WRITTEN -- 131.9%......................... 308,514,389
Other assets less liabilities -- (31.9%).. (74,722,729)
------------
NET ASSETS -- 100% $233,791,660
============
</TABLE>
5
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED) ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
* 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) Non-income producing security.
(b) Coupon consists of 3.00% cash payment and 4.25% paid-in-kind.
(c) The warrants entitle the holders to purchase 13% common stock at an
exercise price of $0.01 per share. The warrants are exerciseable until
August 15, 2001.
(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) 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 March 31, 1995,
these securities amounted to $11,250,000 or 4.80% net assets.
(f) The redemption value of this security is indexed to the spread between
the referenced treasury yield and the referenced emerging market debt yield.
(g) 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. Stated interest rate in effect at March 31, 1995.
IAB Interest Arrears Bonds.
IDU Interest Due
IE Interest Equalization Bonds.
PDI Past Due Interest Bonds.
VRN Variable Rate Note. Stated interest rate in effect at March 31, 1995.
See notes to financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995 (UNAUDITED) ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $368,847,626)............................ $314,491,771
Receivable for investment securities sold.......................................... 25,517,622
Interest receivable................................................................ 11,126,882
Deferred organization expenses and other assets.................................... 35,588
------------
Total assets....................................................................... 351,171,863
------------
LIABILITIES
Outstanding options written, at value (premium received $4,290,850)................ 5,977,382
Due to custodian................................................................... 1,501,616
Loan payable....................................................................... 68,000,000
Payable for investment securities purchased........................................ 28,333,564
Net unrealized depreciation of swap contracts...................................... 9,280,422
Dividend payable................................................................... 2,960,191
Advisory fee payable............................................................... 189,513
Administrative fee payable......................................................... 37,903
Interest payable................................................................... 25,145
Accrued expenses and other liabilities............................................. 1,074,467
------------
Total liabilities.................................................................. 117,380,203
------------
NET ASSETS (equivalent to $8.29 per share, based on 28,192,298 shares outstanding)... $233,791,660
============
COMPOSITION OF NET ASSETS
Common stock, at par............................................................... $ 281,923
Additional paid-in capital......................................................... 391,051,792
Distributions in excess of net investment income................................... (4,507,668)
Accumulated net realized loss...................................................... (87,711,577)
Net unrealized depreciation of investments, options and swap contracts............. (65,322,810)
------------
$233,791,660
============
NET ASSET VALUE PER SHARE............................................................ $8.29
=====
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS
OCTOBER 1, 1994 TO MARCH 31, 1995 (UNAUDITED) ACM MANAGED DOLLAR INCOME
FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................................ $23,282,632
Dividends........................................................................... 478,516 $ 23,761,148
----------- ------------
EXPENSES
Advisory fee........................................................................ 1,325,575
Administrative fee.................................................................. 265,123
Loan origination fee and loan expenses.............................................. 297,060
Custodian........................................................................... 68,647
Audit and legal..................................................................... 65,634
Transfer agency..................................................................... 49,500
Reports and notices to shareholders................................................. 45,231
Directors' fees..................................................................... 13,880
Amortization of organization expenses............................................... 3,988
Miscellaneous....................................................................... 13,282
-----------
Total expenses before interest...................................................... 2,147,920
Interest expense.................................................................... 2,952,518
-----------
Total expenses...................................................................... 5,100,438
------------
Net investment income............................................................... 18,660,710
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND OPTIONS
Net realized loss on investment transactions........................................ (46,205,539)
Net realized loss on option transactions............................................ (3,172,765)
Net change in unrealized depreciation of investments, options and swap contracts.... (30,108,817)
------------
Net loss on investments............................................................. (79,487,121)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS............................................ $(60,826,411)
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED OCTOBER 22, 1993*
MARCH 31, 1995 TO
(UNAUDITED) SEPTEMBER 30, 1994
---------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income..................................................... $ 18,660,710 $ 31,168,079
Net realized loss on investment and option transactions................... (49,378,304) (38,165,107)
Net change in unrealized depreciation of investments, options and
swap contracts........................................................ (30,108,817) (35,213,993)
------------ ------------
Net decrease in net assets from operations................................ (60,826,411) (42,211,021)
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income...................................... (18,660,710) (31,168,079)
Distributions in excess of net investment income.......................... (4,250,300) (448,110)
Tax return of capital distribution........................................ -0- (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....... 3,709,953 7,724,066
------------ ------------
Total increase (decrease)................................................. (80,027,468) 313,719,018
NET ASSETS
Beginning of period....................................................... 313,819,128 100,110
------------ ------------
End of period............................................................. $233,791,660 $313,819,128
============ ============
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
See notes to financial statements.
8
<PAGE>
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED) ACM MANAGED DOLLAR INCOME FUND,
INC.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INCREASE (DECREASE) IN CASH FROM OPERATING ACTIVITIES:
Interest and dividends received..................................... $ 21,143,677
Interest expense paid............................................... (4,034,490)
Operating expenses paid............................................. (2,076,626)
-------------
Net increase in cash from operating activities...................... $ 15,032,561
INVESTING ACTIVITIES:
Purchases of long-term portfolio investments........................ $(535,835,703)
Proceeds from disposition of long-term portfolio investments........ 570,923,725
Purchases of short-term portfolio investments, net.................. (10,622,349)
-------------
Net increase in cash from investing activities...................... 24,465,673
FINANCING ACTIVITIES*:
Cash dividends and distributions paid............................... (16,498,234)
Repayment of borrowings............................................. (23,000,000)
-------------
Net decrease in cash from financing activities...................... (39,498,234)
------------
Net change in cash.................................................. -0-
Cash at beginning of period......................................... -0-
------------
Cash at end of period............................................... $ -0-
============
- --------------------------------------------------------------------------------------------------------------
RECONCILIATION OF NET DECREASE IN NET ASSETS FROM
OPERATIONS TO NET INCREASE IN CASH FROM OPERATING
ACTIVITIES:
Net decrease in net assets from operations.......................... $(60,826,411)
ADJUSTMENTS
Increase in interest receivable..................................... $ (785,169)
Accretion of bond discount.......................................... (1,832,302)
Increase in accrued expenses........................................ 71,294
Decrease in interest expenses....................................... (1,081,972)
Net loss on investments............................................. 79,487,121
-------------
Total adjustments................................................... 75,858,972
------------
NET INCREASE IN CASH FROM OPERATING ACTIVITIES........................ $ 15,032,561
============
</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
MARCH 31, 1995 (UNAUDITED) 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 price 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 SECURITY TRANSACTIONS
Interest income is accrued daily. Security transactions are accounted for on the
date the securities are purchased or sold. Securities purchased or sold on a
when-issued basis may be settled a month or more after trade date. Security
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 re-corded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles.
- --------------------------------------------------------------------------------
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 other clerical services.
10
<PAGE>
ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and options) aggregated $546,494,892 and $602,193,648, respectively, for the six
months ended March 31, 1995. At March 31, 1995 the cost of securities for
federal income tax purposes was $368,937,856. Accordingly, gross unrealized
appreciation of investments was $3,483,988 and gross unrealized depreciation of
investments was $57,930,173, resulting in net unrealized depreciation of
$54,446,185.
1. 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 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 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 period ended March 31, 1995 were as
follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUMS
OPTIONS WRITTEN (000) RECEIVED
--------- -----------
<S> <C> <C>
Outstanding options at
beginning of period....................... 950 $ 2,495,000
Options written............................. 1,742 6,242,300
Options expired............................. (1,050) (1,492,500)
Options exercised........................... (250) (1,312,500)
Options terminated in
closing transactions...................... (875) (1,641,450)
------ -----------
Options outstanding at
March 31, 1995.............................. 517 $ 4,290,850
====== ===========
</TABLE>
- --------------------------------------------------------------------------------
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. 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
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONT.) ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
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") and the Chase Manhattan Bank, N.A.
("Chase").
At March 31, 1995 the Fund had outstanding Interest Rate Swaps as follows:
<TABLE>
<CAPTION>
RATE TYPE
---------------------------------------
SWAP NOTIONAL TERMINATION PAYMENTS MADE PAYMENTS RECEIVED UNREALIZED
COUNTERPARTY AMOUNT DATE BY THE FUND BY THE FUND DEPRECIATION
------------ ------------ ----------- --------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Morgan $50,000,000* 7/14/95 Floating-LIBOR+ Floating-LIBOR $(2,281,250)
plus 1.000% plus .8125%
Morgan 50,000,000 1/01/09 Floating-LIBOR Fixed-6.6100% (5,755,000)
plus .8125%
Morgan 18,000,000 5/31/23 Floating-LIBOR Fixed-8.4260% (810,000)
plus .8125%
Chase 11,640,000 1/02/01 Floating-LIBOR Fixed-7.1000% (434,172)
plus .8125%
-----------
$(9,280,422)
===========
</TABLE>
* The payments made by the Fund are based on a notional amount of $32,500,000.
+ LIBOR - London Interbank Offered Rate.
- --------------------------------------------------------------------------------
NOTE E: CAPITAL STOCK
There are 300,000,000 shares of $.01 par value capital stock authorized.
Of the 28,192,298 shares of Common Stock outstanding at March 31, 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 six months ended March 31, 1995, the Fund
issued 397,881 shares 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 March 31, 1995 was $68,000,000 with an average interest rate
of 7.4375%. 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 period ended
March 31, 1995 was approximately $84,131,319 with a related weighted average
annualized interest rate of 6.94%. 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
<TABLE>
<CAPTION>
NET CHANGE
NET REALIZED AND IN NET ASSETS
NET INVESTMENT UNREALIZED GAIN FROM RESULTING MARKET PRICE
INCOME (LOSS) 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>
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
------- ----- -------- ------ -------- ------
$18,660 $ .66 $(79,487) $(2.84) $(60,827) $(2.18)
======= ===== ======== ====== ======== ======
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 1, 1994 OCTOBER 22, 1993*
TO MARCH 31, 1995 TO
(UNAUDITED) SEPTEMBER 30, 1994
----------------- ------------------
<S> <C> <C>
Net asset value, beginning of period......................... $11.29 $14.04(a)
------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income........................................ .66 1.13
Net realized and unrealized loss on investments
and option transactions.................................... (2.84) (2.66)
------ ------
Net decrease in net asset value from operations ............. (2.18) (1.53)
------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment income......................... (.82) (1.13)
Dividends in excess of net investment income................. -0- (.02)
Tax return of capital distribution .......................... -0- (.07)
------ ------
Total dividends.............................................. (.82) (1.21)
------ ------
Net asset value, end of period............................... $8.29 $11.29
------ ------
Market value, end of period.................................. $8.375 $11.25
------ ------
TOTAL RETURN (B)
- ----------------
Total investment return based on:
Market value................................................. (19.93)% (11.94)%
====== ======
Net asset value.............................................. (19.88)% (11.62)%
====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted).................... $233,791 $313,819
Ratio of expenses to average net assets...................... 2.90%(c) 1.78%(c)
Ratio of expenses to average net assets
excluding interest expense................................. 1.22%(c) 1.07%(c)
Ratio of net investment income to average net assets......... 10.63%(c) 8.54%(c)
Portfolio turnover rate...................................... 151% 225%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
(a) Net of offering cost 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 a year is not annualized.
(c) Annualized.
14
<PAGE>
ACM MANAGED DOLLAR INCOME FUND, INC.
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
JOHN D. CARIFA, Chairman
RUTH BLOCK
DAVID H. DIEVLER
JOHN H. DOBKIN
WILLIAM H. FOULK, JR.
DR. JAMES M. HESTER
CLIFFORD L. MICHEL
ROBERT C. WHITE
OFFICERS
WAYNE D. LYSKI, President
ROBERT M. SINCHE, 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
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
CUSTODIAN, DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
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.
15
<PAGE>
ACM
- --------------------------------------------------------------------------------
Managed
- --------------------------------------------------------------------------------
Dollar
- --------------------------------------------------------------------------------
Income Fund
- --------------------------------------------------------------------------------
Semi-Annual
Report
March 31, 1995
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
Alliance Capital [LOGO APPEARS HERE]
/(R)/These registered service marks used under license from the owner,
Alliance Capital Management L.P.
MDISR
