<PAGE>
LETTER TO SHAREHOLDERS ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
May 23, 1997
Dear Shareholder:
Since our last report in September 1996, the U.S. bond market has posted modest
returns. After rallying at the end of 1996, the market reversed direction in
early 1997 and gave up some of its earlier gains. Data indicating resurgent
strength in the economy, particularly within the labor market, and renewed
concerns about inflation, pushed the bond market lower during the first quarter.
In response to continued strong growth and what were perceived as potential
inflationary imbalances, the Federal Reserve raised interest rates in March,
further eroding bond market returns.
INVESTMENT RESULTS
Although the pace of price appreciation of securities in the emerging market and
high yield bond sectors has slowed recently, we are pleased to report that ACM
Managed Dollar Income Fund, which invests in both of these sectors, posted solid
returns over the most recent reporting period. We have introduced a second
benchmark to this report because your Fund invests at least 35% of its assets in
U.S. high yield securities. Comparing your Fund's investment results with both
an emerging markets and high yield bond index will give you a more accurate
performance comparison.
For the six months ended March 31, 1997, the Fund returned 7.92% on a net asset
value (NAV) basis. This compares with a return of 8.50% for the J.P. Morgan
Emerging Markets Bond Index and 5.94% for the First Boston High Yield Index. For
the twelve months ended March 31, 1997, your Fund achieved a total return of
35.04% on a net asset value basis compared with 31.06% for the J.P. Morgan
Emerging Markets Bond Index and 11.66% for the First Boston High Yield Index.
As is usually the case with funds that invest in emerging markets, your Fund's
performance was strongly influenced by developments in the U.S. economy.
Economic developments in the U.S., which directly impact the domestic high yield
bond market, also substantially, though less directly, impact the emerging
market debt sector. Most emerging market bonds are issued in U.S. dollars and
trade in the U.S. relative to the U.S. yield curve, making them sensitive to
U.S. interest rate levels. Therefore, we present you with a U.S. economic review
and investment outlook in addition to an emerging markets investment outlook.
ECONOMIC REVIEW
The U.S. economy finished 1996 on a strong note. After moderating in the third
quarter, the economy picked up speed as the year came to a close, led by a
rebound in consumer spending. The annualized gain in retail sales of merchandise
jumped to 4.8% in the fourth quarter, up from only 0.9% in the third quarter. An
unexpected surge in export growth also added to year-end growth. In all, growth
in aggregate output, as measured by Gross Domestic Product (GDP), which dipped
to 2.1% in the third quarter, accelerated to 3.8% during the final three months
of 1996.
1
<PAGE>
ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
The economy continued its strong performance in the first quarter of 1997,
buoyed by continued growth in the labor market. The unemployment rate edged down
to 5.2% and wages continued to climb, with hourly earnings up 4% annually
through March. Retail sales continued their strong pace during the first quarter
and consumer confidence remained elevated. The production side of the economy
also showed considerable strength with first quarter industrial production up by
4.9% over levels from a year earlier and total hours worked up by 3.8% over the
same time period. Overall, GDP growth jumped to 5.6% during the first three
months of 1997 -- its fastest rate of increase in nearly 10 years.
Despite this strong growth, inflation remained well-behaved. After moving
slightly higher late in 1996, consumer and producer price gains both retreated
in early 1997 with consumer prices advancing through March at a 2.8% annual rate
and producer prices up just 1.6% for the same period. Nonetheless, the Federal
Reserve raised interest rates 0.25% at the end of March in a preemptive strike
against what were seen as mounting inflationary pressures.
INVESTMENT OUTLOOK
U.S. economic growth has continued into its third consecutive quarter at a pace
considered above the long-term, non-inflationary rate. While continued growth at
the current pace may warrant additional rate increases, we expect the U.S.
economy to gradually slow over the next several quarters to a more sustainable
2% to 2.5% growth rate. We anticipate that this slowing will occur before any
substantial inflationary pressures materialize. Given the potential for further
rate increases in the near-term, the market will be particularly vulnerable to
daily economic news which may put upward pressure on yields. In contrast to
recent periods of rising rates, the relative lack of leverage in the U.S.
financial system suggests that interest rates and volatility will be less
substantial than in 1994.
Our outlook remains favorable for the U.S. high yield market. Currently,
approximately 42% of your Fund's portfolio is invested in U.S. high yield
securities at market value. The growing economy should provide solid support for
this market sector, and the higher coupons available on high yield securities
should continue to attract investors and offset any price weakness the bond
market may experience. We have no major sector themes driving our security
selection. We will continue to review each security using a fundamental, bottom-
up approach.
Overall, we remain positive on emerging market debt. Currently, approximately
58% of your Fund's portfolio is invested in emerging markets at market value.
Higher U.S. interest rates may produce temporary weakness in emerging market
debt prices; however, the fundamental economics remain sound for this fixed-
income sector and should support additional gains in the upcoming year.
In Argentina, the economy is gaining momentum and we believe it is on track for
at least 5% growth this year, after 4.4% growth in 1996. The strength of the
economic expansion is producing a rapid increase in tax revenues, while fiscal
expenditures remain largely unchanged from last year's levels. The recent
decision by Standard & Poor's to raise many Argentine corporate debt ratings
underscores the economic progress being made in this country.
Panama's external debt (including Brady bonds) was recently assigned a Ba1
rating by Moody's. This rating reflects the sound economic policies being
pursued by the Panamanian government and should support significant price gains
in the debt securities of that country in the upcoming year.
2
<PAGE>
ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
The Mexican economy continues to perform strongly, led by sharp increases in
production and manufacturing. Growth is expected to remain strong at around 4%
in 1997 and inflation and interest rates should both decline during the upcoming
year. Investor confidence in Mexico's economic policies is growing. The decision
to prepay the remaining $3.5 billion owed to the U.S. for the 1995 peso bailout
is another positive step in Mexico's efforts to restore their credibility in
international capital markets.
In Russia, recent data indicate that the economy is beginning to grow. Inflation
remains on a downward trend and reserves have increased considerably. The
government has reinforced its commitment to pursuing a market-oriented economy
with the naming of an aggressive, reform-minded cabinet, but the fiscal
situation remains negative. The development of a realistic budget will be an
essential step in putting the country's fiscal affairs in order.
As disclosed in the prospectus for the Fund's initial public offering, it is the
Fund's current policy to conduct a tender offer during the second quarter of
each year if, during an appropriate "measurement period" of 12 calendar weeks
designated by the Fund's Board of Directors, The Fund's shares traded at a
discount to net asset value of greater than 3%.
During the measurement period selected by the Board of Directors for this
purpose, the 12 weeks ended Friday, May 2, 1997, and the Fund's shares traded at
an average discount to net asset value of 6.6%. Accordingly, the Fund commenced
on May 8, 1997, a tender offer for 7,081,253 of its issued and outstanding
shares. The offer is expected to remain open until June 5, 1997. The results of
the tender offer will be reported publicly and will be discussed in the Fund's
next regular report to its shareholders.
Thank you for your continued interest and investment in ACM Managed Dollar
Income Fund. We look forward to reporting to you again on market activity and
the Fund's investment results in coming periods.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Wayne D. Lyski
Wayne D. Lyski
President
3
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1997 (unaudited) ACM Managed Dollar Income Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
SOVEREIGN DEBT
OBLIGATIONS--71.6%
COLLATERALIZED
BRADY BONDS(a)--38.3%
ARGENTINA--11.4%
Republic of Argentina
Discount Series L-GL
6.375%, 3/31/23 (b)..............................$ 11,500 $ 9,300,625
Euro Par bonds
5.25%, 3/31/23 (b)............................... 54,500 34,096,562
------------
Total Argentinian Securities...................... 43,397,187
------------
BRAZIL--2.1%
Republic of Brazil
Par bonds Series Z-L
5.25%, 4/15/24 (b)............................... 13,000 8,116,875
------------
BULGARIA--4.3%
Republic of Bulgaria
Discount Bonds FRN
6.5625%, 7/28/24................................. 27,550 16,357,813
------------
ECUADOR--1.5%
Republic of Ecuador
Discount Bonds FRN
6.4375%, 2/28/25................................. 9,000 5,838,750
------------
MEXICO--7.8%
United Mexican States
Euro Par Bonds Series B
6.25%, 12/31/19 (c).............................. 42,000 29,662,500
------------
NIGERIA--2.6%
Central Bank of Nigeria
Par Bonds
6.25%, 11/15/20 (d).............................. 15,500 9,949,063
------------
PANAMA--0.5%
Republic of Panama
Par Bonds
3.00%, 7/17/26................................... 3,000 1,725,000
------------
VENEZUELA--8.1%
Republic of Venezuela
Par Bonds
6.75%, 3/31/20 (e)
Series W- A...................................... 34,500 24,268,594
Series W- B...................................... 9,000 6,330,937
------------
Total Venezuelan Securities...................... 30,599,531
------------
Total Collateralized
Brady Bonds
(cost $146,634,028).............................. 145,646,719
------------
LOAN PARTICIPATIONS
& ASSIGNMENTS--14.1%
ALGERIA--6.1%
Algeria Refinanced Trust
Loan Assignment FRN
Tranche B
7.1875%, 9/05/05................................. 15,000 11,212,500
Tranche 1
6.625% , 3/04/00................................. 5,455 4,363,636
7.3125%, 3/04/00................................. 9,545 7,636,364
------------
Total Algerian Loan Assignments................... 23,212,500
------------
IVORY COAST--2.4%
Republic of Ivory Coast
Loan Assignment (f).............................. 23,250 8,893,125
------------
MOROCCO--4.5%
Republic of Morocco
Loan Participation
Tranche A
6.375%, 1/01/09.................................. 20,000 17,250,000
------------
RUSSIA--1.1%
Vneshekonombank
Loan Assignment (f).............................. 5,331 4,171,592
------------
Total Loan Participations &
Assignments
(cost $52,670,858)............................... 53,527,217
------------
4
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
OTHER SOVEREIGN
DEBT OBLIGATIONS--11.2%
BULGARIA--2.3%
Republic of Bulgaria
IAB FRN
6.5625%, 7/28/11................................... $15,000 $ 8,578,125
------------
ECUADOR--2.5%
Republic of Ecuador
PDI Bonds FRN
6.4375%, 2/27/15 (g)............................... 16,683 9,498,772
------------
PERU--2.7%
Republic of Peru
FLIRB
3.25%, 3/07/17(b)(h)............................... 20,000 10,350,000
------------
VENEZUELA--3.7%
Republic of Venezuela
DCB FRN
6.50%, 12/18/07.................................... 16,500 14,246,719
------------
Total Other Sovereign
Debt Obligations
(cost $44,029,192)................................. 42,673,616
------------
SOVEREIGN DEBT RELATED--8.0%
Morgan Guaranty Trust Co.
Indexed Note
Linked to Russian US$
Vneshekonombank Loan
Assignment
14.00%, 4/15/97(i)................................. 15,735 15,107,282
14.00%, 5/02/97(i)................................. 17,350 15,288,820
------------
(cost $33,085,113)................................. 30,396,102
------------
Total Sovereign
Debt Obligations
(cost $276,419,191)............................... 272,243,654
------------
U.S. CORPORATE FIXED
INCOME OBLIGATIONS--52.3%
AGRICULTURE--1.3%
Trans-Resources, Inc.
11.875%, 7/01/02................................... 5,000 4,825,000
------------
BASIC INDUSTRIES--1.3%
MAXXAM Group Holdings, Inc.
12.00%, 8/01/03.................................... 5,000 5,100,000
------------
================================================================================
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
BROADCASTING--2.5%
Albritton Communications Co.
9.75%, 11/30/07.................................... $10,000 $ 9,325,000
------------
BROADCASTING
& CABLE--15.8%
CCPR Services, Inc.
10.00%,2/01/07 (h)................................. 5,150 4,866,750
Frontiervision
11.00%, 10/15/06................................... 7,600 7,714,000
Intermedia Capital Partners
11.25%, 8/01/06.................................... 6,000 6,150,000
International Cable Television
10.00%, 2/15/07 (h)................................ 10,000 9,600,000
Optel, Inc.
13.00%, 2/15/05 (h)................................ 12,500 11,500,000
RSL Communications, Ltd.
12.25%, 11/15/06 (h)............................... 10,000 10,150,000
Telemundo Group, Inc.
7.00%, 2/15/06..................................... 6,400 6,352,000
TCI Satellite Entertainment, Inc.
10.875%, 2/15/07 (h)............................... 4,000 3,520,000
------------
Total Broadcasting & Cable.......................... 59,852,750
------------
BROADCASTING
& MEDIA--1.1%
Sullivan Graphics, Inc.
12.75%, 8/01/05.................................... 4,000 4,070,000
------------
CHEMICALS--0.8%
Uniroyal Technology Corp.
11.75%, 6/01/03.................................... 3,000 2,895,000
warrants expiring
6/01/03 (j)(k)..................................... 30 30,000
------------
Total Chemicals.................................... 2,925,000
------------
COMMUNICATION--1.8% Innova S De R.L.
12.875%,4/01/07(h)................................. 7,000 6,956,250
------------
CONSUMER PRODUCTS
& SERVICES--4.3%
Renaissance Cosmetics, Inc.
11.75%, 2/15/04 (h)................................ 4,250 4,292,500
Riverwood International Corp.
10.25%, 4/01/06.................................... 8,500 7,905,000
Waterford Gaming L.L.C.
12.75%, 11/15/03 (h)............................... 4,000 4,260,000
------------
Total Consumer Products & Services.................. 16,457,500
------------
5
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) ACM Managed Dollar Income Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
ENERGY--0.8%
National Energy Group, Inc.
10.75%, 11/01/06.................................. $3,000 $ 3,082,500
------------
FOOD DISTRIBUTION--1.6%
Specialty Foods Corp.
11.125%, 10/01/02................................. 6,150 6,165,375
------------
GROCERIES--1.4%
Jitney-Jungle Stores of America
12.00%, 3/01/06................................... 5,000 5,312,500
------------
LEISURE & ENTERTAINMENT--2.5% Alliance Gaming Corp.
12.875%, 6/30/03.................................. 6,000 6,510,000
Trump Atlantic City
11.25%, 5/01/06................................... 3,500 3,176,250
------------
Total Leisure & Entertainment...................... 9,686,250
------------
METAL/MINERALS--1.0%
Weirton Steel Corp.
10.75%, 6/01/05................................... 4,000 3,980,000
------------
OIL & GAS--1.9% TranTexas Gas Corp.
11.50%, 6/15/02................................... 6,500 7,182,500
------------
PLASTICS--1.5%
Crain Industries, Inc.
13.50%, 8/15/05................................... 5,000 5,675,000
------------
PUBLISHING--2.1%
Hollinger International Publishing
9.25%, 3/15/07.................................... 3,000 2,925,000
Scholastic Brands, Inc.
11.00%, 1/15/07 (h)............................... 5,000 5,125,000
------------
Total Publishing................................... 8,050,000
------------
SUPERMARKET--1.3%
SFW Acquisition Corp.
10.00%, 2/06/00 (h)............................... 5,000 5,006,250
================================================================================
Shares,
Contracts
or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
TECHNOLOGY--3.0%
Unisys Corp.
12.00%, 4/15/03................................... $10,750 $ 11,233,750
------------
TELECOMMUNICATIONS--4.5%
Goss Graphics Systems, Inc.
12.00%, 10/15/06.................................. 10,000 10,525,000
Orion Network Systems, Inc.
11.25%, 1/15/07................................... 4,000 3,960,000
12.50%, 1/15/07 (l)............................... 5,000 2,525,000
------------
Total Telecommunications.......................... 17,010,000
------------
TRANSPORTATION--1.8%
Johnstown America Industries, Inc.
11.75%, 8/15/05................................... 6,900 6,779,250
------------
Total U.S. Corporate Fixed
Income Obligations
(cost $197,746,193)............................... 198,674,875
------------
NON-U.S. FIXED
INCOME SECURITIES--1.8%
MEXICO--1.8%
Grupo Mexicano De Desarrollo S.A.
8.25%, 2/17/01 (h)
(cost $6,384,012)................................. 10,000 6,650,000
------------
OTHER INVESTMENTS--0.1%
Renaissance Cosmetics, Inc.
Warrants expiring 8/15/01 (m)..................... 8,000 400,000
Terex Corp. Rights................................ 20,600 103,000
------------
Total Other Investments
(cost $108,950)................................... 503,000
------------
OPTIONS PURCHASED--0.1%
Republic of Bulgaria Discount
expiring February '98,
strike price $69.625
(cost $662,500)................................... 25,000 259,000
TOTAL INVESTMENTS--125.9%
(cost $481,320,846)............................... 478,330,529
Other assets less liabilities--(25.9%)............ (98,253,310)
------------
NET ASSETS--100%.................................. $380,077,219
============
6
<PAGE>
ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
(a) 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.
(b) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at March 31, 1997.
(c) Security trades with recovery rights expiring June 30, 2003.
(d) Security trades with oil warrants expiring November 15, 2020.
(e) Security trades with oil warrants expiring April 15, 2020.
(f) Security is in default and is non-income producing.
(g) Coupon consists of 3.25% cash payment and 3.1875% payment-in-kind.
(h) 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,
1997, these securities amounted to $82,276,750 or 21.6% of net assets.
(i) Principal amount represents par value at purchase date. The redemption
value of these securities is linked to the change in the bid price of the
referenced emerging market debt.
(j) Non-income producing security.
(k) Each warrant entitles the holder to purchase one share at an exercise price
of $4.375 per share. The warrants are excercisable until June 1, 2003.
(l) Indicates a security that has a zero coupon until a predetermined schedule
at which time the stated coupon rate becomes effective until final
maturity.
(m) Each warrant entitles the holder to purchase one share at an exercise price
of $0.01 per share. The warrants are excercisable until August 15, 2001.
Glossary of Terms:
DCB - Debt conversion bond.
FLIRB - Front loaded interest reduction bond.
FRN - Floating rate note. Coupon will fluctuate based upon an
interest rate index.
Stated interest rate in effect at March 31,1997.
IAB - Interest arrears bond.
PDI - Past due interest bond.
See notes to financial statements.
7
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997 (unaudited) ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $481,320,846)........ $478,330,529
Receivable for investment securities sold...................... 54,090,208
Interest receivable............................................ 12,999,881
Deferred organization expenses and other assets................ 47,516
------------
Total assets................................................... 545,468,134
------------
LIABILITIES
Loan payable................................................... 100,000,000
Due to custodian............................................... 16,813,568
Payable for investment securities purchased.................... 44,988,277
Net unrealized depreciation of swap contract................... 2,115,625
Advisory fee payable........................................... 309,832
Interest payable............................................... 89,931
Administrative fee payable..................................... 61,966
Net unrealized depreciation on capitalized interest purchased.. 5,906
Accrued expenses and other liabilities......................... 1,005,810
------------
Total liabilities.............................................. 165,390,915
------------
NET ASSETS...................................................... $380,077,219
============
COMPOSITION OF NET ASSETS
Common stock, at par........................................... $ 283,250
Additional paid-in capital..................................... 391,817,637
Undistributed net investment income............................ 3,081,156
Accumulated net realized loss on investment transactions....... (9,992,976)
Net unrealized depreciation of investments, options and
swap contracts................................................ (5,111,848)
------------
$380,077,219
============
NET ASSET VALUE PER SHARE (based on 28,325,009 shares
outstanding)................................................... $13.42
======
- --------------------------------------------------------------------------------
See notes to financial statements.
8
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended March 31, 1997 (unaudited) ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
<TABLE>
<S>
INVESTMENT INCOME <C> <C>
Interest..................................................... $ 25,321,594
------------
EXPENSES
Advisory fee................................................. $ 1,828,114
Administrative fee........................................... 365,622
Custodian.................................................... 152,516
Loan origination fee and loan expenses....................... 135,834
Audit and legal.............................................. 45,690
Transfer agency.............................................. 42,008
Directors' fees.............................................. 20,000
Reports and notices to shareholders.......................... 16,749
Registration fees............................................ 9,421
Amortization of organization expenses........................ 3,988
Miscellaneous................................................ 11,452
------------
Total expenses before interest expense....................... 2,631,394
Interest expense............................................. 2,805,552
------------
Total expenses............................................... 5,436,946
------------
Net investment income........................................ 19,884,648
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, OPTIONS WRITTEN AND SWAP CONTRACTS
Net realized gain on investment transactions................. 36,094,011
Net realized loss on options written......................... (16,000)
Net change in unrealized appreciation of investments,
options and swap contracts.................................. (28,374,586)
------------
Net gain on investments...................................... 7,703,425
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS................... $ 27,588,073
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1997 September 30,
(unaudited) 1996
---------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................................................. $ 19,884,648 $ 36,229,933
Net realized gain on investment transactions, options written
and swap contracts............................................................. 36,078,011 42,078,877
Net change in unrealized appreciation (depreciation) of investments,
options and swap contracts..................................................... (28,374,586) 32,913,344
------------ ------------
Net increase in net assets from operations........................................ 27,588,073 111,222,154
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income............................................................. (18,056,898) (35,689,077)
------------ ------------
Total increase.................................................................... 9,531,175 75,533,077
NET ASSETS
Beginning of year................................................................. 370,546,044 295,012,967
------------ ------------
End of period (including undistributed net investment income of
$3,081,156 at March 31, 1997 and $1,253,406 at September 30, 1996)............. $380,077,219 $370,546,044
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
9
<PAGE>
STATEMENT OF CASH FLOWS
Six Months Ended March 31, 1997 (unaudited) ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH FROM OPERATING
ACTIVITIES:
Interest and dividends received................. $ 25,245,702
Received from Custodian......................... 16,813,568
Interest expense paid........................... (3,525,557)
Operating expenses paid......................... (3,414,038)
-------------
Net increase in cash from operating
activities..................................... $ 35,119,675
INVESTING ACTIVITIES:
Purchases of long-term investments.............. (648,909,733)
Proceeds from disposition of long-term
investments.................................... 653,363,260
Purchases of short-term investments, net........ (29,139,693)
-------------
Net decrease in cash from investing
activities..................................... (24,686,166)
FINANCING ACTIVITIES(a):
Cash dividends and distributions paid........... (18,056,898)
Proceeds from borrowings........................ 3,500,000
-------------
Net decrease in cash from financing
activities..................................... (14,556,898)
-------------
Net decrease in cash............................ (4,123,389)
Cash at beginning of year....................... 4,123,389
-------------
Cash at end of period........................... $ -0-
=============
- --------------------------------------------------------------------------------
RECONCILIATION OF NET INCREASE IN NET ASSETS
FROM OPERATIONS TO NET INCREASE IN CASH FROM
OPERATING ACTIVITIES:
Net increase in net assets from operations...... $ 27,588,073
ADJUSTMENTS:
Decrease in interest receivable................. $ 607,913
Accretion of bond discount...................... (1,515,961)
Decrease in accrued expenses.................... 49,512
Decrease in interest payable.................... (720,005)
Increase in payable to Custodian................ 16,813,568
Net gain on investments......................... (7,703,425)
-------------
Total adjustments............................... 7,531,602
-------------
NET INCREASE IN CASH FROM OPERATING ACTIVITIES.. $ 35,119,675
=============
- --------------------------------------------------------------------------------
(a) Non-cash financing activities not included herein consist of reinvestment
of dividends and distributions.
See notes to financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 (unaudited) ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
NOTE A: Significant Accounting Policies
ACM Managed Dollar Income Fund (the "Fund") was incorporated under the laws of
the State of Maryland on August 10, 1993 and is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. The 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 recently 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 invest-ment companies and to distribute substantially
all of its investment company taxable income and net realized gains, if
applicable, to shareholders. Therefore, no provisions for federal income or
excise taxes are required.
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 re-corded on the ex-dividend
date and are determined in accordance with income tax regulations.
- --------------------------------------------------------------------------------
NOTE B: Advisory and Administrative Fees
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management, L.P. (the "Adviser") an advisory fee equal to an annualized
rate of .75 of 1% of the average adjusted weekly net assets of the Fund during
the month.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Investment Adviser, the Fund
reimburses AFS for costs relating to servicing phone inquiries for the Fund. The
Fund reimbursed AFS $2,610 during the six months ended March 31, 1997.
Under the terms of an Administration Agreement, the Fund pays Princeton
Administrators, L.P (the "Administrator") a monthly fee equal to the annualized
rate of .15 of 1% of the Fund's average adjusted weekly net assets. The
Administrator prepares financial and regulatory reports for the Fund and
provides clerical and other services.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
NOTE C: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $693,898,010 and $704,876,351,
respectively, for the six months ended March 31, 1997. There were no purchases,
or sales of U.S. government and government agency obligations for the six months
ended March 31, 1997.
At March 31, 1997, the cost of investments, including options purchased, for
federal income tax purposes was the same as the cost for financial reporting
purposes. Accordingly, gross unrealized appreciation of investments was
$11,843,275 and gross unrealized depreciation of investments was $14,833,592,
resulting in net unrealized depreciation of $2,990,317.
For federal income tax purposes, the Fund had a capital loss carryforward at
September 30, 1996 of approximately $36,026,439 which will expire in 2003.
1. Options Transactions
For investment and 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
premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from 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.
There were no transactions in options written for the six months ended March 31,
1997.
2. 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 debt
instruments and for investment purposes. A swap is an agreement that obligates
two parties to exchange a series of cash flows at specified intervals based upon
or calculated by reference to changes in specified prices or rates for a
specified amount of an underlying asset. The payment flows are usually netted
against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of another party to the swap contract
to comply with the terms of the swap contract. The loss incurred by the failure
of a counterparty is generally limited to the net interest payment to be
received by the Fund, and/or the termination value at the end of the contract.
Therefore the Fund considers the creditworthiness of each counterparty to a swap
contract in evaluating potential credit risk. Additionally, risks may arise from
unanticipated movements in interest rates or in the value of the underlying
securities.
12
<PAGE>
ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
The Fund records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as interest
income (or as an offset to interest income). Fluctuations in the value of swap
contracts are recorded for financial statement purposes as net unrealized
appreciation or depreciation of investments, options and swap contracts.
At March 31, 1997 the Fund had outstanding an interest rate swap contract as
follows:
<TABLE>
<CAPTION>
Payments Made Payments Received
by the Fund by the Fund
-------------------------------- --------------------------------
Swap Termination Notional Notional Unrealized
Counterparty Date Amount Rate Amount Rate Depreciation
- ------------ ----------- ----------- --------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Morgan 01/01/09 $25,000,000 Floating-LIBOR+ $25,000,000 Fixed-6.61% $(2,115,625)
Guaranty plus .8125%
</TABLE>
+ LIBOR - London Interbank Offered Rate.
- --------------------------------------------------------------------------------
NOTE D: 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 March 31, 1997, the Adviser
owned 7,100 shares.
During the six months ended March 31, 1997 and for the year ended September 30,
1996, the Fund did not issue shares in connection with the dividend reinvestment
plan.
- --------------------------------------------------------------------------------
NOTE E: Bank Borrowing
The Fund entered into a Revolving Credit Agreement with Citibank, N.A. which was
reviewed on March 29, 1996. The maximum credit available is $100,000,000 and the
amount outstanding as of March 31, 1997 was $100,000,000 with an average
interest rate of 6.47%. 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 six months ended March 31, 1997 was approximately
$97,718,232 with a related weighted average annualized interest rate of 5.68%.
The Fund is also obligated to pay Citibank, N.A. a facility fee computed at the
rate of .15 of 1% per annum on the full $100,000,000 available.
- --------------------------------------------------------------------------------
NOTE F: 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.
13
<PAGE>
FINANCIAL HIGHLIGHTS ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION> Year Ended
Six Months Ended September 30, October 22, 1993 (a)
March 31, 1997 ------------------------- to
(unaudited) 1996 1995 September 30, 1994
-------------- ------ ------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period........................... $ 13.08 $10.42 $11.29 $14.04 (b)
-------- ------ ------ ------
Income From Investment Operations
- ---------------------------------
Net investment income................ .71 1.27 1.32 1.13
Net realized and
unrealized gain (loss) on
investment transactions,
options and swap contracts.......... .27 2.65 (.85) (2.66)
-------- ------ ------ ------
Net increase (decrease) in
net asset value from
operations.......................... .98 3.92 .47 (1.53)
-------- ------ ------ ------
Less: Dividends and Distributions
- ---------------------------------
Dividends from net investment
income.............................. (.64) (1.26) (1.32) (1.13)
Distributions in excess of
net investment income............... -0- -0- -0- (.02)
Tax return of capital distribution... -0- -0- (.02) (.07)
-------- ------ ------ ------
Total dividends and distributions.... (.64) (1.26) (1.34) (1.22)
-------- ------ ------ ------
Net asset value, end of period....... $ 13.42 $13.08 $10.42 $11.29
======== ====== ====== ======
Market value, end of period.......... $ 12.875 $11.75 $9.875 $11.25
======== ====== ====== ======
Total Return (c)
- ----------------
Total investment return based on:
Market value......................... 15.26% 33.53% .92% (11.94)%
Net asset value...................... 7.92% 40.86% 6.11% (11.62)%
Ratios/Supplemental Data
- ------------------------
Net assets, end of period
(000's omitted)..................... $380,077 $370,546 $295,013 $313,819
Ratio of expenses to average net
assets.............................. 2.23%(d) 2.59% 2.83% 1.78%(d)
Ratio of expenses to average net
assets excluding interest expense... 1.08%(d)(e) 1.07% 1.17% 1.07%(d)
Ratio of net investment
income to average net assets........ 8.16%(d) 8.79% 10.56% 8.54%(d)
Portfolio turnover rate.............. 150% 443% 344% 225%
</TABLE>
- --------------------------------------------------------------------------------
(a) Commencement of operations.
(b) Net of offering costs of $.06.
(c) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of each period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based
on market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods. Total investment return calculated
for a period of less than one year is not annualized.
(d) Annualized.
(e) Net of interest expense of 1.15% on loan agreement (see Note E).
14
<PAGE>
ACM Managed Dollar Income Fund
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
John D. Carifa, Chairman
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
William H. Foulk, Jr.(1)
Dr. James M. Hester(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
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
Wayne C. Tappe, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Joseph J. Mantineo, Controller
ADMINISTRATOR
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
CUSTODIAN, DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
LEGAL COUNSEL
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
- --------------------------------------------------------------------------------
(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 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
Summary of General Information
THE FUND
ACM Managed Dollar Income Fund 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, each Sunday in The New York Times and each Saturday in Barron's and
other newspapers in a table called "Closed-End Funds." Additional information
about the Fund is available by calling 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
1345 Avenue of the Americas
New York, New York 10105
ALLIANCE CAPITAL [LOGO](R)
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
MDISR
ACM
Managed
Dollar
Income Fund
SEMI-ANNUAL
REPORT
MARCH 31, 1997
ALLIANCE(R)
