<PAGE>
LETTER TO SHAREHOLDERS ACM Managed Dollar Income Fund
================================================================================
November 11, 1997
Dear Shareholder:
Since our last report dated March 31, 1997, the U.S. bond market has posted
strong returns. The market rallied over the summer to end the period with solid
gains. Within the traditional bond market (i.e. governments, investment grade
corporates, mortgage-backed securities and asset-backed securities) corporates
were the best performing, followed by governments, mortgage-backed securities
and asset-backed securities. The high yield sector continued to benefit from the
strong economy and stable credit environment. As a result, this sector posted
solid gains and outperformed all sectors of the traditional market.
INVESTMENT RESULTS
For the six months ended September 30, 1997, we are pleased to report that the
ACM Managed Dollar Income Fund returned 23.83% on a net asset value (NAV) basis.
This compares with a return of 18.05% for the J.P. Morgan Emerging Markets Bond
Index and 9.23% for the First Boston High Yield Index. For the 12 month period
ended September 30, 1997, the Fund achieved a total return of 33.64% at NAV
compared with 28.08% for the J.P. Morgan Emerging Markets Bond Index and 15.73%
for the First Boston High Yield Index.
Your Fund's outperformance can be attributed to overweightings in Venezuela,
Russia and Bulgaria, coupled with an emphasis on the technology sector in the
U.S. high yield market.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS*
Period Ended September 30, 1997
<TABLE>
<CAPTION>
Total Return
6 Months 12 Months
-------- ---------
<S> <C> <C>
ACM Managed Dollar
Income Fund 23.83% 33.64%
J.P. Morgan Emerging
Markets Bond Index 18.05% 28.08%
First Boston High
Yield Index 9.23% 15.73%
</TABLE>
* The Fund's investment results are cumulative total returns for the period and
are based on the net asset value as of September 30, 1997. All fees and expenses
related to the operation of the Fund have been deducted. Returns for the Fund
include the reinvestment of any distributions paid during the period. Past
performance is no guarantee of future results.
The J.P. Morgan Emerging Markets Bond Index is composed of dollar-denominated
restructured sovereign bonds; a large percentage of the index is made up of
Brady Bonds. The First Boston High Yield Index is a trader priced portfolio
representing 250 sectors and constructed to mirror the high yield debt market.
The indices are unmanaged and reflect no fees or expenses. An investor cannot
invest directly in the indices.
- --------------------------------------------------------------------------------
ECONOMIC REVIEW
U.S. Gross Domestic Product (GDP) growth slowed from a robust 4.9% first quarter
pace to 3.3% in the second quarter. Weakness in consumer spending was the
catalyst, as retail and auto sales declined and housing activity slowed. While
some wage pressures were apparent, inflation remained subdued.
1
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
During the third quarter, economic growth continued at a healthy pace and
inflation remained at low absolute levels worldwide. Although U.S. growth slowed
from its first half level, the economy remained strong, led by strength in the
labor market. The unemployment rate remained low at 4.9%, consumer confidence
reached new highs, and real income grew solidly. GDP growth for the third
quarter was 3.5%, slightly higher than anticipated.
The Federal Reserve made no change to monetary policy during the reporting
period, despite the fact that growth remained above trend levels. Improving
inflation fundamentals, a strong dollar and currency devaluations in Southeast
Asia argued against an increase in official U.S. interest rates. Inflation
remained well-behaved with consumer prices advancing 2.2% and producer prices
unchanged between September 1996 and September 1997.
INVESTMENT OUTLOOK
Recent slowing in employment gains and soft retail sales suggest the U.S.
economy is poised to slow from its torrid pace of the last year. The currency
devaluations and economic slowing in Southeast Asia should also temper U.S.
growth. Therefore, we anticipate 3.5% U.S. GDP growth for 1997. Given the
prolonged period of strong capacity utilization, employment gains and the
difficulty of forecasting U.S. inflation in an increasingly global economy,
there is a small but measurable chance that the Federal Reserve will modestly
raise interest rates as a precautionary measure. Accordingly, some caution is
warranted by investors.
We continue to have a favorable outlook for the high yield market. The strong
U.S. economy will provide support for this market sector, and as interest rates
remain in a trading range between 5.75% - 6.75%, investor demand for higher
yields should remain strong. However, as the economy begins to slow, security
selection within the high yield sector will take on added importance. As a
result, we will continue to review each security using a fundamental, bottom-up
approach.
In the developing markets, commitment to economic integration remains high and
the global environment of relatively stable growth and inflation will support
the integration process. Nonetheless, in the period ahead, we believe growth and
inflation prospects will diverge. In our view, Latin America, Eastern Europe and
Russia will generally enhance global growth as their economic and inflation
trends improve. Much of Southeast Asia will detract from global growth as their
economies slow and inflation increases. We believe that country selection will
be more critical than in the last several quarters.
The picture in Latin America continues to be one of growth, albeit slower than
in past years, and low inflation. In Brazil, inflation fell in August and is
expected to register 4.5% - 5.0% for all of 1997. The government's recent
decision to vigorously defend the Brazilian real will likely produce temporary
weakness but will provide a sound foundation to ensure continued economic
growth. Although the Mexican peso fell victim to the currency crisis plaguing
Southeast Asia, economic fundamentals remain strong. The Mexican economy grew at
a 7.0% rate during the first half of 1997 and industrial production surged 8.2%
between August 1996 and August 1997, following July's jump of 10.3%. These
figures bode well for third quarter growth and are consistent with our belief
that Mexico will grow 5% - 6% annually through 2000. Despite excellent
fundamentals, Argentina will continue to be hit by the spillover from Southeast
Asia. Although there is no question about the government's resolve to protect
the currency, the fact that Argentina has a fixed exchange rate leaves it
vulnerable to investor concerns about a devaluation and/or loss in liquidity.
Longer-term, we remain positive on Argentina's economic prospects.
2
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
In Russia, the economy appears to be expanding. Russia's GDP in August 1997
showed a 0.7% increase over year earlier levels. Industrial production shows a
similar pattern, increasing 3.0% between August 1996 and August 1997 following a
3.4% increase between July 1996 and July 1997. The recently completed
restructuring of Russia's London Club debt should also support continued gains
in the prices of Russian bonds. However, a recent downturn in revenue generation
threatens the excellent reform momentum and bears close scrutiny.
In Southeast Asia, the near-term outlook is bleak. The unfolding adjustments for
these countries involve much weaker currencies, higher interest rates, lower
stock prices, numerous bankruptcies, banking-sector consolidation and slower
growth. Financial markets in this region will remain under intense pressure as
policy makers grapple with appropriate responses to economic crises. The IMF's
decision to step in and provide funds to shore up the shaky Thai and Indonesian
financial sectors should eventually help to provide needed stability. Long term,
we are optimistic about the investment value in this region, since favorable
fundamentals are still in place. We will be monitoring developments in this
region closely in the upcoming periods.
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
September 30, 1997 ACM Managed Dollar Income Fund
================================================================================
<TABLE>
<CAPTION>
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SOVEREIGN DEBT
OBLIGATIONS--65.0%
COLLATERALIZED
BRADY BONDS(a)--22.4%
ARGENTINA--3.6%
Republic of Argentina
Euro Par bonds
5.50%, 3/31/23(B) ....................... $16,000 $ 12,105,000
-------------
BULGARIA--4.2%
Republic of Bulgaria
Discount Bonds FRN
6.6875%, 7/28/24 ........................ 17,000 14,131,250
-------------
ECUADOR--7.5%
Republic of Ecuador
Par Bonds
3.50%, 2/28/25(b) ....................... 44,500 25,045,156
-------------
MEXICO--7.1%
United Mexican States
Discount Bonds FRN Series D
6.8125%, 12/31/19(c) .................... 6,000 5,741,250
Euro Par Bonds Series B
6.25%, 12/31/19(c) ...................... 22,000 18,280,625
-------------
24,021,875
-------------
Total Collateralized Brady Bonds
(cost $68,773,748) ...................... 75,303,281
-------------
OTHER SOVEREIGN
DEBT OBLIGATIONS--15.2%
RUSSIA--3.8%
Russia Principal Loans--WI
FRN
12/15/20(d)(e) .......................... 17,250 12,862,031
-------------
VENEZUELA--11.4%
Republic of Venezuela
Global Bond
9.25%, 9/15/27 .......................... 40,023 38,171,936
-------------
Total Other Sovereign Debt
Obligations
(cost $49,971,764) ...................... 51,033,967
-------------
SOVEREIGN DEBT
RELATED--11.9%
Morgan Guaranty Trust Co.
Indexed Note
Linked to Russian US$
Vneshekonombank Loan
Assignment
14.00%, 10/15/97(f)
(cost $40,561,442) ...................... 40,561 39,968,434
-------------
NON-COLLATERALIZED
BRADY BONDS--11.3%
BRAZIL--8.9%
Republic of Brazil C Bonds
8.00%, 4/15/14(g) ....................... 35,300 30,060,561
-------------
BULGARIA--2.4%
Republic of Bulgaria
IAB FRN
6.6875%, 7/28/11 ........................ 10,000 8,075,000
-------------
Total Non-Collateralized
Brady Bonds
(cost $37,680,110) ...................... 38,135,561
-------------
LOAN PARTICIPATION &
ASSIGNMENT--4.2%
ALGERIA--2.5%
Algeria Refinancing
Trust FRN Loan Assignment
Tranche B
6.50%, 9/05/05 .......................... 10,000 8,500,000
-------------
RUSSIA--1.7%
Vneshekonombank
Loan Participation(h) ................... 5,331 5,529,358
-------------
Total Loan Participation &
Assignment
(cost $11,010,984) ...................... 14,029,358
-------------
Total Sovereign Debt Obligations
(cost $207,998,048) ..................... 218,470,601
-------------
</TABLE>
4
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
<TABLE>
<CAPTION>
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. CORPORATE DEBT
OBLIGATIONS--47.8%
AGRICULTURE--1.6%
Trans-Resources, Inc.
11.875%, 7/01/02 ........................ $ 5,000 $ 5,325,000
-------------
AUTOMOTIVE--2.0%
United Auto Group, Inc.
11.00%, 7/15/07(e) ...................... 6,500 6,825,000
-------------
BASIC INDUSTRY--1.6%
MAXXAM Group Holdings, Inc.
12.00%, 8/01/03 ......................... 5,000 5,425,000
-------------
BROADCASTING &
CABLE--11.3%
CCPR Services, Inc.
10.00%, 2/01/07 ......................... 3,000 3,093,750
Frontiervision Holdings LP
11.00%, 10/15/06 ........................ 5,000 5,475,000
11.875%, 9/15/07(e)(i) .................. 3,000 2,070,000
Intermedia Capital Partners
11.25%, 8/01/06 ......................... 6,000 6,690,000
Optel, Inc. Series B
13.00%, 2/15/05(j) ...................... 8,500 8,468,125
RSL Communications, Ltd.
12.25%, 11/15/06 ........................ 5,000 5,381,250
Warrants, expiring
11/15/06(k)(l) .......................... 6,500 390,000
Telemundo Group, Inc.
7.00%, 2/15/06 .......................... 6,400 6,336,000
-------------
37,904,125
-------------
BROADCASTING &
MEDIA--1.2%
Sullivan Graphics, Inc.
12.75%, 8/01/05 ......................... 4,000 4,075,000
-------------
CHEMICALS--2.2%
Sterling Chemicals, Inc.
11.25%, 4/01/07 ......................... 4,000 4,380,000
Uniroyal Technology Corp.
11.75%, 6/01/03 ......................... 3,000 2,876,250
Warrants, expiring
6/01/03(k)(m) ........................... 30,000 30,000
-------------
7,286,250
-------------
CONSUMER PRODUCTS
& SERVICES--4.8%
Renaissance Cosmetics, Inc.
11.75%, 2/15/04 ......................... 4,250 4,303,125
Warrants, expiring
8/15/01(k)(n) ........................... 8,000 400,000
Riverwood International Corp.
10.875%, 4/01/08 ........................ 7,000 7,026,250
Waterford Gaming LLC
12.75%, 11/15/03 ........................ 4,000 4,475,000
-------------
16,204,375
-------------
ENERGY--2.7%
National Energy Group, Inc.
10.75%, 11/01/06 ........................ 3,000 3,150,000
Transamerican Energy, Inc.
11.50%, 6/15/02(e) ...................... 6,000 6,000,000
-------------
9,150,000
-------------
FOOD DISTRIBUTION--2.1%
Specialty Foods Corp.
11.125%, 10/01/02 ....................... 7,150 7,221,500
-------------
GROCERY--2.1%
DiGiorgio Corp.
10.00%, 6/15/07(e) ...................... 7,000 7,000,000
-------------
LEISURE &
ENTERTAINMENT--2.2%
Trump Atlantic City
11.25%, 5/01/06 ......................... 7,500 7,303,125
-------------
MEDIA--0.9%
Digital Television Services, LLC
12.50%, 8/01/07(e) ...................... 3,000 3,127,500
-------------
METAL/MINERALS--1.3%
Weirton Steel Corp.
10.75%, 6/01/05 ......................... 4,000 4,300,000
-------------
PLASTICS--1.7%
Crain Industries, Inc.
13.50%, 8/15/05 ......................... 5,000 5,750,000
-------------
PUBLISHING--1.5%
Commemorative Brands, Inc.
11.00%, 1/15/07 ......................... 5,000 5,150,000
-------------
</TABLE>
5
<PAGE>
PORTFOLIO OF INVESTMENTS(continued)
ACM Managed Dollar Income Fund
================================================================================
<TABLE>
<CAPTION>
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS--6.4%
Globalstar LP/Globalstar Capital
11.25%, 6/15/04 ......................... $ 1,400 $ 1,459,500
GST Equipment Funding
13.25%, 5/01/07(e) ...................... 3,250 3,786,250
Hyperion Telecommunications
12.25%, 9/01/04(e) ...................... 3,000 3,270,000
Orion Network Systems, Inc.
11.25%, 1/15/07 ......................... 5,000 5,475,000
Warrants, expiring
1/15/07(k)(o) ........................... 5,000 62,500
Primus Telecommunications
Group, Inc.
11.75%, 8/01/04(p) ...................... 7,000 7,490,000
-------------
21,543,250
-------------
TEXTILE--0.9%
Delta Mills Inc.
9.625%, 9/01/07(e) ...................... 3,000 3,041,250
-------------
TRANSPORTATION--1.3%
Johnstown America Industries, Inc.
11.75%, 8/15/05 ......................... 4,000 4,320,000
-------------
Total U.S. Corporate Debt
Obligations
(cost $151,284,232) ..................... 160,951,375
-------------
NON-U.S. CORPORATE DEBT
OBLIGATIONS--13.1%
BRAZIL--8.1%
Tevecap SA
12.625%, 11/26/04 ....................... 10,000 10,675,000
Trikem SA
10.625%, 7/24/07(e) ..................... 7,000 7,021,000
TV Filme, Inc.
12.875%, 12/15/04(e) .................... 9,250 9,573,750
-------------
27,269,750
-------------
DOMINICAN REPUBLIC--2.5%
Tricom SA
11.375%, 9/01/04(e) ..................... 8,200 8,446,000
-------------
MEXICO--1.0%
Innova S de RL
12.875%, 4/01/07(e) ..................... 3,000 3,217,500
-------------
NETHERLANDS--0.9%
ITT Publimedia
9.375%, 9/15/07(e) ...................... 3,000 3,120,000
-------------
THAILAND--0.6%
Tanayong Public Co., Ltd.
3.50%, 3/01/04 .......................... 5,200 1,976,000
-------------
Total Non-U.S. Corporate
Debt Obligations
(cost $43,737,879) ...................... 44,029,250
-------------
OPTIONS PURCHASED--0.2%
Republic of Bulgaria Discount Bonds
expiring February '98, strike
price $69.625
(cost $500,000) ......................... 250 823,725
-------------
U.S. GOVERNMENT
OBLIGATIONS--4.1%
U.S. Treasury Bill
5.06%, 10/23/97
(cost $13,657,636) ...................... 13,700 13,662,572
-------------
TIME DEPOSIT--0.8%
State Street Bank & Trust Co.,
5.25%, 10/01/97
(cost $2,762,000) ....................... 2,762 2,762,000
-------------
TOTAL INVESTMENTS--131.0%
(cost $419,939,795) ..................... 440,699,523
Other assets less liabilities--(31.0%) .... (104,185,082)
-------------
NET ASSETS--100% .......................... $ 336,514,441
=============
</TABLE>
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 increases periodically based upon a predetermined schedule. Stated
interest rate in effect at September 30, 1997.
(c) Security trades with recovery rights expiring June 30, 2003.
(d) An interest rate based on the six month Libor Rate plus 81.25 basis points
will take effect upon issuance of the bonds.
(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 September 30,
1997, these securities amounted to $79,360,281 or 23.6% of net assets.
(f) 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.
(g) Coupon consists of 4.5% cash payment and 3.5% paid in kind.
(h) Security is in default and is non-income producing.
(i) 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.
(j) Consists of $8,500,000 senior notes and 8,500 shares of common stock.
(k) Non-income producing security.
(l) Each warrant entitles the holder to purchase 1.815 shares at an exercise
price of $0.01 per share.
(m) Each warrant entitles the holder to purchase one share at an exercise price
of $4.375 per share.
(n) Each warrant entitles the holder to purchase one share at an exercise price
of $0.01 per share.
(o) Each warrant entitles the holder to purchase .8463 shares at an exercise
price of $0.01 per share.
(p) Security trades with warrants expiring August 1, 2004.
Glossary of Terms:
IAB - Interest Arrears Bond.
FRN - Floating Rate Note.
WI - When Issued.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1997 ACM Managed Dollar Income Fund
=================================================================================
<S> <C>
ASSETS
Investments in securities, at value (cost $419,939,795) ........ $440,699,523
Cash ........................................................... 501
Receivable for investment securities sold ...................... 13,602,647
Interest receivable ............................................ 10,043,401
Deferred organization expenses and other assets ................ 17,488
------------
Total assets ................................................... 464,363,560
------------
LIABILITIES
Loan payable ................................................... 100,000,000
Payable for investment securities purchased .................... 26,939,019
Advisory fee payable ........................................... 268,694
Interest payable ............................................... 143,223
Administrative fee payable ..................................... 53,739
Accrued expenses and other liabilities ......................... 444,444
------------
Total liabilities .............................................. 127,849,119
------------
NET ASSETS ....................................................... $336,514,441
============
COMPOSITION OF NET ASSETS
Common stock, at par ........................................... $ 212,438
Additional paid-in capital ..................................... 289,140,976
Undistributed net investment income ............................ 4,450,601
Accumulated net realized gain on investment transactions ....... 21,951,384
Net unrealized appreciation of investments and other assets .... 20,759,042
------------
$336,514,441
============
NET ASSET VALUE PER SHARE (based on 21,243,756 shares outstanding) $15.84
======
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended September 30, 1997 ACM Managed Dollar Income Fund
=================================================================================================================
<S> <C> <C>
INVESTMENT INCOME
Interest......................................................................... $ 48,617,399
EXPENSES
Advisory fee..................................................................... $3,515,489
Administrative fee............................................................... 703,097
Custodian........................................................................ 172,451
Audit and legal.................................................................. 105,197
Transfer agency.................................................................. 99,127
Directors' fees.................................................................. 53,896
Reports and notices to shareholders.............................................. 36,424
Registration fees................................................................ 32,340
Amortization of organization expenses............................................ 7,997
Miscellaneous ................................................................... 25,976
---------
Total expenses before interest expense .......................................... 4,751,994
Interest expense................................................................. 6,320,929
---------
Total expenses................................................................... 11,072,923
------------
Net investment income............................................................ 37,544,476
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions..................................... 68,475,490
Net change in unrealized appreciation of investments and other assets............ (2,503,696)
------------
Net gain on investments.......................................................... 65,971,794
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $103,516,270
============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
=================================================================================================================
Year Ended Year Ended
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income................................................ $ 37,544,476 $ 36,229,933
Net realized gain on investment transactions......................... 68,475,490 42,078,877
Net change in unrealized appreciation (depreciation) of investments
and other assets................................................... (2,503,696) 32,913,344
------------- ------------
Net increase in net assets from operations........................... 103,516,270 111,222,154
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income................................................ (34,785,980) (35,689,077)
COMMON STOCK TRANSACTIONS:
Tender offer resulting in the redemption of 7,081,253 shares
of Common Stock.................................................... (102,761,893) -0-
------------- ------------
Total increase (decrease)............................................ (34,031,603) 75,533,077
NET ASSETS
Beginning of year.................................................... 370,546,044 295,012,967
------------- ------------
End of year (including undistributed net investment income of
$4,450,601 and $1,253,406, respectively)........................... $ 336,514,441 $370,546,044
============= ============
- --------------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Year Ended September 30, 1997 ACM Managed Dollar Income Fund
=================================================================================================================
<S> <C> <C>
INCREASE (DECREASE) IN CASH FROM OPERATING ACTIVITIES:
Interest and dividends received.............................................. $ 49,279,944
Interest expense paid........................................................ (6,987,642)
Operating expenses paid...................................................... (5,289,091)
--------------
Net increase in cash from operating activities............................... $ 37,003,211
INVESTING ACTIVITIES:
Purchases of long-term investments........................................... (1,166,061,729)
Proceeds from disposition of long-term investments........................... 1,305,388,311
Purchases of short-term investments, net..................................... (46,404,808)
--------------
Net increase in cash from investing activities............................... 92,921,774
FINANCING ACTIVITIES(a):
Redemptions resulting from tender offer...................................... (102,761,893)
Cash dividends and distributions paid........................................ (34,785,980)
Proceeds from borrowings..................................................... 3,500,000
--------------
Net decrease in cash from financing activities............................... (134,047,873)
-------------
Net decrease in cash......................................................... (4,122,888)
Cash at beginning of year.................................................... 4,123,389
-------------
Cash at end of year.......................................................... $ 501
=============
</TABLE>
<TABLE>
<CAPTION>
=================================================================================================================
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM
OPERATIONS TO NET INCREASE IN CASH FROM OPERATING
ACTIVITIES:
<S> <C> <C>
Net increase in net assets from operations................................... $ 103,516,270
ADJUSTMENTS:
Decrease in interest receivable.............................................. $ 3,564,393
Accretion of bond discount................................................... (2,901,848)
Decrease in accrued expenses................................................. (537,097)
Decrease in interest payable................................................. (666,713)
Net gain on investments...................................................... (65,971,794)
------------
Total adjustments............................................................ (66,513,059)
-------------
NET INCREASE IN CASH FROM OPERATING ACTIVITIES $ 37,003,211
=============
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(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
September 30, 1997 ACM Managed Dollar Income Fund
================================================================================
NOTE A: Significant Accounting Policies
ACM Managed Dollar Income Fund, Inc. (the "Fund") was incorporated under the
laws of the State of Maryland on August 10, 1993 and is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end management
investment company. The following is a summary of significant accounting
policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Listed securities not
traded and securities traded in the over-the-counter market, including listed
debt securities whose primary market is believed to be over-the-counter, are
valued at the mean between the most recent quoted bid and asked prices provided
by the principal market makers. Publicly traded sovereign debt obligations are
typically traded internationally on the over-the-counter market. Due to the
nature of the markets for sovereign debt obligations, quotations from several
sources are obtained so that the Fund's portfolio investments are not generally
priced by a single source. Readily marketable sovereign debt obligations and
fixed income securities may be valued on the basis of prices provided by a
pricing service when such prices are believed by the Adviser to reflect the fair
value of such securities. Options are valued at market value or fair value using
methods determined by the Board of Directors. Securities for which market
quotations are not readily available are valued in good faith at fair value
using methods determined by the Board of Directors. Securities which mature in
60 days or less are valued at amortized cost, which approximates market value,
unless this method does not represent fair value.
2. Organization Expenses
Organization expenses of approximately $40,000 were deferred and are being
amortized on a straight-line basis through October 1998.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
of its investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
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 discount as an adjustment to interest income.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to book to tax differences on accrual of income, resulted in a net
increase in Additional paid-in capital, net increase in Undistributed net
investment income and a corresponding decrease in accumulated net realized gain
on investment transactions. This reclassification had no effect on net assets.
- --------------------------------------------------------------------------------
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.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) ACM Managed Dollar Income Fund
================================================================================
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Adviser, the Fund reimburses AFS for
costs relating to servicing phone inquiries for the Fund. The Fund reimbursed
AFS $2,610 during the year ended September 30, 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 certain financial and regulatory reports for the Fund and
provides clerical and other services.
- --------------------------------------------------------------------------------
NOTE C: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $1,193,000,748 and $1,341,654,204,
respectively, for the year ended September 30, 1997. There were no purchases or
sales of U.S. government or government agency obligations for the year ended
September 30, 1997.
At September 30, 1997, the cost of investments, including options purchased, for
federal income tax purposes was $420,982,721. Accordingly, gross unrealized
appreciation of investments was $21,290,973 and gross unrealized depreciation of
investments was $1,574,171, resulting in net unrealized appreciation of
$19,716,802.
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 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 options
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 year ended September 30,
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
12
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
a specified amount of an underlying asset. The payment flows are usually netted
against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of another party to the swap contract
to comply with the terms of the swap contract. The loss incurred by the failure
of a counterparty is generally limited to the net interest payment to be
received by the Fund, and/or the termination value at the end of the contract.
Therefore, the Fund considers the creditworthiness of each counterparty to a
swap contract in evaluating potential credit risk. Additionally, risks may arise
from unanticipated movements in interest rates or in the value of the underlying
securities.
The Fund records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as interest
income (or as an offset to interest income). Fluctuations in the value of swap
contracts are recorded for financial statement purposes as net unrealized
appreciation or depreciation of investments.
At September 30, 1997, the Fund had no outstanding interest rate swap contracts.
- --------------------------------------------------------------------------------
NOTE D: Capital Stock
There are 300,000,000 shares of $.01 par value capital stock authorized. Of the
21,243,756 shares of Common Stock outstanding at September 30, 1997, the Adviser
owned 7,100 shares. During the year ended September 30, 1997, the Fund purchased
and retired 7,081,253 shares of its outstanding Common Stock for $14.49 per
share pursuant to a tender offer. The Fund incurred tender offer costs of
$154,537 which were charged to additional paid-in capital.
During the years ended September 30, 1997 and 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
renewed on March 27, 1997. The maximum credit available is $100,000,000 and the
amount outstanding as of September 30, 1997 was $100,000,000 with an average
interest rate of 6.45%. Interest payments on current borrowings are based on the
London Interbank Offered Rate plus a premium. The average daily amount of the
loan outstanding during the year ended September 30, 1997 was approximately
$98,868,493 with a related weighted average annualized interest rate of 6.18%.
The Fund is also obligated to pay Citibank, N.A. a commitment fee computed at
the rate of .125 of 1% per annum on the average daily unused portion of the
revolving credit.
- --------------------------------------------------------------------------------
NOTE F: Concentration of Risk
Investing in securities of foreign companies and foreign governments involves
special risks which include 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>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS ACM Managed Dollar Income Fund
===========================================================================================================================
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
For the Year Ended
September 30, October 22, 1993 (a)
---------------------------------------- to
1997 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 ............................. 1.45(c) 1.27 1.32 1.13
Net realized and unrealized gain (loss) on
investment transactions and other assets ........ 2.62 2.65 (.85) (2.66)
------ ------ ------ ------
Net increase (decrease) in net asset value
from operations ................................. 4.07 3.92 .47 (1.53)
------ ------ ------ ------
Less: Dividends and Distributions
- ---------------------------------
Dividends from net investment income .............. (1.31) (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 ................. (1.31) (1.26) (1.34) (1.22)
------ ------ ------ ------
Net asset value, end of period .................... $15.84 $13.08 $10.42 $11.29
====== ====== ====== ======
Market value, end of period ....................... $15.00 $11.75 $9.875 $11.25
====== ====== ====== ======
Total Return (d)
- ----------------
Total investment return based on:
Market value ...................................... 40.87% 33.53% .92% (11.94)%
Net asset value ................................... 33.64% 40.86% 6.11% (11.62)%
Ratios/Supplemental Data
- ------------------------
Net assets, end of period (000's omitted) ......... $336,514 $370,546 $295,013 $313,819
Ratio of expenses to average net assets ........... 2.36% 2.59% 2.83% 1.78%(e)
Ratio of expenses to average net assets
excluding interest expense(f) ................... 1.01% 1.07% 1.17% 1.07%(e)
Ratio of net investment income to average
net assets ...................................... 8.00% 8.79% 10.56% 8.54%(e)
Portfolio turnover rate ........................... 274% 443% 344% 225%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations.
(b) Net of offering costs of $.06.
(c) Based on average shares outstanding.
(d) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of each period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based
on market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods. Total investment return calculated
for a period of less than one year is not annualized.
(e) Annualized.
(f) Net of interest expense of 1.35%, 1.52%, 1.66% and .71%, respectively, on
loan agreements (see Note E).
14
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ACM Managed Dollar Income Fund
================================================================================
To the Shareholders and Board of Directors
ACM Managed Dollar Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of ACM
Managed Dollar Income Fund, Inc., including the portfolio of investments, as of
September 30, 1997, and the related statements of operations and cash flows for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of ACM
Managed Dollar Income Fund, Inc. at September 30, 1997, the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated periods, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
November 20, 1997
15
<PAGE>
ADDITIONAL INFORMATION ACM Managed Dollar Income Fund
================================================================================
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
pursuant to which dividends and capital gain distributions to shareholders will
be paid in or reinvested in additional shares of the Fund. State Street Bank and
Trust Company (the "Agent") will act as agent for participants under the Plan.
Shareholders whose shares are held in the name of a broker or nominee should
contact such broker or nominee to determine whether or how they may participate
in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will issue
new shares at the greater of net asset value or 95% of the then current
market price.
(ii) If the shares of Common Stock are trading at a discount from net asset
value at the time of valuation, the Plan Agent will receive the dividend or
distribution in cash and apply it to the purchase of the Fund's shares of
Common Stock in the open market on the New York Stock Exchange or
elsewhere, for the participants' accounts. Such purchases will be made on
or shortly after the payment date for such dividend or distribution and in
no event more than 30 days after such date except where temporary
curtailment or suspension of purchase is necessary to comply with Federal
securities laws. If, before the Plan agent has completed its purchases, the
market price exceeds the net asset value of a share of Common Stock, the
average purchase price per share paid by the Plan agent may exceed the net
asset value of the Fund's shares of Common Stock, resulting in the
acquisition of fewer shares than if the dividend or distribution had been
paid in shares issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificated form in the name of
the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's account will be the average cost,
including brokerage commissions, of any shares purchased in the open market plus
the cost of any shares issued by the Fund.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent to
written notice of the change sent to participants in the Plan at least 90 days
before the record date for such dividend or distribution. The Plan may also be
amended or terminated by the Agent on at least 90 days' written notice to
participants in the Plan. All correspondence concerning the Plan should be
directed to the Agent at State Street Bank and Trust Company, P.O. Box 366,
Boston, Massachusetts 02101.
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change of
control of the Fund, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv) no change in the person
primarily responsible for the day-to-day management of the Fund's portfolio, who
is Wayne D. Lyski, the President of the Fund.
16
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
Supplemental Proxy Information (Unaudited)
The Annual Meeting of Shareholders of the ACM Managed Dollar Income Fund, Inc.
was held on January 23, 1997. The description of each proposal and number of
shares voted at the meeting are as follows:
<TABLE>
<CAPTION>
Shares Shares Voted
Voted For Without Authority
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect directors Class One Director
(term expires in 1998)
Donald J. Robinson 19,932,317 357,756
Class Three Directors
(term expires in 2000)
Ruth Block 19,930,605 359,468
John D. Carifa 19,932,879 357,194
Robert C. White 19,922,938 367,135
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP
as the Fund's independent auditors for the Fund's
fiscal year ending September 30, 1997: 19,850,953 188,118 251,002
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
ACM Managed Dollar Income Fund
================================================================================================
<S> <C>
BOARD OF DIRECTORS
John D. Carifa, Chairman William H. Foulk, Jr.(1)
Ruth Block(1) Dr. James M. Hester(1)
David H. Dievler(1) Clifford L. Michel(1)
John H. Dobkin(1) Donald J. Robinson(1)
Robert C. White(1)
OFFICERS
Wayne D. Lyski, President Edmund P. Bergan, Jr., Secretary
Kathleen A. Corbet, Senior Vice President Mark D. Gersten, Treasurer & Chief Financial Officer
Paul J. DeNoon, Vice President Joseph J. Mantineo, Controller
Vicki L. Fuller, Vice President
Wayne C. Tappe, Vice President
ADMINISTRATOR INDEPENDENT AUDITORS
Princeton Administrators, L.P. Ernst & Young LLP
P.O. Box 9095 787 Seventh Avenue
Princeton, NJ 08543-9095 New York, NY 10019
CUSTODIAN, DIVIDEND PAYING AGENT, LEGAL COUNSEL
TRANSFER AGENT AND REGISTRAR Seward & Kissel
State Street Bank & Trust Company One Battery Park Plaza
225 Franklin Street New York, NY 10004
Boston, MA 02110
- ------------------------------------------------------------------------------------------------
</TABLE>
(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.
18
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<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."
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 questions concerning Shareholder account
information, or if you would like a brochure describing the Dividend
Reinvestment Plan, please call State Street Bank and Trust Company at
1-800-219-4218.
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
----------------------------
Annual Report
September 30, 1997
[LOGO] Alliance(R)
