<PAGE>
LETTER TO SHAREHOLDERS ACM Managed Dollar Income Fund
================================================================================
May 27, 1998
Dear Shareholder:
We are pleased to report to you on our strategy, performance and outlook of the
ACM Managed Dollar Income Fund for the six-month period that ended March 31,
1998. The Fund is designed for investors who seek high current income. The
Fund's secondary objective is capital appreciation. To achieve these objectives,
the Fund invests primarily in high yielding, high risk U.S. and non-U.S. fixed
income securities, denominated in U.S. dollars, that we expect to benefit from
improving economic and credit fundamentals.
MARKET OVERVIEW
During the six-month period under review, developments in East Asia caused
concern in the world's financial markets. Economic problems that began in
Thailand quickly spread to Malaysia, Indonesia, the Philippines and South Korea.
Throughout the region, fast growth, fueled by strong capital inflows, and
overvalued currencies had combined to produce large external trade deficits,
property and stock market bubbles and overextended banking systems. Immediate
policy responses in the affected countries were often inadequate and/or poorly
articulated, causing a temporary sell-off across worldwide financial markets. As
a result, the International Monetary Fund (IMF), along with world leaders, put
pressure on the Asian countries to make the necessary economic reforms. These
reforms were then supported by large capital infusions from the IMF and its
sponsors. Although the worst appears to be behind us, volatility should continue
to persist due to concerns about a possible currency devaluation by China and
the uncertain economic environment in Japan.
Outside of East Asia, emerging markets worldwide were negatively impacted as
investors assumed that these countries would experience similar problems. As a
result, security prices initially were pushed lower in Latin America and Eastern
Europe. As investors realized that the spill-over effects from Asia were
limited, they bid up the prices of Latin American and Eastern European
securities. By the end of March 1998, prices of many emerging market debt issues
returned to their pre-Asian crisis level.
In spite of events in East Asia, the U.S. economy continued along a path of
strong growth coupled with low inflation. First quarter Gross Domestic Product
(GDP), a measure of U.S. economic growth, came in at 4.2%, higher than the
fourth quarter's 3.7%. In addition, the Consumer Price Index recorded a low
year-over-year rate of 1.4% in March. Benefiting from this positive domestic
economic news, the high yield market posted the strongest returns among the
major fixed income sectors.
INVESTMENT STRATEGY
Consistent with our long-term positive outlook on the emerging markets and the
U.S. high yield market, we maintained an above-market spread duration in your
Fund's portfolio. Spread duration is a measure of a bond's price sensitivity to
changes in its yield spread relative to Treasury securities. Among other
factors, spread duration can be driven by a country's credit risk profile.
Maintaining an above-market spread duration enhances price movements in a Fund's
portfolio. In addition, we increased our telecom sector allocation within the
U.S. high yield portion of the portfolio, to take advantage of above average
spreads in this growing sector of the high yield market.
INVESTMENT RESULTS
The following table shows how your Fund performed over the past six- and
12-month periods. For comparison, we have included the J.P. Morgan Emerging
Market Bond Index-Plus, a standard measure of the performance of a basket of
unmanaged emerging market debt securities, and the First Boston High Yield
Index, a standard measure of the performance of a
1
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
basket of unmanaged U.S. high yield debt securities. We compare your Fund's
performance to a blended composite of both indices, 65% J.P. Morgan Emerging
Markets Bond Index-Plus and 35% First Boston High Yield Index, because this
blended composite more closely resembles the composition of your Fund.
INVESTMENT RESULTS*
Period Ended March 31, 1998
<TABLE>
<CAPTION>
Total Returns
6 Months 12 Months
-------- ---------
<S> <C> <C>
ACM Managed Dollar
Income Fund 2.11% 26.44%
J.P. Morgan Emerging
Markets Bond Index-Plus 0.88% 17.99%
First Boston High
Yield Index 4.67% 14.33%
Composite:
65% J.P. Morgan Emerging
Markets Bond Index-Plus
35% First Boston High
Yield Index 2.21% 16.71%
</TABLE>
* The Fund's investment results are cumulative total returns for the period
and are based on the net asset value as of March 31, 1998. 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.
Over the six-month period under review, the Fund slightly underperformed its
benchmark due to underweighted positions in Bulgaria, investments in Brazilian
corporate securities which fell in price (these securities are not included in
the benchmark) and an above-market weighting in Russia. Additionally, these
negative effects were enhanced due to our above-market spread duration. However,
over the longer 12-month period, an overweighted position in Russia and spread
duration helped the Fund to significantly outperform its benchmark.
OUTLOOK
The outlook for emerging market debt continues to be attractive. We remain
positive in our view on Latin America. Although tougher competition and falling
demand from Asia will slow their economies, we still anticipate healthy growth
in the region. In particular, we favor countries such as Mexico, Argentina and
Peru. In Eastern Europe, we continue to view Russia positively. The government
remains committed to reforms and the economy continues to show improvement.
In the U.S. we continue to have a favorable outlook for the high yield market.
The combination of moderate growth and low inflation provides, in our view, an
ideal environment for investing in these securities. However, as the economy
begins to slow, security selection within the high yield sector will take on
added importance. We will continue to review each security using a fundamental,
bottom-up approach.
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
2
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1998 (unaudited) ACM Managed Dollar Income Fund
================================================================================
<TABLE>
<CAPTION>
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SOVEREIGN DEBT
OBLIGATIONS--53.5%
OTHER SOVEREIGN
DEBT OBLIGATIONS--29.9%
ARGENTINA--9.2%
Republic of Argentina
Global Bond
11.375%, 1/30/17 ........................ $ 25,000 $ 27,875,000
-------------
INDONESIA--3.3%
Republic of Indonesia
7.75%, 8/01/06 .......................... 12,000 10,000,800
-------------
RUSSIA--12.9%
Russian Principal Loans--FRN
6.719%, 12/15/20(a) ..................... 62,250 39,086,775
-------------
VENEZUELA--4.5%
Republic of Venezuela
Global Bond
9.25%, 9/15/27 .......................... 15,023 13,685,953
-------------
Total Other Sovereign
Debt Obligations
(cost $110,427,045) ..................... 90,648,528
-------------
NON-COLLATERALIZED
BRADY BONDS--23.6%
BRAZIL--15.4%
Republic of Brazil C Bonds
8.00%, 4/15/14(b) ....................... 55,303 46,557,885
-------------
ECUADOR--4.9%
Republic of Ecuador
PDI Bonds FRN
6.625%, 2/27/15(c) ...................... 22,810 14,755,047
-------------
PERU--3.3%
Republic of Peru
FLIRB
3.25%, 3/07/17(d)(e) .................... 5,000 3,151,563
Republic of Peru--PDI
4.00%, 3/07/17(d) ....................... 10,000 6,884,375
-------------
10,035,938
-------------
Total Non-Collateralized
Brady Bonds
(cost $51,489,136) ...................... 71,348,870
-------------
Total Sovereign Debt Obligations
(cost $161,916,181) ..................... 161,997,398
-------------
U.S. CORPORATE DEBT
OBLIGATIONS--48.7%
AGRICULTURE--1.7%
Trans-Resources, Inc.
10.75%, 3/15/08(e) ...................... 5,000 5,162,500
-------------
BASIC INDUSTRY--1.8%
MAXXAM Group Holdings, Inc.
12.00%, 8/01/03 ......................... 5,000 5,475,000
-------------
BROADCASTING &
CABLE--5.4%
Optel, Inc. Series B
13.00%, 2/15/05(f) ...................... 8,500 9,477,500
Telemundo Group, Inc.
7.00%, 2/15/06 .......................... 6,400 6,848,000
-------------
16,325,500
-------------
BROADCASTING &
MEDIA--1.4%
Sullivan Graphics, Inc.
12.75%, 8/01/05 ......................... 4,000 4,220,000
-------------
CHEMICALS--2.4%
Sterling Chemicals, Inc.
11.25%, 4/01/07 ......................... 4,000 4,090,000
Uniroyal Technology Corp.
11.75%, 6/01/03 ......................... 3,000 3,120,000
Warrants, expiring
6/01/03(g)(h) ........................... 30 30,000
-------------
7,240,000
-------------
CONSUMER PRODUCTS
& SERVICES--3.1%
Renaissance Cosmetics, Inc.
Warrants, expiring
8/15/01(g)(i) ........................... 8,000 8,000
Riverwood International Corp.
10.875%, 4/01/08 ........................ 5,000 5,050,000
Waterford Gaming LLC
12.75%, 11/15/03 ........................ 3,784 4,200,240
-------------
9,258,240
-------------
</TABLE>
3
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
<TABLE>
<CAPTION>
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
ENERGY--2.9%
National Energy Group, Inc.
10.75%, 11/01/06 ........................ $ 3,000 $ 2,880,000
Transamerican Energy, Inc.
11.50%, 6/15/02 ......................... 6,000 5,970,000
-------------
8,850,000
-------------
GROCERY--4.0%
DiGiorgio Corp.
10.00%, 6/15/07 ......................... 7,000 7,000,000
The Pantry, Inc.
10.25%, 10/15/07 ........................ 5,000 5,175,000
-------------
12,175,000
-------------
HEALTHCARE--2.0%
Healthcor Holdings, Inc.
11.00%, 12/01/04(e) ..................... 6,000 5,985,000
-------------
LEISURE &
ENTERTAINMENT--2.0%
Trump Atlantic City
11.25%, 5/01/06 ......................... 6,000 6,195,000
-------------
METAL/MINERALS--5.5%
ACME Metals, Inc.
10.875%, 12/15/07(e) .................... 6,000 6,225,000
Doe Run Resources
11.25%, 3/15/05 ......................... 6,000 6,225,000
Weirton Steel Corp.
10.75%, 6/01/05 ......................... 4,000 4,260,000
-------------
16,710,000
-------------
OIL & GAS--1.0%
Panaco, Inc.
10.625%, 10/01/04 ....................... 3,000 3,045,000
-------------
PLASTICS--1.9%
Foamex LP
13.50%, 8/15/05(e) ...................... 5,000 5,800,000
-------------
PUBLISHING--1.7%
Commemorative Brands, Inc.
11.00%, 1/15/07 ......................... 5,000 5,125,000
-------------
RESTAURANTS--1.7%
Planet Hollywood International
12.00%, 4/01/05(e) ...................... 5,000 5,125,000
-------------
<CAPTION>
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS--10.2%
American Mobile Satellite Corp.
12.25%, 4/01/08 ......................... 3,000 3,112,500
Convergent Communications
13.0%, 4/01/08(e) ....................... 3,200 3,224,000
Iridium L.L.C. Capital Corp.
11.25%, 7/15/05(e) ...................... 10,000 10,650,000
Orion Network Systems, Inc.
11.25%, 1/15/07 ......................... 5,000 5,800,000
Warrants, expiring
1/15/07(g)(j) ........................... 5,000 70,000
Primus Telecommunications
Group, Inc.
11.75%, 8/01/04 ......................... 7,000 7,822,500
Warrants, expiring
8/01/04(g)(k) ........................... 7,000 21,000
-------------
30,700,000
-------------
Total U.S. Corporate Debt
Obligations
(cost $138,578,513) ..................... 147,391,240
-------------
NON-U.S. CORPORATE DEBT
OBLIGATIONS--17.4%
ARGENTINA--2.7%
Supercanal Holdings SA
12.00%, 11/07/02 ........................ 8,059 8,058,533
-------------
AUSTRALIA--1.7%
Centaur Mining & Exploration
11.00%, 12/01/07(e) ..................... 5,000 5,200,000
-------------
JAPAN--2.3%
Fuji JB LLC Inv Pfd
9.875%, 6/30/08(e) ...................... 7,000 6,969,508
-------------
RUSSIA--3.1%
Sibneft Promissory Note
0.00%, 9/18/98 .......................... 10,000 9,345,000
-------------
SOUTH KOREA--7.3%
Korea Electric Power
6.00%, 12/01/26 ......................... 10,000 9,100,400
Korea Electric Power
7.00%, 2/01/27 .......................... 4,000 3,444,808
Samsung Electronics
8.50%, 11/01/02(e) ...................... 10,000 9,436,000
-------------
21,981,208
-------------
</TABLE>
4
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) ACM Managed Dollar Income Fund
================================================================================
<TABLE>
<CAPTION>
Shares
Contracts or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
THAILAND--0.3%
Tanayong Public Co., Ltd.
3.50%, 3/01/04(l) ....................... $ 5,200 $ 962,000
-------------
Total Non-U.S. Corporate
Debt Obligations
(cost $53,818,612) ...................... 52,516,249
-------------
OPTIONS PURCHASED--0.0%
Republic of Venezuela Par
expiring April '98, strike
price $87.125
(cost $210,000) ......................... 20,000 140,000
-------------
NON-CONVERTIBLE
PREFERRED STOCK--1.8%
Nextel Communications, Inc.,
11.125%(e)
(cost $5,090,000) ....................... 5,000 5,300,000
-------------
<CAPTION>
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSIT--4.2%
State Street Bank & Trust Co.,
5.25%, 4/01/98
(cost $12,784,000) ...................... $ 12,784 $ 12,784,000
-------------
TOTAL INVESTMENTS--125.6%
(cost $372,397,306) ..................... 380,128,887
Other assets less liabilities--(25.6%) .... (77,550,783)
-------------
NET ASSETS--100% $ 302,578,104
=============
</TABLE>
- --------------------------------------------------------------------------------
(a) Coupon consists of 3.249% cash payment and 3.47% payment in kind.
(b) Coupon consists of 4.5% cash payment and 3.5% payment in kind.
(c) Coupon consists of 3.25% cash payment and 3.375% payment in kind.
(d) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at March 31, 1998.
(e) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At March 31,
1998, these securities amounted to $72,228,571 or, 23.87% of net assets.
(f) Consists of $8,500,000 senior notes and 8,500 shares of common stock.
(g) Non-income producing security.
(h) Each warrant entitles the holder to purchase one share at an exercise price
of $4.375 per share.
(i) Each warrant entitles the holder to purchase one share at an exercise price
of $0.01 per share.
(j) Each warrant entitles the holder to purchase .8463 shares at an exercise
price of $0.01 per share.
(k) Each warrant entitles the holder to purchase 1.74513 shares at an exercise
price of $9.075 per share.
(l) Illiquid security valued at fair value (see Note A).
Glossary of Terms:
FLIRB -Front Loaded Interest Reduction Bond.
FRN - Floating Rate Note.
PDI - Past Due Interest.
5
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998 (unaudited) ACM Managed Dollar Income Fund
==================================================================================
<S> <C>
ASSETS
Investments in securities, at value (cost $372,397,306) ..... $380,128,887
Cash ........................................................ 1,609,686
Receivable for investment securities sold ................... 21,073,164
Interest receivable ......................................... 9,326,346
Deferred organization expenses and other assets ............. 123,934
-------------
Total assets ................................................ 412,262,017
-------------
LIABILITIES
Loan payable ................................................ 90,000,000
Payable for investment securities purchased ................. 18,984,000
Advisory fee payable ........................................ 242,801
Interest payable ............................................ 142,031
Administrative fee payable .................................. 48,560
Accrued expenses and other liabilities ...................... 266,521
-------------
Total liabilities ........................................... 109,683,913
-------------
NET ASSETS ....................................................... $302,578,104
=============
COMPOSITION OF NET ASSETS
Common stock, at par ........................................ $215,370
Additional paid-in capital .................................. 293,121,121
Undistributed net investment income ......................... 3,727,420
Accumulated net realized loss on investment transactions .... (2,237,761)
Net unrealized appreciation of investments and other assets . 7,751,954
-------------
$302,578,104
=============
NET ASSET VALUE PER SHARE (based on 21,537,049 shares outstanding) $14.05
=============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended March 31, 1998 (unaudited) ACM Managed Dollar Income Fund
===============================================================================================================
<S> <C> <C>
INVESTMENT INCOME
Interest .......................................................... $20,848,380
EXPENSES
Advisory fee ........................................................ $1,493,245
Administrative fee .................................................. 298,649
Custodian ........................................................... 50,994
Audit and legal ..................................................... 49,927
Reports and notices to shareholders ................................. 47,766
Transfer agency ..................................................... 17,614
Registration fees ................................................... 16,125
Directors' fees ..................................................... 13,953
Amortization of organization expenses ............................... 3,988
Miscellaneous ....................................................... 22,937
------------
Total expenses before interest expense .............................. 2,015,198
Interest expense .................................................... 3,055,708
------------
Total expenses ...................................................... 5,070,906
------------
Net investment income ............................................... 15,777,474
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions ........................ 1,515,800
Net change in unrealized appreciation of investments and other assets (13,007,088)
------------
Net loss on investments ............................................. (11,491,288)
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............................. $4,286,186
============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
==========================================================================================================
Six Months Ended
March 31, 1998 Year Ended
(unaudited) September 30, 1997
----------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ................................................ $ 15,777,474 $ 37,544,476
Net realized gain on investment transactions ......................... 1,515,800 68,475,490
Net change in unrealized appreciation of investments and other assets (13,007,088) (2,503,696)
------------- -------------
Net increase in net assets from operations ........................... 4,286,186 103,516,270
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................................ (16,500,655) (34,785,980)
Net realized gain on investments ..................................... (25,704,945) -0-
------------- -------------
Net decrease in net assets resulting from dividends & distributions to
shareholders ....................................................... (42,205,600) (34,785,980)
COMMON STOCK TRANSACTIONS:
Tender offer resulting in the redemption of 7,081,253 shares
of Common Stock .................................................... -0- (102,761,893)
Reinvestment of dividends resulting in the issuance of Common Stock .. 3,983,077 -0-
------------- -------------
Total decrease ....................................................... (33,936,337) (34,031,603)
NET ASSETS
Beginning of year .................................................... 336,514,441 370,546,044
------------- -------------
End of period (including undistributed net investment income of
$3,727,420 and $4,450,601, respectively) ........................... $ 302,578,104 $ 336,514,441
============= =============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Six Months Ended March 31, 1998 (unaudited) ACM Managed Dollar Income Fund
=======================================================================================
<S> <C> <C>
INCREASE (DECREASE) IN CASH FROM OPERATING ACTIVITIES:
Interest and dividends received .................... $ 20,642,848
Interest expense paid .............................. (3,056,900)
Operating expenses paid ............................ (2,326,651)
-------------
Net increase in cash from operating activities ..... $ 15,259,297
INVESTING ACTIVITIES:
Purchases of long-term investments ................. (464,751,316)
Proceeds from disposition of long-term investments . 467,792,825
Sales of short-term investments, net ............... 31,530,902
-------------
Net increase in cash from investing activities ..... 34,572,411
FINANCING ACTIVITIES(a):
Cash dividends and distributions paid .............. (38,222,523)
Repayment for borrowings ........................... (10,000,000)
-------------
Net decrease in cash from financing activities ..... (48,222,523)
-------------
Net increase in cash ............................... 1,609,185
Cash at beginning of period ........................ 501
-------------
Cash at end of period .............................. $ 1,609,686
=============
- ---------------------------------------------------------------------------------------
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM
OPERATIONS TO NET INCREASE IN CASH FROM OPERATING
ACTIVITIES:
Net increase in net assets from operations.......... $ 4,286,186
ADJUSTMENTS:
Decrease in interest receivable..................... $ 717,055
Accretion of bond discount.......................... (922,587)
Decrease in accrued expenses and other assets....... (311,453)
Decrease in interest payable........................ (1,192)
Net loss on investments............................. 11,491,288
-------------
Total adjustments................................... 10,973,111
-------------
NET INCREASE IN CASH FROM OPERATING ACTIVITIES $ 15,259,297
=============
</TABLE>
- --------------------------------------------------------------------------------
(a) Non-cash financing activities not included herein consist of reinvestment
of dividends and distributions. See notes to financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (unaudited) 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 ex-change or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sale price or, if there was no sale on such day, the
last bid price quoted on such day. If no bid prices are quoted, then the
security is valued at the mean of the bid and asked prices as obtained on that
day from one or more dealers regularly making a market in that security.
Securities traded on the over-the-counter market, and securities listed on a
foreign securities exchange whose operations are similar to the United States
over-the-counter market and securities listed on a national securities exchange
whose primary market is believed to be over-the-counter are valued at the mean
of the closing bid and asked price provided by two or more dealers regularly
making a market in such securities. U.S. government securities and other debt
securities which mature in 60 days or less are valued at amortized cost unless
this method does not represent fair value. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith by, or in accordance with procedures approved by, the Board of
Directors. Fixed income securities may be valued on the basis of prices provided
by a pricing service when such prices are believed to reflect the fair market
value of such securities. Listed put and call options purchased by the Fund are
valued at the last sale price. If there has been no sale on that day, such
securities will be valued at the closing bid prices on that day.
2. 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
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 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.
- --------------------------------------------------------------------------------
NOTE B: Advisory and Administrative Fees
Under the terms of the Investment Advisory Agreement, the Fund pays Alliance
Capital Management, L.P. (the "Adviser") an advisory fee equal to an annualized
rate of .75 of 1% of the average adjusted weekly net assets of the Fund during
the month.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance 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 $7,555 during the six months ended March 31, 1998.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) ACM Managed Dollar Income Fund
================================================================================
Under the terms of an Administration Agreement, the Fund pays Princeton
Administrators, L.P (the "Admin-istrator") a monthly fee equal to the annualized
rate of .15 of 1% of the Fund's average adjusted weekly net assets. The
Administrator prepares financial and regulatory reports for the Fund and
provides clerical and other services.
- --------------------------------------------------------------------------------
NOTE C: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments,
options and U.S. Government Securities) aggregated $444,040,274 and
$461,085,275, respectively, for the six months ended March 31, 1998. There were
no purchases or sales of U.S. government or government agency obligations for
the six months ended March 31, 1998.
At March 31, 1998, the cost of investments, including options purchased, for
federal income tax purposes was $372,397,306. Accordingly, gross unrealized
appreciation of investments was $12,792,952 and gross unrealized depreciation of
investments was $5,061,371, resulting in net unrealized appreciation of
$7,731,581.
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
written. The difference between the premium and the amount paid on effecting a
closing purchase transaction, including brokerage commissions, is also treated
as a realized gain, or if the premium is less than the amount paid for the
closing purchase transaction, as a realized loss. If a call option is exercised,
the premium is added to the proceeds from the sale of the underlying security in
determining whether the Fund has realized a gain or loss. If a put option is
exercised, the premium reduces the cost basis of the security purchased by the
Fund. In 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 period ended March 31,
1998.
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.
10
<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 on interest rate swap contracts.
At March 31, 1998 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
21,537,049 shares of Common Stock outstanding at March 31, 1998, the Adviser
owned 7,100 shares.
During the six months ended March 31, 1998, the Fund issued 293,293 shares in
connection with the dividend reinvestment plan, and for the year ended September
30, 1997, 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 24, 1998. The maximum credit available is $95,000,000 and the
amount outstanding as of March 31, 1998 was $90,000,000 with an average interest
rate of 6.40%. 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, 1998 was approximately
$93,901,099 with a related weighted average annualized interest rate of 6.53%.
The Fund is also obligated to pay Citibank, N.A. a facility fee computed at the
rate of .125 of 1% per annum on the average daily unused portion of the
revolving credit.
- --------------------------------------------------------------------------------
NOTE F: Concentration of Risk
Investing in securities of foreign companies and foreign governments involves
special risks which include revaluation of currencies and future adverse
political and economic developments. Moreover, securities of many foreign
companies and foreign governments and their markets may be less liquid and their
prices more volatile than those of comparable U.S. companies and the United
States Government. The Fund invests in the sovereign debt obligations of
countries that are considered emerging market countries at the time of purchase.
Therefore, the Fund is susceptible to governmental factors and economic and debt
restructuring developments adversely affecting the economies of these emerging
market countries. In addition, these debt obligations may be less liquid and
subject to greater volatility than debt obligations of more developed countries.
- --------------------------------------------------------------------------------
NOTE G: Year 2000
Many computer software systems in use today cannot properly process date-related
information from and after January 1, 2000. Should any of the computer systems
employed by the Fund's major service providers fail to process this type of
information properly, that could have a negative impact on the Fund's operations
and the services that are provided to the Fund's shareholders. The Adviser, as
well as Alliance Fund Services, have advised the Fund that they are reviewing
all of their computer systems with the goal of modifying or replacing such
systems prior to January 1, 2000, to the extent necessary to foreclose any such
negative impact. In addition, the Adviser has been advised by the Fund's
custodian that it is also in the process of reviewing its systems with the same
goal. As of the date of this report, the Fund and the Adviser have no reason to
believe that those goals will not be achieved. Similarly, the values of certain
of the portfolio securities held by the Fund may be adversely affected by the
inability of the securities' issuers of third parties to process this type of
information properly.
11
<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
Six Months Ended September 30, October 22, 1993 (a)
March 31, 1998 ---------------------------------------------- to
(unaudited) 1997 1996 1995 September 30, 1994
------------ ------------ ------------ ------------ ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $15.84 $13.08 $10.42 $11.29 $14.04(b)
------------ ------------ ------------ ------------ ------------
Income From Investment Operations
- ---------------------------------
Net investment income .................... .73(c) 1.45(c) 1.27 1.32 1.13
Net realized and unrealized gain (loss) on
investment and options ................. (.54) 2.62 2.65 (.85) (2.66)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net asset value
from operations ........................ .19 4.07 3.92 .47 (1.53)
------------ ------------ ------------ ------------ ------------
Less: Dividends and Distributions
- ---------------------------------
Dividends from net investment income ..... (.77) (1.31) (1.26) (1.32) (1.13)
Distributions in excess of net investment
income ................................. -0- -0- -0- -0- (.02)
Distribution from net realized gains
on investments ......................... (1.21) -0- -0- -0- -0-
Tax return of capital distribution ....... -0- -0- -0- (.02) (.07)
------------ ------------ ------------ ------------ ------------
Total dividends and distributions ........ (1.98) (1.31) (1.26) (1.34) (1.22)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period ........... $14.05 $15.84 $13.08 $10.42 $11.29
============ ============ ============ ============ ============
Market value, end of period .............. $14.25 $15.00 $11.75 $9.875 $11.25
============ ============ ============ ============ ============
Total Return(d)
- ---------------
Total investment return based on:
Market value ............................. 9.37% 40.87% 33.53% .92% (11.94)%
Net asset value .......................... 2.11% 33.64% 40.86% 6.11% (11.62)%
Ratios/Supplemental Data
- ------------------------
Net assets, end of period (000's omitted) $302,578 $336,514 $370,546 $295,013 $313,819
Ratio of expenses to average net assets .. 2.54%(e) 2.36% 2.59% 2.83% 1.78%(e)
Ratio of expenses to average net assets
excluding interest expense(f) .......... 1.01%(e) 1.01% 1.07% 1.17% 1.07%(e)
Ratio of net investment income to average
net assets ............................. 7.91%(e) 8.00% 8.79% 10.56% 8.54%(e)
Portfolio turnover rate .................. 118% 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 the period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than the total investment return
based on market value in periods where there is an increase in the discount
or a decrease in the premium of the market value to the net asset value
from the beginning to the end of such periods. Conversely, total investment
return based on net asset value will be lower than total investment return
based on market value in periods where there is a decrease in the discount
or an increase in the premium of the market value to the net asset value
from the beginning to the end of such periods. Total investment return
calculated for a period of less than one year is not annualized.
(e) Annualized.
(f) Net interest expense of 1.53%, 1.35%, 1.52%, 1.66% and .71%, respectively,
on loan agreements (See Note E).
12
<PAGE>
ADDITIONAL INFORMATION ACM Managed Dollar Income Fund
================================================================================
Supplemental Proxy Information
The Annual Meeting of Shareholders of The Alliance ACM Managed Dollar Income
Fund was held on March 31, 1998. 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>
1. To elect directors: Class One Directors
(term expires in 2001)
David H. Dievler 12,834,680 183,008
Clifford L. Michel 12,856,925 160,763
Donald J. Robinson 12,857,281 160,407
<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, 1998: 12,792,617 51,053 174,018
</TABLE>
13
<PAGE>
ACM Managed Dollar Income Fund
================================================================================
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
Paul J. DeNoon, Vice President & Chief Financial Officer
VICKI L. FULLER, VICE PRESIDENT Juan J. Rodriguez, Controller
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
- --------------------------------------------------------------------------------
(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.
14
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- --------------------------------------------------------------------------------
ACM
-------------------------------
MANAGED
-------------------------------
DOLLAR
-------------------------------
INCOME FUND
-------------------------------
Semi-Annual Report
March 31, 1998
Alliance [LOGO]
- --------------------------------------------------------------------------------
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 DividendReinvestment
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)These registered service marks used under license from the owner, Alliance
Capital Management L.P.
MDISR
