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CLOSED END
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ACM Managed Dollar Income Fund
Annual Report
September 30, 2002
[GRAPHIC OMITTED]
Alliance Capital [LOGO](R)
The Investment Professional's Choice
Investment Products Offered
---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
---------------------------
Alliance Fund Distributors, Inc., the principal underwriter of the Alliance
mutual funds and an affiliate of Alliance Capital Management L.P., the manager
of the funds, is a member of the NASD.
----------------------
LETTER TO SHAREHOLDERS
----------------------
LETTER TO SHAREHOLDERS
November 18, 2002
Dear Shareholder:
This report provides investment results, performance information and market
outlook for ACM Managed Dollar Income Fund (the "Fund") for the annual reporting
period ended September 30, 2002.
Investment Objective and Policies
This closed-end fund is designed for investors who seek high current income and
capital appreciation. To achieve this objective, it invests primarily in
high-yielding, 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.
Fund Performance
The following table shows how the Fund performed over the past six- and 12-month
periods ended September 30, 2002. For comparison we have included a composite
benchmark consisting of 65% of the J.P. Morgan Emerging Market Bond Index Plus
(JPM EMBI+), a standard measure of the performance of a basket of unmanaged
emerging market debt securities, and 35% of the Credit Suisse First Boston High
Yield (CSFBHY) Index, a standard measure of the performance of a basket of
unmanaged U.S. high yield debt securities. We compare the Fund's performance to
this composite benchmark because it more closely resembles the composition of
the Fund's portfolio.
INVESTMENT RESULTS*
Periods Ended September 30, 2002
------------------------
Total Returns
------------------------
6 Months 12 Months
-----------------------------------------------------------------------------
ACM Managed Dollar Income Fund (NAV) -16.15% 0.23%
-----------------------------------------------------------------------------
J.P. Morgan Emerging Markets Bond Index Plus -6.42% -1.14%
-----------------------------------------------------------------------------
Credit Suisse First Boston High Yield Index -5.05% 2.85%
-----------------------------------------------------------------------------
Composite: 65%/35% (65% JPM EMBI+/35% CSFBHY) -5.94% 0.26%
-----------------------------------------------------------------------------
* The Fund's investment results represent total returns for the periods
shown and are based on the net asset value (NAV) of the Fund as of
September 30, 2002. 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 each period. Past performance is no
guarantee of future results.
The unmanaged J.P. Morgan Emerging Markets Bond Index Plus is comprised of
dollar-denominated restructured sovereign bonds; a large percentage of the
index is made up of Brady bonds. The unmanaged Credit Suisse First Boston
High Yield Index is a measure of lower-rated, fixed income,
non-convertible U.S. dollar-denominated securities meeting certain
criteria developed by Credit Suisse designed to enable the index to
reflect the high yield market. The composite is from the inception of the
JPM EMBI+, which was 12/31/93. The indices are unmanaged and reflect no
fees or expenses. An investor cannot invest directly in an index, and its
results are not indicative of any specific investment, including ACM
Managed Dollar Income Fund.
Additional investment results appear on pages 6-8.
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ACM MANAGED DOLLAR INCOME FUND o 1
----------------------
LETTER TO SHAREHOLDERS
----------------------
During the annual reporting period ended September 30, 2002, the Fund's
performance closely matched its benchmark. The modest return, however, masked a
highly volatile year whereby both high yield and emerging market debt returns
spiked early in the period on stronger than expected U.S. and global growth
news, then retreated significantly in the final six-months as expectations of a
strong economic recovery fell short.
Early in the period, the Fund significantly outperformed relative to the
benchmark due to security selection and leveraging of both the Fund's emerging
market and high yield holdings. Within the emerging market sector, the Fund's
overweight position in Russia, as well as its holdings in Mexico, Brazil, the
Philippines and the Ukraine, enhanced performance. Elimination of the Fund's
position in Argentina in November of 2001 (prior to its default) was a key
decision that contributed positively to performance. Russia, which benefited
from strong economic growth in spite of lower oil prices, outperformed all other
emerging market countries as measured by the JPM EMBI+.
The Fund also benefited from its high yield allocation, specifically cable
holdings, such as Cablevision and Charter Communications, which were viewed as
stable, cash flow producing companies. (Events in the second half of the year
would alter market perceptions.) An overweight position in the hotel and lodging
sectors also helped performance. These securities rallied post September 11th
as the market began to anticipate an economic recovery.
In the final six months of the period, however, the Fund's high yield and
emerging market holdings, as well as its leveraging, detracted from performance
and negated the Fund's outperformance from the first half. Investors' risk
aversion in the second half of the year was heightened by a stalled economic
recovery, corporate governance issues and a significant decline in equity
valuations. Within the Fund's high yield allocation, an overweight in the cable
and wireless sector dampened performance as the sector returned -24.60% during
the last six months as measured by the CSFBHY Index. Specific holdings in the
cable and telecommunications sector that detracted from performance included
Charter Communications, WorldCom and Adelphia.
Adelphia's disclosure of off-balance sheet leverage, accounting irregularities
and unreliable subscriber counts, which ultimately resulted in its filing for
Chapter 11 protection in June 2002, placed a very critical spotlight on the
cable sector. The wireless telecommunications subsector, which had suffered post
September 11, 2001 due to reduced subscriber additions and greater scrutiny of
their leveraged balance sheets, continued to experience heavy selling pressure
and precipitously lower bond prices. Exacerbating the fall was an unexpected
wholesale downgrading of the entire wireless telecommunications subsector by
Moody's due to concerns over the material slowdown in subscriber additions,
mature market conditions and the perceived difficulty for the market to support
six national carriers competing on price.
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2 o ACM MANAGED DOLLAR INCOME FUND
----------------------
LETTER TO SHAREHOLDERS
----------------------
The Fund also lost ground in the last half of the period due to its emerging
market allocation, particularly its holdings in Brazil and Ecuador. Brazil was
one of the worst performing emerging market countries during the final six
months, returning -36.30% as bonds declined due to political uncertainty and
anxiety surrounding their presidential elections in October. In Ecuador, bond
prices also declined significantly as prospects for a deal with the
International Monetary Fund (IMF) were delayed, resulting in returns during the
last six months of -28.06%. The Fund's overweight position in Russia again
helped enhance the Fund's performance in the last half of the period.
Market Overview
The global economic recovery has stalled since our last report, led by a loss of
economic momentum in the United States. Although U.S. economic growth surpassed
expectations for the first quarter of 2002 (+5.0%), continuing weakness in the
labor market, anemic business spending and a sharp decline in equity valuations
dampened prospects for a stronger economic recovery.
During the annual reporting period, several shocks were absorbed by the market,
including the aftereffects of the terrorist attack of September 11, corporate
governance scandals and the possibility of military action against Iraq, all of
which encouraged more conservative behavior by businesses and investors. The
high yield market, as measured by the CSFBHY Index, posted a modest return of
2.85% for the annual period. The modest return, however, masked a period of
extreme volatility and disparity of returns by industry sector as market
concerns regarding accounting irregularities, negative earnings surprises and
declining equity valuations predominated amidst a general environment of risk
aversion. Particularly hard hit were the media cable and telecommunications
sectors, while more defensive sectors fared better.
Emerging market debt, as measured by the JPM EMBI+, returned -1.14% for the
annual period with a significant disparity between Latin (-16.47%) and non-Latin
(+30.94%) countries. Latin American markets were affected by contagion from
Brazil and Ecuador, two of the worst performers within the Index. Russia
(+45.19%) and the Ukraine (+39.75%) were among the best performers during the
period, with returns supported by strong economic growth.
Outlook
Economic data indicates the U.S. economy is in a recovery stage, albeit an
uneven and narrow one. Fiscal and monetary stimuli are working their way through
the economy, most visibly in strong demand for autos and housing. However, risk
aversion--brought on by financial-market losses and the possibility of
military action against Iraq--is suppressing forms of economic activity
involving long-term commitment, such as the construction of office buildings and
plants, and the hiring of new personnel.
We expect the risk aversion to begin to unwind in the first half of 2003 when
further progress is made in the U.S. eco-
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 3
----------------------
LETTER TO SHAREHOLDERS
----------------------
nomic recovery, and when uncertainty about war in Iraq has likely lifted, even
if our forces continue to be engaged there. This would set the stage for
improved stock and corporate bond market performance, higher Treasury yields and
the broadening of economic recovery. As conditions stabilize, we believe the
U.S. Federal Reserve will likely begin to tighten, and the yield curve should
flatten.
By most measures, high yield spreads are at or near their highest levels since
1991. The high yield mutual fund liquidity ratio indicates that investors are
sitting on cash, waiting for the "right time" to commit. Just as in the more
hard hit sectors of the investment-grade market, high yield spreads could narrow
very quickly once the market turns. While high downgrade/upgrade ratios and
soaring default rates have rattled investors in recent months, we believe those
numbers have peaked. With the economy likely to continue to recover, we expect
the investment environment for the Fund's high yield securities to eventually
become more favorable. Within high yield, we are focusing on fundamentally sound
credits in oversold sectors and on the economically sensitive industries, such
as paper and packaging, which should rebound as the economy continues to
progress on its path of recovery.
Emerging market bonds are currently relatively cheap, offering upside potential.
There are several significant factors outside of the emerging markets that will
determine the sector's direction. The Iraqi outcome and the direction of the
world economy, particularly the U.S. economy, remain in question and present the
most significant risks. Events in Brazil, especially the direction of policy
initiatives set forth by the newly elected President, Luiz da Silva, will impact
the tone of the emerging markets, most notably in Latin America. The new
President will influence the rewriting of next year's budget, as well as the
upcoming IMF negotiations. We currently believe the newly elected president will
pursue more centrist rather than the more socialist policies investors feared.
We now believe that President da Silva will appoint an economic team that will
control spending and avoid a debt default.
Portfolio Management
As previously announced, Wayne D. Lyski is retiring as the person principally
responsible for the day-to-day management of the Fund's portfolio, and is being
succeeded in an orderly transition by a team headed by Paul J. DeNoon and George
D. Caffrey. Paul and George have been involved with Wayne in running the Fund
for over two years. As head of the Fund's
--------------------------------------------------------------------------------
4 o ACM MANAGED DOLLAR INCOME FUND
----------------------
LETTER TO SHAREHOLDERS
----------------------
portfolio management team since the Fund's inception in 1993, Wayne has made a
profound contribution to the best interests of the Fund and its shareholders. We
are deeply grateful to him.
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 the coming periods.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Paul J. DeNoon
Paul J. DeNoon
Vice President
/s/ George D. Caffrey
George D. Caffrey
Vice President
[PHOTO] John D. Carifa
[PHOTO] Paul J. DeNoon
[PHOTO] George D. Caffrey
Portfolio Managers, Paul J. DeNoon and George D. Caffrey, have over 40 years
combined investment experience.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 5
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ACM MANAGED DOLLAR INCOME FUND (NAV)
GROWTH OF A $10,000 INVESTMENT
10/31/93* TO 9/30/02
ACM Managed Dollar Income Fund (NAV): $13,137
Composite: $18,627
[THE FOLLOWING TABLE WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
ACM Managed Dollar
Income Fund (NAV) Composite
-------------------------------------------------------------------------------
10/31/93* $10,000 $10,000
9/30/94 $ 8,836 $ 9,323
9/30/95 $ 9,375 $10,098
9/30/96 $13,206 $13,222
9/30/97 $17,648 $16,204
9/30/98 $11,257 $13,511
9/30/99 $13,345 $15,718
9/30/00 $14,576 $18,687
9/30/01 $13,107 $18,579
9/30/02 $13,137 $18,627
This chart illustrates the total value of an assumed $10,000 investment in ACM
Managed Dollar Income Fund at net asset value (NAV) (from 10/31/93* to 9/30/02)
as compared to the performance of an appropriate composite. The composite
represents 65% of the J.P. Morgan Emerging Markets Bond Index Plus (JPM EMBI+)
and 35% of the Credit Suisse First Boston High Yield (CSFBHY) Index. The
composite is from the inception of the JPM EMBI+, which was 12/31/93. For the
period 10/31/93 through 9/30/94, the J.P. Morgan Emerging Markets Bond Index was
used in place of the JPM EMBI+. All other periods used the composite benchmark.
The chart assumes the reinvestment of dividends and capital gains. Past
performance is not indicative of future results, and is not representative of
future gain or loss in capital value or dividend income.
The unmanaged JPM EMBI+ is comprised of dollar-denominated restructured
sovereign bonds; a large percentage of the index is made up of Brady bonds. The
unmanaged CSFBHY Index is a measure of lower-rated, fixed income,
non-convertible U.S. dollar-denominated securities meeting certain criteria
developed by Credit Suisse designed to enable the index to reflect the high
yield market. The indices are unmanaged and reflect no fees or expenses. When
comparing ACM Managed Dollar Income Fund to the composite shown above, you
should note that no charges or expenses are reflected in the performance of the
composite. An investor cannot invest directly in an index, and its results are
not indicative of any specific investment, including ACM Managed Dollar Income
Fund.
* Closest month-end after Fund's inception date of 10/22/93.
--------------------------------------------------------------------------------
6 o ACM MANAGED DOLLAR INCOME FUND
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ACM MANAGED DOLLAR INCOME FUND (NAV)
HISTORY OF RETURNS
YEARLY PERIODS ENDED 9/30
[BAR CHART OMITTED]
ACM Managed Dollar Income Fund (NAV)--Yearly Periods Ended 9/30
--------------------------------------------------------------------------------
ACM Managed Dollar
Income Fund (NAV) Composite*
--------------------------------------------------------------------------------
9/30/94** -11.64% N/A
9/30/95 6.11% 8.31%
9/30/96 40.86% 30.95%
9/30/97 33.64% 22.55%
9/30/98 -36.22% -16.62%
9/30/99 18.69% 16.33%
9/30/00 9.99% 18.89%
9/30/01 -10.08% -0.57%
9/30/02 0.23% 0.26%
Past performance is no guarantee of future results. The Fund's investment
results represent total returns and are based on the net asset value (NAV). 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
each period.
* The composite represents 65% of the J.P. Morgan Emerging Markets Bond
Index Plus (JPM EMBI+) and 35% of the Credit Suisse First Boston High
Yield (CSFBHY) Index. The composite is from the inception of the JPM
EMBI+, which was 12/31/93. The unmanaged JPM EMBI+ is comprised of
dollar-denominated restructured sovereign bonds; a large percentage of the
index is made up of Brady bonds. The unmanaged CSFBHY Index is a measure
of lower-rated, fixed income, non-convertible U.S. dollar-denominated
securities meeting certain criteria developed by Credit Suisse designed to
enable the index to reflect the high yield market. The indices are
unmanaged and reflect no fees or expenses. An investor cannot invest
directly in an index, and its results are not indicative of any specific
investment, including ACM Managed Dollar Income Fund.
** The Fund's return for the period ended 9/30/94 is from the Fund's
inception date of 10/22/93 through 9/30/94. The JPM EMBI+ was not
available until 12/31/93. Therefore, returns for the benchmark are not
available for the period ended 9/30/94.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 7
-----------------
PORTFOLIO SUMMARY
-----------------
PORTFOLIO SUMMARY
September 30, 2002
INCEPTION DATE PORTFOLIO STATISTICS
10/22/93 Net Assets ($mil): $124.8
SECURITY TYPE
50.8% Sovereign
38.0% Corporate
5.5% Yankee Bonds
2.0% Preferred Stock [PIE CHART OMITTED]
1.5% Brady Bonds
2.2% Short-Term
COUNTRY BREAKDOWN
42.2% United States
21.1% Russia
11.8% Mexico
8.2% Brazil
3.0% Philippines
2.4% Venezuela
1.7% Colombia [PIE CHART OMITTED]
1.3% Turkey
1.3% Panama
1.2% Luxembourg
1.0% Malaysia
0.9% Ukraine
0.8% Ecuador
0.6% Bulgaria
2.5% Other
All data as of September 30, 2002. The Fund's security type and country
breakdown are expressed as a percentage of total investments and may vary over
time. "Other" represents less than 0.5% weightings in each of the following
countries: Argentina, Bahamas, Belize, Canada, El Salvador, the Netherlands,
Nigeria, Peru and United Kingdom.
--------------------------------------------------------------------------------
8 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
PORTFOLIO OF INVESTMENTS
September 30, 2002
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-73.8%
Sovereign Debt Securities-71.7%
Belize-0.7%
Government of Belize
9.50%, 8/15/12 .................................. $ 850 $ 841,500
-----------
Brazil-10.7%
Republic of Brazil
11.00%, 8/17/40(a) .............................. 25,925 11,251,450
11.50%, 3/12/08 ................................. 450 225,000
12.00%, 4/15/10 ................................. 1,050 506,625
12.75%, 1/15/20 ................................. 2,500 1,131,250
14.50%, 10/15/09 ................................ 400 219,000
-----------
13,333,325
-----------
Bulgaria-0.8%
Republic of Bulgaria
8.25%, 1/15/15(b) ............................... 994 1,019,347
-----------
Colombia-2.4%
Republic of Colombia
8.375%, 2/15/27 ................................. 625 377,500
10.00%, 1/23/12 ................................. 675 541,687
10.50%, 7/09/10 ................................. 150 123,375
11.75%, 2/25/20 ................................. 2,335 1,908,862
-----------
2,951,424
-----------
Ecuador-1.1%
Republic of Ecuador
6.00%, 8/15/30(b)(c) ............................ 1,450 531,425
6.00%, 8/15/30(b)(c) ............................ 200 73,300
12.00%, 11/15/12(b) ............................. 1,525 800,625
-----------
1,405,350
-----------
El Salvador-0.4%
Republic of El Salvador
8.50%, 7/25/11(b) ............................... 400 430,200
-----------
Mexico-14.1%
United Mexican States
11.375%, 9/15/16(a) ............................. 14,325 17,655,562
-----------
Panama-0.8%
Republic of Panama
10.75%, 5/15/20 ................................. 1,000 1,006,500
-----------
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 9
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Philippines-4.3%
Republic of Philippines
9.875%, 1/15/19(a) .............................. $ 2,300 $ 2,280,450
10.625%, 3/16/25(a) ............................. 2,950 3,065,050
-----------
5,345,500
-----------
Russia-29.6%
Ministry Finance of Russia
Series V
3.00%, 5/14/08 .................................. 650 452,595
Series VI
3.00%, 5/14/06 .................................. 3,600 2,952,000
Russian Federation
5.00%, 3/31/30(a)(b)(c) ......................... 45,650 32,240,312
5.00%, 3/31/30(c) ............................... 1,850 1,308,875
-----------
36,953,782
-----------
Turkey-1.8%
Republic of Turkey
11.75%, 6/15/10 ................................. 1,375 1,229,250
11.875%, 1/15/30 ................................ 1,050 880,950
12.375%, 6/15/09 ................................ 175 163,450
-----------
2,273,650
-----------
Ukraine-1.3%
Ukraine Government
11.00%, 3/15/07 ................................. 1,596 1,665,426
-----------
Uruguay-0.4%
Republic of Uruguay
7.625%, 1/20/12 ................................. 475 199,500
7.875%, 7/15/27 ................................. 650 248,625
-----------
448,125
-----------
Venezuela-3.3%
Republic of Venezuela
9.25%, 9/15/27 .................................. 6,275 4,166,600
-----------
Total Sovereign Debt Securities
(cost $85,184,330) .............................. 89,496,291
-----------
Collateralized Brady Bond-0.4%(d)
Nigeria-0.4%
Central Bank of Nigeria
6.25%, 11/15/20(e) .............................. 1,000 585,000
-----------
Total Collateralized Brady Bond
(cost $687,320) ................................. 585,000
-----------
--------------------------------------------------------------------------------
10 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Non-Collateralized Brady Bonds-1.7%
Brazil-0.4%
Republic of Brazil-DCB FRN
2.625%, 4/15/12(c) .............................. $ 1,175 $ 462,715
-----------
Panama-1.0%
Republic of Panama PDI FRN
2.75%, 7/17/16(c) ............................... 1,833 1,255,391
-----------
Peru-0.3%
Republic of Peru FLIRB VRN
4.00%, 3/07/17(c) ............................... 650 389,220
-----------
Total Non-Collateralized Brady Bonds
(cost $2,830,316) ............................... 2,107,326
-----------
Total Sovereign Debt Obligations
(cost $88,701,966) .............................. 92,188,617
-----------
U.S. CORPORATE DEBT OBLIGATIONS-53.7%
Aerospace/Defense-0.7%
Sequa Corp.
9.00%, 8/01/09 .................................. 565 497,200
Transdigm, Inc.
10.375%, 12/01/08 ............................... 360 370,800
-----------
868,000
-----------
Automotive-1.7%
ArvinMeritor, Inc.
8.75%, 3/01/12 .................................. 325 350,106
Collins & Aikman Products Co.
10.75%, 12/31/11 ................................ 385 369,600
Dana Corp.
10.125%, 3/15/10(b) ............................. 410 401,800
Dura Operating Corp.
Series D
9.00%, 5/01/09 .................................. 632 586,180
Stoneridge, Inc.
11.50%, 5/01/12 ................................. 220 225,500
United Auto Group, Inc.
9.625%, 3/15/12(b) .............................. 245 248,675
-----------
2,181,861
-----------
Broadcasting & Media-3.2%
Albritton Communications Co.
Series B
8.875%, 2/01/08 ................................. 680 697,000
American Media Operation
10.25%, 5/01/09 ................................. 435 452,400
Fox Family Worldwide, Inc.
10.25%, 11/01/07 ................................ 905 958,031
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 11
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Lin Holdings Corp.
10.00%, 3/01/08(f) .............................. $ 1,050 $ 1,042,125
Paxson Communications Corp.
10.75%, 7/15/08 ................................. 480 381,600
Sinclair Broadcast Group, Inc.
8.00%, 3/15/12 .................................. 210 212,100
8.75%, 12/15/11 ................................. 270 280,125
-----------
4,023,381
-----------
Building & Real Estate-3.0%
Associated Materials, Inc.
9.75%, 4/15/12(b) ............................... 205 211,150
Beazer Homes USA, Inc.
8.375%, 4/15/12 ................................. 350 351,750
D.R. Horton, Inc.
8.00%, 2/01/09 .................................. 340 334,900
10.50%, 4/01/05 ................................. 195 205,725
LNR Property Corp.
10.50%, 1/15/09 ................................. 1,200 1,230,000
Meritage Corp.
9.75%, 6/01/11 .................................. 535 539,013
Schuler Homes, Inc.
10.50%, 7/15/11 ................................. 805 809,025
The Ryland Group, Inc.
9.75%, 9/01/10 .................................. 50 53,750
-----------
3,735,313
-----------
Cable-4.4%
Charter Communication Holdings
9.625%, 11/15/09 ................................ 310 190,650
10.00%, 5/15/11 ................................. 10 6,150
10.75%, 10/01/09 ................................ 1,900 1,206,500
11.75%, 5/15/11(f) .............................. 3,350 1,139,000
12.125%, 1/15/12(f) ............................. 480 156,000
Echostar DBS Corp.
9.25%, 2/01/06 .................................. 1,060 1,022,900
9.375%, 2/01/09 ................................. 1,285 1,240,025
Mediacom Broadband LLC
11.00%, 7/15/13 ................................. 590 545,750
PanAmSat Corp.
8.50%, 2/01/12(b) ............................... 40 32,200
-----------
5,539,175
-----------
Chemicals-3.0%
Airgas, Inc.
9.125%, 10/01/11 ................................ 275 293,219
Ferro Corp.
9.125%, 1/01/09 ................................. 310 328,153
Georgia Gulf Corp.
10.375%, 11/01/07 ............................... 700 752,500
Huntsman ICI Chemicals
10.125%, 7/01/09 ................................ 1,110 926,850
--------------------------------------------------------------------------------
12 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Lyondell Chemical Co.
9.50%, 12/15/08 ................................. $ 190 $ 172,425
Series A
9.625%, 5/01/07 ................................. 85 78,838
Series B
10.875%, 5/01/09 ................................ 790 628,050
Resolution Performance Products
13.50%, 11/15/10 ................................ 520 577,200
-----------
3,757,235
-----------
Communications-Fixed-1.0%
Qwest Corp.
8.875%, 3/15/12(b) .............................. 1,420 1,242,500
-----------
Communications-Mobile-4.1%
Dobson/Sygnet Communications
12.25%, 12/15/08 ................................ 1,050 677,250
Iridium LLC Capital Corp.
Series B
14.00%, 7/15/05(g) .............................. 5,000 256,250
Nextel Communications, Inc.
5.25%, 1/15/10 .................................. 885 601,800
9.375%, 11/15/09 ................................ 525 401,625
9.95%, 2/15/08(f) ............................... 1,035 771,075
10.65%, 9/15/07 ................................. 190 159,600
Nextel Partners, Inc.
11.00%, 3/15/10 ................................. 600 399,000
12.50%, 11/15/09 ................................ 200 141,000
Rural Cellular Corp.
9.75%, 1/15/10 .................................. 635 339,725
TeleCorp PCS, Inc.
10.625%, 7/15/10 ................................ 378 334,530
Tritel PCS, Inc.
10.375%, 1/15/11 ................................ 329 287,875
Triton PCS, Inc.
8.75%, 11/15/11 ................................. 205 136,325
11.00%, 5/01/08(f) .............................. 840 554,400
-----------
5,060,455
-----------
Consumer Manufacturing-1.9%
Collins & Aikman Floorcovering, Inc.
9.75%, 2/15/10 .................................. 260 265,200
Jostens, Inc.
12.75%, 5/01/10 ................................. 680 771,800
Pennzoil-Quaker State Co.
10.00%, 11/01/08 ................................ 445 528,994
Playtex Products, Inc.
9.375%, 6/01/11 ................................. 275 294,934
Remington Products Co, LLC
11.00%, 5/15/06 ................................. 100 81,500
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 13
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Sealy Mattress Co.
9.875%, 12/15/07 ................................ $ 300 $ 259,500
St. John Knits International, Inc.
12.50%, 7/01/09 ................................. 100 105,500
-----------
2,307,428
-----------
Energy-1.0%
Chesapeake Energy Corp.
9.00%, 8/15/12(b) ............................... 210 216,825
Grey Wolf, Inc.
8.875%, 7/01/07 ................................. 265 271,625
Lomak Petroleum
8.75%, 1/15/07 .................................. 255 256,275
Pride International, Inc.
9.375%, 5/01/07 ................................. 270 283,500
XTO Energy, Inc.
7.50%, 4/15/12 .................................. 250 263,750
-----------
1,291,975
-----------
Entertainment & Leisure-1.2%
Premier Parks
9.75%, 6/15/07 .................................. 510 448,800
10.00%, 4/01/08(f) .............................. 320 264,000
Regal Cinemas, Inc.
9.375%, 2/01/12 ................................. 215 221,450
Six Flags, Inc.
9.50%, 2/01/09 .................................. 600 516,000
-----------
1,450,250
-----------
Financial-2.4%
iStar Financial, Inc.
8.75%, 8/15/08 .................................. 550 571,750
Markel Capital Trust I
Series B
8.71%, 1/01/46 .................................. 660 529,455
Nationwide CSN Trust
9.875%, 2/15/25(b) .............................. 1,000 1,049,100
PXRE Capital Trust I
8.85%, 2/01/27 .................................. 440 347,600
Western Financial Bank
9.625%, 5/15/12 ................................. 410 391,550
Williams Scotsman, Inc.
9.875%, 6/01/07 ................................. 180 153,900
-----------
3,043,355
-----------
Food/Beverage-0.7%
B&G Foods, Inc.
9.625%, 8/01/07 ................................. 190 194,275
Del Monte Corp.
9.25%, 5/15/11 .................................. 265 266,325
--------------------------------------------------------------------------------
14 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
DIMON, Inc.
Series B
9.625%, 10/15/11 ................................ $ 185 $ 194,481
Swift & Co.
10.125%, 10/01/09(b) ............................ 255 236,513
-----------
891,594
-----------
Gaming-4.0%
Ameristar Casinos, Inc.
10.75%, 2/15/09 ................................. 205 226,012
Argosy Gaming Co.
9.00%, 9/01/11 .................................. 545 568,162
Boyd Gaming Corp.
9.25%, 8/01/09 .................................. 400 428,500
Harrahs Operating Company, Inc.
7.875%, 12/15/05 ................................ 525 556,500
Horseshoe Gaming Holding Corp.
Series B
8.625%, 5/15/09 ................................. 185 194,250
MGM Mirage
8.375%, 2/01/11 ................................. 790 821,600
Mandalay Resort Group
10.25%, 8/01/07 ................................. 505 546,663
Mohegan Tribal Gaming
8.375%, 7/01/11 ................................. 590 607,700
8.75%, 1/01/09 .................................. 140 146,650
Park Place Entertainment
7.875%, 3/15/10 ................................. 295 299,425
9.375%, 2/15/07 ................................. 335 355,938
Station Casinos, Inc.
8.375%, 2/15/08 ................................. 205 214,225
-----------
4,965,625
-----------
Healthcare-3.7%
Advanced Medical Optics, Inc.
9.25%, 7/15/10 .................................. 315 310,275
Concentra Operating Corp.
13.00%, 8/15/09 ................................. 540 569,700
Extendicare Health Services
9.50%, 7/01/10(b) ............................... 155 157,325
HCA, Inc.
7.875%, 2/01/11 ................................. 880 962,373
Hanger Orthopedic Group, Inc.
10.375%, 2/15/09 ................................ 180 190,800
Iasis Healthcare Corp.
13.00%, 10/15/09 ................................ 690 706,388
PacifiCare Health Systems, Inc.
10.75%, 6/01/09 ................................. 495 491,288
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 15
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Triad Hospitals Holdings
Series B
8.75%, 5/01/09 .................................. $ 95 $ 100,938
11.00%, 5/15/09 ................................. 750 826,875
Vanguard Health Systems, Inc.
9.75%, 8/01/11 .................................. 275 272,250
-----------
4,588,212
-----------
Hotels & Lodging-3.2%
Extended Stay America, Inc.
9.875%, 6/15/11 ................................. 735 712,950
Felcor Lodging, L.P.
8.50%, 6/01/11 .................................. 197 185,673
9.50%, 9/15/08 .................................. 195 194,513
Host Marriott, L.P.
9.25%, 10/01/07 ................................. 680 676,600
9.50%, 1/15/07 .................................. 600 601,500
MeriStar Hospitality Corp.
9.125%, 1/15/11 ................................. 295 264,025
MeriStar Hospitality Operating Partnership, L.P.
10.50%, 6/15/09 ................................. 275 268,125
Starwood Hotels & Resorts Worldwide, Inc.
7.875%, 5/01/12(b) .............................. 575 562,063
Vail Resorts, Inc.
8.75%, 5/15/09 .................................. 470 481,750
-----------
3,947,199
-----------
Industrial-1.1%
Flowserve Corp.
12.25%, 8/15/10 ................................. 520 538,200
H&E Equipment/Finance
11.125%, 6/15/12(b) ............................. 270 214,650
NMHG Holdings Co.
10.00%, 5/15/09 ................................. 220 223,300
The Manitowoc Company, Inc.
10.50%, 8/01/12(b) .............................. 210 220,500
TriMas Corp
9.875, 6/15/12(b) ............................... 220 216,700
-----------
1,413,350
-----------
Metals/Mining-1.0%
Commonwealth Industries, Inc.
10.75%, 10/01/06 ................................ 30 29,850
Earle M. Jorgenson Co.
9.75%, 6/01/12 .................................. 170 166,600
P & L Coal Holdings
Series B
9.625%, 5/15/08 ................................. 200 210,500
Steel Dynamics, Inc.
9.50%, 3/15/09(b) ............................... 260 263,900
United States Steel LLC
10.75%, 8/01/08 ................................. 540 534,600
-----------
1,205,450
-----------
--------------------------------------------------------------------------------
16 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Paper & Packaging-4.7%
Berry Plastics Corp.
10.75%, 7/15/12 ................................. $ 355 $ 367,425
Carauster Industries, Inc.
9.875%, 4/01/11 ................................. 85 86,700
Crown Paper Co.
11.00%, 9/01/05(g)(h) ........................... 5,000 0
Graphic Packaging Corp.
8.625%, 2/15/12 ................................. 50 50,500
Greif Bros. Corp.
8.875%, 8/01/12(b) .............................. 325 325,000
Huntsman Packaging Corp.
13.00%, 6/01/10 ................................. 195 186,225
Owens-Brockway Glass Container, Inc.
8.875%, 2/15/09 ................................. 670 676,700
Owens-Illinois, Inc.
7.80%, 5/15/18 .................................. 385 302,225
7.85%, 5/15/04 .................................. 230 218,500
Packaging Corp. of America
9.625%, 4/01/09 ................................. 185 199,338
Plastipak Holdings, Inc.
10.75%, 9/01/11 ................................. 550 585,750
Pliant Corp.
13.00%, 6/01/10 ................................. 215 205,325
Riverwood International Corp.
10.625%, 8/01/07 ................................ 510 522,750
Russell-Stanley Holdings, Inc.
9.00%, 11/30/08(b)(h)(i) ........................ 715 536,372
Silgan Holdings, Inc.
9.00%, 6/01/09(b) ............................... 265 274,938
9.00%, 6/01/09 .................................. 130 134,875
Stone Container
9.25%, 2/01/08 .................................. 750 776,250
9.75%, 2/01/11 .................................. 357 373,065
-----------
5,821,938
-----------
Petroleum Products-0.6%
Frontier Oil Corp.
11.75%, 11/15/09 ................................ 700 714,000
-----------
Retail-0.3%
Advance Stores Company, Inc.
10.25%, 4/15/08 ................................. 390 414,375
-----------
Service-4.6%
Alderwoods Group, Inc.
12.25%, 1/02/09 ................................. 295 284,675
Allied Waste North America
8.50%, 12/01/08 ................................. 540 515,700
8.875%, 4/01/08 ................................. 810 789,750
10.00%, 8/01/09 ................................. 1,962 1,814,850
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 17
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Coinmach Corp.
9.00%, 2/01/10 .................................. $ 250 $ 259,375
Corrections Corp. of America
9.875%, 5/1/09(b) ............................... 325 337,594
Iron Mountain, Inc.
8.625%, 4/01/13 ................................. 410 412,050
Service Corp. International
6.00%, 12/15/05 ................................. 230 196,650
6.30%, 3/15/20(j) ............................... 45 43,650
6.50%, 3/15/08 .................................. 240 195,600
7.70%, 4/15/09(b) ............................... 225 187,875
7.70%, 4/15/09 .................................. 575 488,750
Stewart Enterprises, Inc.
10.75%, 7/01/08 ................................. 230 253,000
-----------
5,779,519
-----------
Supermarket & Drugstore-1.1%
Fleming Companies, Inc.
9.875%, 5/01/12(b) .............................. 495 264,825
Series B
10.625%, 7/31/07 ................................ 25 14,625
Rite Aid Corp.
11.25%, 7/01/08 ................................. 815 599,025
Roundy's, Inc.
8.875%, 6/15/12(b) .............................. 170 166,600
Stater Bros. Holdings, Inc.
10.75%, 8/15/06 ................................. 370 371,850
-----------
1,416,925
-----------
Technology-0.8%
Fairchild Semiconductor
10.50%, 2/01/09 ................................. 780 815,100
ON Semiconductor Corp.
12.00%, 5/15/08(b) .............................. 275 173,250
-----------
988,350
-----------
Utilities-Electric & Gas-0.3%
AES Corp.
8.875%. 2/15/11 ................................. 730 375,950
9.375%, 9/15/10 ................................. 40 21,000
-----------
396,950
-----------
Total U.S. Corporate Debt Obligations
(cost $84,063,511) .............................. 67,044,415
-----------
NON-U.S. CORPORATE DEBT OBLIGATIONS-7.7%
Argentina-0.3%
Supercanal Holdings, SA
10.75%, 11/07/02(g)(h) .......................... 3,478 417,315
-----------
--------------------------------------------------------------------------------
18 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Bahamas-0.1%
Sun International Hotels, Ltd.
8.875%, 8/15/11 ................................. $ 100 $ 100,750
-----------
Brazil-0.5%
Banco Nacional de Desenvolvimento
6.50%, 6/15/06(b) ............................... 1,000 600,000
-----------
Canada-0.5%
Corus Entertainment, Inc.
8.75%, 3/01/12 .................................. 250 255,625
Fairfax Financial Holdings
7.375%, 4/15/18 ................................. 180 98,347
7.75%, 7/15/37 .................................. 165 85,569
Tembec Industries, Inc.
8.625%, 6/30/09 ................................. 215 215,538
-----------
655,079
-----------
Ireland-0.3%
MDP Acquistions PLC
9.625%, 10/01/12(b) ............................. 415 412,925
-----------
Malaysia-1.4%
Petronas Capital, Ltd.
7.875%, 5/22/22(b) .............................. 1,600 1,757,453
-----------
Mexico-2.5%
Innova S. de R.L.
12.875%, 4/01/07 ................................ 4,275 3,122,888
-----------
Luxembourg-1.7%
Mobile Telesystems Finance S.A.
10.95%, 12/21/04 ................................ 2,130 2,177,925
-----------
Netherlands-0.1%
Netia Holdings BV
Series B
11.25%, 11/01/07(g) ............................. 475 83,125
-----------
Russia-0.3%
AO Siberian Oil Company
11.50%, 2/13/07 ................................. 300 310,200
-----------
Total Non-U.S. Corporate Debt Obligations
(cost $13,722,445) .............................. 9,637,660
-----------
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 19
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Shares or
Principal
Amount
(000) U.S. $ Value
-------------------------------------------------------------------------------
Convertible Preferred Stock-0.0%
PSINet, Inc.
7.00%(b)(g) ................................... 15,000 $ 1,050
------------
Total Convertible Preferred Stock
(cost $600,000) ............................... 1,050
------------
Non-Convertible Preferred Stock-2.9%
Broadwing Communications, Inc.
Series B
12.50% ........................................ 880 90,200
CSC Holdings, Inc.
Series M
11.125% ....................................... 26,009 1,710,092
Nextel Communications
Series E
11.125%(k) .................................... 1,229 737,400
Sinclair Capital
11.625% ....................................... 850 89,037
Sovereign REIT
12.00%(b) ..................................... 870 939,600
------------
Total Non-Convertible Preferred Stock
(cost $5,156,927) ............................. 3,566,329
------------
Common Stock, Warrants & Rights-0.0%
Jostens, Inc. Cl. E
Warrants, expiring 5/01/10(l)(m) .............. 655 16,539
Republic of Venezuela
Warrants, expiring 4/15/20(l) ................. 7,140 0
Russell-Stanley Holdings, Inc.
Common Stock(l) ............................... 100,000 0
United Mexican States Recovery Rights(l) ......... 3,538,000 11,499
------------
Total Common Stock, Warrants & Rights
(cost $13,100) ................................ 28,038
------------
Short-Term Investment-3.1%
Time Deposit-3.1%
State Street Bank & Trust Co.
1.25%, 10/01/02
(cost $3,842,000) ............................. $ 3,842 3,842,000
------------
Total Investments-141.2%
(cost $196,099,949) ........................... 176,308,109
Other assets less liabilities--(41.2%) ........... (51,473,623)
------------
Net Assets-100.0% ................................ $124,834,486
============
--------------------------------------------------------------------------------
20 o ACM MANAGED DOLLAR INCOME FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
(a) Positions with an aggregate market value of $61,368,746 have been
segregated to collateralize reverse repurchase agreements.
(b) 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,
2002, the market value of these securities aggregated $46,346,592 or 37.1%
of net assets.
(c) Coupon changes periodically based upon a predetermined schedule. Stated
interest rate was in effect at September 30, 2002.
(d) Sovereign debt obligations issued as a part of debt restructuring 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.
(e) Security trades with oil warrants expiring November 15, 2020. As of
September 30, 2002, the Fund holds 1,500 oil warrants.
(f) 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.
(g) Security is in default or arrears and is non-income producing.
(h) Illiquid security, valued at fair value (See Note A.)
(i) Coupon is paid-in-kind
(j) Coupon is fixed until March 15, 2003. At that time, the security may then
be remarketed at a new fixed rate.
(k) Paid-in-kind preferred stock payments.
(l) Non-income producing security.
(m) Each warrant entitles the holder to purchase 1.889 shares of common stock
at $.01 per share. The warrants are exercisable until May 1, 2010.
Glossary of Terms:
DCB - Debt Conversion Bond
FLIRB - Front Loaded Interest Reduction Bond
FRN - Floating Rate Note
PDI - Past Due Interest
VRN - Variable Rate Note
See notes to financial statements.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 21
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
September 30, 2002
Assets
Investments in securities, at value
(cost $196,099,949) ................................... $ 176,308,109(a)
Cash ..................................................... 241
Due from brokers ......................................... 14,304,500
Interest receivable ...................................... 4,463,600
Collateral held for securities loaned .................... 4,028,530
Receivable for investment securities sold ................ 2,282,740
Dividend receivable ...................................... 72,338
Other assets ............................................. 10,573
-------------
Total assets ............................................. 201,470,631
-------------
Liabilities
Reverse repurchase agreements ............................ 70,299,946
Payable for collateral received on securities loaned ..... 4,028,530
Payable for investment securities purchased .............. 2,036,872
Advisory fee payable ..................................... 82,432
Administrative fee payable ............................... 16,487
Accrued expenses and other liabilities ................... 171,878
-------------
Total liabilities ........................................ 76,636,145
-------------
Net Assets ............................................... $ 124,834,486
=============
Composition of Net Assets
Common stock, at par ..................................... $ 223,578
Additional paid-in capital ............................... 294,839,405
Distributions in excess of net investment income ......... (196,275)
Accumulated net realized loss on investment
transactions .......................................... (150,240,382)
Net unrealized depreciation of investments ............... (19,791,840)
-------------
$ 124,834,486
=============
Net Asset Value Per Share
(based on 22,357,807 shares outstanding) .............. $5.58
=====
(a) Includes securities on loan with a value of $3,801,638 (See Note I).
See notes to financial statements.
--------------------------------------------------------------------------------
22 o ACM MANAGED DOLLAR INCOME FUND
-----------------------
STATEMENT OF OPERATIONS
-----------------------
STATEMENT OF OPERATIONS
Year Ended September 30, 2002
Investment Income
Interest ..................................... $ 21,796,468
Dividends .................................... 545,884
-------------
$ 22,342,352
Expenses
Advisory fee ................................. 1,294,008
Administrative fee ........................... 258,793
Printing ..................................... 117,183
Audit and legal .............................. 102,391
Custodian .................................... 76,916
Transfer agency .............................. 46,518
Directors' fees .............................. 30,026
Registration fees ............................ 24,938
Miscellaneous ................................ 43,348
-------------
Total expenses before interest expense ....... 1,994,121
Interest expense ............................. 1,671,921
-------------
Total expenses ............................... 3,666,042
-------------
Net investment income ........................ 18,676,310
-------------
Realized and Unrealized Gain (Loss)
on Investments
Net realized loss on investment
transactions .............................. (30,457,612)
Net change in unrealized
appreciation/depreciation
of investments ............................ 14,551,799
-------------
Net loss on investments ...................... (15,905,813)
-------------
Net Increase in Net Assets from
Operations ................................ $ 2,770,497
=============
See notes to financial statements.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 23
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, September 30,
2002 2001
============= =============
Increase (Decrease) in Net Assets
from Operations
Net investment income ........................ $ 18,676,310 $ 21,776,043
Net realized loss on investment
transactions .............................. (30,457,612) (27,137,698)
Net change in unrealized
appreciation/depreciation
of investments ............................ 14,551,799 (10,959,081)
------------- -------------
Net increase (decrease) in net assets
from operations ........................... 2,770,497 (16,320,736)
Dividends and Distributions
to Shareholders from
Net investment income ........................ (18,835,190) (21,047,520)
Tax return of capital ........................ (730,704) (1,562,731)
Common Stock Transactions
Reinvestment of dividends resulting
in the issuance of Common Stock ........... 1,520,333 1,365,636
Tender offer (resulting in the redemption
of 0 and 248,723 shares of
common stock, respectively) ............... -0- (1,766,095)
Tender offer costs ........................... -0- (212,169)
------------- -------------
Total decrease ............................... (15,275,064) (39,543,615)
Net Assets
Beginning of period .......................... 140,109,550 179,653,165
------------- -------------
End of period ................................ $ 124,834,486 $ 140,109,550
============= =============
See notes to financial statements.
--------------------------------------------------------------------------------
24 o ACM MANAGED DOLLAR INCOME FUND
-----------------------
STATEMENT OF CASH FLOWS
-----------------------
STATEMENT OF CASH FLOWS
Year Ended September 30, 2002
Increase (Decrease) in Cash from
Operating Activities:
Interest and dividends received .............. $ 20,317,023
Interest expense paid ........................ (1,911,163)
Operating expenses paid ...................... (2,054,279)
-------------
Net increase in cash from operating
activities ................................ $ 16,351,581
Investing Activities:
Purchases of long-term investments ........... (131,507,083)
Proceeds from disposition of
long-term investments ..................... 137,962,059
Proceeds from disposition
of short-term investments, net ............ 2,194,000
-------------
Net increase in cash from
investing activities ...................... 8,648,976
Financing Activities: (a)
Cash dividends paid .......................... (18,045,561)
Tender offer expenses ........................ (166,059)
Increase in reverse repurchase
agreements ................................ 55,711,250
Repayment of bank loan ....................... (62,500,000)
-------------
Net decrease in cash from
financing activities ...................... (25,000,370)
-------------
Net increase in cash ......................... 187
Cash at beginning of period .................. 54
-------------
Cash at end of period ........................ $ 241
=============
--------------------------------------------------------------------------------
Reconciliation of Net Increase in
Net Assets from Operations to Net
Increase in Cash from Operating Activities:
Net increase in net assets from
operations ................................ $ 2,770,497
Adjustments:
Decrease in dividends and
interest receivable ....................... $ 898,098
Accretion of bond discount and
amortization of bond premium .............. (2,923,427)
Decrease in accrued expenses and
other assets .............................. (60,158)
Decrease in interest payable ................. (239,242)
Net realized loss on investment
transactions .............................. 30,457,612
Net change in unrealized appreciation/
depreciation of investments ............... (14,551,799)
-------------
Total adjustments ............................ 13,581,084
-------------
Net Increase in Cash from Operating
Activities ................................ $ 16,351,581
=============
(a) Non-cash financing activities not included herein consist of reinvestment
of dividends and distributions.
See notes to financial statements.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 25
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTES TO FINANCIAL STATEMENTS
September 30, 2002
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 financial statements have been prepared in conformity
with accounting principles generally accepted in the United States which
requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange 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. 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.
3. 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 deter-
--------------------------------------------------------------------------------
26 o ACM MANAGED DOLLAR INCOME FUND
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
mined on the identified cost basis. The Fund accretes discounts as adjustments
to interest income.
4. 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 conformity with
accounting principles generally accepted in the United States. 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 the tax
return of capital and recognition of premium on debt securities resulted in a
net decrease in distributions in excess of net investment income, a net increase
in accumulated net realized loss on investment transactions and a corresponding
decrease in additional paid-in capital. The reclassification has no effect on
net assets.
5. Repurchase Agreements
The Fund's custodian or designated subcustodian will take control of securities
as collateral under repurchase agreements and determine on a daily basis that
the value of such securities are sufficient to cover the value of the repurchase
agreements. If the seller defaults and the value of collateral declines or if
bankruptcy proceedings are commenced with respect to the seller of the security,
realization of collateral by the Fund may be delayed or limited.
6. Change in Accounting Principle
As required, effective October 1, 2001, the Fund has adopted the provisions of
the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began
amortizing premium on debt securities for financial statement reporting purposes
only. This change has no impact on the net assets of the Fund. Prior to October
1, 2001, the Fund did not amortize premiums on debt securities.
The cumulative effect of this accounting change resulted in a $161,414 decrease
in cost of investments and a corresponding $161,414 decrease in net unrealized
depreciation, based on investments owned by the Fund on October 1, 2001.
The effect of this change for the year ended September 30, 2002, was to decrease
net investment income by $158,880, decrease net unrealized depreciation of
investments by $34,861 and decrease net realized loss on investment transactions
by $124,019. The statements of changes in net assets and financial highlights
for prior periods have not been restated to reflect the change in accounting
principle.
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. Such
fee is accrued daily and paid monthly.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 27
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Global Investor Services, Inc. (AGIS), an affiliate of the Adviser, the Fund
reimburses AGIS for costs relating to servicing phone inquiries for the Fund.
The Fund reimbursed AGIS $2,030 during the year ended September 30, 2002.
Under the terms of an Administration Agreement, the Fund pays Princeton
Administrators, L.P. (the "Administrator") a fee at an annual rate of .15 of 1%
of the Fund's average adjusted weekly net assets. Such fee is accrued daily and
paid monthly. 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 U.S. government
securities and short-term investments) aggregated $124,959,434 and $122,237,100,
respectively, for the year ended September 30, 2002. There were no purchases or
sales of U.S. government or government agency obligations for the year ended
September 30, 2002.
At September 30, 2002, the cost of investments for federal income tax purposes
was $197,587,611. Accordingly, gross unrealized appreciation of investments was
$16,718,541 and gross unrealized depreciation of investments was $37,998,043,
resulting in net unrealized depreciation of $21,279,502.
1. Options Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) 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 the premium and a change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired through
the exercise of call options is increased by premiums paid. The proceeds from
securities sold through the exercise of put options are decreased by the
premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from 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 received and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a real-
--------------------------------------------------------------------------------
28 o ACM MANAGED DOLLAR INCOME FUND
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
ized 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 received
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 purchased or written for the year ended
September 30, 2002.
2. Interest Rate Swap Agreements
The Fund may enter into interest rate swap agreements 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 the counterparty 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 on interest rate swap contracts. Realized gains and
losses from terminated swap contracts are included in net realized gain/loss on
investment transactions.
At September 30, 2002, the Fund had no outstanding interest rate swap contracts.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 29
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE D
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended September
30, 2002 and September 30, 2001 were as follows:
2002 2001
============ ============
Distributions paid from:
Ordinary income ....................... $(18,835,190) $(21,047,520)
------------ ------------
Total taxable distributions ............. (18,835,190) (21,047,520)
Tax return of capital ................. (730,704) (1,562,731)
------------ ------------
Total distributions paid ................ $(19,565,894) $(22,610,251)
============ ============
As of September 30, 2002, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses .................... $(148,948,995)(a)
Unrealized appreciation/(depreciation) .................. (21,279,502)(b)
-------------
Total accumulated earnings/(deficit) .................... $(170,228,497)
=============
(a) On September 30, 2002, the Fund had a net capital loss carryforward of
$126,240,223 of which $57,455,739 expires in the year 2007, $24,635,181
expires in the year 2008, $10,899,598 expires in the year 2009 and
$33,249,705 expires in the year 2010. To the extent future capital gains
are offset by capital loss carryforward, such gains will not be
distributed. Net capital losses incurred after October 31, and within the
taxable year are deemed to arise on the first business day of the Fund's
next taxable year. For the year ended September 30, 2002, the Fund
deferred to October 1, 2002, post October capital losses of $22,708,772.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral
of losses on wash sales and the difference between book and tax
amortization methods for premium and market discount.
NOTE E
Common Stock
There are 300,000,000 shares of $.01 par value common stock authorized, of which
22,357,807 shares were outstanding at September 30, 2002. During the years ended
September 30, 2002 and September 30, 2001, the Fund issued 223,517 and 186,638
shares, respectively, in connection with the Fund's dividend reinvestment plan.
On May 7, 2001, the Fund purchased and retired 248,723 shares of its outstanding
common stock for $7.13 per share pursuant to a tender offer. The Fund incurred
costs of $212,169, which were charged to additional paid in capital. At May 7,
2001, 22,019,479 shares of common stock were outstanding. The purpose of the
tender offer was to fulfill an undertaking made in connection with the initial
public offering price of the Fund's shares.
NOTE F
Bank Borrowing
The Fund entered into a Revolving Credit Agreement with Citibank, N.A. which was
renewed on March 23, 2001. On March 22, 2002, the Fund terminated this
agreement. The maximum credit available was $85,000,000. The average daily
amount of the loan out-
--------------------------------------------------------------------------------
30 o ACM MANAGED DOLLAR INCOME FUND
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
standing during the period ended March 22, 2002 was approximately $57,586,705
with a related weighted average annualized interest rate of 3.92%. The Fund was
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 G
Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account with the custodian containing liquid assets having a value at least
equal to the repurchase price.
"Due from brokers" on the statement of assets and liabilities represents the
receivable from the respective brokers for the reverse repurchase agreements
entered into on September 27, 2002 and September 30, 2002.
As of September 30, 2002, the Fund had entered into the following reverse
repurchase agreements:
Amount Broker Interest Rate Maturity
============ ========================= ============= =============
$29,931,232 Deutsche Banc 1.85% 12/31/2002
2,334,500 JP Morgan Chase 0.80 12/31/2002
3,045,000 JP Morgan Chase 0.25 12/31/2002
12,856,257 JP Morgan Chase 1.85 12/31/2002
13,207,957 JP Morgan Chase 1.55 10/02/2002
8,925,000 Morgan Stanley Dean Witter 1.75 12/31/2002
For the period from March 23, 2002 through September 30, 2002, the average
amount of reverse repurchase agreements outstanding was $62,318,225 and the
daily weighted average interest rate was 1.65%.
NOTE H
Concentration of Risk
Investing in securities of foreign companies and foreign governments involves
special risks, which include the possibility of future political and economic
development, which could adversely affect the value of such securities.
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 I
Securities Lending
The Fund has entered into a securities lending agreement with AG Edwards & Sons,
Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent,
on behalf of the Fund, administers the lending of portfolio se-
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 31
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
curities to certain broker-dealers. In return, the Fund earns fee income from
the lending transactions. All loans are continuously secured by collateral
exceeding the value of the securities loaned. All collateral consists of either
cash or U.S. government securities. The Lending Agent invests the cash
collateral in an eligible money market vehicle in accordance with the investment
restrictions of the Fund. AG Edwards & Sons, Inc. will indemnify the Fund for
any loss resulting from a borrower's failure to return a loaned security when
due. As of September 30, 2002, the Fund had loaned securities with a value of
$3,801,638 and received cash collateral of $4,028,530. For the year ended
September 30, 2002, the Fund earned fee income of $1,741 which is included in
interest income in the accompanying statement of operations.
--------------------------------------------------------------------------------
32 o ACM MANAGED DOLLAR INCOME FUND
--------------------
FINANCIAL HIGHLIGHTS
--------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended September 30,
--------------------------------------------------------------
2002(a) 2001 2000 1999 1998
--------------------------------------------------------------
Net asset value,
beginning of period ............ $ 6.33 $ 8.09 $ 8.39 $ 8.18 $ 15.84
--------------------------------------------------------------
Income From Investment
Operations
Net investment income(b) ......... .84 .98 1.08 1.25 1.41
Net realized and unrealized
gain (loss) on investment
transactions ................... (.71) (1.72) (.22) .34 (6.30)
--------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ..................... .13 (.74) .86 1.59 (4.89)
--------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income .............. (.85) (.95) (1.02) (1.25) (1.56)
Distributions in excess of
net investment income .......... -0- -0- -0- (.13) -0-
Distributions in excess of
net realized gain on
investments .................... -0- -0- -0- -0- (1.21)
Tax return of capital ............ (.03) (.07) (.14) -0- -0-
--------------------------------------------------------------
Total dividends and
distributions .................. (.88) (1.02) (1.16) (1.38) (2.77)
--------------------------------------------------------------
Net asset value,
end of period .................. $ 5.58 $ 6.33 $ 8.09 $ 8.39 $ 8.18
==============================================================
Market value,
end of period .................. $ 6.29 $ 7.62 $ 8.50 $ 10.25 $ 9.31
==============================================================
Total Return
Total investment return
based on:(c)
Market value ................... (6.14)% 3.02% (5.41%) 27.06% (23.44)%
Net asset value ................ .23% (10.08)% 9.99% 18.69% (36.22)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ................ $124,834 $140,110 $179,653 $184,618 $176,920
Ratio to average net assets of:
Expenses ....................... 2.12% 2.75% 2.70% 2.46% 2.56%
Expenses, excluding interest
expense(d) ................... 1.15% 1.13% 1.09% 1.11% 1.03%
Net investment income .......... 10.81% 9.90% 9.55% 11.27% 8.19%
Portfolio turnover rate .......... 63% 129% 134% 223% 208%
See footnote summary on page 34.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 33
--------------------
FINANCIAL HIGHLIGHTS
--------------------
(a) As required, effective October 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide, Audits of Investment
Companies, and began amortizing premium on debt securities for financial
statement reporting purposes only. The effect of this change for the year
ended September 30, 2002 was to decrease net investment income per share
by $0.01, decrease net realized and unrealized loss on investments by
$0.01 and decrease the ratio of net investment income to average net
assets from 10.91% to 10.81%. Per share, ratios and supplemental data for
periods prior to October 1, 2001 have not been restated to reflect this
change in presentation.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of 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.
(d) Net interest expense of .97%, 1.62%, 1.61%, 1.35%, and 1.53%,
respectively, on loan agreements (See Notes F and G).
--------------------------------------------------------------------------------
34 o ACM MANAGED DOLLAR INCOME FUND
---------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
---------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of ACM Managed Dollar Income Fund,
Inc.
We have audited the accompanying statement of assets and liabilities of ACM
Managed Dollar Income Fund, Inc. (the "Fund"), including the portfolio of
investments, as of September 30, 2002, 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 five years in the period then ended. 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 auditing standards generally accepted
in the United States. 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 and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 2002, by correspondence
with the custodian and others. 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, 2002, 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 five years in the period then ended, in conformity
with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
November 14, 2002
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 35
----------------------
ADDITIONAL INFORMATION
----------------------
ADDITIONAL INFORMATION (unaudited)
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
pursuant to which dividends and capital gain distributions to shareholders will
be paid in or reinvested in additional shares of the Fund. State Street Bank and
Trust Company (the "Agent") will act as agent for participants under the Plan.
Shareholders whose shares are held in the name of a broker or nominee should
contact such broker or nominee to determine whether or how they may participate
in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will
issue new shares at the greater of net asset value or 95% of the then
current market price.
(ii) If the shares of Common Stock are trading at a discount from net
asset value at the time of valuation, the Plan Agent will receive the
dividend or distribution in cash and apply it to the purchase of the
Fund's shares of Common Stock in the open market on the New York Stock
Exchange or elsewhere, for the participants' accounts. Such purchases will
be made on or shortly after the payment date for such dividend or
distribution and in no event more than 30 days after such date except
where temporary curtailment or suspension of purchase is necessary to
comply with Federal securities laws. If, before the Plan agent has
completed its purchases, the market price exceeds the net asset value of a
share of Common Stock, the average purchase price per share paid by the
Plan agent may exceed the net asset value of the Fund's shares of Common
Stock, resulting in the acquisition of fewer shares than if the dividend
or distribution had been paid in shares issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of the
participant, and each shareholder's proxy will include those shares purchased or
received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro-rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's account will be the average cost,
including brokerage commissions,
--------------------------------------------------------------------------------
36 o ACM MANAGED DOLLAR INCOME FUND
----------------------
ADDITIONAL INFORMATION
----------------------
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.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 37
----------------------------
GLOSSARY OF INVESTMENT TERMS
----------------------------
GLOSSARY OF INVESTMENT TERMS
benchmark
A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.
bond
Bonds are issued by governments or corporations when they need to raise cash.
Bonds are sold, or issued, to investors and have a maturity date, which is the
date the issuer is obligated to repay the investor for the principal, or face
amount, of the bond. Bonds also pay interest until maturity. Bonds are also
called fixed-income securities.
credit rating
Credit ratings are issued by independent organizations such as the Standard &
Poor's Ratings group or Moody's Investors Service. These groups attempt to
assess the likelihood that the issuer of the bond will be able to make timely
payments of principal and interest on the bond, based on such factors as the
issuer's financial condition and any collateral securing these obligations.
Ratings typically range from AAA, which is the highest rating, to D, which is
the lowest rating.
index
A compilation of securities of similar types of companies that is used to
measure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.
portfolio
The collection of securities that make up a fund's or an investor's investments.
sector
A group of securities that are similar with respect to maturity, type, rating,
industry and/or coupon. Refers to a distinct part of the economy, for example,
the technology sector.
Treasuries
Negotiable U.S. government debt obligations, backed by the full faith and credit
of the U.S. government. Treasuries are issued either as bills, notes or bonds
depending on the maturity. Treasuries are exempt from state and local taxes.
yield
The rate of return on an asset, usually referring to dividend or interest
payments, expressed as a percentage of current market price.
--------------------------------------------------------------------------------
38 o ACM MANAGED DOLLAR INCOME FUND
----------------
ALLIANCE CAPITAL
----------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with
approximately $369 billion in assets under management. In recognition of our
far-reaching investment capabilities, Alliance Capital has been selected by
employee benefit plans for 43 of the FORTUNE 100 companies and public retirement
funds in 44 states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 600
investment professionals in 36 cities and 19 countries. Our commitment to this
process means that our mutual fund shareholders have their portfolios managed by
the same experienced analysts and portfolio managers who manage the pension
funds of some of America's largest institutional investors.
All information on Alliance Capital is as of 9/30/02.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 39
------------------
BOARD OF DIRECTORS
------------------
BOARD OF DIRECTORS
John D. Carifa, Chairman
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
William H. Foulk, Jr.(1)
Dr. James M. Hester(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
Wayne D. Lyski, President
Kathleen A. Corbet, Senior Vice President
Paul J. DeNoon, Vice President
George D. Caffrey, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Administrator
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
Custodian, Dividend Paying Agent,
Transfer Agent And Registrar
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Independent Auditors
Ernst & Young LLP
5 Times Square
New York, NY 10036
(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 therein, 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.
--------------------------------------------------------------------------------
40 o ACM MANAGED DOLLAR INCOME FUND
----------------------
MANAGEMENT OF THE FUND
----------------------
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
-----------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR**
John D. Carifa, **, 57 President, Chief Operating Officer and 114 None
1345 Avenue of the a Director of Alliance Capital
Americas Management Corporation ("ACMC"),
New York, NY 10105 with which he has been associated with
(9) since prior to 1997.
DISINTERESTED DIRECTORS
Ruth Block, #+, 72 Formerly an Executive Vice President and 93 None
P.O. Box 4623 Chief Insurance Officer of The Equitable
Stamford, CT 06903 Life Assurance Society of the United States;
(9) Chairman and Chief Executive Officer of
Evlico. Formerly a Director of Avon, BP
Amoco Corporation, Ecolab, Inc., Tandem
Financial Group and Donaldson, Lufkin &
Jenrette Securities Corporation.
David H. Dievler, #+, 73 Independent Consultant. Until December 98 None
P.O. Box 167 1994, Senior Vice President of ACMC
Spring Lake, NJ 07762 responsible for mutual fund administration.
(9) Prior to joining ACMC in 1984, Chief
Financial Officer of Eberstadt Asset
Management since 1968. Prior to that,
Senior Manager at Price Waterhouse & Co.,
member of the American Institute of
Certified Public Accountants since 1953.
John H. Dobkin, #+, 60 Consultant. Formerly a Senior Adviser 94 None
P.O. Box 12 from June 1999-June 2000 and President
Annandale, NY 12504 (December 1989-May 1999) of Historic
(9) Hudson Valley (historic preservation).
Previously, Director of the National
Academy of Design and during 1988-92,
Director and Chairman of the Audit
Committee of ACMC.
William H. Foulk, Jr., #+, 70 Investment Adviser and Independent 110 None
2 Soundview Drive Consultant. Formerly Senior Manager
Suite 100 of Barrett Associates, Inc., a registered
Greenwich, CT 06830 investment adviser, with which he had
(9) been associated since prior to 1997.
Formerly Deputy Comptroller of the State of
New York and, prior thereto, Chief
Investment Officer of the New York Bank for
Savings.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 41
----------------------
MANAGEMENT OF THE FUND
----------------------
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
-----------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
Dr. James M. Hester, #+, 78 President of The Harry Frank 12 None
25 Cleveland Lane Guggenheim Foundation, with which
Princeton, NJ 08540 he has been associated since prior to 1997.
(9) Formerly President of New York University
and the New York Botanical Garden,
Rector of the UnitedNations University and Vice
Chairman of the Board of the Federal Reserve Bank
of New York.
Clifford L. Michel, #+, 63 Senior Counsel of the law firm of Cahill 93 Placer Dome,
St. Bernard's Road Gordon & Reindel, since February 2001 Inc.
Gladstone, NJ 07934 and a partner of that firm for more than
(9) 25 years prior thereto. President and Chief
Executive Officer and Director of Wenonah
Development Company (investments).
Donald J. Robinson, #+, 68 Senior Counsel at the law firm of Orrick, 92 None
98 Hell's Peak Road Herrington & Sutcliffe LLP since 1997.
Weston, VT 05161 Formerly a senior partner and a member
(6) of the Executive Committee of that firm. He
was also a member and Chairman of the
Municipal Securities Rulemaking Board and a
Trustee of the Museum of the City of New
York.
* There is no stated term of office for the Fund's Directors.
** Mr. Carifa is an "interested director", as defined in the 1940 Act,
due to his position as President and Chief Operating Officer of
ACMC, the Fund's investment adviser.
# Member of the Audit Committee.
+ Member of the Nominating Committee.
--------------------------------------------------------------------------------
42 o ACM MANAGED DOLLAR INCOME FUND
----------------------
MANAGEMENT OF THE FUND
----------------------
Officer Information
Certain information concerning the Fund's Officers is listed below.
Principal Position(s) Principal Occupation
Name, Address* and Age Held with Fund During Past 5 Years
----------------------------------------------------------------------------------------------------------------------------------
Wayne D. Lyski, 61 President Executive Vice President of ACMC,** with which he has been associated
since prior to 1997.
Kathleen A. Corbet, 42 Senior Vice President Executive Vice President of ACMC,** with which she has been associated
since prior to 1997.
Paul J. DeNoon, 40 Vice President Senior Vice President of ACMC,** with which he has been associated
since prior to 1997.
George D. Caffrey, 49 Vice President Vice President of ACMC,** and a Portfolio Manager since January 2000.
Prior thereto, he headed the High Yield Bond Group at AIG Global
Investment Corporation since prior to 1997
Edmund P. Bergan, Jr., 52 Secretary Senior Vice President and General Counsel of Alliance Fund
Distributors, Inc. ("AFD") ** and Alliance Global Investor Services
Inc. ("AGIS"), ** with which he has been associated since prior to
1997.
Mark D. Gersten, 52 Treasurer and Chief Senior Vice President of AGIS,** with which he has been associated
Financial Officer since prior to 1997.
Vincent S. Noto, 37 Controller Vice President of AGIS,** with which he has been associated since
prior to 1997.
* The address for each of the Fund's Officers is 1345 Avenue of the
Americas, New York, NY 10105.
** ACMC, AFD and AGIS are affiliates of the Fund.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 43
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
U.S. Stock Funds
Growth & Income Fund
Growth Fund
Health Care Fund
Mid-Cap Growth Fund*
Premier Growth Fund
Quasar Fund
Technology Fund
AllianceBernstein Value Funds
Disciplined Value Fund
Global Value Fund
International Value Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
AllianceBernstein Blended Style Series
U.S. Large Cap Portfolio
Global & International Stock Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
The Korean Investment Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Small Cap Growth Portfolio
Technology Portfolio
Taxable Bond Funds
Americas Government Income Trust**
Corporate Bond Portfolio
Emerging Market Debt Fund***
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
U.S. Government Portfolio
Tax-Exempt Bond Funds
National
Intermediate Diversified
Insured National
Arizona
California
Intermediate California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Intermediate New York
Ohio
Pennsylvania
Virginia
Asset Allocation Funds
Balanced Shares
Conservative Investors Fund
Growth Investors Fund
Closed-End Funds
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Southern Africa Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.
* The Alliance Fund changed its name to Alliance Mid-Cap Growth Fund on
February 1, 2002.
** Alliance North American Government Income Trust changed its name to
Alliance Americas Government Income Trust on March 1, 2002.
*** Alliance Global Dollar Government Fund changed its name to Alliance
Emerging Market Debt Fund on March 1, 2002.
--------------------------------------------------------------------------------
44 o ACM MANAGED DOLLAR INCOME FUND
------------------------------
SUMMARY OF GENERAL INFORMATION
------------------------------
SUMMARY OF GENERAL
INFORMATION
Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 426-5523. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper Analytical Services, Inc., Morningstar, Inc. and Bloomberg. 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 aid
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 (800)
219-4218.
--------------------------------------------------------------------------------
ACM MANAGED DOLLAR INCOME FUND o 45
ACM Managed Dollar Income Fund
1345 Avenue of the Americas
New York, NY 10105
Alliance Capital [LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
MDIAR0902