As filed with the Securities and Exchange Commission on May 13, 2005
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
Schedule TO
Tender Offer Statement under Section 14(d)(1) or 13(e)(4)
of the Securities Exchange Act of 1934
(Amendment No. )*
ACM Managed Dollar Income Fund, Inc.
(Name of Subject Company (Issuer))
ACM Managed Dollar Income Fund, Inc.
(Name of Filing Persons (Offeror and Issuer))
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
000949107
(CUSIP Number of Class of Securities)
Mark R. Manley
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(212) 969-1000
(Name, address, and telephone number of person authorized to
receive notices and communications on behalf of filing persons)
With a copy to:
Patricia A. Poglinco, Esquire
Seward & Kissel LLP
One Battery Park Place
New York, New York 10004
Calculation of Filing Fee
================================================================================
Transaction Valuation Amount of Filing Fee
--------------------------------------------------------------------------------
$8,935,479.95 (a)............................. $1,051.71(b)
================================================================================
(a) Calculated as the aggregate maximum purchase price to be paid for 1,135,385
shares in the offer, based upon the net asset value per share of $7.87 at
May 11, 2005.
(b) Calculated as the Transaction Valuation multiplied by 0.00011770.
[_] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
[_] Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
[_] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[_] third-party tender offer subject to Rule 14d-1.
[_] issuer tender offer subject to Rule 13e-4.
[_] going-private transaction subject to Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer. [_]
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Introductory Statement
This Tender Offer Statement on Schedule TO relates to an offer by ACM
Managed Dollar Income Fund, Inc., a Maryland corporation (the "Fund"), to
purchase for cash up to 1,135,385 of the Fund's issued and outstanding shares of
Common Stock, par value $0.01 per share, upon the terms and subject to the
conditions contained in the Offer to Purchase dated May 13, 2005 and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer") and are filed as exhibits to this
Schedule TO.
The information in the Offer to Purchase and the related Letter of
Transmittal is incorporated herein by reference in answer to the items required
to be disclosed in this Schedule TO.
Item 12. Exhibits.
(a)(1)(i) Offer to Purchase, dated May 13, 2005.
(a)(1)(i)(A) Consent of Ernst & Young LLP, dated May 13, 2005.
(a)(1)(ii) Form of Letter of Transmittal.
(a)(1)(iii) Form W-9, Form W-8BEN, and Form W-8IMY - not being filed
available at http:\\www.irs.gov
(a)(1)(iv) Form of Notice of Guaranteed Delivery.
(a)(1)(v) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(vi) Form of Letter to Clients of Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(1)(vii) Form of Letter to Stockholders Who Have Requested Information.
(a)(2) None.
(a)(3) Not Applicable.
(a)(4) Not applicable.
(a)(5)(i) Advertisement printed in The Wall Street Journal on May 13, 2005.
(a)(5)(ii) Press release issued on May 10, 2005 (Previously filed as a
preliminary communication with the Fund's Schedule TO submitted
via EDGAR on May 11, 2005).
(a)(5)(iii) Press release issued on March 14, 2005. (Previously filed as a
preliminary communication with the Fund's Schedule TO submitted
via EDGAR on May 11, 2005).
(a)(5)(iv) Press release issued on December 14, 2004. (Previously filed as a
preliminary communication with the Fund's Schedule TO submitted
via EDGAR on May 11, 2005).
(b) None.
(d) Advisory Agreement between ACM Managed Dollar Income Fund, Inc.
and Alliance Capital Management L.P. dated October 22, 1993
(Previously filed as Exhibit (c)(1) to the Fund's Schedule 13E-4
submitted via EDGAR on May 8, 1997).
(g) None.
(h) None.
Item 13. Information Required by Schedule 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
ACM MANAGED DOLLAR INCOME FUND, INC.
/s/ Mark R. Manley
------------------------------------------
Name: Mark R. Manley
Title: Secretary
Dated: May 13, 2005
00250.0158 #566841
Exhibit (a)(1)(i)
ACM MANAGED DOLLAR INCOME FUND, INC.
OFFER TO PURCHASE FOR CASH 1,135,385 OF ITS ISSUED
AND OUTSTANDING SHARES AT NET ASSET VALUE PER SHARE
--------------------------------------------------------------------------------
THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT EASTERN TIME ON
JUNE 10, 2005, UNLESS THIS OFFER IS EXTENDED.
--------------------------------------------------------------------------------
To the Stockholders of ACM Managed Dollar Income Fund, Inc.:
ACM Managed Dollar Income Fund, Inc., a non-diversified, closed-end management
investment company incorporated in Maryland (the "Fund"), is offering to
purchase 1,135,385 of its issued and outstanding shares of Common Stock, par
value $0.01 per share (the "Shares"), to fulfill an undertaking made in
connection with the initial public offering of the Shares. See Section 2. The
offer is for cash at a price equal to the net asset value ("NAV") per Share
determined as of the close of the regular trading session of the New York Stock
Exchange, the principal market in which the Shares are traded (the "NYSE"), on
the date after the date the offer expires, and is upon the terms and subject to
the conditions set forth in this Offer to Purchase and the related Letter of
Transmittal (which together with any amendments or supplements thereto
collectively constitute the "Offer"). The Offer will expire at 12:00 Midnight
Eastern Time on June 10, 2005, unless extended. The Shares are traded on the
NYSE under the symbol "ADF". The NAV as of the close of the regular trading
session of the NYSE on May 11, 2005 was $7.87 per Share. During the pendency of
the Offer, current NAV quotations can be obtained from D.F King & Co., Inc. (the
"Information Agent"), by calling (800) 859-8509 between the hours of 9:00 a.m.
and 8:00 p.m. Eastern Time, Monday through Friday (except holidays).
THIS OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 3.
IMPORTANT INFORMATION
Stockholders who desire to tender their Shares should either: (1) properly
complete and sign the Letter of Transmittal, provide thereon the original of any
required signature guarantee(s) and mail or deliver it together with the Shares
(in proper certificated or uncertificated form), any other documents required by
the Letter of Transmittal, and a check in the amount of $25.00 payable to
EquiServe Trust Company, N.A. Depositary (the "Processing Fee"); or (2) request
their broker, dealer, commercial bank, trust company or other nominee to effect
the transaction on their behalf. Stockholders who desire to tender Shares
registered in the name of such a firm must contact that firm to effect a tender
on their behalf. Tendering Stockholders will not be obligated to pay brokerage
commissions in connection with their tender of Shares, but they may be charged a
fee by such a firm for processing the tender(s). The Fund reserves the absolute
right to reject tenders determined not to be in appropriate form or not
accompanied by the Processing Fee.
If you do not wish to tender your Shares, you need not take any action.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS NOR ALLIANCE CAPITAL MANAGEMENT L.P.
(THE "INVESTMENT ADVISER") MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. NO PERSON HAS BEEN
AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE FUND, ITS BOARD OF
DIRECTORS OR THE INVESTMENT ADVISER AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR
REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER OR TO MAKE ANY
REPRESENTATION OR TO GIVE ANY INFORMATION IN CONNECTION WITH THE OFFER OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF MADE OR GIVEN, ANY
SUCH RECOMMENDATION, REPRESENTATION OR INFORMATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND, ITS BOARD OF DIRECTORS OR THE INVESTMENT
ADVISER. STOCKHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE
OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISERS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EQUISERVE TRUST COMPANY, N.A., DEPOSITARY
Telephone Number: (800) 219-4218
By Registered, Certified Or Express
By First Class Mail: Mail or Overnight Courier: By Hand:
EquiServe Trust Company, N.A. EquiServe Trust Company, N.A. Equiserve
Attn: Corporate Actions Attn: Corporate Actions Attn: Corporate Actions
P.O. Box 859208 161 Bay State Drive 17 Battery Place, 11th Floor
Braintree, MA 02185-9208 Braintree, MA 02184 New York, NY 10004
D.F. KING & CO., INC., INFORMATION AGENT
48 Wall Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: (800) 859-8509
SUMMARY TERM SHEET
(Section references are to this Offer to Purchase)
This Summary Term Sheet highlights certain information concerning this tender
offer. To understand the offer fully and for a more complete discussion of the
terms and conditions of the offer, you should read carefully the entire Offer to
Purchase and the related Letter of Transmittal.
What is the tender offer?
o ACM Managed Dollar Income Fund, Inc. (the "Fund") is offering to
purchase 1,135,385 of its shares of Common Stock for cash at a price
per share equal to the per share net asset value as of the close of
the regular trading session of the NYSE on June 13, 2005 (or, if the
offer is extended, on the date after the date to which the offer is
extended) upon specified terms and subject to conditions as set
forth in the tender offer documents.
When will the tender offer expire, and may the offer be extended?
o The tender offer will expire at 12:00 Midnight Eastern Time on June
10, 2005, unless extended. The Fund may extend the period of time
the offer will be open by issuing a press release or making some
other public announcement by no later than the next business day
after the offer otherwise would have expired. See Section 15.
What is the net asset value per Fund share and the closing sale price on the
NYSE per Fund share as of a recent date?
o As of May 11, 2005, the net asset value per share was $7.87 and the
closing sale price per share was $7.67. See Section 8 of the Offer
to Purchase for details. During the pendency of the tender offer,
current net asset value quotations can be obtained from D.F. King &
Co., Inc. by calling (800) 859-8509 between 9:00 a.m. and 8:00 p.m.
Eastern Time, Monday through Friday (except holidays). You can find
the current market price per share, as quoted on the NYSE, under the
symbol "ADF".
Will the net asset value be higher or lower on the date that the price to be
paid for tendered shares is to be determined?
o No one can accurately predict the net asset value at a future date.
2
What happens if I tender my shares and the net asset value on the date of
determination of the tender price is lower than the then current market price
per share on the NYSE?
o You would receive less money for your shares than if you had sold
them on the NYSE.
How do I tender my shares?
o If your shares are registered in your name, you should obtain the
tender offer materials, including the Offer to Purchase and the
related Letter of Transmittal, read them, and if you should decide
to tender, complete a Letter of Transmittal and submit any other
documents required by the Letter of Transmittal. These materials
must be received by EquiServe Trust Company, N.A., the Depositary,
in proper form before 12:00 Midnight Eastern Time on June 10, 2005
(unless the tender offer is extended by the Fund in which case the
new deadline will be as stated in the public announcement of the
extension). If your shares are held by a broker, dealer, commercial
bank, trust company or other nominee (e.g., in "street name"), you
should contact that firm to obtain the package of information
necessary to make your decision, and you can only tender your shares
by directing that firm to complete, compile and deliver the
necessary documents for submission to the Depositary by June 10,
2005 (or if the offer is extended, the expiration date as extended).
See Section 4.
Is there any cost to me to tender?
o There is a $25.00 processing fee per tendering stockholder. A tender
will not be a proper one unless a check payable to EquiServe Trust
Company, N.A. for this fee accompanies the tender documents
submitted to EquiServe Trust Company, N.A. The processing fee will
be refunded only if no shares tendered are purchased pursuant to the
offer. Your broker, dealer, commercial bank, trust company or other
nominee may charge you fees according to its individual policies.
See the Letter of Transmittal.
May I withdraw my shares after I have tendered them and, if so, by when?
o Yes, you may withdraw your shares at any time prior to 5:00 P.M.
Eastern Time on June 14, 2005 (or if the offer is extended, at any
time prior to 5:00 P.M. Eastern Time on the second day on which the
NYSE is open for trading after the new expiration date). Withdrawn
shares may be re-tendered by following the tender procedures before
the offer expires (including any extension period). In addition, if
shares tendered have not by then been accepted for payment, you may
withdraw your tendered shares at any time after July 11, 2005. See
Section 5.
How do I withdraw tendered shares?
o A notice of withdrawal of tendered shares must be timely received by
EquiServe Trust Company, N.A., which specifies the name of the
stockholder who tendered the shares, the number of shares being
withdrawn (which must be all of the shares tendered) and, as regards
share certificates which represent tendered shares that have been
delivered or otherwise identified to EquiServe Trust Company, N.A.,
the name of the registered owner of such shares if different than
the person who tendered the shares. See Section 5.
May I place any conditions on my tender of shares?
o No.
Is there a limit on the number of shares I may tender?
o No. Also, your tender will be proper only if you tender all Fund
shares you own or which you are considered to own under specified
federal tax rules. See Sections 1 and 14.
3
What if more than 1,135,385 shares are tendered (and not timely withdrawn)?
o The Fund will purchase duly tendered shares from tendering
stockholders pursuant to the terms and conditions of the tender
offer on a pro rata basis (disregarding fractions) in accordance
with the number of shares tendered by each stockholder (and not
timely withdrawn), unless the Fund determines not to purchase any
shares. The Fund's present intention, if the tender offer is
oversubscribed, is not to purchase more than 1,135,385 shares. See
Section 1.
If I decide not to tender, how will the tender offer affect the Fund shares I
hold?
o Your percentage ownership interest in the Fund will increase after
completion of the tender offer. See Section 11.
Does the Fund have the financial resources to make payment?
o Yes.
If shares I tender are accepted by the Fund, when will payment be made?
o It is contemplated, subject to change, that payment for tendered
shares, if accepted, will be made on or about June 21, 2005. See
Section 6.
Is my sale of shares in the tender offer a taxable transaction?
o For most stockholders, yes. All U.S. stockholders, other than those
who are tax-exempt, who sell shares in the tender offer will
recognize gain or loss for U.S. federal income tax purposes equal to
the difference between the cash they receive for the shares sold and
their adjusted basis in the shares. The sale date for tax purposes
will be the date the Fund accepts shares for purchase. See Section
14 for details, including the nature of the income or loss and the
differing rules for U.S. and non-U.S. stockholders. Please consult
your tax advisor as well.
Is the Fund required to complete the tender offer and purchase all shares
tendered up to the number of shares tendered for?
o Under most circumstances, yes. There are certain circumstances,
however, in which the Fund will not be required to purchase any
shares tendered as described in Section 3.
Is there any reason shares tendered would not be accepted?
o In addition to those circumstances described in Section 3 in which
the Fund is not required to accept tendered shares, the Fund has
reserved the right to reject any and all tenders determined by it
not to be in appropriate form. Tenders will be rejected if all
shares actually and constructively (as determined under the Internal
Revenue Code) owned by the tendering stockholder are not tendered or
if the tender does not include original signature(s) or the original
of any required signature guarantee(s).
How will tendered shares be accepted for payment?
o Properly tendered shares, up to the number tendered for, will be
accepted for payment by a determination of the Fund's Board of
Directors followed by notice of acceptance to EquiServe Trust
Company, N.A. which is thereafter to make payment as directed by the
Fund with funds to be deposited with it by the Fund. See Section 6.
What action need I take if I decide not to tender my shares?
o None.
4
Does management encourage stockholders to participate in the tender offer, and
will they participate in the tender offer?
o No. Neither the Fund, its Board of Directors nor the Fund's
investment adviser is making any recommendation to tender or not to
tender shares in the tender offer. No director or officer of the
Fund intends to tender shares. See Section 10.
Will this be my last opportunity to tender shares to the Fund?
o Under the terms of the Fund's original prospectus undertaking, the
Fund is also to conduct a tender offer during each year after 2005,
subject to a policy that the Fund would not proceed with a tender
offer in a particular year if Fund shares have traded on the NYSE
during a specified 12 week period (the "Measurement Period") at an
average price at or above their net asset value ("NAV") or at an
average discount from NAV of less than 3%, determined on the basis
of the average market price per share and discounts as of the last
trading day in each week. The Measurement Period is required to
commence on a date designated by the Fund's Board of Directors which
shall be no later than the end of the first calendar quarter of that
year. Pursuant to the undertaking, the Fund may, but is not required
to, conduct other tender offers. See Section 2.
How do I obtain information?
o Questions and requests for assistance or requests for additional
copies of the Offer to Purchase, the Letter of Transmittal and all
other tender offer documents should be directed to D.F. King & Co.,
Inc. the Information Agent for the tender offer, at (800) 859-8509
(Toll-Free) or (212) 269-5550 (Call Collect). If you do not own
shares directly, you should obtain this information and the
documents from your broker, dealer, commercial bank, trust company
or other nominee, as appropriate.
5
TABLE OF CONTENTS
Section Page
------- ----
Summary Term Sheet........................................................ 2
1. Price; Number of Shares............................................... 7
2. Purpose of the Offer; Plans or Proposals of the Fund.................. 7
3. Certain Conditions of the Offer....................................... 8
4. Procedures for Tendering Shares....................................... 9
a. Proper Tender of Shares........................................... 9
b. Signature Guarantees and Method of Delivery....................... 9
c. Dividend Reinvestment Plan........................................ 10
d. Book-Entry Delivery............................................... 10
e. Guaranteed Delivery............................................... 10
f. Determinations of Validity........................................ 11
g. United States Federal Income Tax Withholding...................... 11
5. Withdrawal Rights..................................................... 11
6. Payment for Shares.................................................... 12
7. Source and Amount of Funds............................................ 13
8. Price Range of Shares; Dividends/Distributions........................ 13
9. Selected Financial Information........................................ 14
10. Interest of Directors, Executive Officers and Certain Related Persons. 15
11. Certain Effects of the Offer.......................................... 16
12. Certain Information about the Fund.................................... 16
13. Additional Information................................................ 16
14. Certain United States Federal Income Tax Consequences................. 18
15. Amendments; Extension of Tender Period; Termination................... 19
16. Miscellaneous......................................................... 20
Exhibit A: Audited Financial Statements of the Fund for the
Fiscal Years ended September 30, 2004 and September 30, 2003.............. 21
6
1. Price; Number of Shares. Upon the terms and subject to the conditions
of the Offer, the Fund will accept for payment and purchase for cash up to
1,135,385 of its issued and outstanding Shares that are properly tendered prior
to 12:00 Midnight Eastern Time on June 10, 2005 (and not withdrawn in accordance
with Section 5). The Fund reserves the right to amend, extend or terminate the
Offer. See Sections 3 and 15. The Fund will not be obligated to purchase Shares
pursuant to the Offer under certain circumstances. See Section 3. The later of
June 10, 2005 or the latest date to which the Offer is extended is hereinafter
called the "Expiration Date." The purchase price of the Shares will be their NAV
per Share determined as of the close of the regular trading session of the NYSE
on the date after the Expiration Date. The Fund will not pay interest on the
purchase price under any circumstances. The NAV as of the close of the regular
trading session of the NYSE on May 11, 2005 was $7.87 per Share. During the
pendency of the Offer, current NAV quotations can be obtained from the
Depositary by calling (800) 219-4218 between the hours of 9:00 a.m. and 5:00
p.m. Eastern Time, Monday through Friday (except holidays).
The Offer is being made to all Stockholders and is not conditioned upon
Stockholders tendering in the aggregate any minimum number of Shares. Pursuant
to the Fund's Prospectus dated October 22, 1993 (the "Prospectus"), however, a
Stockholder wishing to accept the Offer is required to tender all (but not less
than all) Shares owned by the Stockholder and all Shares attributed to the
Stockholder for federal income tax purposes under Section 318 of the Internal
Revenue Code of 1986, as amended (the "Code"), as of the date of purchase of
Shares by the Fund pursuant to the Offer. See Section 14 concerning the tax
consequences of tendering Shares.
If more than 1,135,385 Shares are duly tendered pursuant to the Offer (and
not withdrawn as provided in Section 5), unless the Fund determines not to
purchase any Shares, the Fund will purchase Shares from tendering Stockholders,
in accordance with the terms and conditions specified in the Offer, on a pro
rata basis (disregarding fractions), in accordance with the number of Shares
duly tendered by or on behalf of each Stockholder (and not so withdrawn). If
Shares duly tendered by or on behalf of a Stockholder include Shares held
pursuant to the Fund's Dividend Reinvestment Plan, the proration will be applied
first with respect to other Shares tendered and only thereafter, if and as
necessary, with respect to Shares held pursuant to that Plan.
On May 11, 2005, there were 22,707,703 Shares issued and outstanding, and
there were 864 holders of record of Shares. Certain of these holders of record
were brokers, dealers, commercial banks, trust companies and other institutions
that held Shares in nominee name on behalf of multiple beneficial owners.
2. Purpose of the Offer; Plans or Proposals of the Fund. The purpose of
the Offer is to fulfill an undertaking made in connection with the initial
public offering of the Shares, as set forth in the Fund's Prospectus. In the
Prospectus, the Fund indicated that, in recognition of the possibility that the
Shares might trade at a discount to NAV, the Fund's Board of Directors (the
"Board of Directors" or the "Board") had determined that it would be in the
interest of Stockholders to take action to attempt to reduce or eliminate a
market value discount from NAV.
In this regard, in the Prospectus, the Fund undertook to conduct a tender
offer for Shares during the second quarter of 1995 and each year thereafter
subject to a policy that the Fund would not proceed with the tender offer in a
particular year if Shares have traded on the principal securities exchange where
Shares are listed (at present the NYSE) at an average price at or above NAV or
at an average discount from NAV of less than 3% determined on the basis of the
average market prices per Share and discounts as of the last trading day in each
week (a "weekly valuation day") during a period of 12 calendar weeks of the
relevant year (the "Measurement Period"). The Measurement Period is required to
commence on a date designated by the Fund's Board of Directors which shall be no
later than the end of the first calendar quarter of that year. At the December
2004 Regular Meeting, the Board fixed as the Measurement Period for purposes of
determining whether a mandatory tender offer was required to be conducted during
the second quarter of 2005, the 12 weeks ended March 11, 2005. The average
trading price of the Shares on the weekly valuation days during the Measurement
Period was approximately $7.89 per Share, and the average NAV per Share on the
same days was approximately $8.18, reflecting an average discount of 3.55%.
Accordingly, the Fund is conducting the Offer.
In addition to tender offers pursuant to the above-described undertaking,
the Board considers from time to time more frequent tender offers for Shares and
may consider other steps to reduce or eliminate the Fund's market value discount
from NAV such as open market repurchases of Shares. There can be no assurance
that the Board will authorize any such action. There can also be no assurance
that the Offer, other Share tender offers, Share repurchases or other steps will
result in the Shares trading at a price that approximates or is equal to their
NAV. The market price of the Shares will be
7
determined by, among other things, the relative demand for and supply of Shares
in the market, the Fund's investment performance, the Fund's dividends and
yield, and investor perception of the Fund's overall attractiveness as an
investment as compared with other investment alternatives.
Except as set forth above, as referred to in Section 7 or the last
paragraph of Section 10, or in connection with the operation of the Fund's
Dividend Reinvestment Plan, the Fund does not have any present plans or
proposals and is not engaged in any negotiations that relate to or would result
in (a) any extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Fund or any of its subsidiaries; (b) other than in
connection with transactions in the ordinary course of the Fund's operations and
for purposes of funding the Offer, any purchase, sale or transfer of a material
amount of assets of the Fund or any of its subsidiaries; (c) any material change
in the Fund's present dividend rate or policy, or indebtedness or capitalization
of the Fund; (d) any change in the composition of the Board or management of the
Fund, including, but not limited to, any plans or proposals to change the number
or the term of members of the Board, to fill any existing vacancies on the Board
or to change any material term of the employment contract of any executive
officer; (e) any other material change in the Fund's corporate structure or
business, including any plans or proposals to make any changes in the Fund's
investment policy for which a vote would be required by Section 13 of the
Investment Company Act of 1940, as amended (the "1940 Act"); (f) any class of
equity securities of the Fund to be delisted from a national securities exchange
or to cease to be authorized to be quoted in an automated quotations system
operated by a national securities association; (g) any class of equity
securities of the Fund becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act or 1934, as amended
(the "Exchange Act"); (h) the suspension of the Fund's obligation to file
reports pursuant to Section 15(d) of the Exchange Act; (i) the acquisition by
any person of additional securities of the Fund, or the disposition of
securities of the Fund; or (j) any changes in the Fund's charter, bylaws or
other governing instruments or other actions that could impede the acquisition
of control of the Fund.
3. Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer or the Prospectus, the announced policy of the Board, which may be
changed by the Board, is that the Fund will not purchase Shares pursuant to the
Offer if (a) such transaction, if consummated, would (i) result in the delisting
of the Shares from the NYSE (the NYSE having advised the Fund that it would
consider delisting if the aggregate market value of the outstanding publicly
held Shares is less than $5,000,000, the number of publicly held Shares falls
below 600,000 or the number of round-lot holders falls below 1,200) or (ii)
impair the Fund's status as a regulated investment company under the Code (which
would make the Fund a taxable entity, causing the Fund's income to be taxed at
the corporate level in addition to the taxation of Stockholders who receive
dividends from the Fund); (b) the Fund would not be able to liquidate portfolio
securities in an orderly manner and consistent with the Fund's investment
objective and policies in order to purchase Shares tendered pursuant to the
Offer; (c) there is any (i) material legal action or proceeding instituted or
threatened which challenges, in the Board's judgment, the Offer or otherwise
materially adversely affects the Fund, (ii) suspension of or limitation on
prices for trading securities generally on the NYSE or any foreign exchange on
which portfolio securities of the Fund are traded, (iii) declaration of a
banking moratorium by Federal, state or foreign authorities or any suspension of
payment by banks in the United States, New York State or in a foreign country
which is material to the Fund, (iv) limitation which affects the Fund or the
issuers of its portfolio securities imposed by Federal, state or foreign
authorities on the extension of credit by lending institutions or on the
exchange of foreign currencies, (v) commencement of war, armed hostilities or
other international or national calamity directly or indirectly involving the
United States or any foreign country that is material to the Fund, or (vi) other
event or condition which, in the Board's judgment, would have a material adverse
effect on the Fund or its Stockholders if Shares tendered pursuant to the Offer
were purchased; or (d) the Board determines that effecting the transaction would
constitute a breach of their fiduciary duty owed the Fund or its stockholders.
The Board may modify these conditions in light of experience.
The foregoing conditions are for the Fund's sole benefit and may be
asserted by the Fund regardless of the circumstances giving rise to any such
condition (including any action or inaction of the Fund), and any such condition
may be waived by the Fund, in whole or in part, at any time and from time to
time in its reasonable judgment. The Fund's failure at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right; the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts or circumstances;
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time. Any determination by the Fund concerning the
events described in this Section 3 shall be final and binding.
8
The Fund reserves the right, at any time during the pendency of the Offer,
to amend, extend or terminate the Offer in any respect. See Section 15.
4. Procedures for Tendering Shares.
a. Proper Tender of Shares. For Shares to be properly tendered pursuant to
the Offer, a properly completed and duly executed Letter of Transmittal bearing
original signature(s) and the original of any required signature guarantee(s),
all Shares actually, or as determined under Section 318 of the Code
constructively, owned by the tendering Stockholder (see Sections 1 and 14) (in
proper certificated or uncertificated form), any other documents required by the
Letter of Transmittal and the Processing Fee must be received by the Depositary
at the appropriate address set forth on page 2 of this Offer before 12:00
Midnight Eastern Time on the Expiration Date. Letters of Transmittal and
certificates representing tendered Shares should not be sent or delivered to the
Fund. Stockholders who desire to tender Shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
that firm to effect a tender on their behalf.
Section 14(e) of the Exchange Act and Rule 14e-4 promulgated thereunder
make it unlawful for any person, acting alone or in concert with others,
directly or indirectly, to tender Shares in a partial tender offer for such
person's own account unless at the time of tender, and at the time the Shares
are accepted for payment, the person tendering has a net long position equal to
or greater than the amount tendered in (a) Shares and will deliver or cause to
be delivered such Shares for the purpose of tender to the Fund within the period
specified in the Offer, or (b) an equivalent security and, upon the acceptance
of his or her tender, will acquire Shares by conversion, exchange, or exercise
of such equivalent security to the extent required by the terms of the Offer,
and will deliver or cause to be delivered the Shares so acquired for the purpose
of tender to the Fund prior to or on the Expiration Date. Section 14(e) and Rule
14e-4 provide a similar restriction applicable to the tender or guarantee of a
tender on behalf of another person.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering Stockholder and the Fund upon the terms and
subject to the conditions of the Offer, including the tendering Stockholder's
representation that the Stockholder has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 and that the tender of such Shares
complies with Rule 14e-4.
b. Signature Guarantees and Method of Delivery. No signature guarantee is
required if (a) the Letter of Transmittal is signed by the registered holder(s)
(including, for purposes of this document, any participant in The Depository
Trust Company ("DTC") book-entry transfer facility whose name appears on DTC's
security position listing as the owner of Shares) of the Shares tendered
thereby, unless such holder(s) has completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" in the
Letter of Transmittal or (b) the Shares tendered are tendered for the account of
a firm (an "Eligible Institution") which is a broker, dealer, commercial bank,
credit union, savings association or other entity and which is a member in good
standing of a stock transfer association's approved medallion program (such as
STAMP, SEMP or MSP). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5 of
the Letter of Transmittal.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered thereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) for the Shares tendered without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered thereby are owned of record by two or more
joint owners, all such owners must sign the Letter of Transmittal.
If any of the tendered Shares are registered in different names (including
Shares constructively owned by the tendering Stockholder as determined under
Section 318 of the Code which must also be tendered--see Sections 1 and 14), it
is necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations.
If the Letter of Transmittal or any certificates for Shares tendered or
stock powers relating to Shares tendered are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and proper evidence satisfactory to the Fund of their
authority so to act must be submitted.
9
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares transmitted therewith, no endorsements of certificates or separate stock
powers with respect to such Shares are required unless payment is to be made to,
or certificates for Shares not purchased are to be issued in the name of, a
person other than the registered holder(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed thereon, the certificate(s)
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) on the
certificate(s) for the Shares involved. Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution. See Section 6.
c. Dividend Reinvestment Plan. EquiServe Trust Company, N.A., the Fund's
Transfer Agent, holds Shares in uncertificated form for certain Stockholders
pursuant to the Fund's Dividend Reinvestment Plan. In addition to tendering all
of their other Shares, Stockholders wishing to accept the Offer must tender all
such uncertificated Shares. See Section 1 concerning the manner in which any
necessary proration will be made.
d. Book-Entry Delivery. The Depositary has established an account with
respect to the Shares at DTC for purposes of the Offer. Any financial
institution that is a participant in the DTC system may make book-entry delivery
of tendered Shares by causing DTC to transfer such Shares into the Depositary's
account at DTC in accordance with DTC's procedures for such transfers. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at DTC, a Letter of Transmittal properly completed and
bearing original signature(s) and the original of any required signature
guarantee(s), or an Agent's Message (as defined below) in connection with a
book-entry transfer, any other documents required by the Letter of Transmittal
and the Processing Fee, must in any case be received by the Depositary prior to
12:00 Midnight Eastern Time on the Expiration Date at one of its addresses set
forth on page 2 of this Offer, or the tendering Stockholder must comply with the
guaranteed delivery procedures described below.
The term "Agent's Message" means a message from DTC transmitted to, and
received by, the Depositary forming a part of a timely confirmation of a
book-entry transfer of Shares (a "Book-Entry Confirmation") which states that
(a) DTC has received an express acknowledgment from the DTC participant
tendering the Shares that are the subject of the Book-Entry Confirmation, (b)
the DTC participant has received and agrees to be bound by the terms of the
Letter of Transmittal, and (c) the Fund may enforce such agreement against the
DTC participant.
Delivery of documents to DTC in accordance with DTC's procedures does not
constitute delivery to the Depositary.
e. Guaranteed Delivery. Notwithstanding the foregoing, if a Stockholder
desires to tender Shares pursuant to the Offer and the certificates for the
Shares to be tendered are not immediately available, or time will not permit the
Letter of Transmittal and all documents required by the Letter of Transmittal to
reach the Depositary prior to 12:00 Midnight Eastern Time on the Expiration
Date, or a Stockholder cannot complete the procedures for delivery by book-entry
transfer on a timely basis, then such Stockholder's Shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution; and
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery in the form provided by the Fund is received by the Depositary
prior to 12:00 Midnight Eastern Time on the Expiration Date; and
(iii) the certificates for all such tendered Shares, in proper form
for transfer, or a Book-Entry Confirmation with respect to such Shares, as
the case may be, together with a Letter of Transmittal properly completed
and bearing original signature(s) and the original of any required
signature guarantee(s) (or, in the case of a book-entry transfer, an
Agent's Message), any documents required by the Letter of Transmittal and
the Processing Fee, are received by the Depositary prior to 5:00 P.M.
Eastern Time on the second NYSE trading day after the date of execution of
the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution and a representation that the Stockholder owns the
Shares tendered within the meaning of, and that the tender of the Shares
effected thereby complies with, Rule 14e-4 under the Exchange Act, each in the
form set forth in the Notice of Guaranteed Delivery.
10
THE METHOD OF DELIVERY OF ANY DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND
SOLE RISK OF THE TENDERING STOCKHOLDER. IF DOCUMENTS ARE SENT BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Stockholders have the responsibility to cause their Shares tendered (in proper
certificated or uncertificated form), the Letter of Transmittal properly
completed and bearing original signature(s) and the original of any required
signature guarantee(s), and any other documents required by the Letter of
Transmittal and the Processing Fee, to be timely delivered. Timely delivery is a
condition precedent to acceptance of Shares for purchase pursuant to the Offer
and to payment of the purchase amount.
Notwithstanding any other provision hereof, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share certificates evidencing such Shares or a
Book-Entry Confirmation of the delivery of such Shares (if available), a Letter
of Transmittal properly completed and bearing original signature(s) and the
original of any required signature guarantee(s) or, in the case of a book-entry
transfer, an Agent's Message, any other documents required by the Letter of
Transmittal and the Processing Fee.
f. Determinations of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders will be
determined by the Fund, in its sole discretion, which determination shall be
final and binding. The Fund reserves the absolute right to reject any or all
tenders determined not to be in appropriate form or not accompanied by the
Processing Fee or to refuse to accept for payment, purchase, or pay for, any
Shares if, in the opinion of the Fund's counsel, accepting, purchasing or paying
for such Shares would be unlawful. The Fund also reserves the absolute right to
waive any of the conditions of the Offer or any defect in any tender, whether
generally or with respect to any particular Share(s) or Stockholder(s). The
Fund's interpretations of the terms and conditions of the Offer shall be final
and binding.
NEITHER THE FUND, ITS BOARD OF DIRECTORS, THE INVESTMENT ADVISER, THE
DEPOSITARY NOR ANY OTHER PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF
ANY DEFECT OR IRREGULARITY IN ANY TENDER, AND NONE OF THEM WILL INCUR ANY
LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE.
g. United States Federal Income Tax Withholding. To prevent the imposition
of U.S. federal backup withholding tax equal to 28% of the gross payments made
pursuant to the Offer, prior to such payments each Stockholder accepting the
Offer who has not previously submitted to the Fund a correct, completed and
signed Internal Revenue Service ("IRS") Form W-9 ("Form W-9") (for U.S.
Stockholders) or IRS Form W-8BEN ("Form W-8BEN") (or, if appropriate, Form
W-8IMY ("Form W-8IMY")) (for non-U.S. Stockholders), or otherwise established an
exemption from such withholding, must submit the appropriate form to the
Depositary. See Section 14.
Under certain circumstances (see Section 14), the Depositary will withhold
a tax equal to 30% of the gross payments payable to a non-U.S. Stockholder
unless the Depositary determines that a reduced rate of withholding or an
exemption from withholding is applicable. (Exemption from backup withholding tax
does not exempt a non-U.S. Stockholder from the 30% withholding tax.) For this
purpose, a "Non-U.S. Stockholder", is, in general, a Stockholder that is not (i)
a citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of the source of
such income, or (iv) a trust if (A) a court within the United States is able to
exercise primary supervision over the administration of the trust and (B) one or
more U.S. persons have the authority to control all substantial decisions of the
trust. The Depositary will determine a Stockholder's status as a Non-U.S.
Stockholder and the Stockholder's eligibility for a reduced rate of, or an
exemption from, withholding by reference to any outstanding certificates or
statements concerning such eligibility, unless facts and circumstances indicate
that such reliance is not warranted. A Non-U.S. Stockholder that has not
previously submitted the appropriate certificates or statements with respect to
a reduced rate of, or exemption from, withholding for which such Stockholder may
be eligible should consider doing so in order to avoid over-withholding. See
Section 14.
5. Withdrawal Rights. At any time prior to 5:00 P.M. Eastern Time on the
second day on which the NYSE is open for trading after the Expiration Date, and,
if the Shares have not by then been accepted for payment by the Fund, at any
time after July 11, 2005, any Stockholder may withdraw all, but not less than
all, of the Shares that the Stockholder has tendered.
11
To be effective, a written notice of withdrawal of Shares tendered must be
timely received by the Depositary at the appropriate address set forth on page 2
of this Offer. Stockholders may also send a facsimile transmission notice of
withdrawal, which must be timely received by the Depositary at (781) 380-3388,
and the original notice of withdrawal must be delivered to the Depositary by
overnight courier or by hand the next day. Any notice of withdrawal must specify
the name(s) of the person having tendered the Shares to be withdrawn, the number
of Shares to be withdrawn (which may not be less than all of the Shares tendered
by the Stockholder-see Sections 1 and 14) and, if one or more certificates
representing such Shares have been delivered or otherwise identified to the
Depositary, the name(s) of the registered owner(s) of such Shares as set forth
in such certificate(s) if different from the name(s) of the person tendering the
Shares. If one or more certificates have been delivered to the Depositary, then,
prior to the release of such certificate(s), the certificate number(s) shown on
the particular certificate(s) evidencing such Shares must also be submitted and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution.
All questions as to the validity, form and eligibility (including time of
receipt) of notices of withdrawal will be determined by the Fund in its sole
discretion, which determination shall be final and binding. Shares properly
withdrawn will not thereafter be deemed to be tendered for purposes of the
Offer. Withdrawn Shares, however, may be re-tendered by following the procedures
described in Section 4 prior to 12:00 Midnight Eastern Time on the Expiration
Date. Except as otherwise provided in this Section 5, tenders of Shares made
pursuant to the Offer will be irrevocable.
NEITHER THE FUND, ITS BOARD OF DIRECTORS, THE INVESTMENT ADVISER, THE
DEPOSITARY NOR ANY OTHER PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF
ANY DEFECT OR IRREGULARITY IN ANY NOTICE OF WITHDRAWAL, NOR SHALL ANY OF THEM
INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE.
6. Payment for Shares. For purposes of the Offer, the Fund will be deemed
to have accepted for payment and purchased Shares that are tendered (and not
withdrawn in accordance with Section 5 pursuant to the Offer) when, as and if it
gives oral or written notice to the Depositary of its acceptance of such Shares
for payment pursuant to the Offer. Under the Exchange Act, the Fund is obligated
to pay for or return tendered Shares promptly after the termination, expiration
or withdrawal of the Offer. Upon the terms and subject to the conditions of the
Offer, the Fund will pay for Shares properly tendered as soon as practicable
after the Expiration Date. The Fund will make payment for Shares purchased
pursuant to the Offer by depositing the aggregate purchase price therefor with
the Depositary, which will make payment to Stockholders promptly as directed by
the Fund. The Fund will not pay interest on the purchase price under any
circumstances.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of: (a) a Letter of Transmittal
properly completed and bearing original signature(s) and any required signature
guarantee(s), (b) such Shares (in proper certificated or uncertificated form),
(c) any other documents required by the Letter of Transmittal, and (d) the
Processing Fee. Stockholders may be charged a fee by a broker, dealer or other
institution for processing the tender requested. Certificates representing
Shares tendered but not purchased will be returned promptly following the
termination, expiration or withdrawal of the Offer, without further expense to
the tendering Stockholder. The Fund will pay any transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, tendered
Shares are registered in the name of any person other than the person signing
the Letter of Transmittal, the amount of any such transfer taxes (whether
imposed on the registered owner or such other person) payable on account of the
transfer to such person of such Shares will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes, or exemption
therefrom, is submitted. The Fund may not be obligated to purchase Shares
pursuant to the Offer under certain conditions. See Section 3.
Any tendering Stockholder or other payee who has not previously submitted
a correct, completed and signed Form W-8BEN (or, if appropriate, Form W-8IMY) or
Form W-9, as necessary, and who fails to complete fully and sign either the Form
W-8BEN (or, if appropriate, Form W-8IMY) or Substitute Form W-9 in the Letter of
Transmittal and provide that form to the Depositary, may be subject to federal
backup withholding tax of 28% of the gross proceeds paid to such Stockholder or
other payee pursuant to the Offer. See Section 14 regarding this tax as well as
possible withholding at the rate of 30% (or lower applicable treaty rate) on the
gross proceeds payable to tendering Non-U.S. Stockholders.
12
7. Source and Amount of Funds. The total cost to the Fund of purchasing
1,135,385 of its issued and outstanding Shares pursuant to the Offer would be
$8,935,480 (based on a price per Share of $7.87, the NAV as of the close of the
regular trading session of the NYSE on May 11, 2005). On May 11, 2005, the
aggregate value of the Fund's net assets was $178,778,788.
To pay the aggregate purchase price of Shares accepted for payment
pursuant to the Offer, the Fund anticipates that funds will first be derived
from any cash on hand and then from the proceeds from the sale of portfolio
securities held by the Fund. The selection of which portfolio securities to
sell, if any, will be made by the Investment Adviser, taking into account
investment merit, relative liquidity and applicable investment restrictions and
legal requirements. The Fund reserves the right to finance a portion of the
Offer through temporary borrowing.
The purchase of Shares by the Fund will decrease the net assets of the
Fund and, therefore, have the effect of increasing the Fund's expense ratio. In
addition, the purchases may have an adverse effect on the Fund's investment
performance.
Because the Fund may sell portfolio securities to raise cash for the
purchase of Shares, during the pendency of the Offer, and possibly for a short
time thereafter, the Fund may hold a greater than normal percentage of its
assets in cash and cash equivalents, which would tend to decrease the Fund's net
income. As of May 11, 2005, cash and cash equivalents constituted approximately
1% of the Fund's total assets.
Under some market circumstances, it may be necessary for the Fund to raise
cash by liquidating portfolio securities in a manner that could reduce the
market value of such securities and, thus, reduce both the NAV of the Shares and
the proceeds from the sale of such securities. Liquidating portfolio securities,
if necessary, may also lead to the premature disposition of portfolio
investments and additional transaction costs. Depending upon the timing of such
sales, any such decline in NAV may adversely affect any tendering Stockholders
whose Shares are accepted for purchase by the Fund, as well as those
Stockholders who do not sell Shares pursuant to the Offer. Stockholders who
retain their Shares may be subject to certain other effects of the Offer. See
Section 11.
8. Price Range of Shares; Dividends/Distributions. The following table
sets forth, for the periods indicated, the high and low NAVs per Share and the
high and low closing sale prices per Share as reported on the NYSE Composite
Tape, and the amounts of cash dividends/distributions per Share paid during such
periods.
Net Asset Value Market Price
--------------- -------------- Dividends/
High Low High Low Distributions
---- --- ---- --- -------------
Fiscal Year (ending September 30)
2003
1st Quarter 6.88 6.33 7.60 6.29 .2175
2nd Quarter 7.99 6.91 8.50 7.31 .1875
3rd Quarter 7.70 7.08 8.46 7.28 .2025
4th Quarter 8.04 7.61 8.49 7.82 .2025
2004
1st Quarter 8.29 7.95 8.58 8.02 .2125
2nd Quarter 8.11 7.12 8.56 6.87 .2600
3rd Quarter 7.93 7.43 8.24 7.66 .2025
4th Quarter 8.19 7.87 8.03 7.73 .1240
2005
1st Quarter 8.27 7.84 7.98 7.34 .1695
2nd Quarter (through May 11, 2005) 7.95 7.83 7.70 7.51 .2825
As of the close of business on May 11, 2005, the Fund's NAV was $7.87 per
Share, and the high, low and closing prices per Share on the NYSE on that date
were $7.71, $7.61 and $7.67, respectively. During the pendency of the Offer,
current NAV quotations can be obtained by contacting the Depositary in the
manner indicated in Section 1.
13
The tendering of Shares, unless and until Shares tendered are accepted for
payment and purchase, will not affect the record ownership of any such tendered
Shares for purposes of entitlement to any dividends payable by the Fund.
9. Selected Financial Information. Set forth below is a summary of
selected financial information for the Fund as of and for the fiscal years ended
September 30, 2004 and September 30, 2003. The information with respect to the
two fiscal years has been excerpted from the Fund's audited financial statements
contained in its Annual Reports to Stockholders for these years. A copy of the
two audited statements is included as Exhibit A to this Offer to Purchase. The
summary of selected financial information set forth below is qualified in its
entirety by reference to such statements and the financial information, the
notes thereto and related matter contained therein.
SUMMARY OF SELECTED FINANCIAL INFORMATION
For the Period Indicated Below
Year Ended Year Ended
September 30, 2004 September 30, 2003
------------------ ------------------
(Audited) (Audited)
------------------ ------------------
STATEMENT OF ASSETS AND LIABILITIES
(AT END OF PERIOD)
Total assets ................................................... $ 229,737,177 $ 254,741,146
Total liabilities .............................................. 51,001,685 81,559,479
Net assets ..................................................... $ 178,735,492 $ 173,181,667
Net asset value per Share ...................................... $ 7.87 $ 7.68
Shares outstanding ............................................. 22,697,719 22,540,621
STATEMENT OF OPERATIONS
Investment income .............................................. $ 19,723,717 $ 20,942,886
Expenses ....................................................... 2,544,505 2,649,271
--------------- ---------------
Net investment income .......................................... 17,179,212 18,293,615
Net gain (loss) on investment transactions ..................... 5,218,642 46,957,017
--------------- ---------------
Net increase (decrease) in net assets from operations .......... $ 22,397,854 $ 65,250,632
=============== ===============
SELECTED DATA FOR A SHARE OF COMMON STOCK
OUTSTANDING THROUGHOUT EACH PERIOD
Income From Investment Operations
Net investment income (a) .................................... $ 0.76 $ 0.81
Net realized and unrealized gain (loss) on investment
and option transactions .................................... 0.23 2.10
--------------- ---------------
Net increase (decrease) in net asset value from operations ... 0.99 2.91
--------------- ---------------
Dividends and Distributions
Dividends from net investment income ......................... (0.80) (0.81)
Total dividends and distributions ............................ (0.80) (0.81)
--------------- ---------------
Net asset value, end of period ............................... $ 7.87 $ 7.68
--------------- ---------------
Market value, end of period .................................. $ 7.87 $ 8.15
--------------- ---------------
RATIOS
Expenses to average net assets ............................... 1.44% 1.72%
Expenses to average net assets excluding interest expense 1.15% 1.21%
Net investment income to average net assets .................. 9.76% 11.88%
14
SUMMARY OF SELECTED FINANCIAL INFORMATION (continued)
For the Period Indicated Below
Year Ended Year Ended
September 30, 2004 September 30, 2003
------------------ ------------------
(Audited) (Audited)
------------------ ------------------
TOTAL INVESTMENT RETURN
Total investment return based on: (b)
Market value ........................... 6.91% 45.71%
Net asset value ........................ 13.45% 54.77%
----------
(a) Based on average shares outstanding
(b) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of the period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than 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 the 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 full year
is not annualized.
10. Interest of Directors, Executive Officers and Certain Related Persons.
The directors and executive officers of the Fund and the aggregate number and
percentage of the Shares each of them beneficially owns is set forth in the
table below. The address of each of them is in care of the Fund at 1345 Avenue
of the Americas, New York, New York 10105, Telephone: (212) 969-1000. It is the
policy of the Boards of Directors of all registered investment companies to
which the Investment Adviser provides investment advisory services, including
the Fund, (collectively, the "Alliance Fund Complex") that each Director will
invest specified minimum amounts and an overall total of at least $150,000 in
shares of investment companies, within the Alliance Fund Complex. As of May 11,
2005, the directors of the Fund as a group beneficially owned less than 1% of
the Shares. As of May 11, 2005 the Investment Adviser owned 0 Shares.
Number of Percentage of
Shares Beneficially Shares Beneficially
Name and Position Owned Owned
----------------- ------------------- -------------------
Mark O. Mayer, President and Director 0 0%
Philip J. Kirstein, Senior Vice President and Independent
Compliance Officer 0 0
Paul J. DeNoon, Vice President 0 0
Sheryl Rothman, Vice President 0 0
Mark R. Manley, Secretary 0 0
Vincent S. Noto, Controller 0 0
Mark D. Gersten, Treasurer and Chief Financial Officer 0 0
William H. Foulk, Jr., Chairman and Director 500 0.0022%
Ruth Block, Director 3,000 0.0132%
David H. Dievler, Director 0 0
John H. Dobkin, Director 0 0
Michael J. Downey, Director 0 0
Dr. James M. Hester, Director 0 0
Pursuant to an Advisory Agreement dated as of October 22, 1993 with the
Investment Adviser (a copy of which is incorporated by reference as an exhibit
to Schedule TO filed with the Securities and Exchange Commission-See Section
13), the Fund employs the Investment Adviser to manage the investment and
reinvestment of the assets of the Fund. The Investment Adviser, whose business
address and telephone numbers are 1345 Avenue of the Americas, New York, New
York 10105 and (212) 969-1000, has been the Fund's investment adviser since the
Fund's commencement of operations. For services provided by the Investment
Adviser under the Investment Advisory Agreement, the Fund pays the Investment
15
Adviser a fee computed and paid monthly in arrears on the last day of each
calendar month at an annualized rate of .75% of the Fund's average weekly net
assets. For purposes of calculating this fee, average weekly net assets are
determined on the basis of the Fund's average net assets for each weekly period
(ending on Friday) ending during the month. The net assets for each weekly
period are determined by averaging the net assets on the Friday of such weekly
period with the net assets on the Friday of the immediately preceding weekly
period. When a Friday is not a Fund business day, the calculation is determined
with reference to the net assets of the Fund on the Fund business day
immediately preceding such Friday. During the fiscal years ended September 30,
2004 and September 30, 2003, the Fund paid to the Investment Adviser fees
totaling $1,320,701 and $1,154,590, respectively, pursuant to the Investment
Advisory Agreement.
During the past sixty days, there have not been any transactions involving
Shares that were effected by the Fund. Based upon the Fund's records and upon
information provided to the Fund, there have not been any transactions in Shares
that were effected during such period by any director or executive officer of
the Fund, any person controlling the Fund, any director or executive officer of
any corporation or other person ultimately in control of the Fund, any associate
or minority-owned subsidiary of the Fund or any executive officer or director of
any subsidiary of the Fund. Based upon information provided or available to the
Fund, no director, officer or affiliate of the Fund intends to tender Shares
pursuant to the Offer. The Offer does not, however, restrict the purchase of
Shares pursuant to the Offer from any such person.
11. Certain Effects of the Offer. The purchase of Shares pursuant to the
Offer will have the effect of increasing the proportionate interest in the Fund
of Stockholders who do not tender Shares. All Stockholders remaining after the
Offer will be subject to any increased risks associated with the reduction in
the number of outstanding Shares and the reduction in the Fund's assets
resulting from payment for the tendered Shares, such as any greater volatility
due to decreased portfolio diversification and proportionately higher expenses.
Under certain circumstances, the need to raise cash in connection with the
purchase of Shares pursuant to the Offer may have an adverse effect on the
Fund's NAV and/or income per Share. See Section 7. All Shares purchased by the
Fund pursuant to the Offer will be retired and thereafter will be authorized and
unissued Shares.
12. Certain Information about the Fund. The Fund was incorporated in
Maryland on August 10, 1993 and is registered as a non-diversified, closed-end
management investment company under the 1940 Act. The Fund's primary investment
objective is to seek high current income. Its secondary investment objective is
capital appreciation. In seeking to achieve these objectives, the Fund invests
at least 35% of its total assets in U.S. corporate fixed income securities. The
balance of the Fund's investment portfolio is invested in (a) fixed income
securities issued or guaranteed by foreign governments, including participations
in loans between foreign governments and financial institutions, and interests
in entities organized and operated for the purpose of restructuring the
investment characteristics of instruments issued or guaranteed by foreign
governments and (b) non-U.S. corporate fixed income securities. Substantially
all of the Fund's assets are to be invested in high yield, high risk securities
that are low-rated (i.e., below investment grade), or of comparable quality and
unrated, and that are considered to be predominately speculative as regards the
issuer's capacity to pay interest and repay principal. The Fund is permitted to
invest up to 50% of its total assets in securities that are not readily
marketable.
Reference is made to Sections 2, 8 and 9 and to the financial statements
referred to in Section 9.
The principal executive office and business address of the Fund is located
at 1345 Avenue of the Americas, New York, New York 10105. The Fund's business
telephone number is (212) 969-1000.
13. Additional Information. As has been previously reported, the staff of
the U.S. Securities and Exchange Commission ("SEC") and the Office of the New
York Attorney General ("NYAG") have been investigating practices in the mutual
fund industry identified as "market timing" and "late trading" of mutual fund
shares. Certain other regulatory authorities have also been conducting
investigations into these practices within the industry and have requested that
the Investment Adviser provide information to them. The Investment Adviser has
been cooperating and will continue to cooperate with all of these authorities.
The shares of the Fund are not redeemable by the Fund, but are traded on an
exchange at prices established by the market. Accordingly, the Fund and its
shareholders are not subject to the market timing and late trading practices
that are the subject of the investigations mentioned above or the lawsuits
described below. Please see below for a description of the agreements reached by
the Investment Adviser and the SEC and NYAG in connection with the
investigations mentioned above.
16
Numerous lawsuits have been filed against the Investment Adviser and
certain other defendants in which plaintiffs make claims purportedly based on or
related to the same practices that are the subject of the SEC and NYAG
investigations referred to above. Some of these lawsuits name the Fund as a
party. The lawsuits are now pending in the United States District Court for the
District of Maryland pursuant to a ruling by the Judicial Panel on Multidistrict
Litigation transferring and centralizing all of the mutual funds involving
market and late trading in the District of Maryland. Management of the
Investment Adviser believes that these private lawsuits are not likely to have a
material adverse effect on the results of operations or financial condition of
the Fund. On December 18, 2003, the Investment Adviser confirmed that it had
reached terms with the SEC and the NYAG for the resolution of regulatory claims
relating to the practice of "market timing" mutual fund shares in some of the
AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an
Order of the Commission ("SEC Order"). The agreement with the NYAG is
memorialized in an Assurance of Discontinuance dated September 1, 2004 ("NYAG
Order"). Among the key provisions of these agreements are the following: (i) The
Investment Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on
(i) their aliquot share of losses suffered by the fund due to market
timing, and (ii) a proportionate share of advisory fees paid by such fund
during the period of such market timing;
(ii) The Investment Adviser agreed to reduce the advisory fees it receives
from some of the AllianceBernstein long-term, open-end retail funds,
commencing January 1, 2004, for a period of at least five years; and
(iii) The Investment Adviser agreed to implement changes to its governance
and compliance procedures. Additionally, the SEC Order contemplates that
the Investment Adviser's registered investment company clients, including
the Fund, will introduce governance and compliance changes.
The shares of the Fund are not redeemable by the Fund, but are traded on
an exchange at prices established by the market. Accordingly, the Fund and its
shareholders are not subject to the market timing practices described in the SEC
Order and are not expected to participate in the Reimbursement Fund. Since the
Fund is a closed-end fund, it will not have its advisory fee reduced pursuant to
the terms of the agreements mentioned above.
The Investment Adviser and approximately twelve other investment
management firms were publicly mentioned in connection with the settlement by
the SEC of charges that an unaffiliated broker/dealer violated federal
securities laws relating to its receipt of compensation for selling specific
mutual funds and the disclosure of such compensation. The SEC has indicated
publicly that, among other things, it is considering enforcement action in
connection with mutual funds' disclosure of such arrangements and in connection
with the practice of considering mutual fund sales in the direction of brokerage
commissions from fund portfolio transactions. The SEC has issued subpoenas to
the Investment Adviser in connection with this matter and the Investment Adviser
has provided documents and other information to the SEC and is cooperating fully
with its investigation.
On June 22, 2004, a purported class action complaint entitled Aucoin, et
al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed
against the Investment Adviser, Alliance Capital Management Holding L.P.,
Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein
Investment Research & Management, Inc., certain current and former directors of
the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Aucoin Complaint was filed in the United States District Court
for the Southern District of New York by an alleged shareholder of an
AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other things,
(i) that certain of the defendants improperly authorized the payment of
excessive commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain of the
defendants misrepresented and omitted from registration statements and other
reports material facts concerning such payments, and (iii) that certain
defendants caused such conduct as control persons of other defendants. The
Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a)
of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach
of common law fiduciary duties, and aiding and abetting breaches of common law
fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages
and punitive damages, rescission of their contracts with the Investment Adviser,
including recovery of all fees paid to the Investment Adviser pursuant to such
contracts, an accounting of all fund-related fees,
17
commissions and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual
allegations substantially similar to those in the Aucoin Complaint were filed
against the Investment Adviser and certain other defendants, and others may be
filed. The Investment Adviser believes that these matters are not likely to have
a material adverse effect on the Fund or the Investment Adviser's ability to
perform advisory services relating to the Fund.
An Issuer Tender Offer Statement on Schedule TO (the "Schedule TO")
including the exhibits thereto, filed with the Securities and Exchange
Commission (the "SEC"), provides certain additional information relating to the
Offer, and may be inspected and copied at the prescribed rates at the SEC's
public reference facilities at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of the Schedule TO and the exhibits are available on
the EDGAR Database on the SEC's Web site at http://www.sec.gov and copies of
this information may also be obtained, after paying a duplicating fee, by
electronic request at the following E-mail address: publicinfo@sec.gov or by
writing the SEC's Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549.
14. Certain United States Federal Income Tax Consequences. The following
discussion is a general summary of the U.S. federal income tax consequences of a
sale of Shares pursuant to the Offer based on current U.S. federal income tax
law, including applicable Treasury regulations and IRS rulings. Each Stockholder
is encouraged to consult the Stockholder's tax advisor for a full understanding
of the tax consequences of such a sale, including potential state, local and
foreign taxation by jurisdictions of which the Stockholder is a citizen,
resident or domiciliary. In view of the requirement of the Offer that a
tendering Stockholder must tender, or cause the tender of, both all of the
Shares owned by the Stockholder and all of the Shares attributed to the
Stockholder under Section 318 of the Code as of the date of purchase of Shares
by the Fund pursuant to the Offer, tax advisors should also be consulted
regarding the application of the constructive ownership rules of Section 318. In
general, Section 318 provides that Shares owned by certain family members of a
tendering Stockholder, and by certain entities in which the Stockholder has a
direct or indirect interest, are treated as owned by the Stockholder for
purposes of determining the federal income tax consequences of a sale of Shares
pursuant to the Offer.
U.S. Stockholders. It is anticipated that Stockholders (other than
tax-exempt persons) who are citizens and/or residents of the U.S., corporations,
partnerships or other entities created or organized in or under the laws of the
U.S. or any political subdivision thereof, estates the income of which is
subject to U.S. federal income taxation regardless of the source of such income,
and trusts if (A) a court within the United States is able to exercise primary
supervision over the administration of the trust and (B) one or more United
States persons have the authority to control all substantial decisions of the
trust ("U.S. Stockholders"), and who sell Shares pursuant to the Offer will
recognize gain or loss for U.S. federal income tax purposes equal to the
difference between the amount of cash they receive pursuant to the Offer and
their adjusted tax basis in the Shares sold. The sale date for tax purposes will
be the date the Fund accepts Shares for purchase. This gain or loss will be
capital gain or loss if the Shares sold are held by the tendering U.S.
Stockholder at the time of sale as a capital asset and will be treated as either
long-term or short-term if the Shares have been held at that time for more than
one year or one year or less, respectively. Any such long-term capital gain
realized by a non-corporate U.S. Stockholder will be taxed at a maximum rate of
15%. This U.S. federal income tax treatment, however, is based on the
expectation that not all Stockholders will tender their Shares pursuant to the
Offer and that the continuing ownership interest in the Fund of tendering
Stockholders will be sufficiently reduced. It is therefore possible that the
cash received for the Shares purchased would be taxable as a distribution by the
Fund, rather than as a gain from the sale of the Shares. In that event, the cash
received by a U.S. Stockholder will be taxable as a dividend, i.e., as ordinary
income, to the extent of the U.S. Stockholder's allocable share of the Fund's
current or accumulated earnings and profits, with the excess of the cash
received over the portion so taxable constituting a non-taxable return of
capital to the extent of the U.S. Stockholder's tax basis in the Shares sold and
with any remaining excess of such cash being treated as either long-term or
short-term capital gain from the sale of the Shares depending on how long they
were held by the U.S. Stockholder. If cash received by a U.S. Stockholder is
taxable as a dividend, the Stockholder's tax basis in the purchased Shares will
be considered transferred to the remaining Shares held by the Stockholder. In
the case of a tendering U.S. Stockholder that is a corporation treated as
receiving a distribution from the Fund pursuant to the Offer, special basis
adjustments may also be applicable with respect to any Shares of such U.S.
Stockholder not purchased pursuant to the Offer. Some or all of the
distributions from a mutual fund may be treated as "qualified dividend income,"
taxable to individuals at the
18
reduced maximum rate of 15%, provided that both the fund and the individual
satisfy certain holding period and other requirements. Based upon the investment
policies of the Fund, it is expected that only a small portion, if any, of the
Fund's distributions would be treated as "qualified dividend income."
Under the "wash sale" rules under the Code, a loss recognized on Shares
sold pursuant to the Offer will ordinarily be disallowed to the extent a U.S.
Stockholder acquires Shares within 30 days before or after the date the Shares
are purchased pursuant to the Offer and, in that event, the basis and holding
period of the Shares acquired will be adjusted to reflect the disallowed loss.
The Depositary may be required to withhold 28% of the gross proceeds paid
to a U.S. Stockholder or other payee pursuant to the Offer unless either: (a)
the U.S. Stockholder has completed and submitted to the Depositary a Form W-9
(or Substitute Form W-9), providing the U.S. Stockholder's employer
identification number or social security number as applicable, and certifying
under penalties of perjury that: (a) such number is correct; (b) either (i) the
U.S. Stockholder is exempt from backup withholding, (ii) the U.S. Stockholder
has not been notified by the IRS that the U.S. Stockholder is subject to backup
withholding as a result of an under-reporting of interest or dividends, or (iii)
the IRS has notified the U.S. Stockholder that the U.S. Stockholder is no longer
subject to backup withholding; or (c) an exception applies under applicable law.
A Substitute Form W-9 is included as part of the Letter of Transmittal for U.S.
Stockholders.
Non-U.S. Stockholders. The U.S. federal income taxation of a Non-U.S.
Stockholder on a sale of Shares pursuant to the Offer depends on whether this
transaction is "effectively connected" with a trade or business carried on in
the U.S. by the Non-U.S. Stockholder as well as the tax characterization of the
transaction as either a sale of the Shares or a distribution by the Fund, as
discussed above for U.S. Stockholders. If the sale of Shares pursuant to the
Offer is not so effectively connected and if, as anticipated for U.S.
Stockholders, it gives rise to gain or loss, any gain realized by a Non-U.S.
Stockholder upon the tender of Shares pursuant to the Offer will not be subject
to U.S. federal income tax or to any U.S. tax withholding, provided, however,
that such a gain will be subject to U.S. federal income tax at the rate of 30%
(or such lower rate as may be applicable under a tax treaty) if the Non-U.S.
Stockholder is a non-resident alien individual who is physically present in the
United States for more than 182 days during the taxable year of the sale. If,
however, U.S. Stockholders are deemed to receive a distribution from the Fund
with respect to Shares they tender, the cash received by a tendering Non-U.S.
Stockholder will also be treated for U.S. tax purposes as a distribution by the
Fund, with the cash then being characterized in the same manner as described
above for U.S. Stockholders. In such an event, the portion of the distribution
treated as a dividend (which would not include the portion of such dividend
attributable to certain interest income and certain capital gain income) to the
Non-U.S. Stockholder would be subject to a U.S. withholding tax at the rate of
30% (or such lower rate as may be applicable under a tax treaty) if the dividend
is not effectively connected with the conduct of a trade or business in the
United States by the Non-U.S. Stockholder. If the amount realized on the tender
of Shares by a Non-U.S. Stockholder is so effectively connected, regardless of
whether the tender is characterized as a sale or as giving rise to a
distribution from the Fund for U.S. federal income tax purposes, the transaction
will be treated and taxed in the same manner as if the Shares involved were
tendered by a U.S. Stockholder.
Non-U.S. Stockholders should provide the Depositary with a completed Form
W-8BEN (or, if appropriate, Form W-8IMY) in order to avoid 28% backup
withholding on the cash they receive from the Fund regardless of how they are
taxed with respect to their tender of the Shares involved. A copy of Form W-8BEN
(or, if appropriate, Form W-8IMY) is provided with the Letter of Transmittal for
Non-U.S. Stockholders.
15. Amendments; Extension of Tender Period; Termination. The Fund reserves
the right, at any time during the pendency of the Offer, to amend, extend or
terminate the Offer in any respect. Without limiting the manner in which the
Fund may choose to make a public announcement of such an amendment, extension or
termination, the Fund shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, except as provided by
applicable law (including Rule 14e-1(d) promulgated under the Exchange Act) and
by the requirements of the NYSE (including the listing agreement with respect to
the Shares).
Except to the extent required by applicable law (including Rule
13e-4(f)(1) promulgated under the Exchange Act), the Fund will have no
obligation to extend the Offer. In the event that the Fund is obligated to, or
elects to, extend the Offer, the purchase price for each Share purchased
pursuant to the Offer will be the per Share NAV determined as of the close of
the regular trading session of the NYSE on the date after the Expiration Date as
extended. No Shares will be accepted for payment until on or after the new
Expiration Date.
19
16. Miscellaneous. The Offer is not being made to, nor will the Fund
accept tenders from, or on behalf of, owners of Shares in any jurisdiction in
which the making of the Offer or its acceptance would not comply with the
securities or "blue sky" laws of that jurisdiction. The Fund is not aware of any
jurisdiction in which the making of the Offer or the acceptance of tenders of,
purchase of, or payment for, Shares in accordance with the Offer would not be in
compliance with the laws of such jurisdiction. The Fund, however, reserves the
right to exclude Stockholders in any jurisdiction in which it is asserted that
the Offer cannot lawfully be made or tendered Shares cannot lawfully be
accepted, purchased or paid for. So long as the Fund makes a good-faith effort
to comply with any state law deemed applicable to the Offer, the Fund believes
that the exclusion of holders residing in any such jurisdiction is permitted
under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on the Fund's
behalf by one or more brokers or dealers licensed under the laws of such
jurisdiction.
May 13, 2005 ACM MANAGED DOLLAR INCOME FUND, INC.
20
EXHIBIT A
PORTFOLIO OF INVESTMENTS
September 30, 2004
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-63.0%
Argentina-2.1%
Republic of Argentina FRN
1.98%, 8/03/12(a) $ 2,315 $ 1,710,785
6.00%, 3/31/23(b) 1,225 643,125
11.375%, 1/30/17(b) 175 53,375
11.75%, 6/15/15(b) 350 105,875
12.25%, 6/19/18(b) 833 244,926
15.50%, 12/19/08(a)(b) 3,093 927,900
-------------
3,685,986
-------------
Brazil-13.7%
Republic of Brazil
7.72%, 6/29/09(a) 682 746,108
8.25%, 1/20/34 250 222,875
10.125%, 5/15/27 650 689,000
10.50%, 7/14/14 1,785 1,988,490
11.00%, 8/17/40(c) 5,546 6,214,293
12.00%, 4/15/10 1,350 1,606,500
12.75%, 1/15/20 1,145 1,451,287
Republic of Brazil-DCB FRN
Series L
2.125%, 4/15/12(a) 1,313 1,217,756
C-Bonds
8.00%, 4/15/14(c) 10,432 10,314,953
-------------
24,451,262
-------------
Bulgaria-0.5%
Republic of Bulgaria
8.25%, 1/15/15(d) 451 556,985
8.25%, 1/15/15 355 438,425
-------------
995,410
-------------
Colombia-2.7%
Republic of Colombia
8.25%, 12/22/14 510 503,625
10.75%, 1/15/13 237 271,721
11.75%, 2/25/20(c) 3,290 4,030,250
-------------
4,805,596
-------------
Ecuador-0.9%
Republic of Ecuador
8.00%, 8/15/30(a) 1,805 1,471,075
8.00%, 8/15/30(a)(d) 75 61,125
-------------
1,532,200
-------------
El Salvador-0.3%
Republic of El Salvador
7.625%, 9/21/34(d) 150 153,750
8.50%, 7/25/11(d) 400 444,400
-------------
598,150
-------------
21
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Indonesia-0.5%
Republic of Indonesia
6.75%, 3/10/14(d) $ 945 $ 922,556
-------------
Jamaica-0.4%
Government of Jamaica
11.75%, 5/15/11 565 658,225
12.75%, 9/01/07 65 75,725
-------------
733,950
-------------
Mexico-7.9%
United Mexican States
8.00%, 9/24/22(c) 4,472 5,042,180
8.125%, 12/30/19(c) 2,085 2,376,900
11.375%, 9/15/16(c) 4,508 6,638,030
-------------
14,057,110
-------------
Panama-1.2%
Republic of Panama
8.875%, 9/30/27 200 209,400
9.375%, 4/01/29 306 342,567
9.625%, 2/08/11 300 344,700
10.75%, 5/15/20 1,050 1,248,450
-------------
2,145,117
-------------
Peru-1.9%
Republic of Peru
8.375%, 5/03/16 775 806,000
9.125%, 2/21/12 1,300 1,443,000
9.875%, 2/06/15 979 1,125,850
-------------
3,374,850
-------------
Philippines-2.0%
Republic of Philippines
8.25%, 1/15/14 25 24,600
9.00%, 2/15/13 100 103,000
9.875%, 1/15/19(c) 2,600 2,688,400
10.625%, 3/16/25 779 833,530
-------------
3,649,530
-------------
Russia-19.5%
Ministry Finance of Russia
Series V
3.00%, 5/14/08 3,530 3,194,650
Series VII
3.00%, 5/14/11 1,420 1,127,196
Russian Federation
5.00%, 3/31/30(a)(d) 30,060 28,895,175
5.00%, 3/31/30(a) 1,775 1,706,219
-------------
34,923,240
-------------
Turkey-3.1%
Republic of Turkey
9.875%, 3/19/08 400 449,000
11.50%, 1/23/12(c) 1,325 1,649,625
11.75%, 6/15/10 750 930,375
12.375%, 6/15/09(c) 2,000 2,490,000
-------------
5,519,000
-------------
22
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Ukraine-2.2%
Ukraine Government
6.875%, 3/04/11(d) $ 500 $ 490,000
7.65%, 6/11/13 1,765 1,765,000
11.00%, 3/15/07 1,528 1,665,931
-------------
3,920,931
-------------
Uruguay-0.7%
Republic of Uruguay
7.875%, 1/15/33 1,483 1,197,795
-------------
Venezuela-3.4%
Republic of Venezuela
5.375%, 8/07/10 975 878,963
9.25%, 9/15/27(c) 5,200 5,124,600
-------------
6,003,563
-------------
Total Sovereign Debt Securities
(cost $90,396,410) 112,516,246
-------------
U.S. CORPORATE DEBT OBLIGATIONS-45.7%
Aerospace/Defense-0.7%
DRS Technologies, Inc.
6.875%, 11/01/13 325 338,000
K&F Industries, Inc.
Series B
9.625%, 12/15/10 175 194,687
Sequa Corp.
9.00%, 8/01/09 210 232,050
TD Funding Corp.
8.375%, 7/15/11 450 481,500
-------------
1,246,237
-------------
Air Transportation-0.4%
American Trans Air, Inc.
6.99%, 4/15/16(d) 490 362,331
Series RJ04
9.558%, 9/01/19 283 283,377
-------------
645,708
-------------
Automotive-1.3%
Dana Corp.
10.125%, 3/15/10 235 266,725
Dura Operating Corp.
Series D
9.00%, 5/01/09 392 348,880
HLI Operating, Inc.
10.50%, 6/15/10 266 289,940
Keystone Automotive Operations, Inc.
9.75%, 11/01/13 365 392,375
TRW Automotive, Inc.
9.375, 2/15/13 91 103,968
11.00%, 2/15/13 156 185,640
United Auto Group, Inc.
9.625%, 3/15/12 260 286,650
United Rentals North America, Inc.
6.50%, 2/15/12 494 475,475
-------------
2,349,653
-------------
23
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Broadcasting & Media-1.1%
Albritton Communications Co.
7.75%, 12/15/12 $ 385 $ 398,475
Emmis Operating Co.
6.875%, 5/15/12 335 347,563
PRIMEDIA, Inc.
8.00%, 5/15/13(d) 80 76,100
8.875%, 5/15/11 305 305,000
Radio One, Inc.
8.875%, 7/01/11 235 259,088
Sinclair Broadcast Group, Inc.
8.00%, 3/15/12 90 93,375
8.75%, 12/15/11 265 287,525
Young Broadcasting, Inc.
8.50%, 12/15/08 180 191,250
-------------
1,958,376
-------------
Building & Real Estate-2.4%
Associated Materials, Inc.
11.25%, 3/01/14(d)(e) 935 680,212
Dayton Superior Corp.
10.75%, 9/15/08 180 192,600
D.R. Horton, Inc.
6.875%, 5/01/13 340 371,450
KB HOME
7.75%, 2/01/10 520 565,500
LNR Property Corp.
7.25%, 10/15/13 500 545,000
7.625%, 7/15/13 125 136,875
Meritage Corp.
9.75%, 6/01/11(a) 440 493,900
Nortek, Inc.
8.50%, 9/01/14(d) 490 513,275
Schuler Homes, Inc.
10.50%, 7/15/11 360 414,000
William Lyon Homes, Inc.
10.75%, 4/01/13 265 306,075
-------------
4,218,887
-------------
Cable-2.6%
Cablevision Systems Corp.
8.00%, 4/15/12(d) 895 935,275
Charter Communications Operating LLC
8.00%, 4/30/12(d) 1,000 997,500
CSC Holdings, Inc.
6.75%, 4/15/12(d) 880 882,200
7.625%, 7/15/18 405 413,100
DirectTV Holdings LLC
8.375%, 3/15/13 285 324,187
Echostar DBS Corp.
6.375%, 10/01/11 650 658,125
Insight Midwest LP
9.75%, 10/01/09 380 397,100
-------------
4,607,487
-------------
24
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
CHEMICALS-1.2%
Equistar Chemical Funding LP
10.125%, 9/01/08 $ 520 $ 586,300
10.625%, 5/01/11 130 148,200
Huntsman Advanced Materials LLC
11.00%, 7/15/10(d) 275 319,000
Huntsman International LLC
9.875%, 3/01/09 325 358,313
Resolution Performance Products LLC
9.50%, 4/15/10 410 423,325
Westlake Chemical Corp.
8.75%, 7/15/11 270 303,075
-------------
2,138,213
-------------
Communications - Fixed-1.9%
Cincinnati Bell, Inc.
8.375%, 1/15/14 535 488,187
FairPoint Communications, Inc.
11.875%, 3/01/10 300 342,000
Qwest Communications International, Inc.
7.50%, 2/15/14(d) 205 188,088
Qwest Corp.
9.125%, 3/15/12(d) 1,420 1,562,000
Time Warner Telecom, Inc.
9.25%, 2/15/14* 875 870,625
-------------
3,450,900
-------------
Communications - Mobile-1.9%
Iridium LLC Capital Corp.
Series B
14.00%, 7/15/05(b) 5,000 462,500
Nextel Communications, Inc.
6.875%, 10/31/13 480 499,200
7.375%, 8/01/15 430 462,250
9.50%, 2/01/11 465 527,775
PanAmSat Corp.
9.00%, 8/15/14(d) 690 717,600
Rural Cellular Corp.
8.25%, 3/15/12(d) 240 244,200
TeleCorp PCS, Inc.
10.625%, 7/15/10 203 225,514
Tritel PCS, Inc.
10.375%, 1/15/11 234 267,004
-------------
3,406,043
-------------
Consumer Manufacturing-1.3%
Broder Brothers Co.
11.25%, 10/15/10 500 500,000
Jostens, Inc.
7.625%, 10/01/12(d) 275 276,375
12.75%, 5/01/10 605 680,195
K2, Inc
7.375%, 7/01/14(d) 355 376,300
Playtex Products, Inc.
8.00%, 3/01/11 315 333,900
St. John Knits International, Inc.
12.50%, 7/01/09 200 214,000
-------------
2,380,770
-------------
25
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Energy-3.1%
Belden & Blake Corp.
8.75%, 7/15/12(d) $ 340 $ 362,100
Chesapeake Energy Corp.
7.75%, 1/15/15 350 381,500
Grant Prideco, Inc.
9.00%, 12/15/09 360 402,300
Hilcorp Energy
10.50%, 9/01/10(d) 770 852,775
Northwest Pipelines Corp.
8.125%, 3/01/10 310 347,587
Premco Refining Group, Inc.
9.50%, 2/01/13 250 294,375
Pride International, Inc.
7.375%, 7/15/14(d) 395 438,450
Southern Natural Gas Co.
7.35%, 2/15/31 365 360,438
8.875%, 3/15/10 290 326,250
Universal Compression, Inc.
7.25%, 5/15/10 220 233,200
Williams Cos., Inc.
7.625%, 7/15/19 1,345 1,472,775
-------------
5,471,750
-------------
Entertainment & Leisure-0.5%
Gaylord Entertainment Co.
8.00%, 11/15/13 315 331,538
Universal City Development Partners
11.75%, 4/01/10 425 495,125
-------------
826,663
-------------
Financial-2.0%
Crum & Foster Holdings Corp.
10.375%, 6/15/13 195 208,162
Markel Capital Trust I
Series B
8.71%, 1/01/46(f) 615 651,900
Nationwide CSN Trust
9.875%, 2/15/25(d) 1,000 1,067,831
PXRE Capital Trust I
8.85%, 2/01/27 510 525,300
Western Financial Bank
9.625%, 5/15/12 420 474,600
Williams Scotsman, Inc.
9.875%, 6/01/07 740 708,550
-------------
3,636,343
-------------
Food/Beverage-1.1%
Del Monte Food Co.
8.625%, 12/15/12 145 161,312
9.25%, 5/15/11 255 280,500
DIMON, Inc.
7.75%, 6/01/13 110 107,250
Series B
9.625%, 10/15/11 395 416,725
Dole Food Company, Inc.
8.625%, 5/01/09(a) 240 261,600
8.875%, 3/15/11 145 157,687
26
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Merisant Co.
9.50%, 7/15/13(d) $ 300 $ 285,000
North Atlantic Trading Co.
9.25%, 3/01/12 250 240,000
-------------
1,910,074
-------------
Gaming-3.3%
Ameristar Casinos, Inc.
10.75%, 2/15/09 215 244,025
Argosy Gaming Co.
9.00%, 9/01/11 220 246,950
Boyd Gaming Corp.
7.75%, 12/15/12 255 273,487
Harrah's Operating Company, Inc.
7.875%, 12/15/05 215 227,631
MGM Mirage, Inc.
8.375%, 2/01/11* 575 634,656
Mandalay Resort Group
10.25%, 8/01/07 530 601,550
Mohegan Tribal Gaming
6.375%, 7/15/09 140 145,250
7.125%, 8/15/14(d) 695 728,012
Park Place Entertainment
7.00%, 4/15/13 305 339,313
7.875%, 3/15/10 135 152,550
9.375%, 2/15/07 230 257,025
Riviera Holdings Corp.
11.00%, 6/15/10 300 330,000
Seneca Gaming Corp.
7.25%, 5/01/12* 765 789,863
Turning Stone Casino Resort Enterprise
9.125%, 12/15/10(d) 270 291,600
Venetian Casino Resort, LLC
11.00%, 6/15/10 570 659,775
-------------
5,921,687
-------------
Healthcare-3.1%
Alliance Imaging, Inc.
10.375%, 4/15/11* 395 429,069
Concentra Operating Corp.
9.125%, 6/01/12(d) 175 191,625
9.50%, 8/15/10 200 221,000
Extendicare Health Services
9.50%, 7/01/10 315 353,588
Genesis HealthCare Corp.
8.00%, 10/15/13 330 359,700
HCA, Inc.
7.875%, 2/01/11 455 514,566
Hanger Orthopedic Group, Inc.
10.375%, 2/15/09 595 547,400
IASIS Healthcare LLC
8.75%, 6/15/14(d) 490 513,275
PacifiCare Health Systems, Inc.
10.75%, 6/01/09 380 437,950
Select Medical Corp.
7.50%, 8/01/13 690 724,500
Tenet Healthcare Corp.
7.375%, 2/01/13 310 291,400
27
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Triad Hospitals, Inc.
7.00%, 11/15/13 $ 520 $ 529,100
Universal Hospital Services, Inc.
10.125%, 11/01/11 440 446,600
-------------
5,559,773
-------------
Hotels & Lodging-1.2%
Corrections Corp. of America
7.50%, 5/01/11 40 42,250
9.875%, 5/01/09 260 290,225
10.00%, 9/15/08 28 29,400
Host Marriott LP
9.25%, 10/01/07 100 112,000
9.50%, 1/15/07 310 343,325
La Quinta Corp.
8.875%, 3/15/11 375 420,000
Starwood Hotels & Resorts Worldwide, Inc.
7.875%, 5/01/12 400 452,500
Vail Resorts, Inc.
6.75%, 2/15/14 355 358,550
-------------
2,048,250
-------------
Index-2.5%
Dow Jones CDX HY
7.75%, 12/29/09(d)* 4,500 4,556,250
-------------
Industrial-2.5%
AMSTED Industries, Inc.
10.25%, 10/15/11(d) 465 511,500
Case New Holland, Inc.
9.25%, 8/01/11(d) 645 722,400
FastenTech, Inc.
11.50%, 5/01/11(d) 325 365,625
Flowserve Corp.
12.25%, 8/15/10 370 419,950
H & E Equipment/Finance
11.125%, 6/15/12 600 618,000
NMHG Holding Co.
10.00%, 5/15/09 220 242,000
SPX Corp.
7.50%, 1/01/13 205 208,331
Terex Corp.
10.375%, 4/01/11 375 423,750
Trinity Industries, Inc.
6.50%, 3/15/14 530 522,050
TriMas Corp.
9.875, 6/15/12 470 487,625
-------------
4,521,231
-------------
Metals/Mining-0.7%
AK Steel Corp.
7.875%, 2/15/09 355 352,337
International Steel Group, Inc.
6.50%, 4/15/14(d) 437 437,000
Peabody Energy Corp.
6.875%, 3/15/13 380 410,400
-------------
1,199,737
-------------
28
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Paper & Packaging-3.0%
Ball Corp.
6.875%, 12/15/12 $ 1,000 $ 1,065,000
Berry Plastics Corp.
10.75%, 7/15/12 390 440,700
Crown Paper Co.
11.00%, 9/01/05(b) 5,000 1
Georgia-Pacific Corp.
9.375%, 2/01/13* 715 841,913
Graphic Packaging Int'l Corp.
9.50%, 8/15/13 655 748,338
Greif Bros. Corp.
8.875%, 8/01/12 260 289,900
Owens-Brockway Glass Container, Inc.
8.875%, 2/15/09 735 799,312
Pliant Corp.
11.125%, 9/01/09 520 540,800
Russell-Stanley Holdings, Inc.
9.00%, 11/30/08(d)(g) 855 85,449
Stone Container Corp.
9.25%, 2/01/08 535 597,863
9.75%, 2/01/11 12 13,290
-------------
5,422,566
-------------
Publishing-1.3%
American Media, Inc.
8.875%, 1/15/11 105 108,937
10.25%, 5/01/09 475 499,937
Dex Media East LLC
9.875%, 11/15/09 110 126,500
12.125%, 11/15/12 195 242,775
Dex Media West LLC
8.50%, 8/15/10 160 181,600
9.875%, 8/15/13 571 670,925
PEI Holdings, Inc.
11.00%, 3/15/10 143 166,059
RH Donnelley, Inc.
10.875%, 12/15/12(d) 255 309,188
-------------
2,305,921
-------------
Restaurants-0.1%
Domino's, Inc.
8.25%, 7/01/11 237 256,552
-------------
RETAIL-0.4%
J.C. Penney Corporation, Inc.
8.00%, 3/01/10 455 518,131
Petro Stopping Centers LP
9.00%, 2/15/12 250 265,000
-------------
783,131
-------------
Service-1.1%
Allied Waste North America
8.50%, 12/01/08 80 86,800
8.875%, 4/01/08 600 651,000
Iron Mountain, Inc.
7.75%, 1/15/15 115 121,900
8.625%, 4/01/13 350 379,750
29
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
National Waterworks, Inc.
10.50%, 12/01/12 $ 235 $ 266,725
Service Corp. International
6.50%, 3/15/08 240 249,900
7.70%, 4/15/09 240 258,600
-------------
2,014,675
-------------
Supermarket & Drugstore-1.4%
Couche-Tard, Inc.
7.50%, 12/15/13 298 317,370
Pathmark Stores, Inc.
8.75%, 2/01/12* 610 570,350
Rite Aid Corp.
9.25%, 6/01/13 75 76,875
9.50%, 2/15/11 615 676,500
Roundy's, Inc.
Series B
8.875%, 6/15/12 250 269,375
Stater Bros. Holdings, Inc.
8.125%, 6/15/12(d) 595 623,263
-------------
2,533,733
-------------
Technology-1.8%
Amkor Technologies, Inc.
7.75%, 5/15/13 1,165 955,300
Fairchild Semiconductor
10.50%, 2/01/09 470 502,900
ON Semiconductor Corp.
12.00%, 3/15/10 465 534,750
Unisys Corp.
6.875%, 3/15/10 1,000 1,042,500
7.875%, 4/01/08 185 190,088
-------------
3,225,538
-------------
Transportation-0.1%
Horizon Lines, LLC
9.00%, 11/01/12(d) 195 205,725
-------------
Utilities - Electric & Gas-1.7%
AES Corporation
8.75%, 5/15/13(d) 65 73,287
9.00%, 5/15/15(d) 105 118,387
10.00%, 7/15/05(d) 172 174,224
Calpine Corp.
8.50%, 7/15/10(d) 715 546,975
Dynegy Holdings, Inc.
10.125%, 7/15/13(d) 305 350,750
NRG Energy, Inc.
8.00%, 12/15/13(d) 490 524,912
Ormat Funding Corp.
8.25%, 12/30/20(d) 395 390,607
PG&E Corp.
6.875%, 7/15/08 370 400,525
SEMCO Energy, Inc.
7.125%, 5/15/08 125 131,875
7.75%, 5/15/13 235 253,213
-------------
2,964,755
-------------
Total U.S. Corporate Debt Obligations
(cost $90,625,683) 81,766,628
-------------
30
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
NON-U.S. CORPORATE DEBT OBLIGATIONS-8.6%
Bahamas-0.2%
Sun International Hotels, Ltd.
8.875%, 8/15/11 $ 245 $ 268,581
-------------
Bermuda-0.4%
NCL Corp
10.625%, 7/15/14(d) 685 717,538
-------------
Brazil-0.7%
PF Export Receivables Master Trust
6.436%, 6/01/15(d) 1,309 1,313,608
-------------
Canada-1.0%
Celestica, Inc.
7.875%, 7/01/11 610 632,875
Fairfax Financial Holdings
7.375%, 4/15/18 250 202,500
7.75%, 4/26/12 285 257,925
Intrawest Corp.
7.50%, 10/15/13 195 202,069
10.50%, 2/01/10 140 151,200
Russel Metals, Inc.
6.375%, 3/01/14 345 345,000
-------------
1,791,569
-------------
France-0.3%
Crown Euro Holdings S.A.
9.50%, 3/01/11 405 451,575
-------------
Great Britian-0.6%
Inmarsat Finance PLC
7.625%, 6/30/12(d) 560 555,800
Royal & Sun Alliance Insurance Group PLC
8.95%, 10/15/29 420 522,510
-------------
1,078,310
-------------
Ireland-0.4%
Eircom Funding
8.25%, 8/15/13 230 251,850
MDP Acquisitions PLC
9.625%, 10/01/12 390 440,700
-------------
692,550
-------------
Kazakhstan-0.4%
Hurricane Finance BV
9.625%, 2/12/10(d) 400 432,000
Kazkommerts International BV
8.50%, 4/16/13(d) 350 355,250
-------------
787,250
-------------
Liberia-0.4%
Royal Caribbean Cruises, Ltd.
8.00%, 5/15/10 625 703,906
-------------
31
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Mexico-2.6%
Innova S. de R.L.
9.375%, 9/19/13 $ 2,865 $ 3,115,687
12.875%, 4/01/07 1,003 1,025,772
Vitro Envases Norteamerica
10.75%, 7/23/11(d) 420 411,600
-------------
4,553,059
-------------
Romania-0.3%
Mobifon Holdings BV
12.50%, 7/31/10 425 497,250
-------------
Russia-1.1%
Gazprom OAO
9.625%, 3/01/13(d) 150 166,500
Mobile Telesystems Finance S.A.
9.75%, 1/30/08 525 561,750
9.75%, 1/30/08(d) 100 106,250
10.95%, 12/21/04 1,105 1,116,050
Tyumen Oil
11.00%, 11/06/07(d) 70 78,575
-------------
2,029,125
-------------
Singapore-0.2%
Flextronics International, Ltd.
6.50%, 5/15/13 425 434,563
-------------
Total Non-U.S. Corporate Debt Obligations
(cost $14,393,799) 15,318,884
-------------
NON-CONVERTIBLE PREFERRED STOCK-0.7%
Sovereign Real Estate Investment Trust
12.00%(d) 870 1,278,900
-------------
Total Non-Convertible Preferred Stock
(cost $818,725) 1,278,900
-------------
32
Contracts(h),
or Shares U.S. $ Value
--------------------------------------------------------------------------------
WARRANTS(i)-0.0%
Central Bank of Nigeria
Warrants, expiring 11/15/20(i) $ 1,000 $ 0
Republic of Venezuela
Warrants, expiring 4/15/20(i) 7,140 0
-------------
Total Warrants
(cost $0) 0
-------------
CALL OPTIONS PURCHASED(i)-0.0%
Republic of Brazil C-Bonds
Expiring Oct '04 @ 111.50 150,000 2,850
Expiring Oct '04 @ 112.50 300,000 4,500
Expiring Oct '04 @ 113.00 300,000 3,900
-------------
Total Call Options Purchased
(cost $14,595) 11,250
-------------
Total Investments Before Security
Lending Collateral-118.0%
(cost $196,249,212) 210,891,908
-------------
Investments of Cash Collateral for
Securites Loaned-2.1%
Short-Term Investment
UBS Private Money Market Fund, LLC 1.66%
(cost $3,828,575) 3,828,575 3,828,575
-------------
Total Investments-120.1%
(cost $200,077,787) 214,720,483
Other Assets Less Liabilities-(20.1)% (35,984,991)
-------------
Net Assets-100.0% $ 178,735,492
-------------
CREDIT DEFAULT SWAP CONTRACTS (see Note C)
Notional Unrealized
Swap Counterparty & Amount Interest Termination Appreciation/
Reference Obligation (000) Rate Date (Depreciation)
-----------------------------------------------------------------------------------------
Buy Contracts:
Citigroup Global Markets, Inc.
Federal Republic of Hungary
4.50%, 2/06/13 350 0.50% 11/26/13 $ (7,436)
Citigroup Global Markets, Inc.
Federal Republic of Philippines
10.625%, 3/16/25 510 5.60 3/20/14 (12,001)
JP Morgan Chase Bank
Federal Republic of Ecuador
7.00%, 8/15/30 275 3.70 4/30/05 (7,478)
33
CREDIT DEFAULT SWAP CONTRACTS (see Note C) (continued)
Notional Unrealized
Swap Counterparty & Amount Interest Termination Appreciation/
Reference Obligation (000) Rate Date (Depreciation)
-----------------------------------------------------------------------------------------
Sale Contracts:
Citigroup Global Markets, Inc.
Federal Republic of Brazil
12.25%, 3/06/30 1,000 6.35% 8/20/05 $ 58,508
Citigroup Global Markets, Inc.
Federal Republic of Brazil
12.25%, 3/06/30 900 4.40 5/20/06 58,610
Credit Suisse First Boston Int'l.
Federal Republic of Brazil
12.25%, 3/06/30 750 6.90 6/20/07 92,625
Morgan Stanley Dean Witter
Federal Republic of Brazil
12.25%, 3/06/30 680 3.80 8/20/06 24,763
Citigroup Global Markets, Inc.
Federal Republic of Philippines
10.625%, 3/16/25 510 4.95 3/20/09 13,190
Citigroup Global Markets, Inc.
Federal Republic of Mexico
8.30%, 8/15/31 750 2.40 5/20/14 56,625
Citigroup Global Markets, Inc.
Federal Republic of Mexico
8.30%, 8/15/31 1,100 2.05 5/20/09 58,797
REVERSE REPURCHASE AGREEMENTS (see Note C)
Interest
Broker Rate Maturity Amount
-------------------------------------------------------------------------------
Barclays Securities 1.50% 12/30/05 $ 2,275,189
Barclays Securities 1.40 12/30/05 4,410,343
Chase Manhattan Bank 0.25 12/30/05 6,472,665
Chase Manhattan Bank 0.75 12/30/05 2,556,250
Chase Manhattan Bank 1.65 12/30/05 2,480,796
Chase Manhattan Bank 1.65 12/30/05 1,234,500
Citigroup Global Markets, Inc 0.75 12/30/05 9,290,508
Citigroup Global Markets, Inc 1.35 12/30/05 5,467,977
Merrill Lynch 1.40 12/30/05 3,585,000
Merrill Lynch 1.70 12/30/05 962,891
Santander Investment Securities 1.70 12/30/05 3,740,751
-----------
$42,476,870
-----------
34
* Represents entire or partial securities out on loan. See Note F for
securities lending information.
(a) Coupon changes periodically based upon a predetermined schedule. Stated
interest rate in effect at September 30, 2004.
(b) Security is in default and is non-income producing.
(c) Positions, or portions thereof, with an aggregate market value of
$42,597,463 have been segregated to collateralize reverse repurchase
agreements.
(d) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At September 30, 2004, the aggregate market value of these
securities amounted to $59,711,229 or 33.4% of net assets.
(e) 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.
(f) Illiquid security, valued at fair market value (see Note A).
(g) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security, which represents 0.05% of net assets as of September
30, 2004, is considered illiquid and restricted.
Acquisition Acquisition Market Percentage of
Restricted Security Date Cost Value Net Assets
--------------------------- ----------- ----------- ------ -------------
Russell-Stanley Holdings, Inc. 2/26/99- $4,978,465 $85,449 0.05%
9.00%; 11/30/08 8/16/04
(h) One contract relates to principal amount of $1.00.
(i) Non-income producing security.
Glossary of Terms:
DCB - Debt Conversion Bond
FRN - Floating Rate Note
See notes to financial statements.
35
STATEMENT OF ASSETS & LIABILITIES
September 30, 2004
Assets
Investments in securities, at value
(cost $200,077,787-including investment of cash
collateral for securities loaned of $3,828,575) ........ $ 214,720,483(a)
Cash ...................................................... 3,043,614
Receivable for investment securities sold ................. 7,508,869
Interest and dividends receivable ......................... 4,091,523
Unrealized appreciation on credit default swap contracts .. 363,118
Prepaid expenses .......................................... 9,570
-------------
Total assets .............................................. 229,737,177
-------------
Liabilities
Reverse repurchase agreements ............................. 42,476,870
Payable for collateral received on securities loaned ...... 3,828,575
Due to broker ............................................. 3,115,728
Payable for investment securities purchased ............... 1,305,371
Advisory fee payable ...................................... 123,279
Unrealized depreciation on credit default swap contracts .. 26,915
Administrative fee payable ................................ 19,727
Accrued expenses and other liabilities .................... 105,220
-------------
Total liabilities ......................................... 51,001,685
-------------
Net Assets ................................................ $ 178,735,492
=============
Composition of Net Assets
Common stock, at par ...................................... $ 226,977
Additional paid-in capital ................................ 296,774,513
Distributions in excess of net investment income .......... (382,449)
Accumulated net realized loss on investment transactions .. (132,862,448)
Net unrealized appreciation of investments ................ 14,978,899
-------------
$ 178,735,492
=============
Net Asset Value Per Share
(based on 22,697,719 shares outstanding) ............... $ 7.87
=============
(a) Includes securities on loan with a value of $3,674,409 (see Note F)
See notes to financial statements.
36
STATEMENT OF OPERATIONS
Year Ended September 30, 2004
Investment Income
Interest ........................................................ $ 19,551,527
Dividends ....................................................... 172,190 $ 19,723,717
------------
Expenses
Advisory fee .................................................... 1,320,701
Administrative fee .............................................. 251,049
Custodian ....................................................... 117,577
Audit and legal ................................................. 112,883
Printing ........................................................ 64,772
Transfer agency ................................................. 46,447
Directors' fees ................................................. 33,857
Registration .................................................... 26,125
Miscellaneous ................................................... 45,616
------------
Total expenses before interest .................................. 2,019,027
Interest expense ................................................ 525,478
------------
Total expenses .................................................. 2,544,505
------------
Net investment income ........................................... 17,179,212
------------
Realized and Unrealized Gain (Loss) on Investment Transactions
Net realized gain on:
Investment transactions ...................................... 11,701,009
Swap contracts ............................................... 2,295,256
Written options .............................................. 224,373
Net change in unrealized appreciation/depreciation of:
Investments .................................................. (8,367,899)
Swap contracts ............................................... (634,097)
------------
Net gain on investment transactions ............................. 5,218,642
------------
Net Increase in Net Assets from Operations ...................... $ 22,397,854
============
See notes to financial statements.
37
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, September 30,
2004 2003
---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Resulting from Operations
Net investment income ................................................ $ 17,179,212 $ 18,293,615
Net realized gain on investment transactions ......................... 14,220,638 3,184,282
Net change in unrealized appeciation/depreciation of investments ..... (9,001,996) 43,772,735
------------- -------------
Net increase in net assets from operations ........................... 22,397,854 65,250,632
Dividends and Distributions to Shareholders from
Net investment income ................................................ (18,071,829) (18,177,141)
Common Stock Transactions
Reinvestment of dividends resulting in the issuance of Common Stock .. 1,227,800 1,273,690
------------- -------------
Total increase ....................................................... 5,553,825 48,347,181
Net Assets
Beginning of period .................................................. 173,181,667 124,834,486
------------- -------------
End of period (including distributions in excess of net
investment income of $382,449 and $123,407, respectively.) ........ $ 178,735,492 $ 173,181,667
============= =============
See notes to financial statements.
38
STATEMENT OF CASH FLOWS
Year Ended September 30, 2004
Increase (Decrease) in Cash from Operation Activities:
Interest and dividends received .................................... $ 19,354,791
Interest expense paid .............................................. (572,479)
Operating expenses paid ............................................ (2,057,932)
-------------
Net increase in cash from operating activities ..................... $ 16,724,380
Investing Activities:
Purchases of long-term investments ................................. (215,236,454)
Proceeds from disposition of long-term investments ................. 227,660,021
Proceeds from disposition of short-term investments, net
Cash collateral received on securities loaned ...................... 3,828,575
Net premium received on option transactions ........................ 78,104
Net premium received on swaps transactions ......................... 2,295,256
Net increase in cash from investing activities ..................... 18,625,502
Financing Activities:*
Cash dividends paid ................................................ (16,844,029)
Proceeds from reverse repurchase agreements ........................ (16,155,022)
Net decrease in cash from financing activities ..................... (32,999,051)
-----------
Net increase in cash ............................................... 2,350,831
Cash at beginning of period ........................................ 692,783
-----------
Cash at end of period .............................................. $ 3,043,614
===========
---------------------------------------------------------------------------------------------------------
Reconciliation of Net Increase in Net Assets from
Operations to Net Increase in Cash from Operating Activities:
Net increase in net assets from operations ......................... $22,397,854
Adjustments:
Decrease in dividends and interest receivable ...................... $ 1,475,867
Accretion of bond discount and amortization of bond premium ........ (1,844,793)
Decrease in accrued expenses and other assets ...................... (38,905)
Decrease in interest payable ....................................... (47,001)
Net realized gain on investment transactions ....................... (14,220,638)
Net change in unrealized appreciation/depreciation of investments .. 9,001,996
------------
Total adjustments .................................................. (5,673,474)
-----------
Net Increase in Cash from Operating Activities ..................... $16,724,380
===========
* Non-cash financing activities not included herein consist of reinvestment
of dividends and distributions.
See notes to financial statements.
39
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
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 U.S. generally accepted accounting principles, 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 are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available or
are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If there
has been no sale on such day, the securities are valued at the mean of the
closing bid and asked prices on such day. Securities listed on more than one
exchange are valued by reference to the principal exchange on which the
securities are traded; securities not listed on an exchange but traded on The
NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ
Official Closing Price; listed put or call options 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; open futures contracts and options thereon
are valued using the closing settlement price or, in the absence of such a
price, the most recent quoted bid price. If there are no quotations available
for the day of valuation, the last available closing settlement price is used;
securities traded in the over-the-counter market, (OTC) (but excluding
securities traded on NASDAQ) are valued at the mean of the current bid and asked
prices as reported by the National Quotation Bureau or other comparable sources;
U.S. Government securities and other debt instruments having 60 days or less
remaining until maturity are valued at amortized cost if their original maturity
was 60 days or less; or by amortizing their fair value as of the 61st day prior
to maturity if their original term to maturity exceeded 60 days; fixed-income
securities, including mortgage backed and asset backed securities, may be valued
on the basis of prices provided by a pricing service or at a price obtained from
one or more of the major broker/dealers. In cases where broker/dealer quotes are
obtained, Alliance Capital Management, L.P. (the "Adviser") may establish
procedures whereby changes in market yields or spreads are used to adjust, on a
daily basis, a recently obtained quoted price on a security; and OTC and other
derivatives are valued on the basis of a quoted bid price or spread from a major
broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not limited
to, information obtained by contacting the issuer, analysts, analysis of the
issuer's financial statements or other available documents. In addition, the
Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
40
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 any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned or
required. Taxes are accrued and applied to net investment income, net realized
gains and net unrealized appreciation/depreciation as such income and/or gains
are earned.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Dividend income is recorded on the ex-dividend
date or as soon as the Fund is informed of the dividend. Investment transactions
are accounted for on the date the securities are purchased or sold. Investment
gains and losses are determined on the identified cost basis. The Fund accretes
discounts as adjustments to interest income. Additionally, the Fund amortizes
premiums on debt securities for financial statement reporting purposes only.
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
U.S. generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences do not require such
reclassification.
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.
NOTE B
Advisory, Administrative Fees and Other Transactions with Affiliates
Under the terms of an Investment Advisory Agreement, the Fund pays the Adviser
an advisory fee at an annual 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
Global Investor Services, Inc. (AGIS), a wholly-owned subsidiary of the Adviser,
the Fund reimburses AGIS for costs relating to servicing phone inquiries on
behalf of the Fund. During the year ended September 30, 2004, the Fund
reimbursed $265 to AGIS.
Under the terms of an Administration Agreement, the Fund paid Princeton
Administrators, L.P. (the "Administrator") a fee at an annual rate of .15 of 1%
of the average adjusted weekly net assets of the Fund for the period September
1, 2003 through June 30, 2004. Effective July 1, 2004, this fee was reduced so
as to charge the Fund at a reduced annual rate of .12 of 1% of the average
adjusted weekly net assets of the Fund but in no event less than $12,500 per
month. 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.
41
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended September 30, 2004, were as follows:
Purchases Sales
------------- -------------
Investment securities (excluding U.S. government securities) .... $ 209,461,003 $ 230,120,754
U.S. government securities ...................................... -0- -0-
At September 30, 2004, the cost of investments for federal income tax purposes,
gross unrealized appreciation and gross unrealized depreciation (excluding
written options and swap contracts) are as follows:
Cost ................................................. $ 201,224,761
=============
Gross unrealized appreciation ........................ $ 28,690,049
Gross unrealized depreciation ........................ (15,194,327)
-------------
Net unrealized appreciation .......................... $ 13,495,722
=============
1. Option Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) put
and call options on U.S. and foreign government securities and foreign
currencies 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 the premiums paid. The proceeds
from securities sold through the exercise of put options are decreased by the
premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from 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 realized loss. If a call
option is exercised, the premium received is added to the proceeds from the sale
of the underlying security or currency 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 or currency purchased by the Fund. In
writing an option, the Fund bears the market risk of an unfavorable change in
the price of the security or currency underlying the written option. Exercise of
an option written by the Fund could result in the Fund selling or buying a
security or currency at a price different from the current market value.
42
Transactions in written options for the year ended September 30, 2004 were as
follows:
Number of
Contracts Premiums
(000) Received
--------- ----------
Options outstanding at September 30, 2003 ............ -0- $ -0-
Options written ...................................... 12,258 224,373
Options exercised .................................... (770) (11,935)
Options terminated in closing purchase transactions .. -0- -0-
Options expired ...................................... (11,488) (212,438)
--------- ---------
Options outstanding at September 30, 2004 ............ -0- $ -0-
--------- ---------
2. Swap Agreements
The Fund may enter into swaps on sovereign debt obligations to hedge its
exposure to interest rates and credit risk or 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.
As of October 1, 2003, the Portfolios have adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. The Fund accrues for the interim payments on
swap contracts on a daily basis, with the net amount recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities. Once the interim payments are settled in cash, the net amount is
recorded as realized gain/loss on swaps, in addition to realized gain/loss
recorded upon the termination of swaps contracts on the statements of
operations. Prior to October 1, 2003, these interim payments were reflected
within interest income in the statement of operations. Fluctuations in the value
of swap contracts are recorded as a component of net change in unrealized
appreciation/depreciation of investments.
The Fund may enter into credit default swaps. The Fund may purchase credit
protection on the referenced obligation of the credit default swap ("Buy
Contract") or provide credit protection on the referenced obligation of the
credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap
provides upon the occurrence of a credit event, as defined in the swap
agreement, for the Fund to buy/(sell) from/(to) the counterparty at the notional
amount (the "Notional Amount") and receive/(deliver) the principal amount of the
referenced obligation. If a credit event occurs, the maximum payout amount for a
Sale Contract is limited to the Notional Amount of the swap contract ("Maximum
Payout Amount"). During the term of the swap agreement, the Fund receives/(pays)
semi-annual fixed payments from/(to) the respective counterparty, calculated at
the agreed upon interest rate applied to the Notional Amount. These interim
payments are recorded within unrealized appreciation/depreciation of swap
contracts on the statement of assets and liabilities.
Credit default swaps may involve greater risks than if a Fund had invested in
the referenced obligation directly. Credit default swaps are subject to general
market risk, liquidity risk, counterparty risk and credit risk. If the Fund is a
buyer and no credit event occurs, it will lose its investment. In addition, if
the Fund is a seller and a credit event occurs, the value of the referenced
obligation received by the Fund coupled with the periodic payments previously
received, may be less than the Maximum Payout Amount it pays to the buyer,
resulting in a loss to the Fund.
43
At September 30, 2004, the Fund had Sale Contracts outstanding with Maximum
Payout Amounts aggregating $5,690,000, with net unrealized appreciation of
$363,118 and terms ranging from 1 year to 10 years, as reflected in the
portfolio of investments.
In certain circumstances, the Fund may hold Sale Contracts on the same
referenced obligation and with the same counterparty it has purchased credit
protection, which may reduce its obligation to make payments on Sale Contracts,
if a credit event occurs. The Fund had Buy Contracts outstanding with a Notional
Amount of $510,000 with respect to the same referenced obligation and same
counterparty of certain Sale Contracts outstanding, which reduced its obligation
to make payments on Sale Contracts to $5,180,000 as of September 30, 2004.
3. 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.
For the year ended September 30, 2004, the average amount of reverse repurchase
agreements outstanding was $56,493,655 and the daily weighted average annual
interest rate was 0.93%.
NOTE D
Capital Stock
There are 300,000,000 shares of $.01 par value common stock authorized of which
22,697,719 shares were issued and outstanding at September 30, 2004. During the
year ended September 30, 2004 and the year ended September 30, 2003, the Fund
issued 157,097 and 182,814 shares, respectively, in connection with the Fund's
dividend reinvestment plan.
NOTE E
Risks Involved in Investing in the Fund
Interest Rate Risk and Credit Risk-Interest rate risk is the risk that changes
in interest rates will affect the value of the Fund's investments in
fixed-income debt securities such as bonds or notes. Increases in interest rates
may cause the value of the Fund's investments to decline. Credit risk is the
risk that the issuer or guarantor of a debt security, or the counterparty to a
derivative contract, will be unable or unwilling to make timely principal and/or
interest payments, or to otherwise honor its obligations. The degree of risk for
a particular security may be reflected in its credit risk rating. Credit risk is
greater for medium quality and lower-rated securities. Lower-rated debt
securities and similar unrated securities (commonly known as "junk bonds") have
speculative elements or are predominantly speculative risks.
Concentration of Risk -- Investing in securities of foreign companies and
foreign governments involves special risks which include the possibility of
future political and economic developments 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 economics 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.
44
Indemnification Risk -- In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
NOTE F
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 securities to
certain broker-dealers. In return, the Fund receives fee income from the lending
transactions or it retains a portion of interest on the investment of any cash
received as collateral. The Fund also continues to receive dividends or interest
on the securities loaned. Unrealized gain or loss on the value of the securities
loaned that may occur during the term of the loan will be reflected in the
accounts of the Fund. 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 may invest the cash collateral
received in accordance with the investment restrictions of the Fund in one or
more of the following investments: U.S. Government or U.S. Government agency
obligations, bank obligations, corporate debt obligations, asset-backed
securities, structured products, repurchase agreements and an eligible money
market fund. The Lending Agent will indemnify the Fund for any loss resulting
from a borrower's failure to return a loaned security when due. As of September
30, 2004, the Fund had loaned securities with a value of $3,674,409 and received
cash collateral of $3,828,575, which was invested in a money market fund as
included in the portfolio of investments. For the year ended September 30, 2004,
the Fund earned fee income of $20,102, which is included in interest income in
the accompanying statement of operations.
NOTE G
Distributions to Shareholders
The tax character of the distributions paid to shareholders during the fiscal
years ended September 30, 2004 and September 30, 2003 were as follows:
2004 2003
Distributions paid from:
Ordinary income ......................... $ 18,071,829 $ 18,177,141
------------ ------------
Total taxable distributions ................ 18,071,829 18,177,141
Tax return of capital ...................... -0- -0-
------------ ------------
Total distributions paid ................... $ 18,071,829 $ 18,177,141
============ ============
As of September 30, 2004, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses ................... $ (132,040,578)(a)
Unrealized appreciation/(depreciation) ................. 13,774,580(b)
--------------
Total accumulated earnings/(deficit) ................... $ (118,265,998)
==============
(a) On September 30, 2004, the Fund had a net capital loss carryforward of
$132,040,578 of which $43,032,718 expires in the year 2007, $24,635,181
expires in the year 2008, $10,899,598 expires in the year 2009,
$33,249,705 expires in 2010 and $20,223,376 expires in the year 2011. To
the extent future capital gains are offset by capital loss carryforwards,
such gains will not be distributed. During the fiscal year, the Fund
utilized capital loss carryforwards of $14,423,021
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral
of losses on wash sales, the difference between book and tax amortization
methods for premium and the difference between book and tax treatment of
swap income.
45
During the current fiscal year, permanent differences, primarily due to
distributions in excess of net investment income, the tax character of paydown
gains/losses, tax treatment of swap income and the tax treatment of bond
premium, resulted in a net decrease in distributions in excess of net investment
income, a net increase in accumulated net realized loss on investments and a
decrease in additional paid-in capital. This reclassification had no effect on
net assets.
NOTE H
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the Office of the New York Attorney General ("NYAG") have
been investigating practices in the mutual fund industry identified as "market
timing" and "late trading" of mutual fund shares. Certain other regulatory
authorities have also been conducting investigations into these practices within
the industry and have requested that the Adviser provide information to them.
The Adviser has been cooperating and will continue to cooperate with all of
these authorities. The shares of the Fund are not redeemable by the Fund, but
are traded on an exchange at prices established by the market. Accordingly, the
Fund and its shareholders are not subject to the market timing and late trading
practices that are the subject of the investigations mentioned above or the
lawsuits described below. Please see below for a description of the agreements
reached by the Adviser and the SEC and NYAG in connection with the
investigations mentioned above.
Numerous lawsuits have been filed against the Adviser and certain other
defendants in which plaintiffs make claims purportedly based on or related to
the same practices that are the subject of the SEC and NYAG investigations
referred to above. Some of these lawsuits name the Fund as a party. The lawsuits
are now pending in the United States District Court for the District of Maryland
pursuant to a ruling by the Judicial Panel on Multidistrict Litigation
transferring and centralizing all of the mutual funds involving market and late
trading in the District of Maryland. Management of the Adviser believes that
these private lawsuits are not likely to have a material adverse effect on the
results of operations or financial condition of the Fund.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the
"Reimbursement Fund") to compensate mutual fund shareholders for the
adverse effects of market timing attributable to market timing
relationships described in the SEC Order. According to the SEC
Order, the Reimbursement Fund is to be paid, in order of priority,
to fund investors based on (i) their aliquot share of losses
suffered by the fund due to market timing, and (ii) a proportionate
share of advisory fees paid by such fund during the period of such
market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some
of the AllianceBernstein long-term, open-end retail funds,
commencing January 1, 2004, for a period of at least five years; and
(iii) The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order contemplates that
the Adviser's registered investment company clients, including the
Fund, will introduce governance and compliance changes.
The shares of the Fund are not redeemable by the Fund, but are traded on an
exchange at prices established by the market. Accordingly, the Fund and its
shareholders are not subject to the market timing practices described in the SEC
Order and are not expected to participate in the Reimbursement Fund. Since the
Fund is a closed-end fund, it will not have its advisory fee reduced pursuant to
the terms of the agreements mentioned above.
46
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
an unaffiliated broker/dealer violated federal securities laws relating to its
receipt of compensation for selling specific mutual funds and the disclosure of
such compensation. The SEC has indicated publicly that, among other things, it
is considering enforcement action in connection with mutual funds' disclosure of
such arrangements and in connection with the practice of considering mutual fund
sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC has issued subpoenas to the Adviser in connection with
this matter and the Adviser has provided documents and other information to the
SEC and is cooperating fully with its investigation.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint
names certain of the AllianceBernstein mutual funds as nominal defendants. The
Aucoin Complaint was filed in the United States District Court for the Southern
District of New York by an alleged shareholder of an AllianceBernstein mutual
fund. The Aucoin Complaint alleges, among other things, (i) that certain of the
defendants improperly authorized the payment of excessive commissions and other
fees from fund assets to broker-dealers in exchange for preferential marketing
services, (ii) that certain of the defendants misrepresented and omitted from
registration statements and other reports material facts concerning such
payments, and (iii) that certain defendants caused such conduct as control
persons of other defendants. The Aucoin Complaint asserts claims for violation
of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206
and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding
and abetting breaches of common law fiduciary duties. Plaintiffs seek an
unspecified amount of compensatory damages and punitive damages, rescission of
their contracts with the Adviser, including recovery of all fees paid to the
Adviser pursuant to such contracts, an accounting of all fundrelated fees,
commissions and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
The Adviser believes that these matters are not likely to have a material
adverse effect on the Fund or the Adviser's ability to perform advisory services
relating to the Fund.
47
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended September 30,
----------------------------------------------------------------------------
2004(a) 2003 2002(b) 2001 2000
----------------------------------------------------------------------------
Net asset value, beginning of period .......... $ 7.68 $ 5.58 $ 6.33 $ 8.09 $ 8.39
----------------------------------------------------------------------------
Income From Investment Operations
Net investment income(c) ...................... 0.76 0.81 0.84 0.98 1.08
Net realized and unrealized gain (loss) on
investment transactions .................... 0.23 2.10 (0.71) (1.72) (0.22
----------------------------------------------------------------------------
Net increase (decrease) in net asset value
from operations ............................ 0.99 2.91 0.13 (0.74) 0.86
----------------------------------------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income .......... (0.80) (0.81) (0.85) (0.95) (1.02
Tax return of capital ......................... -0- -0- (0.03) (0.07) (0.14
----------------------------------------------------------------------------
Total dividends and distributions ............. (0.80) (0.81) (0.88) (1.02) (1.16
----------------------------------------------------------------------------
Net asset value, end of period ................ $ 7.87 $ 7.68 $ 5.58 $ 6.33 $ 8.09
============================================================================
Market value, end of period ................... $ 7.87 $ 8.15 $ 6.29 $ 7.62 $ 8.50
============================================================================
Premium/Discount .............................. 0.00% 6.12% 12.72% 20.38% 5.07%
Total Return
Total investment return based on:(d)
Market value ............................... 6.91% 45.71% (6.14)% 3.02% (5.41)%
Net asset value ............................ 13.45% 54.77% .23% (10.08)% 9.99%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ..... $ 178,735 $ 173,182 $ 124,834 $ 140,110 $ 179,653
Ratios to average net assets of:
Expenses ................................... 1.44% 1.72% 2.12% 2.75% 2.70%
Expenses, excluding interest expense(e) .... 1.15% 1.21% 1.15% 1.13% 1.09%
Net investment income ...................... 9.76% 11.88% 10.81% 9.90% 9.55%
Portfolio turnover rate ....................... 95% 80% 63% 129% 134%
(a) As of October 1, 2003, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. These interim payments are reflected
within net realized and unrealized gain (loss) on swap contracts, however,
prior to October 1, 2003, these interim payments were reflected within
interest income/expense on the statement of operations. The effect of this
change for the fiscal year ended September 30, 2004, was to decrease net
investment income per share by $0.01 and increase net realized and
unrealized gain (loss) on investment transactions per share by $0.01 and
decrease the ratio of net investment income to average net assets by
0.17%.
(b) 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
end September 30, 2002 was to decrease net investment income per share by
$0.01, decrease net realized and unrealized loss on investment 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.
(c) Based on average shares outstanding.
(d) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of each period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained
under the Fund's dividend reinvestment plan. Generally, total investment
return based on net asset value will be higher than total investment
return based on market value in periods where there is an increase in the
discount or a decrease in the premium of the market value to the net asset
value from the beginning to the end of such periods. Conversely, total
investment return based on net asset value will be lower than total
investment return based on market value in periods where there is a
decrease in the discount or an increase in the premium of the market value
to the net asset value from the beginning to the end of such periods.
Total investment return calculated for a period of less than one year is
not annualized.
(e) Excludes net interest expense of .29%, .51%, .97%, 1.62% and 1.61%,
respectively, on borrowings.
48
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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, 2004, 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 of the Public
Company Accounting Oversight Board (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, 2004,
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, 2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
November 22, 2004
49
PORTFOLIO OF INVESTMENTS
September 30, 2003
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-67.6%
Argentina-0.3%
Republic of Argentina FRN
1.162%, 8/03/12(a) ...................... $ 800 $ 492,000
-----------
Belize-0.5%
Government of Belize
9.50%, 8/15/12 .......................... 850 854,250
-----------
Brazil-11.8%
Banco Nacional de Desenvolvimento
6.50%, 6/15/06(b) ....................... 475 484,500
Republic of Brazil
8.875%, 4/15/24 ......................... 1,550 1,243,875
10.00%, 1/16/07 ......................... 50 53,375
10.00%, 8/07/11 ......................... 1,150 1,124,125
10.125%, 5/15/27 ........................ 1,250 1,118,750
11.00%, 8/17/40(c) ...................... 5,275 4,984,875
11.50%, 3/12/08 ......................... 450 492,300
12.00%, 4/15/10 ......................... 200 215,300
12.75%, 1/15/20 ......................... 1,500 1,607,250
14.50%, 10/15/09 ........................ 1,000 1,201,500
Republic of Brazil-DCB FRN
Series L
2.1875%, 4/15/12(a) ..................... 3,075 2,460,000
C-Bonds
8.00%, 4/15/14(c) ....................... 6,065 5,572,241
-----------
20,558,091
-----------
Bulgaria-1.1%
Republic of Bulgaria
8.25%, 1/15/15(b) ....................... 1,624 1,848,875
-----------
Colombia-2.8%
Republic of Colombia
8.375%, 2/15/27 ......................... 625 566,562
9.75%, 4/23/09 .......................... 250 276,875
10.00%, 1/23/12 ......................... 900 980,100
10.50%, 7/09/10 ......................... 150 168,600
10.75%, 1/15/13 ......................... 550 616,000
11.75%, 2/25/20(c) ...................... 1,910 2,242,340
4,850,477
-----------
Ecuador-0.8%
Republic of Ecuador
7.00%, 8/15/30(a)(b) .................... 1,775 1,112,037
12.00%, 11/15/12(b) ..................... 275 227,563
-----------
1,339,600
-----------
El Salvador-0.5%
Republic of El Salvador
7.75%, 1/24/23(b) ....................... 450 469,125
8.50%, 7/25/11(b) ....................... 400 434,600
-----------
903,725
-----------
50
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Mexico-7.8%
United Mexican States
11.375%, 9/15/16(c) ..................... $ 9,375 $13,476,563
-----------
Panama-0.7%
Republic of Panama
9.375%, 4/01/29 ......................... 475 535,563
10.75%, 5/15/20 ......................... 550 654,500
-----------
1,190,063
-----------
Peru-2.0%
Republic of Peru
9.125%, 2/21/12 ......................... 1,525 1,700,375
9.875%, 2/06/15(c) ...................... 1,025 1,186,438
Republic of Peru FLIRB VRN
4.50%, 3/07/17(a) ....................... 650 567,125
-----------
3,453,938
-----------
Philippines-2.2%
Republic of Philippines
9.00%, 2/15/13 .......................... 150 160,500
9.875%, 1/15/19(c) ...................... 2,300 2,501,250
10.625%, 3/16/25(c) ..................... 1,075 1,243,238
-----------
3,904,988
-----------
Russia-27.7%
Ministry Finance of Russia
Series V
3.00%, 5/14/08 .......................... 650 570,375
Series VI
3.00%, 5/14/06 .......................... 3,600 3,478,680
Russian Federation
5.00%, 3/31/30(a)(b)(c) ................. 44,550 42,252,891
5.00%, 3/31/30(a)(b) .................... 1,850 1,751,025
-----------
48,052,971
-----------
TURKEY-5.1%
Republic of Turkey
9.50%, 1/15/14(c) ....................... 6,400 6,544,000
9.875%, 3/19/08 ......................... 400 431,600
11.75%, 6/15/10 ......................... 1,175 1,341,263
11.875%, 1/15/30 ........................ 400 464,000
-----------
8,780,863
-----------
Ukraine-0.8%
Ukraine Government
11.00%, 3/15/07(b) ...................... 1,241 1,380,377
-----------
Uruguay-0.9%
Republic of Uruguay
7.50%, 3/15/15 .......................... 151 117,219
7.875%, 1/15/33 ......................... 2,065 1,393,875
-----------
1,511,094
-----------
Venezuela-2.6%
Republic of Venezuela
5.375%, 8/07/10 ......................... 400 287,000
9.25%, 9/15/27 .......................... 3,675 2,844,450
10.75%, 9/19/13(b) ...................... 1,000 922,500
51
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Republic of Venezuela DCB FRN
Series DL
1.875%, 12/18/07(a) ..................... $ 536 $ 484,282
------------
4,538,232
------------
Total Sovereign Debt Obligations
(cost $84,462,440) ...................... 117,136,107
------------
U.S. CORPORATE DEBT OBLIGATIONS-50.4%
Aerospace/Defense-0.5%
K&F Industries, Inc.
Series B
9.625%, 12/15/10 ........................ 190 209,950
Sequa Corp.
9.00%, 8/01/09 .......................... 210 231,000
TD Funding Corp.
8.375%, 7/15/11(b) ...................... 450 486,000
------------
926,950
------------
Automotive-1.5%
Dana Corp.
10.125%, 3/15/10 ........................ 575 645,438
Dura Operating Corp.
Series D
9.00%, 5/01/09 .......................... 422 394,570
HLI Operating, Inc.
10.50%, 6/15/10(b) ...................... 440 481,800
TRW Automotive, Inc.
9.375%, 2/15/13(b) ...................... 410 463,300
11.00%, 2/15/13(b) ...................... 255 298,350
United Auto Group, Inc.
9.625%, 3/15/12 ......................... 280 307,300
------------
2,590,758
------------
Broadcasting & Media-1.4%
Albritton Communications Co.
7.75%, 12/15/12 ......................... 415 425,375
Emmis Communications Corp.
12.50%, 3/15/11(d) ...................... 350 313,250
PRIMEDIA, Inc.
8.00%, 5/15/13(b) ....................... 80 81,200
8.875%, 5/15/11 ......................... 325 338,813
Radio One, Inc.
8.875%, 7/01/11 ......................... 415 453,388
Sinclair Broadcast Group, Inc.
8.00%, 3/15/12 .......................... 270 286,200
8.75%, 12/15/11 ......................... 285 311,363
Young Broadcasting, Inc.
8.50%, 12/15/08 ......................... 195 208,650
------------
2,418,239
------------
Building & Real Estate-2.1%
Beazer Homes USA, Inc.
8.375%, 4/15/12 ......................... 195 211,575
Jacuzzi Brands, Inc.
9.625%, 7/01/10(b) ...................... 300 312,750
52
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
KB HOME
7.75%, 2/01/10 .......................... $ 560 $ 593,600
LNR Property Corp.
7.625%, 7/15/13(b) ...................... 125 129,375
10.50%, 1/15/09 ......................... 725 775,750
M.D.C Holdings, Inc.
7.00%, 12/01/12 ......................... 200 220,209
Meritage Corp.
9.75%, 6/01/11 .......................... 470 517,000
Schuler Homes, Inc.
10.50%, 7/15/11 ......................... 385 438,419
Werner Holdings Co., Inc.
Series A
10.00%, 11/15/07 ........................ 200 204,000
William Lyon Homes, Inc.
10.75%, 4/01/13 ......................... 285 310,650
-----------
3,713,328
-----------
Cable-1.6%
CSC Holdings, Inc.
7.625%, 7/15/18 ......................... 405 390,825
DirecTV Holdings LLC
8.375%, 3/15/13 ......................... 305 345,412
Echostar DBS Corp.
5.75%, 10/01/08(b) ...................... 435 437,719
6.375%, 10/01/11(b) ..................... 255 256,275
9.375%, 2/01/09 ......................... 795 851,644
Insight Midwest LP
9.75%, 10/01/09 ......................... 405 410,062
-----------
2,691,937
-----------
Chemicals-2.3%
Equistar Chemical Funding LP
10.125%, 9/01/08 ........................ 555 552,225
10.625%, 5/01/11(b) ..................... 130 129,350
FMC Corp.
10.25%, 11/01/09 ........................ 270 309,150
Georgia Gulf Corp.
10.375%, 11/01/07 ....................... 500 530,625
Huntsman Advanced Materials LLC
11.00%, 7/15/10(b) ...................... 295 308,275
Huntsman International LLC
9.875%, 3/01/09 ......................... 780 822,900
Millennium America, Inc.
9.25%, 6/15/08 .......................... 275 286,688
Resolution Performance Products LLC
9.50%, 4/15/10 .......................... 560 574,000
Westlake Chemical Corp.
8.75%, 7/15/11(b) ....................... 445 463,913
-----------
3,977,126
------------
Communications - Fixed-1.7%
FairPoint Communications, Inc.
11.875%, 3/01/10 ........................ 300 343,500
Qwest Corp.
8.875%, 3/15/12(b) ...................... 1,525 1,700,375
Time Warner Telecom, Inc.
10.125%, 2/01/11 ........................ 940 942,350
-----------
2,986,225
-----------
53
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Communications - Mobile-2.9%
ACC Escrow Corp.
10.00%, 8/01/11(b) ...................... $ 660 $ 712,800
Dobson Communications Corp.
8.875%, 10/01/13(b) ..................... 790 802,837
Dobson/Sygnet Communications
12.25%, 12/15/08 ........................ 675 727,312
Iridium LLC Capital Corp.
Series B
14.00%, 7/15/05(e) ...................... 5,000 400,000
Nextel Communications, Inc.
7.375%, 8/01/15 ......................... 460 466,900
9.50%, 2/01/11 .......................... 500 555,000
9.95%, 2/15/08 .......................... 430 454,188
TeleCorp PCS, Inc.
10.625%, 7/15/10 ........................ 203 240,514
Tritel PCS, Inc.
10.375%, 1/15/11 ........................ 234 282,607
Triton PCS, Inc.
8.75%, 11/15/11 ......................... 405 406,012
-----------
5,048,170
-----------
Consumer Manufacturing-2.2%
Applica, Inc.
10.00%, 7/31/08 ......................... 162 170,505
Broder Brothers Co.
11.25%, 10/15/10(b) ..................... 500 508,750
Central Garden & Pet Company
9.125%, 2/01/13 ......................... 195 213,525
Collins & Aikman Floorcoverings, Inc.
9.75%, 2/15/10 .......................... 260 275,600
Hines Nurseries, Inc.
10.25%, 10/01/11(b) ..................... 235 246,750
Jostens, Inc.
12.75%, 5/01/10 ......................... 650 757,250
Rayovac Corp.
8.50%, 10/01/13(b) ...................... 185 185,000
Salton, Inc.
12.25%, 4/15/08 ......................... 490 481,425
Sealy Mattress Co.
9.875%, 12/15/07 ........................ 410 414,100
St. John Knits International, Inc.
12.50%, 7/01/09 ......................... 200 220,000
Warnaco, Inc.
8.875%, 6/15/13(b) ...................... 280 301,700
-----------
3,774,605
-----------
Energy-4.6%
Chesapeake Energy Corp.
7.75%, 1/15/15 .......................... 855 906,300
CITGO Petroleum Corp.
11.375%, 2/01/11(b) ..................... 1,630 1,850,050
Frontier Escrow Corp.
8.00%, 4/15/13(b) ....................... 90 91,800
Frontier Oil Corp.
11.75%, 11/15/09 ........................ 260 295,100
Grant Prideco, Inc.
9.00%, 12/15/09 ......................... 600 649,500
54
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Grey Wolf, Inc.
8.875%, 7/01/07 ......................... $ 90 $ 92,250
Hilcorp Energy
10.50%, 9/01/10(b) ...................... 1,055 1,126,212
Northwest Pipelines Corp.
8.125%, 3/01/10 ......................... 330 359,700
Pioneer Natural Resources Co.
8.875%, 4/15/05 ......................... 395 427,588
Premco Refining Group, Inc.
9.50%, 2/01/13 .......................... 270 298,350
Pride International, Inc.
9.375%, 5/01/07 ......................... 145 150,075
Southern Natural Gas Co.
7.35%, 2/15/31 .......................... 365 337,625
8.875%, 3/15/10 ......................... 290 311,750
Universal Compression, Inc.
7.25%, 5/15/10 .......................... 220 227,700
Westport Resources Corp.
8.25%, 11/01/11(b) ...................... 80 87,800
8.25%, 11/01/11 ......................... 190 208,525
XTO Energy, Inc. ...........................
6.25%, 4/15/13 .......................... 215 223,600
7.50%, 4/15/12 .......................... 250 279,375
-----------
7,923,300
-----------
Entertainment & Leisure-1.3%
Cinemark USA, Inc.
9.00%, 2/01/13 .......................... 365 391,462
Premier Parks
9.75%, 6/15/07 .......................... 165 162,938
Six Flags, Inc.
9.50%, 2/01/09 .......................... 1,050 1,005,375
9.75%, 4/15/13(b) ....................... 85 80,325
Universal City Development Partners
11.75%, 4/01/10(b) ...................... 455 514,150
-----------
2,154,250
-----------
Financial-2.3%
Crum & Forster Holdings Corp.
10.375%, 6/15/13(b) ..................... 210 229,425
iStar Financial, Inc.
7.00%, 3/15/08 .......................... 85 88,825
8.75%, 8/15/08 .......................... 350 393,750
Markel Capital Trust I
Series B
8.71%, 1/01/46(f) ....................... 660 676,500
Nationwide CSN Trust
9.875%, 2/15/25(b) ...................... 1,000 1,162,100
PXRE Capital Trust I
8.85%, 2/01/27 .......................... 510 453,900
Western Financial Bank
9.625%, 5/15/12 ......................... 420 456,750
Williams Scotsman, Inc.
9.875%, 6/01/07 ......................... 550 544,500
-----------
4,005,750
-----------
55
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Food/Beverage-1.1%
Del Monte Food Co.
8.625%, 12/15/12(b) ..................... $ 145 $ 159,137
9.25%, 5/15/11 .......................... 255 281,137
DIMON, Inc.
7.75%, 6/01/13(b) ....................... 110 113,300
Series B
9.625%, 10/15/11 ........................ 175 195,562
Dole Food Company, Inc.
8.625%, 5/01/09 ......................... 255 272,850
8.875%, 3/15/11(b) ...................... 145 155,150
Merisant Co.
9.50%, 7/15/13(b) ....................... 300 322,500
Swift & Co.
10.125%, 10/01/09 ....................... 345 382,950
-----------
1,882,586
-----------
Gaming-3.4%
Ameristar Casinos, Inc.
10.75%, 2/15/09 ......................... 230 262,775
Argosy Gaming Co.
9.00%, 9/01/11 .......................... 235 256,737
Boyd Gaming Corp.
7.75%, 12/15/12 ......................... 255 264,563
Harrah's Operating Company, Inc.
7.875%, 12/15/05 ........................ 230 249,550
Horseshoe Gaming Holding Corp.
Series B
8.625%, 5/15/09 ......................... 195 209,869
MGM Mirage, Inc.
8.375%, 2/01/11 ......................... 575 635,375
Mandalay Resort Group
10.25%, 8/01/07 ......................... 570 658,350
Mohegan Tribal Gaming
6.375%, 7/15/09(b) ...................... 140 141,925
8.375%, 7/01/11 ......................... 220 240,900
Park Place Entertainment
7.00%, 4/15/13 .......................... 305 316,819
7.875%, 3/15/10 ......................... 295 317,125
9.375%, 2/15/07 ......................... 230 254,725
Riviera Holdings Corp.
11.00%, 6/15/10 ......................... 320 318,800
Station Casinos, Inc.
8.375%, 2/15/08 ......................... 235 254,681
Trump Holdings and Funding
11.625%, 3/15/10 ........................ 560 503,300
Turning Stone Casino Resort Enterprise
9.125%, 12/15/10(b) ..................... 290 312,838
Venetian Casino Resort, LLC
11.00%, 6/15/10 ......................... 610 698,450
-----------
5,896,782
-----------
Healthcare-2.7%
Alliance Imaging, Inc.
10.375%, 4/15/11 ........................ 425 444,125
AmerisourceBergen Corp.
8.125%, 9/01/08 ......................... 190 207,100
56
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Concentra Operating Corp.
9.50%, 8/15/10(b) ....................... $ 200 $ 210,000
13.00%, 8/15/09 ......................... 430 479,450
Extendicare Health Services
9.50%, 7/01/10 .......................... 340 370,600
HCA, Inc.
7.875%, 2/01/11 ......................... 655 732,268
Hanger Orthopedic Group, Inc.
10.375%, 2/15/09 ........................ 380 426,075
PacifiCare Health Systems, Inc.
10.75%, 6/01/09 ......................... 585 675,675
Select Medical Corp.
7.50%, 8/01/13(b) ....................... 390 404,625
Triad Hospitals, Inc.
Series B
8.75%, 5/01/09 .......................... 455 497,087
11.00%, 5/15/09 ......................... 245 270,725
-----------
4,717,730
-----------
Hotels & Lodging-1.7%
Extended Stay America, Inc.
9.875%, 6/15/11 ......................... 405 449,044
Felcor Lodging LP
8.50%, 6/01/11 .......................... 145 155,150
10.00%, 9/15/08 ......................... 200 216,000
Host Marriott LP
9.25%, 10/01/07 ......................... 105 115,106
9.50%, 1/15/07 .......................... 330 363,000
La Quinta Corp.
8.875%, 3/15/11(b) ...................... 400 435,500
MeriStar Hospitality Corp.
9.125%, 1/15/11 ......................... 100 105,500
MeriStar Hospitality Operating Partnership, LPP
10.50%, 6/15/09 ......................... 210 227,850
Starwood Hotels & Resorts Worldwide, Inc.
7.875%, 5/01/12 ......................... 515 566,500
Vail Resorts, Inc.
8.75%, 5/15/09 .......................... 280 295,750
-----------
2,929,400
-----------
INDUSTRIAL-2.3%
AMSTED Industries, Inc.
10.25%, 10/15/11(b) ..................... 545 588,600
Case New Holland, Inc.
9.25%, 8/01/11(b) ....................... 685 739,800
Dayton Superior Corp.
10.75%, 9/15/08(b) ...................... 245 252,350
FastenTech, Inc.
11.50%, 5/01/11(b) ...................... 350 367,500
Flowserve Corp.
12.25%, 8/15/10 ......................... 370 429,200
H&E Equipment/Finance
11.125%, 6/15/12 ........................ 260 222,300
NMHG Holding Co.
10.00%, 5/15/09 ......................... 220 243,100
SPX Corp.
7.50%, 1/01/13 .......................... 205 216,788
57
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Terex Corp.
10.375%, 4/01/11 ........................ $ 400 $ 450,000
TriMas Corp.
9.875, 6/15/12 .......................... 505 515,100
-----------
4,024,738
-----------
Metals/Mining-0.8%
AK Steel Corp.
7.875%, 2/15/09 ......................... 1,315 946,799
Peabody Energy Corp.
6.875%, 3/15/13 ......................... 410 429,475
-----------
1,376,274
-----------
Paper & Packaging-3.8%
Anchor Glass Container Corp.
11.00%, 2/15/13(b) ...................... 45 50,625
11.00%, 2/15/13 ......................... 395 444,375
Ball Corp.
6.875%, 12/15/12 ........................ 1,000 1,036,250
Berry Plastics Corp.
10.75%, 7/15/12 ......................... 390 436,800
Constar International, Inc.
11.00%, 12/01/12 ........................ 140 118,300
Crown Paper Co.
11.00%, 9/01/05(e) ...................... 5,000 0
Georgia-Pacific Corp.
9.375%, 2/01/13 ......................... 765 857,756
Graphic Packaging Int'l Corp.
9.50%, 8/15/13(b) ....................... 655 722,137
Greif Bros. Corp.
8.875%, 8/01/12 ......................... 280 304,500
Owens-Brockway Glass Container, Inc.
8.875%, 2/15/09 ......................... 795 850,650
Plastipak Holdings, Inc.
10.75%, 9/01/11 ......................... 275 302,500
Pliant Corp.
11.125%, 9/01/09(b) ..................... 385 412,913
Russell-Stanley Holdings, Inc.
9.00%, 11/30/08(b)(f)(g) ................ 782 359,596
Stone Container Corp.
9.25%, 2/01/08 .......................... 535 584,488
9.75%, 2/01/11 .......................... 12 13,140
-----------
6,494,030
-----------
Publishing-2.0%
American Media, Inc.
8.875%, 1/15/11 ......................... 105 113,006
10.25%, 5/01/09 ......................... 500 536,875
Dex Media East LLC
9.875%, 11/15/09 ........................ 110 125,125
12.125%, 11/15/12 ....................... 320 388,000
Dex Media West LLC
8.50%, 8/15/10(b) ....................... 160 174,800
9.875%, 8/15/13(b) ...................... 625 709,375
Hollinger International Publishing, Inc.
9.00%, 12/15/10 ......................... 530 561,137
Houghton Mifflin Co.
8.25%, 2/01/11 .......................... 280 294,700
9.875%, 2/01/13 ......................... 100 106,500
58
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
PEI Holdings, Inc.
11.00%, 3/15/10 ......................... $ 205 $ 227,550
RH Donnelley, Inc.
10.875%, 12/15/12(b) .................... 255 302,175
-----------
3,539,243
-----------
Restaurants-0.2%
Domino's Inc.
8.25%, 7/01/11(b) ....................... 350 371,437
-----------
Retail-0.8%
J.C. Penney Corporation, Inc.
8.00%, 3/01/10 .......................... 490 540,225
Payless ShoeSource, Inc.
8.25%, 8/01/13(b) ....................... 500 510,000
Saks, Inc.
8.25%, 11/15/08 ......................... 290 319,000
-----------
1,369,225
-----------
Service-2.6%
Allied Waste North America
8.50%, 12/01/08 ......................... 85 92,225
8.875%, 4/01/08 ......................... 645 701,438
10.00%, 8/01/09 ......................... 1,230 1,339,162
Coinmach Corp.
9.00%, 2/01/10 .......................... 250 267,500
Corrections Corp. of America
7.50%, 5/01/11 .......................... 40 41,450
9.875%, 5/1/09 .......................... 280 315,700
Iron Mountain, Inc.
7.75%, 1/15/15 .......................... 115 119,313
8.625%, 4/01/13 ......................... 350 374,500
National Waterworks, Inc.
10.50%, 12/01/12 ........................ 235 257,913
Service Corp. International
6.50%, 3/15/08 .......................... 240 238,800
7.70%, 4/15/09 .......................... 240 246,600
United Rentals, Inc.
10.75%, 4/15/08(b) ...................... 200 222,500
10.75%, 4/15/08 ......................... 205 228,062
-----------
4,445,163
-----------
Supermarket & Drugstore-1.0%
Pathmark Stores, Inc.
8.75%, 2/01/12 .......................... 310 319,300
8.75%, 2/01/12(b) ....................... 185 189,625
Rite Aid Corp.
9.25%, 6/01/13(b) ....................... 75 79,875
9.50%, 2/15/11 .......................... 660 749,100
Roundy's, Inc.
Series B
8.875%, 6/15/12 ......................... 270 283,500
Stater Bros. Holdings, Inc.
10.75%, 8/15/06 ......................... 150 157,875
-----------
1,779,275
-----------
59
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Technology-1.7%
Cooporative Computing, Inc.
10.50%, 6/15/11(b) ...................... $ 305 $ 330,925
Fairchild Semiconductor
10.50%, 2/01/09 ......................... 505 564,337
ON Semiconductor Corp.
12.00%, 3/15/10 ......................... 715 841,913
Unisys Corp.
6.875%, 3/15/10 ......................... 1,000 1,045,000
7.875%, 4/01/08 ......................... 185 193,325
-----------
2,975,500
-----------
Utilities - Electric & Gas-1.9%
AES Corporation
8.75%, 5/15/13(b) ....................... 65 68,575
9.00%, 5/15/15(b) ....................... 105 111,562
10.00%, 7/15/05(b) ...................... 290 300,150
Calpine Corp.
8.50%, 7/15/10(b) ....................... 1,580 1,461,500
PG&E Corp.
6.875%, 7/15/08(b) ...................... 395 416,725
SEMCO Energy, Inc.
7.125%, 5/15/08(b) ...................... 125 126,250
7.75%, 5/15/13(b) ....................... 235 237,938
The Williams Companies, Inc.
8.625%, 6/01/10 ......................... 485 517,738
-----------
3,240,438
-----------
Total U.S. Corporate Debt Obligations
(cost $94,979,445) ...................... 87,252,459
-----------
NON-U.S. CORPORATE DEBT OBLIGATIONS-10.9%
Argentina-0.2%
Supercanal Holdings, SA
10.75%, 11/07/02(e)(f) .................. 3,478 417,315
-----------
Bahamas-0.2%
Sun International Hotels, Ltd.
8.875%, 8/15/11 ......................... 245 266,744
-----------
Canada-0.6%
Fairfax Financial Holdings
7.375%, 4/15/18 ......................... 250 225,000
Intrawest Corp.
9.75%, 8/15/08 .......................... 220 232,375
10.50%, 2/01/10 ......................... 150 166,312
Norske Skog Canada, Ltd.
Series D
8.625%, 6/15/11 ......................... 335 350,494
-----------
974,181
-----------
Cayman Islands-0.8%
PF Export Receivables Master Trust
6.436%, 6/01/15(b) ...................... 1,462 1,454,918
-----------
France-0.3%
Crown Euro Holdings S.A ....................
9.50%, 3/01/11(b) ....................... 405 437,400
-----------
60
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Great Britian-0.3%
Danka Business Systems
11.00%, 6/15/10(b) ...................... $ 95 $ 87,875
Royal & Sun Alliance Insurance Group PLC
8.95%, 10/15/29 ......................... 450 408,162
-----------
496,037
-----------
Ireland-0.4%
Eircom Funding
8.25%, 8/15/13(b) ....................... 245 264,600
MDP Acquisitions PLC
9.625%, 10/01/12 ........................ 390 429,000
-----------
693,600
-----------
Kazakhstan-0.7%
Hurricane Finance BV
9.625%, 2/12/10(b) ...................... 400 436,000
Kazkommerts International BV
8.50%, 4/16/13(b) ....................... 850 830,875
-----------
1,266,875
-----------
Liberia-0.4%
Royal Caribbean Cruises, Ltd. ..............
8.00%, 5/15/10 .......................... 625 662,500
-----------
Luxembourg-1.3%
Mobile Telesystems Finance S.A .............
10.95%, 12/21/04 ........................ 2,130 2,273,775
-----------
Mexico-4.2%
Innova S. de R.L ...........................
9.375%, 9/19/13(b) ...................... 2,865 2,897,231
12.875%, 4/01/07 ........................ 4,275 4,424,625
-----------
7,321,856
-----------
Romania-0.3%
Mobifon Holdings BV
12.50%, 7/31/10(b) ...................... 425 465,375
-----------
Russia-1.0%
Gazprom OAO
9.625%, 3/01/13(b) ...................... 1,000 1,076,875
Tyumen Oil Company
11.00%, 11/06/07(b) ..................... 550 615,000
-----------
1,691,875
-----------
Singapore-0.2%
Flextronics International, Ltd. ............
6.50%, 5/15/13(b) ....................... 425 423,937
------------
Total Non-U.S. Corporate Debt Obligations
(cost $20,782,877) ...................... 18,846,388
-----------
CONVERTIBLE PREFERRED STOCK-0.0%
PSINet, Inc.
7.00%(b) ................................ 15,000 0
-----------
Total Convertible Preferred Stock
(cost $600,000) ......................... 0
-----------
61
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
NON-CONVERTIBLE PREFERRED STOCKS-1.5%
CSC Holdings, Inc.
Series M
11.125% ................................. $ 12,187 $ 1,276,588
Sovereign Real Estate Investment Trust
12.00%(b) ............................... 870 1,287,600
-----------
Total Non-Convertible Preferred Stocks
(cost $1,973,483) ....................... 2,564,188
-----------
COMMON STOCK & WARRANTS-0.0%
Central Bank of Nigeria
Warrants, expiring 11/15/20(h) .......... 1,000 0
Republic of Venezuela
Warrants, expiring 4/15/20(h) ........... 7,140 0
Russell-Stanley Holdings, Inc.
Common Stock(h)(i) ...................... 100,000 1
-----------
Total Common Stock & Warrants
(cost $0) ............................... 1
===========
62
Contracts(j),
or Shares U.S.Value
CALL OPTION PURCHASED(H)-0.0%
Federal Republic of Brazil C -Bonds
Expiring Oct '03 @ 90.9375
(cost $24,782) .......................... 2,154,968 $ 34,479
-------------
Total Investments Before Security
Lending Collateral-130.4%
(cost $202,823,027) ..................... 225,833,622
-------------
Investment of Cash Collateral for
Securities Loaned*-2.1%
Short-Term Investment ................... Shares
UBS Private Money Market Fund, LLC
1.03%
(cost $3,594,750) ....................... 3,594,750 3,594,750
-------------
Total Investments-132.5%
(cost $206,417,777) ..................... 229,428,372
Other assets less liabilities - (32.5)% .... (56,246,705)
-------------
Net Assets-100.0% .......................... $ 173,181,667
-------------
* See Note F for securities lending information.
CREDIT DEFAULT SWAP CONTRACTS (see Note C)
Notional Unrealized
Swap Counterparty & Amount Interest Termination Appreciation/
Reference Obligation (000) Rate Date (Depreciation)
-------------------------------------------------------------------------------------------
Buy Contracts:
Deutsche Bank A.G. London
Federal Republic of Peru
9.875%, 2/06/15 700 3.90% 12/20/08 $ (4,760)
JP Morgan Chase
Federal Republic of Venezuela
1.875%, 12/18/07 1,050 5.00 9/20/04 (10,395)
Sales Contracts:
Citigroup Global Markets, Inc.
Federal Republic of Brazil
12.25%, 3/06/30 1,000 6.35 8/20/05 33,300
Deutsche Bank A.G. London
Federal Republic of Brazil
12.25%, 3/06/30 600 17.85 2/06/08 219,420
Deutsche Bank A.G. London
Federal Republic of Brazil
12.25%, 3/06/30 1,500 14.50 3/08/08 374,550
Deutsche Bank A.G. London
Federal Republic of Romania
8.50%, 5/08/12 1,550 3.55% 4/03/10 105,865
JP Morgan Chase
Federal Republic of Venezuela
1.875%, 12/18/07 1,050 7.70 9/20/06 7,770
JP Morgan Chase
Federal Republic of Brazil
8.00%, 4/15/14 500 8.60 9/20/08 20,550
63
CREDIT DEFAULT SWAP CONTRACTS (see Note C) (continued)
Notional Unrealized
Swap Counterparty & Amount Interest Termination Appreciation/
Reference Obligation (000) Rate Date (Depreciation)
-------------------------------------------------------------------------------------------
Sales Contracts (continued):
JP Morgan Chase
Federal Republic of Brazil
8.00%, 4/15/14 500 9.05 9/20/13 44,800
JP Morgan Chase
Federal Republic of Brazil
8.00%, 4/15/14 2,000 9.34 9/20/13 179,200
REVERSE REPURCHASE AGREEMENTS (see Note C)
Interest
Broker Rate Maturity Amount
-----------------------------------------------------------------------------
Deutsche Bank 1.05% 10/01/03 15,184,024
Deutsche Bank 1.10 10/01/03 945,029
Deutsche Bank 0.25 12/31/03 2,641,922
Deutsche Bank 0.45 12/31/03 2,103,471
Deutsche Bank 1.05 12/31/03 13,005,379
Deutsche Bank 1.10 12/31/03 26,730,084
JP Morgan Chase 0.95 12/31/03 4,408,567
Lehman Brothers 0.15 12/31/03 1,154,628
Lehman Brothers 0.25 12/31/03 6,180,215
Lehman Brothers 0.75 12/31/03 1,124,179
Lehman Brothers 0.85 12/31/03 1,322,123
-----------
$74,799,621
===========
(a) Coupon changes periodically based upon a predetermined schedule. Stated
interest rate in effect at September 30, 2003.
(b) Security is 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,
2003, the aggregate market value of these securities amounted to
$85,971,468 or 50% of net assets.
(c) Positions, or portions thereof, with an aggregate market value of
$73,502,438 have been segregated to collateralize reverse repurchase
agreements.
(d) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective
until final maturity.
(e) Security is in default and is non-income producing.
(f) Illiquid security, valued at fair market value (see Note A).
(g) Coupon is paid in-kind.
(h) Non-income producing security.
(i) Common stock, par value is $0.01 per share.
(j) One contract relates to principal amount of $1.00.
Glossary of Terms:
DCB - Debt Conversion Bond
FLIRB - Front Loaded Interest Reduction Bond
FRN - Floating Rate Note
VRN - Variable Rate Note
See notes to financial statements.
64
STATEMENT OF ASSETS & LIABILITIES
September 30, 2003
Assets
Investments in securities, at value (cost $206,417,777)
--including investment of cash collareral for securities
loaned of $3,594,750 ..................................... $ 229,428,372(a)
Cash ........................................................ 692,783
Due from broker ............................................. 13,005,000
Interest and dividends receivable ........................... 5,567,390
Receivable for investment securities sold ................... 4,870,809
Unrealized appreciation on credit default swap contracts .... 985,455
Paydown receivable .......................................... 177,327
Other assets ................................................ 14,010
-------------
Total assets ................................................ 254,741,146
-------------
Liabilities
Reverse repurchase agreements ............................... 74,799,621
Payable for collateral on securities loaned ................. 3,594,750
Payable for investment securities purchased ................. 2,858,382
Advisory fee payable ........................................ 112,173
Administrative fee payable .................................. 22,433
Unrealized depreciation on credit default swap contracts .... 15,155
Accrued expenses and other liabilities ...................... 156,965
-------------
Total liabilities ........................................... 81,559,479
-------------
Net Assets .................................................. $ 173,181,667
=============
Composition of Net Assets
Common stock, at par ........................................ $ 225,406
Additional paid-in capital .................................. 296,111,267
Distributions in excess of net investment income ............ (123,407)
Accumulated net realized loss on investment transactions .... (147,012,494)
Net unrealized appreciation of investments .................. 23,980,895
-------------
$ 173,181,667
=============
Net Asset Value Per Share
(based on 22,540,621 shares outstanding) $ 7.68
=============
(a) Includes securities on loan with a value of $3,420,869 (see Note F).
See notes to financial statements.
65
STATEMENT OF OPERATIONS
Year Ended September 30, 2003
Investment Income
Interest ...................................................... $ 20,898,974
Dividends ..................................................... 43,912 $ 20,942,886
------------
Expenses
Advisory fee .................................................. 1,154,590
Administrative fee ............................................ 230,916
Printing ...................................................... 126,309
Custodian ..................................................... 98,912
Audit and legal ............................................... 98,072
Transfer agency ............................................... 51,746
Directors' fees ............................................... 38,548
Registration fees ............................................. 24,938
Miscellaneous ................................................. 45,797
------------
Total expenses before interest ................................ 1,869,828
Interest expense .............................................. 779,443
------------
Total expenses ................................................ 2,649,271
------------
Net investment income ......................................... 18,293,615
------------
Realized and Unrealized Gain (Loss) on Investment Transactions
Net realized gain (loss) on:
Investment transactions .................................... 3,255,229
Swap contracts ............................................. (191,781)
Written options ............................................ 120,834
Net change in unrealized appreciation/depreciation of:
Investments ................................................ 42,802,435
Swap contracts ............................................. 970,300
------------
Net gain on investment transactions ........................... 46,957,017
------------
Net Increase in Net Assets from Operations .................... $ 65,250,632
------------
See notes to financial statements.
66
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, September 30,
2003 2002
--------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Resulting from Operations
Net investment income ................................................ $ 18,293,615 $ 18,676,310
Net realized gain (loss) on investment transactions .................. 3,184,282 (30,457,612)
Net change in unrealized appeciation/depreciation of investments ..... 43,772,735 14,551,799
------------- -------------
Net increase in net assets from operations ........................... 65,250,632 2,770,497
Dividends and Distributions to Shareholders from
Net investment income ................................................ (18,177,141) (18,835,190)
Tax return of capital ................................................ -0- (730,704)
Common Stock Transactions
Reinvestment of dividends resulting in the issuance of Common Stock .. 1,273,690 1,520,333
------------- -------------
Total increase (decrease) ............................................ 48,347,181 (15,275,064)
Net Assets
Beginning of period .................................................. 124,834,486 140,109,550
------------- -------------
End of period ........................................................ $ 173,181,667 $ 124,834,486
============= =============
See notes to financial statements.
67
STATEMENT OF CASH FLOWS
Year Ended September 30, 2003
Increase (Decrease) in Cash from Operation Activities:
Interest and dividends received ............................... $ 17,558,683
Interest expense paid ......................................... (1,014,107)
Operating expenses paid ....................................... (1,852,491)
-------------
Net increase in cash from
operating activities ....................................... $ 14,692,085
Investing Activities:
Purchases of long-term investments ............................ (168,937,890)
Proceeds from disposition of long-term investments ............ 162,118,133
Proceeds from disposition of short-term investments, net ...... 247,250
Cash collateral received on securities loaned ................. 3,594,750
Net premium received on option transactions ................... 39,607
Net premium paid on swaps transactions ........................ (191,781)
-------------
Net decrease in cash from investing activities ................ (3,129,931)
Financing Activities:*
Cash dividends paid ........................................... (16,903,451)
Proceeds from reverse repurchase agreements ................... 6,033,839
-------------
Net decrease in cash from financing activities ................ (10,869,612)
------------
Net increase in cash .......................................... 692,542
Cash at beginning of period ................................... 241
------------
Cash at end of period ......................................... $ 692,783
============
---------------------------------------------------------------------------------------------------
Reconciliation of Net Increase in Net
Assets from Operations to Net Increase
in Cash from Operating Activities:
Net increase in net assets from operations $ 65,250,632
Adjustments:
Increase in dividends and interest receivable $ (1,031,452)
Accretion of bond discount and amortization of bond premium (2,352,751)
Increase in accrued expenses and other assets 17,337
Decrease in interest payable (234,664)
Net realized loss on investment transactions (3,184,282)
Net change in unrealized appreciation/depreciation of investments (43,772,735)
------------
Total adjustments (50,558,547)
------------
Net Increase in Cash from Operating Activities $ 14,692,085
============
* Non-cash financing activities not included herein consist of reinvestment
of dividends and distributions.
See notes to financial statements.
68
NOTES TO FINANCIAL STATEMENTS
September 30, 2003
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
In accordance with Pricing Policies adopted by the Board of Directors of the
Fund (the "Pricing Policies") and applicable law, portfolio securities are
valued at current market value or at fair value. The Board of Directors has
delegated to the Adviser, subject to the Board's continuing oversight, certain
responsibilities with respect to the implementation of the Pricing Policies.
Pursuant to the Pricing Policies, securities for which market quotations are
readily available are valued at their current market value. In general, the
market value of these securities is determined as follows:
Securities listed on a national securities exchange or on a foreign securities
exchange are valued at the last sale price at the close of the exchange or
foreign securities exchange. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked prices on such
day. If no bid or asked prices are quoted on such day, then the security is
valued in good faith at fair value in accordance with the Pricing Policies.
Securities listed on more than one exchange are valued by reference to the
principal exchange on which the securities are traded; securities not listed on
an exchange but traded on The Nasdaq Stock Market, Inc. ("NASDAQ") are valued in
accordance with the NASDAQ Official Closing Price; listed put or call options
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; open futures
contracts and options thereon are valued using the closing settlement price or,
in the absence of such a price, the most recent quoted bid price. If there are
no quotations available for the day of valuations, the last available closing
settlement price is used; securities traded in the over-the-counter market, (but
excluding securities traded on NASDAQ) are valued at the mean of the current bid
and asked prices as reported by the National Quotation Bureau or other
comparable sources; U.S. Government securities and other debt instruments having
60 days or less remaining until maturity are valued at amortized cost if their
original maturity was 60 days or less, or by amortizing their fair value as of
the 61st day prior to maturity if their original term to maturity exceeded 60
days; fixed-income securities, including mortgage backed and asset backed
securities, may be valued on the basis of prices provided by a pricing service
or at a price obtained from one or more of the major broker/dealers. In cases
where broker/dealer quotes are obtained, the Pricing Policies provide that the
Adviser may establish procedures whereby changes in market yields or spreads are
used to adjust, on a daily basis, a recently obtained quoted price on a
security; and OTC and other derivatives are valued on the basis of a quoted bid
price or spread from a major broker/dealer in such security. Securities for
which market quotations are not readily available are valued at fair value in
accordance with the Pricing Policies.
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 any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
69
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 securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
Additionally, the Fund amortizes premiums on debt securities for financial
statement reporting purposes only.
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.
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.
NOTE B
Advisory, Administrative Fees and Other Transactions with Affiliates
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") an advisory fee at an annual 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 Global
Investor Services, Inc. (AGIS), a wholly-owned subsidiary of the Adviser, the
Fund reimburses AGIS for costs relating to servicing phone inquiries on behalf
of the Fund. During the year ended September 30, 2003, the Fund reimbursed to
AGIS $1,130.
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 average adjusted weekly net assets of the Fund. 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 short-term investments)
for the year ended September 30, 2003, were as follows:
Purchases Sales
============= =============
Investment securities (excluding U.S. government securities) .. $ 169,585,665 $ 163,816,231
U.S. government securities .................................... -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and gross unrealized depreciation (excluding swap contracts) are as
follows:
Cost .................................................. $ 207,214,925
=============
Gross unrealized appreciation ......................... $ 40,637,969
Gross unrealized depreciation ......................... (18,424,522)
-------------
Net unrealized appreciation ........................... $ 22,213,447
=============
70
1. Option Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) put
and call options on U.S. and foreign government securities and foreign
currencies 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 the premiums paid. The proceeds
from securities sold through the exercise of put options are decreased by the
premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from 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 realized loss. If a call
option is exercised, the premium received is added to the proceeds from the sale
of the underlying security or currency 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 or currency purchased by the Fund. In
writing an option, the Fund bears the market risk of an unfavorable change in
the price of the security or currency underlying the written option. Exercise of
an option written by the Fund could result in the Fund selling or buying a
security or currency at a price different from the current market value.
Transactions in written options for the year ended September 30, 2003 were as
follows:
Number of
Contracts Premiums
(000) Received
========= ========
Options outstanding at September 30, 2002 ............. -0- $ -0-
Options written ....................................... 95,826 125,734
Options terminated in closing purchase transactions ... (31,628) (41,392)
Options expired ....................................... (64,198) (84,342)
Options outstanding at September 30, 2003 ............. -0- -0-
2. Swap Agreements
The Fund may enter into swaps on sovereign debt obligations to hedge its
exposure to interest rates and credit risk or 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
71
income (or as an offset to interest income). Fluctuations in the value of swap
contracts are recorded for financial statement purposes as a component of net
change in unrealized appreciation/depreciation of investments. Realized gains
and/or losses from terminated swap contracts are included in net realized gain
or loss on investment transactions.
The Fund may enter into credit default swaps. A sell/(buy) in a credit default
swap provides, upon the occurrence of a credit event, as defined in the swap
agreement, for the Fund to buy/(sell) from/(to) the counterparty at par and
take/(deliver) the principal amount (the "Notional Amount") of the referenced
obligation. During the term of the swap agreement, the Fund receives/(pays)
semi-annual fixed interest payments from/(to) the respective counterparty,
calculated at the agreed upon interest rate applied to the Notional Amount.
Credit default swaps may involve greater risks than if a Fund had invested in
the referenced obligation directly. Credit default swaps are subject to general
market risk, liquidity risk and credit risk. If the Fund is a buyer and no
credit event occurs, it will lose its investment. In addition, the value of the
referenced obligation received by the Fund as a seller if a credit event occurs,
coupled with the periodic payments previously received, may be less than the
full notional value it pays to the buyer, resulting in a loss of value to the
Fund.
3. 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 broker" shown on the statement of assets and liabilities represents
the receivable from the respective broker for the reverse repurchase agreement
entered into on September 30, 2003.
For the year ended September 30, 2003, the average amount of reverse repurchase
agreements outstanding was $60,189,635 and the daily weighted average annual
interest rate was 1.28%.
NOTE D
Capital Stock
There are 300,000,000 shares of $.01 par value common stock authorized of which
22,540,621 shares were issued and outstanding at September 30, 2003. During the
years ended September 30, 2003 and September 30, 2002, the Fund issued 182,814
and 223,517 shares, respectively, in connection with the Fund's dividend
reinvestment plan.
NOTE E
Concentration of Risk
Investing in securities of foreign companies and foreign governments involves
special risks which include changes in foreign exchange rates and 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 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.
72
NOTE F
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 securities to
certain broker-dealers. In return, the Fund receives fee income from the lending
transactions or it retains a portion of interest on the investment of any cash
received as collateral. The Fund also continues to receive dividends or interest
on the securities loaned. Unrealized gain or loss on the value of the securities
loaned that may occur during the term of the loan will be reflected in the
accounts of the Fund. 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 may invest the cash collateral
received in accordance with the investment restrictions of the Fund in one or
more of the following investments: U.S. Government or U.S. Government agency
obligations, bank obligations, corporate debt obligations, asset-backed
securities, structured products, repurchase agreements and an eligible money
market fund. The Lending Agent will indemnify the Fund for any loss resulting
from a borrower's failure to return a loaned security when due. As of September
30, 2003, the Fund had loaned securities with a value of $3,420,869 and received
cash collateral of $3,594,750, which was invested in a money market fund as
included in the portfolio of investments. For the year ended September 30, 2003,
the Fund earned fee income of $10,189, which is included in interest income in
the accompanying statement of operations.
NOTE G
Distributions to Shareholders
The tax character of distributions paid to shareholders during the fiscal years
ended September 30, 2003 and September 30, 2002 were as follows:
2003 2002
============== ==============
Distributions paid from:
Ordinary income ....................... $ (18,177,141) $ (18,835,190)
------------- -------------
Total taxable distributions .............. (18,177,141) (18,835,190)
Tax return of capital ................. -0- (730,704)
------------- -------------
Total distributions paid ................. (18,177,141) (19,565,894)
============= =============
As of September 30, 2004, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed ordinary income ......................... $ 124,846
Accumulated capital and other losses .................. (146,463,599)(a)
Unrealized appreciation/(depreciation) ................ 23,183,747(b)
-------------
Total accumulated earnings/(deficit) .................. $(123,155,006)
=============
(a) On September 30, 2003, the Fund had a net capital loss carryforward of
$146,463,599 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,
$33,249,705 expires in 2010 and $20,223,376 expires in the year 2011. To
the extent future capital gains are offset by capital loss carryforwards,
such gains will not be distributed.
(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.
During the current fiscal year, permanent differences, primarily due to the tax
treatment of bond premium and the tax character of paydown gains, resulted in a
net increase in distributions in excess of net investment income and a decrease
in accumulated net realized loss on investment transactions. This
reclassification had no effect on net assets.
73
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended September 30,
----------------------------------------------------------------------------
2003 2002(a) 2001 2000 1999
----------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 5.58 $ 6.33 $ 8.09 $ 8.39 $ 8.18
----------------------------------------------------------------------------
Income From Investment Operations
Net investment income(b) ......................... .81 .84 .98 1.08 1.25
Net realized and unrealized gain (loss) on
investment transactions ....................... 2.10 (.71) (1.72) (.22) .34
----------------------------------------------------------------------------
Net increase (decrease) in net asset value
from operations ............................... 2.91 .13 (.74) .86 1.59
----------------------------------------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income ............. (.81) (.85) (.95) (1.02) (1.25)
Distributions in excess of net investment income . -0- -0- -0- -0- (.13)
Tax return of capital ............................ -0- (.03) (.07) (.14) -0-
----------------------------------------------------------------------------
Total dividends and distributions ................ (.81) (.88) (1.02) (1.16) (1.38)
----------------------------------------------------------------------------
Net asset value, end of period ................... $ 7.68 $ 5.58 $ 6.33 $ 8.09 $ 8.39
============================================================================
Market value, end of period ...................... $ 8.15 $ 6.29 $ 7.62 $ 8.50 $ 10.25
============================================================================
Premium/(Discount) ............................... 6.12% 12.72% 20.38% 5.07% 22.17%
Total Return
Total investment return based on:(c)
Market value .................................. 45.71% (6.14)% 3.02% (5.41)% 27.06%
Net asset value ............................... 54.77% .23% (10.08)% 9.99% 18.69%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ........ $ 173,182 $ 124,834 $ 140,110 $ 179,653 $ 184,618
Ratios to average net assets of:
Expenses ...................................... 1.72% 2.12% 2.75% 2.70% 2.46%
Expenses, excluding interest expense(d) ....... 1.21% 1.15% 1.13% 1.09% 1.11%
Net investment income ............................ 11.88% 10.81% 9.90% 9.55% 11.27%
Portfolio turnover rate .......................... 80% 63% 129% 134% 223%
(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 investment 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 each period reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained
under the Fund's dividend reinvestment plan. Generally, total investment
return based on net asset value will be higher than total investment
return based on market value in periods where there is an increase in the
discount or a decrease in the premium of the market value to the net asset
value from the beginning to the end of such periods. Conversely, total
investment return based on net asset value will be lower than total
investment return based on market value in periods where there is a
decrease in the discount or an increase in the premium of the market value
to the net asset value from the beginning to the end of such periods.
Total investment return calculated for a period of less than one year is
not annualized.
(d) Net of interest expense of .51%, .97%, 1.62%, 1.61%, and 1.35%,
respectively, on borrowings.
74
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, 2003, 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, 2003, 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, 2003, 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, 2003
Exhibit (a)(1)(i)(A)
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use of our reports dated November 22, 2004 and November
14, 2003 on ACM Managed Dollar Income Fund, Inc., which are included in Schedule
TO of the Tender Offer Statement under Section 13(e)(4) of the Securities and
Exchange Act of 1934 of ACM Managed Dollar Income Fund, Inc.
ERNST & YOUNG LLP
New York, New York
May 12, 2005
Exhibit (a)(1)(ii)
LETTER OF TRANSMITTAL
to Accompany Shares of Common Stock, $0.01 Par Value
of
ACM MANAGED DOLLAR INCOME FUND, INC.
Tendered Pursuant to the Offer to Purchase Dated May 13, 2005
--------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT EASTERN TIME
ON JUNE 10, 2005, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
Information Agent Telephone Number: (800) 859-8509
Depositary Addresses:
By Registered, Certified Or Express
By First Class Mail: Mail or Overnight Courier: By Hand:
EquiServe Trust Company, N.A. EquiServe Trust Company, N.A. Equiserve
Attn: Corporate Actions Attn: Corporate Actions Attn: Corporate Actions
P.O. Box 859208 161 Bay State Drive 17 Battery Place, 11th Floor
Braintree, MA 02185-9208 Braintree, MA 02184 New York, NY 10004
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
This Letter of Transmittal is to be used (a) if you desire to effect the
tender transaction yourself, (b) if you intend to request
------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED (See Instructions 3 and 4)
------------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Owner(s) (Attach Additional Signed List, if Necessary)
(Please Fill in, if Blank, Exactly the Name(s) in Which Shares are Registered) Shares Tendered*
------------------------------------------------------------------------------------------------------------------------------------
Total Number of
Share Certificate Shares Represented
Number(s)** by Certificate(s)
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Total Shares....
------------------------------------------------------------------------------------------------------------------------------------
* If the Shares tendered hereby are in certificate form, the certificates representing such Shares MUST be returned together
with this Letter of Transmittal.
** Need not be completed for Book-Entry Shares.
------------------------------------------------------------------------------------------------------------------------------------
your broker, dealer, commercial bank, trust company or other nominee to effect
the transaction for you and the Shares are not registered in the name of such
broker, dealer, commercial bank, trust company or other nominee, and (c) by a
broker, dealer, commercial bank, trust company or other nominee effecting the
transaction as a registered owner or on behalf of a registered owner. To accept
the Offer in accordance with its terms, a Letter of Transmittal properly
completed and bearing original signature(s) and the original of any required
signature guarantee(s), any certificates representing Shares tendered, any other
documents required by this Letter of Transmittal and a check payable to
EquiServe Trust Company, N.A. (the "Depositary") in the amount of $25.00 (the
"Processing Fee"), must be mailed or delivered to the Depositary at an
appropriate address set forth above and must be received by the Depositary prior
to 12:00 Midnight Eastern Time on June 10, 2005, or such later time and date to
which the Offer is extended, unless the tendering party has satisfied the
conditions for guaranteed delivery described in Section 4(e) of the Offer to
Purchase. Delivery of documents to a book-entry transfer facility does not
constitute delivery to the Depositary.
THE UNDERSIGNED ALSO TENDERS ALL UNCERTIFICATED SHARES HELD IN THE NAME(S) OF
THE UNDERSIGNED BY THE FUND'S TRANSFER AGENT PURSUANT TO THE FUND'S DIVIDEND
REINVESTMENT PLAN, IF ANY. CHECK THIS BOX |_| IF THERE ARE ANY SUCH SHARES.
|_| THIS BOX SHOULD BE CHECKED IF, IN ADDITION TO SHARES TENDERED HEREBY,
SHARES ARE ALSO CONSTRUCTIVELY OWNED BY THE UNDERSIGNED AS DETERMINED
UNDER SECTION 318 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
A SEPARATE LETTER OF TRANSMITTAL MUST BE SUBMITTED BY EACH REGISTERED OWNER OF
SHARES WHICH ARE CONSIDERED TO BE CONSTRUCTIVELY OWNED BY THE UNDERSIGNED.
The boxes below are to be checked by eligible institutions only.
|_| CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE DEPOSITORY TRUST
COMPANY ("DTC") AND COMPLETE THE FOLLOWING:
NAME OF TENDERING INSTITUTION:____________________________________________
DTC PARTICIPANT NUMBER:___________________________________________________
|_| CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
NAME(S) OF REGISTERED HOLDER(S):________________________________________________
WINDOW TICKET NUMBER (IF ANY):__________________________________________________
DATE OF EXECUTION OF NOTICE OF GUARANTEED DELIVERY: ____________________________
NAME OF ELIGIBLE INSTITUTION WHICH GUARANTEED DELIVERY:_________________________
DTC PARTICIPANT NUMBER (IF DELIVERED BY BOOK-ENTRY TRANSFER):___________________
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The person(s) signing this Letter of Transmittal (the "Signatory") hereby
tender(s) to ACM Managed Dollar Income Fund, Inc., a non-diversified, closed-end
management investment company incorporated in Maryland (the "Fund"), the
above-described shares of common stock, par value $0.01 per share (the
"Shares"), of the Fund, for purchase by the Fund at a price (the "Purchase
Price") equal to the net asset value ("NAV") per Share determined as of the
close of the regular trading session of the New York Stock Exchange on June 13,
2005 (or, if the Offer as defined below is extended, on the date after the
Expiration Date as defined in the Offer to Purchase) in cash, under the terms
and subject to the conditions set forth in the Offer to Purchase dated May 13,
2005, receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which Offer to Purchase and Letter of Transmittal together with any amendments
or supplements thereto collectively constitute the "Offer").
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the Signatory hereby
sells, assigns and transfers to, or upon the order of, the Fund, all right,
title and interest in and to all of the Shares that are being tendered hereby
that are purchased pursuant to the Offer, and hereby irrevocably constitutes and
appoints EquiServe Trust Company, N.A. (the "Depositary") as attorney-in-fact of
the Signatory with respect to such Shares, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) present certificate(s) for such Shares, if any, for
cancellation and transfer on the Fund's books and (b) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares, subject to
the next paragraph, all in accordance with the terms and subject to the
conditions set forth in the Offer.
The Signatory hereby represents and warrants that (a) the Signatory, if a
broker, dealer, commercial bank, trust company or other nominee, has obtained
the tendering Stockholder's instructions to tender pursuant to the terms and
conditions of this Offer in accordance with the letter from the Fund to brokers,
dealers, commercial banks, trust companies and other nominees; (b) when and to
the extent the Fund accepts the Shares for purchase, the Fund will acquire good,
marketable and unencumbered title thereto, free and clear of all security
interests, liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to their sale or transfer, and not
subject to any adverse claim; (c) on request, the Signatory will execute and
deliver any additional documents that the Depositary or the Fund deems necessary
or desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and (d) the Signatory has read and agrees to all of the terms
and conditions of the Offer.
The name(s) and address(es) of the registered owner(s) should be printed
as on the registration of the Shares. If the Shares tendered hereby are in
certificate form, the certificate(s) representing such Shares must be returned
together with this Letter of Transmittal.
The Signatory recognizes that, under certain circumstances as set forth in
the Offer to Purchase, the Fund may amend, extend or terminate the Offer or may
not be required to purchase any of the Shares tendered hereby. In any such
event, the Signatory understands that certificate(s) for the Shares not
purchased, if any, will be returned to the Signatory at its registered address
unless otherwise indicated under the Special Delivery Instructions below. The
Signatory recognizes that the Fund has no obligation, pursuant to the Special
Payment Instructions set forth below, to transfer any Shares from the name of
the registered owner thereof if the Fund purchases none of such Shares.
The Signatory understands that acceptance of Shares by the Fund for
payment will constitute a binding agreement between the Signatory and the Fund
upon the terms and subject to the conditions of the Offer.
The check for the purchase price of the tendered Shares purchased will be
issued to the order of the Signatory and mailed to the address indicated, unless
otherwise indicated below in the box titled Special Payment Instructions or the
box titled Special Delivery Instructions. The Fund will not pay interest on the
purchase price under any circumstances.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the Signatory and all obligations of the Signatory
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the Signatory. Except as stated in the Offer, this tender is
irrevocable.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
certificates not accepted for payment in the name(s) of the registered holder(s)
appearing above under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price for any Shares purchased and/or return any Share
certificates not accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered." In the event that both the Special Payment
Instructions and the Special Delivery Instructions are completed, please issue
the check for the purchase price and/or return any Share certificates not
accepted for payment in the name of, and deliver such check and/or return any
such Share certificates to, the person(s) so indicated. The undersigned
recognizes that the Fund has no obligation pursuant to the Special Payment
Instructions to transfer any Shares from the name of the registered holder
thereof if the Fund does not accept for payment any of the Shares tendered
hereby.
--------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if any certificate for Shares not purchased, and/or a
check for the purchase price of Shares accepted for payment, is to be issued in
the name of someone other than the undersigned.
Issue: |_| Check to:
|_| Certificate(s) to:
Name(s)__________________________________________
(Please Print)
Address(es) _____________________________________
_________________________________________________
_________________________________________________
(Include Zip Code)
_________________________________________________
(Tax Identification or Social Security Number(s))
--------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if any certificate for Shares not purchased, and/or a
check for the purchase price of Shares accepted for payment and issued in the
name of the registered owner(s), is to be sent to someone other than the
registered owner(s) or to the registered owner(s) at an address other than that
shown above.
Issue: |_| Check to:
|_| Certificate(s) to:
Name(s)__________________________________________
(Please Print)
Address(es) _____________________________________
_________________________________________________
_________________________________________________
(Include Zip Code)
_________________________________________________
(Tax Identification or Social Security Number(s))
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STOCKHOLDER(S) SIGN HERE
(See Instructions 1 and 5)
(Please See Substitute Form W-9)
(Please Print Except for Signature)
Must be signed by registered owner(s) exactly as Shares are registered. If
signature is by an attorney-in-fact, executor, administrator, trustee, guardian,
officer of a corporation or another acting in a fiduciary or representative
capacity, please set forth the full title. See Instruction 5. Signature
guarantees are required in certain circumstances. See Instruction 1. By signing
this Letter of Transmittal, you represent that you have read the entire Letter
of Transmittal.
________________________________________________________________________________
________________________________________________________________________________
(Signature(s) Exactly as Shares Are Registered)
Dated ____________________________________________________________________, 2005
Name(s) ________________________________________________________________________
________________________________________________________________________________
(Please Print Name(s) of Owner(s) Exactly as Shares Are Registered)
(Tax Identification or Social Security Number(s))_______________________________
Daytime Telephone Number, including Area Code __________________________________
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
(Please Print Except for Signature)
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
Title___________________________________________________________________________
Name of Firm____________________________________________________________________
Address_________________________________________________________________________
(Include Zip Code)
Telephone Number, including Area Code___________________________________________
Dated ____________________________________________________________________, 2005
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal if (a) this Letter of Transmittal is signed by the
registered holder(s) of Shares tendered hereby (including, for purposes of this
document, any participant in the book-entry transfer facility of The Depository
Trust Company ("DTC") whose name appears on DTC's security position listing as
the owner of Shares), unless such holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" included in this Letter of Transmittal, or (b) the Shares are
tendered for the account of a firm (an "Eligible Institution") which is a
broker, dealer, commercial bank, credit union, savings association or other
entity which is a member in good standing of a stock transfer association's
approved medallion program (such as STAMP, SEMP or MSP). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be used (a) if Shares are to be forwarded herewith, (b) if
uncertificated Shares held by the Fund's transfer agent pursuant to the Fund's
Dividend Reinvestment Plan are to be tendered, or (c) if tenders are to be made
by book-entry transfer to the account maintained by the Depositary pursuant to
the procedure set forth in Section 4 of the Offer to Purchase.
THE METHOD OF DELIVERY OF ANY DOCUMENTS, INCLUDING SHARE CERTIFICATES,
THIS LETTER OF TRANSMITTAL, AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH ANY BOOK-ENTRY TRANSFER FACILITY IS AT THE OPTION AND SOLE RISK OF THE
TENDERING STOCKHOLDER. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE
TIMELY DELIVERY.
Delivery will be deemed made only when actually received by the
Depositary. If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. Stockholders have the
responsibility to cause their Shares (in proper certificated or uncertificated
form), this Letter of Transmittal properly completed and bearing original
signature(s) and the original of any required signature guarantee(s) and any
other documents required by this Letter of Transmittal and the Processing Fee to
be timely delivered in accordance with the Offer.
The Fund will not accept any alternative, conditional or contingent
tenders. All tendering Stockholders, brokers, dealers, commercial banks, trust
companies and other nominees, by execution of this Letter of Transmittal, waive
any right to receive any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in any of the boxes to be
completed is inadequate, the necessary information should be listed on a
separate schedule signed by all of the required signatories and attached hereto.
4. Tender of All Shares Held by the Stockholder. A Stockholder wishing to
accept the Offer must tender, or cause the tender of, all Shares owned by the
Stockholder and all Shares attributed to the Stockholder for federal income tax
purposes under Section 318 of the Internal Revenue Code of 1986, as amended, as
of the date of purchase of Shares pursuant to the Offer. Stockholders should
consult their tax advisors as to the application of the constructive ownership
rules of Section 318. If more than 1,135,385 Shares are duly tendered prior to
the expiration of the Offer (and not timely withdrawn), the Fund will purchase
Shares from tendering Stockholders, in accordance with the terms and subject to
the conditions specified in the Offer to Purchase, on a pro rata basis
(disregarding fractions) in accordance with the number of Shares duly tendered
by each Stockholder during the period the Offer is open (and not timely
withdrawn), unless the Fund determines not to purchase any Shares. Certificates
representing Shares tendered but not purchased will be returned promptly
following the termination, expiration or withdrawal of the Offer, without
further expense to the tendering Stockholder.
5. Signatures on Letter of Transmittal, Authorizations and Endorsements.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) for the Shares tendered without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names (including
Shares attributed to the tendering Stockholder for Federal income tax purposes
under Section 318 of the Code) on several certificates, it is necessary to
complete, sign and submit as many separate Letters of Transmittal as there are
different registrations.
If this Letter of Transmittal or any certificate for Shares tendered or
stock powers relating to Shares tendered are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and proper evidence satisfactory to the Fund of their
authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares transmitted hereby, no endorsements of certificates or separate stock
powers are required unless payment is to be made to, or certificates for Shares
not purchased are to be issued in the name of, a person other than the
registered holder(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed thereon, the certificate(s)
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) on the
certificate(s) for the Shares involved. Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
6. Transfer Taxes. The Fund will pay any transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer, provided, however,
that if (a) payment of the Purchase Price is to be made to, or (in the
circumstances permitted by the Offer) unpurchased Shares are to be registered in
the name(s) of, any person(s) other than the registered owner(s), or (b) if any
tendered certificate(s) are registered, or the Shares tendered are otherwise
held, in the name(s) of any person(s) other than the registered owner, the
amount of any transfer taxes (whether imposed on the registered owner(s) or such
other person(s)) payable on account of the transfer to such person(s) will be
deducted from the Purchase Price unless satisfactory evidence of the payment of
such taxes, or exemption therefrom, is submitted herewith.
7. Special Payment and Delivery Instructions. If certificate(s) for
unpurchased Shares and/or check(s) are to be issued in the name of a person
other than the registered owner(s) or if such certificate(s) and/or check(s) are
to be sent to someone other than the registered owner(s) or to the registered
owner(s) at a different address, the captioned boxes "Special Payment
Instructions" and/or "Special Delivery Instructions" in this Letter of
Transmittal must be completed.
8. Determinations of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders will be
determined by the Fund, in its sole discretion, which determination shall be
final and binding. The Fund reserves the absolute right to reject any or all
tenders determined not to be in appropriate form or to refuse to accept for
payment, purchase or pay for, any Shares if, in the opinion of the Fund's
counsel, accepting, purchasing or paying for such Shares would be unlawful. The
Fund also reserves the absolute right to waive any of the conditions of the
Offer or any defect in any tender, whether generally or with respect to any
particular Share(s) or Stockholder(s). The Fund's interpretations of the terms
and conditions of the Offer (including these instructions) shall be final and
binding.
NEITHER THE FUND, ITS BOARD OF DIRECTORS, THE INVESTMENT ADVISER, THE
DEPOSITARY NOR ANY OTHER PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF
ANY DEFECT OR IRREGULARITY IN ANY TENDER, AND NONE OF THEM WILL INCUR ANY
LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE.
9. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance or requests for additional copies of the Offer to
Purchase and this Letter of Transmittal may be directed to the Information Agent
at the mailing address provided in the Offer to Purchase or by telephoning (800)
859-8509. Stockholders who do not own Shares directly may also obtain such
information and copies from their broker, dealer, commercial bank, trust company
or other nominee. Stockholders who do not own Shares directly are required to
tender their Shares through their broker, dealer, commercial bank, trust company
or other nominee and should NOT submit this Letter of Transmittal to the
Depositary.
10. Restriction on Short Sales. Section 14(e) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and Rule 14e-4 promulgated
thereunder, make it unlawful for any person, acting alone or in concert with
others, to tender Shares in a partial tender offer for such person's own account
unless at the time of tender, and at the time the Shares are accepted for
payment, the person tendering has a "net long position" equal to or greater than
the amount tendered in (a) Shares, and will deliver or cause to be delivered
such Shares for the purpose of tender to the person making the Offer within the
period specified in the Offer, or (b) an equivalent security and, upon
acceptance of his or her tender, will acquire Shares by conversion, exchange, or
exercise of such equivalent security to the extent required by the terms of the
Offer, and will deliver or cause to be delivered the Shares so acquired for the
purpose of tender to the Fund prior to or on the Expiration Date. Section 14(e)
and Rule 14e-4 provide a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.
The acceptance of Shares by the Fund for payment will constitute a binding
agreement between the tendering Stockholder and the Fund upon the terms and
subject to the conditions of the Offer, including the tendering Stockholder's
representation that the Stockholder has a "net long position" in the Shares
being tendered within the meaning of Rule 14e-4 and that the tender of such
Shares complies with Rule 14e-4.
11. Backup Withholding Tax. Under the U.S. federal income tax laws, the
Depositary may be required to withhold 28% of the amount of any payment made to
certain holders pursuant to the Offer. In order to avoid such backup withholding
tax, each tendering U.S. Stockholder who has not already submitted a correct,
completed and signed Form W-9 or Substitute Form W-9 to the Fund should provide
the Depositary with the Stockholder's correct taxpayer identification number
("TIN") by completing a Substitute Form W-9, a copy of which is included in this
Letter of Transmittal. In general, if a U.S. Stockholder is an individual, the
TIN is the individual's Social Security number. If the Depositary is not
provided with the correct TIN, the U.S. Stockholder may be subject to a penalty
imposed by the Internal Revenue Service. Certain U.S. Stockholders (including,
among others, all U.S. corporations) are not subject to these backup withholding
and reporting requirements, but should nonetheless complete a Substitute Form
W-9 to avoid the possible erroneous imposition of a backup withholding tax.
In order for a non-U.S. Stockholder to avoid the 28% backup withholding
tax, the non-U.S. Stockholder must submit a statement to the Depositary signed
under penalties of perjury attesting as to its non-U.S. status. A copy of Form
W-8BEN and Form W-8IMY and instructions for completing those forms are enclosed
for such Stockholders.
Backup withholding tax is not an additional federal income tax. Rather,
the federal income tax liability of a person subject to backup withholding tax
will be reduced by the amount of tax withheld. If backup withholding results in
an overpayment of taxes, the Stockholder may claim a refund from the Internal
Revenue Service. All Stockholders are urged to consult their own tax advisors as
to the specific tax consequences to them of the Offer.
The tax information set forth above is included for general information
only and may not be applicable to the situations of certain taxpayers.
* * *
IMPORTANT: THIS LETTER OF TRANSMITTAL PROPERLY COMPLETED AND BEARING
ORIGINAL SIGNATURE(S) AND THE ORIGINAL OF ANY REQUIRED SIGNATURE GUARANTEE(S),
SHARES (IN PROPER CERTIFICATED OR UNCERTIFICATED FORM) AND OTHER REQUIRED
DOCUMENTS AND THE PROCESSING FEE MUST BE RECEIVED BY THE DEPOSITARY, OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION OF THE OFFER.
Exhibit (a)(1)(iv)
Notice of Guaranteed Delivery
Regarding the Offer by
ACM MANAGED DOLLAR INCOME FUND, INC.
To Purchase for Cash 1,135,385 of Its Issued and Outstanding
Shares at Net Asset Value Per Share
This form must be used to accept the Offer (as defined below) if a Stockholder's
certificates for Shares are not immediately available or if time will not permit
the Letter of Transmittal and other required documents to reach the Depositary
on or before the Expiration Date. Each term used in this form that is not
otherwise defined herein shall have the meaning specified in the Offer to
Purchase dated May 13, 2005. This form must be signed by the Stockholder and
sent to the Depositary by hand, overnight courier, mail or facsimile at the
appropriate address or facsimile number set forth below. Tenders using this form
may be made only by or through an Eligible Institution as defined in Section
4(b) of the Offer to Purchase.
Depositary Addresses:
By First Class Mail:
--------------------
EquiServe Trust Company, N.A.
Attn: Corporate Actions
P.O. Box 859208
Braintree, MA 02185-9208
By Registered, Certified Or Express
Mail Or Overnight Courier:
---------------------------------------
EquiServe Trust Company, N.A.
Attn: Corporate Actions
161 Bay State Drive
Braintree, MA 02184
By Hand:
--------
Equiserve
Attn: Corporate Actions
17 Battery Place, 11th Floor
New York, NY 10004
By Facsimile (for Eligible Institutions Only):
----------------------------------------------
EquiServe Trust Company, N.A.
(781) 380-3388
Depositary Telephone Number to Confirm Receipt of Notices:
(781) 843-1833, Ext. 200
DELIVERY OF THIS INSTRUMENT
OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders to ACM Managed Dollar Income Fund, Inc. (the
"Fund"), upon the terms and subject to the conditions set forth in its Offer to
Purchase dated May 13, 2005 and the related Letter of Transmittal (which
together with any amendments or supplements thereto collectively constitute the
"Offer"), receipt of which are hereby acknowledged, (i) the number of Shares
specified below pursuant to the guaranteed delivery procedures set forth in
Section 4(e) of the Offer to Purchase and (ii) all Shares held in the name(s) of
the registered holder(s) by the Fund's transfer agent pursuant to the Fund's
Dividend Reinvestment Plan.
(Please Print Except for Signature(s))
Number of Shares Tendered:___________________
Certificate Nos. (if available):________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
If Shares will be tendered by book-entry transfer to The Depository Trust
Company, please check box: |_|
DTC Participant Number:_________________________
Name(s) of Record Holder(s):________________________
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
Address:____________________________________________
____________________________________________________
Telephone Number, including Area Code:______________
____________________________________________________
If the undersigned is the beneficial owner of the Shares being tendered, the
undersigned hereby represents and warrants that all Shares owned by the
undersigned as of the date of purchase of Shares by the Fund pursuant to the
Offer and all Shares attributed to the undersigned for Federal income tax
purposes as of such date under Section 318 of the Internal Revenue Code of 1986,
as amended, have been or will be tendered pursuant to the Offer.
Dated: __________________, 2005
Individuals:________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
Signature(s)________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
Entity
____________________________________________________
____________________________________________________
Name of Firm
____________________________________________________
Authorized Signature
____________________________________________________
Name:
____________________________________________________
Title:
GUARANTEE
The undersigned, an Eligible Institution as defined in Section 4(b) of the Offer
to Purchase, hereby, with respect to the Shares tendered hereby pursuant to the
guaranteed delivery procedures set forth in Section 4(e) of the Offer to
Purchase: (a) represents that the person(s) named on the previous page "own(s)"
such Shares within the meaning of Rule 14e-4 under the Securities Exchange Act
of 1934, as amended; (b) represents that the tender of such Shares complies with
Rule 14e-4; and (c) guarantees to deliver to the Depositary certificates
representing such Shares, in proper form for transfer (or to tender Shares
pursuant to the procedure for book-entry transfer into the Depositary's account
at The Depository Trust Company if so specified on the foregoing page), together
with a properly completed and duly executed Letter of Transmittal with any
required signature guarantees, any other required documents, and the $25.00
Processing Fee payable to EquiServe Trust Company, N.A. prior to 5:00 P.M.
Eastern Time on the second New York Stock Exchange trading day after the date of
execution of this Guarantee.
(Please Print Except for Signature)
Name of Firm:___________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Authorized Signature:___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Name:___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Title___________________________________________________________________________
________________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Telephone Number, including Area Code:__________________________________________
________________________________________________________________________________
Dated:____________________, 2005
Account Number:________________________________
Name(s) and Tax Identification or Social Security Number(s) of Beneficial
Owner(s):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone Number(s) including Area Code(s):_____________________________________
________________________________________________________________________________
________________________________________________________________________________
(Signature of beneficial owner) (Signature of additional beneficial
owner, if any)
Dated:___________________________, 2005
Exhibit (a)(1)(v)
Form of Letter to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
Regarding the Offer by
ACM MANAGED DOLLAR INCOME FUND, INC.
To Purchase for Cash 1,135,385 of its Issued and Outstanding
Shares at Net Asset Value Per Share
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Pursuant to your request, we are enclosing the material listed below
relating to the offer by ACM Managed Dollar Income Fund, Inc. (the "Fund") to
purchase 1,135,385 of its issued and outstanding shares of common stock, par
value $0.01 per share (the "Shares"), for cash at a price equal to their net
asset value ("NAV") determined as of the close of the regular trading session of
the New York Stock Exchange ("NYSE") on June 13, 2005 upon the terms and subject
to the conditions set forth in the Offer to Purchase dated May 13, 2005 and the
related Letter of Transmittal (which together with any amendments or supplements
thereto collectively constitute the "Offer"). THE OFFER EXPIRES AT 12:00
MIDNIGHT EASTERN TIME ON JUNE 10, 2005, UNLESS EXTENDED (THE "EXPIRATION DATE").
If the Offer is extended beyond June 10, 2005, the purchase price for Shares
will be their NAV determined as of the close of the regular trading session of
the NYSE on the date after the new Expiration Date.
The following documents are enclosed:
(1) Offer to Purchase dated May 13, 2005;
(2) Letter of Transmittal to be used to tender all Shares;
(3) Notice of Guaranteed Delivery; and
(4) Form of Letter to Clients, which may be sent upon request for
information by your clients for whose account you hold shares
registered in your name (or in the name of your nominee).
No fees or commissions will be payable to brokers, dealers or other
persons for soliciting tenders of Shares pursuant to the Offer. The Fund will
pay all transfer taxes on its purchase of Shares, subject to Instruction 6 of
the Letter of Transmittal. Backup withholding tax at a 28% rate may be required
unless an exemption is proved or unless the required taxpayer identification
information is or has previously been provided to the Fund or the Depositary.
Certain withholdings may also apply with respect to payments to non-U.S.
Stockholders. See Instruction 11 of the Letter of Transmittal.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Stockholders in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Fund by one or more registered brokers or
dealers licensed under the laws of that jurisdiction.
If a client instructs you by telephone to tender Shares, please record the
telephone conversation (in accordance with applicable law) and ask the client to
affirm that all Shares owned by such client as of the date of purchase of Shares
pursuant to the Offer and all Shares attributed to such client for Federal
income tax purposes as of such date under Section 318 of the Internal Revenue
Code of 1986, as amended, have been or will be tendered pursuant to the Offer.
Additional copies of the enclosed material may be obtained from D.F. King
& Co., Inc., the Information Agent, in the manner indicated in the Offer to
Purchase. Any questions you have with respect to the Offer should be directed to
the Information Agent, at (800) 859-8509.
Very truly yours,
ACM MANAGED DOLLAR INCOME FUND, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS THE AGENT OF EITHER THE FUND OR THE DEPOSITARY OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS WITH RESPECT TO THE OFFER, OTHER
THAN THE STATEMENTS SPECIFICALLY SET FORTH IN THE OFFER TO PURCHASE AND THE
LETTER OF TRANSMITTAL, OR TO DISTRIBUTE ANY MATERIAL WITH RESPECT TO THE OFFER
OTHER THAN AS SPECIFICALLY AUTHORIZED HEREIN.
Exhibit (a)(1)(vi)
Form of Letter to Clients of Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
Regarding the Offer by
ACM MANAGED DOLLAR INCOME FUND, INC.
To Purchase for Cash 1,135,385 of Its Issued and Outstanding
Shares at Net Asset Value Per Share
To Our Clients:
Pursuant to your request, enclosed for your consideration are the Offer to
Purchase dated May 13, 2005 of ACM Managed Dollar Income Fund, Inc. (the "Fund")
and the related Letter of Transmittal pursuant to which the Fund is offering to
purchase 1,135,385 shares of its issued and outstanding common stock, par value
$0.01 per share (the "Shares"), for cash at a price equal to their net asset
value ("NAV") determined as of the close of the regular trading session of the
New York Stock Exchange ("NYSE") on June 13, 2005, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated May 13, 2005 and the
related Letter of Transmittal (which together with any amendments or supplements
thereto collectively constitute the "Offer"). THE OFFER EXPIRES AT 12:00
MIDNIGHT EASTERN TIME ON JUNE 10, 2005, UNLESS EXTENDED (THE "EXPIRATION DATE").
If the Offer is extended beyond June 10, 2005, the purchase price for Shares
will be their NAV determined as of the close of the regular trading session of
the NYSE on the date after the new Expiration Date, as extended.
The Offer is being made to fulfill an undertaking made in connection with
the initial public offering of the Shares. Information regarding this
undertaking, as well as information regarding possible future tender offers by
the Fund, is set forth in the Offer to Purchase.
The Offer to Purchase and the Letter of Transmittal are being forwarded to
you as the beneficial owner of Shares held by us for your account but not
registered in your name. We are sending you the Letter of Transmittal for your
information only; you cannot use it to tender Shares we hold for your account. A
tender of such Shares can be made only by us as the holder of record and only
pursuant to your instructions.
Your attention is called to the following:
1. Unless extended, the Offer expires at 12:00 Midnight Eastern Time on
June 10, 2005 and withdrawal rights expire at 5:00 P.M. Eastern Time
on June 14, 2005.
2. The Offer is subject to certain conditions set forth in the Offer to
Purchase. Under certain circumstances, the Fund will not be required
to accept for payment, purchase or pay for any Shares tendered, and
the Fund may also amend, extend or terminate the Offer.
3. A Stockholder wishing to accept the Offer must tender, or cause the
tender of, all Shares owned by the Stockholder and all Shares
attributed to the Stockholder for federal income tax purposes under
Section 318 of the Internal Revenue Code of 1986, as amended, as of
the date of purchase of Shares pursuant to the Offer. Stockholders
should consult their tax advisors as to the application of the
constructive ownership rules of Section 318.
4. If more than 1,135,385 Shares are duly tendered (and not timely
withdrawn), the Fund will purchase Shares from tendering
Stockholders, in accordance with the terms and subject to the
conditions specified in the Offer to Purchase, on a pro rata basis
(disregarding fractions) in accordance with the number of Shares
duly tendered by each Stockholder during the period the Offer is
open and not timely withdrawn), unless the Fund determines not to
purchase any Shares.
5. Each tendering stockholder is required to submit a check in the
amount of $25.00 payable to EquiServe Trust Company, N.A. (the
"Depositary") as a processing fee to help defray the cost associated
with effecting to Offer. A broker, dealer, commercial bank, trust
company or other nominee may also charge a fee for processing
transactions on behalf of a Stockholder. Tendering Stockholders are
not obligated to pay brokerage commissions or, subject to
Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares of the Fund pursuant to the Offer.
IF YOU WISH TO HAVE US TENDER YOUR SHARES, PLEASE SO INSTRUCT US BY
COMPLETING, EXECUTING AND RETURNING TO US THE INSTRUCTION FORM ON THE REVERSE
SIDE HEREOF. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER.
THE OFFER EXPIRES AT 12:00 MIDNIGHT EASTERN TIME ON JUNE 10, 2005, UNLESS
EXTENDED.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or its
acceptance would violate the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Fund by one or more registered brokers or dealers licensed under the laws of
that jurisdiction.
Very truly yours,
ACM MANAGED DOLLAR INCOME FUND, INC.
Instructions Regarding the Offer by
ACM MANAGED DOLLAR INCOME FUND, INC.
To Purchase for Cash 1,135,385 of Its Issued and Outstanding
Shares at Net Asset Value Per Share
THIS FORM IS NOT TO BE USED TO TENDER SHARES DIRECTLY TO THE DEPOSITARY.
IT SHOULD BE SENT TO YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR
OTHER NOMINEE IF THAT FIRM IS THE HOLDER OF RECORD OF YOUR SHARES AND WILL BE
EFFECTING THE TENDER ON YOUR BEHALF.
DO NOT COMPLETE THIS FORM IF YOU HAVE DECIDED NOT TO TENDER YOUR SHARES.
The undersigned acknowledge(s) receipt of your letter and the accompanying
Offer to Purchase dated May 13, 2005 and the related Letter of Transmittal
(which together with any amendments or supplements thereto collectively
constitute the "Offer") in connection with the Offer by ACM Managed Dollar
Income Fund, Inc. (the "Fund") to purchase 1,135,385 shares of its issued and
outstanding common stock, par value $0.01 per share (the "Shares"), at the net
asset value per Share as of the close of the regular trading session of the New
York Stock Exchange on the date after the Expiration Date (as defined in the
Offer to Purchase), on the terms and subject to the conditions of the Offer.
The undersigned hereby instructs you to tender to the Fund all Shares that
are held by you for the account of the undersigned, including all uncertificated
Shares that may be held for the account of the undersigned by the Fund's
transfer agent pursuant to the Fund's Dividend Reinvestment Plan, upon the terms
and subject to the conditions of the Offer.
The undersigned hereby represents and warrants that: (i) all Shares owned
by the undersigned as of the date of purchase of Shares pursuant to the Offer
and all Shares attributed to the undersigned for Federal income tax purposes as
of such date under Section 318 of the Internal Revenue Code of 1986, as amended,
have been or will be tendered pursuant to the Offer; (ii) the undersigned has a
"net long position" in such Shares within the meaning of Rule 14e-4 promulgated
under the Securities Exchange Act of 1934, as amended; and (iii) the tender of
such Shares complies with Rule 14e-4.
(Please Print Except for Signature(s))
Account Number: ___________________________________
Name(s) and Tax Identification or Social Security Number(s) of Beneficial
Owner(s):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone Number(s) including Area Code(s):_____________________________________
________________________________________________________________________________
(Signature of beneficial owner) (Signature of additional beneficial
owner, if any)
Dated: _______________________________, 2005
Exhibit (a)(1)(vii)
Form of Letter to Stockholders Who Have
Requested Information Regarding the Offer by
ACM MANAGED DOLLAR INCOME FUND, INC.
To Purchase for Cash 1,135,385 of Its Issued and Outstanding
Shares at Net Asset Value Per Share
Dear Stockholder:
Pursuant to your request, enclosed for your consideration are the Offer to
Purchase dated May 13, 2005 of ACM Managed Dollar Income Fund, Inc. (the "Fund")
and the related Letter of Transmittal pursuant to which the Fund is offering to
purchase 1,135,385 shares of its issued and outstanding common stock, par value
$0.01 per share (the "Shares"), for cash at a price equal to their net asset
value ("NAV") determined as of the close of the regular trading session of the
New York Stock Exchange ("NYSE") on June 13, 2005, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated May 13, 2005 and the
related Letter of Transmittal (which together with any amendments or supplements
thereto collectively constitute the "Offer"). THE OFFER EXPIRES AT 12:00
MIDNIGHT EASTERN TIME ON JUNE 10, 2005, UNLESS EXTENDED (THE "EXPIRATION DATE").
If the Offer is extended beyond June 10, 2005, the purchase price for Shares
will be their NAV determined as of the close of the regular trading session of
the NYSE on the date after the new Expiration Date, as extended.
Neither the Fund nor its Board of Directors nor Alliance Capital
Management L.P. (the Fund's investment adviser) is making any recommendation to
any holder of Shares as to whether to tender Shares. Each Stockholder is urged
to consult the Stockholder's own investment and tax advisors before deciding
whether to tender Shares. If, after considering the Offer to Purchase and Letter
of Transmittal, you wish to tender your Shares pursuant to the Offer, if you are
the record owner of Shares, you should follow the instructions contained in the
Offer to Purchase and Letter of Transmittal, and, if the Shares are held of
record in the name of a broker, dealer, commercial bank, trust company or other
nominee, you should contact that firm to effect the tender for you.
Your attention is called to the following:
1. Unless extended, the Offer expires at 12:00 Midnight Eastern Time on
June 10, 2005 and withdrawal rights expire at 5:00 P.M. Eastern Time
on June 14, 2005.
2. The Offer is subject to certain conditions set forth in the Offer to
Purchase. Under certain circumstances, the Fund will not be required
to accept for payment, purchase or pay for any Shares tendered, and
the Fund may also amend, extend or terminate the Offer.
3. A Stockholder wishing to accept the Offer must tender, or cause the
tender of, all Shares owned by the Stockholder and all Shares
attributed to the Stockholder for federal income tax purposes under
Section 318 of the Internal Revenue Code of 1986, as amended, as of
the date of purchase of Shares pursuant to the Offer. Stockholders
should consult their tax advisors as to the application of the
constructive ownership rules of Section 318.
4. If more than 1,135,385 Shares are duly tendered (and not timely
withdrawn), the Fund will purchase Shares from tendering
Stockholders, in accordance with the terms and subject to the
conditions specified in the Offer to Purchase, on a pro rata basis
(disregarding fractions) in accordance with the number of Shares
duly tendered by each Stockholder during the period the Offer is
open (and not timely withdrawn), unless the Fund determines not to
purchase any Shares.
5. Each tendering stockholder is required to submit a check in the
amount of $25.00 payable to EquiServe Trust Company, N.A. (the
"Depositary") as a processing fee to help defray the cost associated
with effecting to Offer. A broker, dealer, commercial bank, trust
company or other nominee may also charge a fee for processing
transactions on behalf of a Stockholder. Tendering Stockholders are
not obligated to pay brokerage commissions or, subject to
Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares by the Fund pursuant to the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or its
acceptance would violate the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Fund by one or more registered brokers or dealers licensed under the laws of
that jurisdiction.
Should you have any other questions concerning the enclosed material,
please contact your broker, dealer, commercial bank, trust company or other
nominee, or call the Information Agent at the number indicated in the Offer to
Purchase.
Very truly yours,
ACM MANAGED DOLLAR INCOME FUND, INC.
Exhibit (a)(5)(i)
This announcement is not an offer to purchase or a solicitation of an offer to
sell Shares (as defined below). The Offer (as defined below) is made only by the
Offer to Purchase dated May 13, 2005 and the related Letter of Transmittal and
is not being made to (nor will tenders be accepted from or on behalf of) holders
of Shares in any jurisdiction in which making or accepting the Offer would
violate that jurisdiction's laws. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Fund (as defined below) by
one or more registered brokers or dealers licensed under that jurisdiction's
laws.
ACM MANAGED DOLLAR INCOME FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Notice of Offer to Purchase for Cash 1,135,385 of Its
Issued and Outstanding Shares of Common Stock at Net Asset Value Per Share
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THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT
EASTERN TIME ON JUNE 10, 2005, UNLESS THE OFFER IS EXTENDED.
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ACM Managed Dollar Income Fund, Inc., a Maryland corporation (the "Fund"),
is offering to purchase for cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated May 13, 2005 and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer") 1,135,385 of its issued and outstanding
shares of Common Stock, par value $0.01 per share ("Shares") at a price equal to
the net asset value ("NAV") per Share determined as of the close of the regular
trading session of the New York Stock Exchange (the "NYSE") on June 13, 2005,
or, if the Offer is extended by the Board of Directors of the Fund, on the date
after the date to which the Offer is extended. The Offer will expire at 12:00
Midnight Eastern Time on June 10, 2005, unless extended. An extension would be
communicated by issuance of a press release or other public announcement. The
NAV as of the close of the regular trading session of the NYSE on May 11, 2005
was $7.87 per Share. The purpose of the Offer is to fulfill an undertaking made
by the Fund in connection with the initial public offering of Shares. The Offer
is not conditioned upon stockholders tendering in the aggregate any minimum
number of Shares.
If more than 1,135,385 Shares are duly tendered prior to the expiration of
the Offer, including any extension (and not timely withdrawn), unless the Fund
determines not to purchase any Shares, the Fund will purchase 1,135,385 Shares
on a pro rata basis (disregarding fractions) in accordance with the number of
Shares tendered by or on behalf of each stockholder during the period the Offer
is open (and not timely withdrawn). The Fund does not contemplate extending the
Offer and increasing the number of Shares covered thereby by reason of more than
1,135,385 Shares having been tendered. The acceptance of tendered Shares for
payment and purchase will be by action of the Fund's Board of Directors with
notice thereof to the Depositary. The Fund will deposit the aggregate purchase
price with the Depositary, which will make payment to stockholders in accordance
with the Offer. For taxable stockholders, the sale of Shares pursuant to the
Offer will be a taxable transaction for federal income tax purposes and may also
be a taxable transaction under applicable state, local and foreign tax laws.
Stockholders may tender Shares registered in their names only by
completing a Letter of Transmittal and submitting it and any other documents
required by the Letter of Transmittal in proper form to the Depositary at the
appropriate address set forth in the Offer before the Offer expires, including
any extension. Stockholders whose Shares are held by a broker, dealer,
commercial bank, trust company or other nominee (e.g., in "street name") can
only tender their Shares by directing that firm to properly complete, compile
and deliver the necessary documents on a timely basis to the Depositary. Shares
tendered pursuant to the Offer may be withdrawn by written or facsimile notice
received by the Depositary at the appropriate address at any time prior to 5:00
p.m. Eastern Time on June 14, 2005 (or, if the Offer is extended, prior to that
time on the second day on which the NYSE is open for trading after the new
expiration date), and, if Shares tendered have not been accepted for payment by
the Fund, the Shares may also be withdrawn at any time after July 11, 2005. The
notice is to specify the name of the stockholder who tendered the Shares, the
number of Shares being withdrawn (which must be all of the Shares tendered) and,
as regards Share certificates which represent tendered Shares that have been
delivered or otherwise identified to the Depositary, the name of the registered
owner(s) of such Shares if different than the person who tendered the Shares.
The information required to be disclosed by paragraph (d)(1) of Rule 13e-4
under the Securities Exchange Act of 1934, as amended, is contained in the Offer
to Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
Each stockholder tendering Shares is required to submit a check in the
amount of $25.00 payable to EquiServe Trust Company, N.A. which will help defray
the costs associated with effecting the Offer.
Requests for copies of the Offer to Purchase, the related Letter of
Transmittal and any other tender offer documents should be directed to the
Information Agent at the Information Agent's address or telephone number below
between the hours of 9:00 a.m. and 8:00 p.m. Eastern Time, Monday through Friday
(except holidays). Copies of these documents will be furnished promptly to
stockholders upon request at no expense to them. Stockholders who do not own
Shares directly may also obtain such documents from the broker, dealer,
commercial bank, trust company or other nominee that holds their Shares.
Questions and requests for assistance and for current NAV quotations may be
directed to the Information Agent at the Information Agent's address and
telephone number below, also between the hours of 9:00 a.m. and 8:00 p.m.
Eastern Time, Monday through Friday (except holidays).
Information Agent: Depositary:
D.F.King & Co., Inc. EquiServe Trust Company, N.A.
48 Wall Street Attn: Corporate Actions
New York, New York 10005 P.O. Box 859208
Banks and Brokers Call Collect: Braintree, Massachusetts 02185-9208
(212) 269-5550 Telephone Number: (800) 219-4218
All Others Call Toll-Free: (800) 859-8509
May 13, 2005