Sept-05 ACM MANAGED DOLLAR INCOME FUND

Exhibit 77E

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 identi-

fied 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 (the “Mutual Fund MDL”). 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 Discontinuation 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.

On February 10, 2004, the Adviser received (i) a subpoena duces tecum from

the Office of the Attorney General of the State of West Virginia and (ii) a request

for information from West Virginia’s Office of the State Auditor, Securities

Commission (the “West Virginia Securities Commission”) (together, the

“Information Requests”). Both Information Requests require the Adviser to

produce documents concerning, among other things, any market timing or late

trading in the Adviser’s sponsored mutual funds. The Adviser responded to the

Information Requests and has been cooperating fully with the investigation.

On April 11, 2005, a complaint entitled The Attorney General of the State of West

Virginia v. AIM Advisors, Inc., et al. (“WVAG Complaint”) was filed against the

Adviser, Alliance Capital Management Holding L.P. (“Alliance Holding”), and

various other defendants not affiliated with the Adviser. The WVAG Complaint

was filed in the Circuit Court of Marshall County, West Virginia by the Attorney

General of the State of West Virginia. The WVAG Complaint makes factual allegations

generally similar to those in certain of the complaints related to the lawsuits

discussed above. On May 31, 2005, defendants removed the WVAG

Complaint to the United States District Court for the Northern District of West

Virginia. On July 12, 2005, plaintiff moved to remand. On October 19, 2005,

the WVAG Complaint was transferred to the Mutual fund MDL.

On August 30, 2005, the deputy commissioner of securities of the West Virginia

Securities Commission signed a “Summary Order to Cease and Desist, and

Notice of Right to Hearing” addressed to the Adviser and Alliance Holding. The

Summary Order claims that the Adviser and Alliance Holding violated the West

Virginia Uniform Securities Act, and makes factual allegations generally similar

to those in the SEC Order and the NYAG Order. The Adviser intends to vigorously

defend against the allegations in the WVAG Complaint.

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 Fund was not named as a defendant in the Aucion Compliant.

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 fund-related 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.

On October 19, 2005, the District Court granted in part, and denied in part,

defendants’ motion to dismiss the Aucoin Complaint and as a result the only

claim remaining is plaintiffs’ Section 36(b).

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.