<PAGE>
[LOGO OF ALLIANCE CAPITAL]
ACM Government
Income Fund
Semi-Annual Report
June 30, 2000
[LOGO OF ALLIANCE CAPITAL]
<PAGE>
Investment Products Offered
---------------------------
. Are Not FDIC Insured
. May Lose Value
. Are Not Bank Guaranteed
---------------------------
<PAGE>
LETTER TO SHAREHOLDERS
August 18, 2000
Dear Shareholder:
This report provides you with the investment strategy, performance and outlook
of ACM Government Income Fund (the "Fund") for the semi-annual reporting period
ended June 30, 2000.
Investment Objectives and Policies
This closed-end Fund is designed to provide high current income consistent with
preservation of capital. The Fund invests principally in U.S. government obli-
gations. The Fund may also invest up to 35% of its assets in other fixed- in-
come securities, including those issued by foreign governments. Additionally,
the Fund may utilize other investment instruments, including options and
futures.
Investment Performance
The following table shows how the Fund performed over the past six- and 12-
month periods ended June 30, 2000. For comparison, we have included the perfor-
mance for the Fund's benchmark index, the Lehman Brothers Aggregate Bond Index.
During the six-month period ended June 30, 2000, the Fund outperformed its
benchmark as a result of the Fund's emerging market debt allocation. Addition-
ally, the Fund's Treasury duration structure and Treasury security selection
enhanced performance.
Investment Strategy
Over the past six-month period ended June 30, 2000, we maintained a longer in-
terest rate duration than the market, generally employing U.S. Treasury hold-
ings with maturities of 10 years or more.
INVESTMENT RESULTS*
Periods Ended June 30, 2000
<TABLE>
<CAPTION>
Total Returns
6 Months 12 Months
------------------------------------
<S> <C> <C>
ACM Government
Income Fund 10.37% 11.30%
------------------------------------
Lehman Brothers
Aggregate
Bond Index 3.99% 4.56%
------------------------------------
</TABLE>
* The Fund's
investment results
are total returns
for the periods
shown and are based
on the net asset
value of the Fund
as of June 30,
2000. All fees and
expenses related to
the operation of
the Fund have been
deducted. Returns
for the Fund
include the
reinvestment of any
distributions paid
during the period.
Past performance is
no guarantee of
future results.
The unmanaged
Lehman Brothers
Aggregate Bond
Index is composed
of the Lehman
Brothers Mortgage-
Backed and Asset-
Backed Securities
Indices and the
Lehman Brothers
Government/Corporate
Bond Index. It
includes Treasury,
agency and
corporate bond
issues, as well as
mortgage-backed
securities. The
Index is unmanaged
and does not
reflect fees and
expenses. An
investor cannot
invest directly in
an index, and its
results are not
indicative of any
particular
investment,
including ACM
Government Income
Fund.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.1
<PAGE>
LETTER TO SHAREHOLDERS
We opportunistically employed securities issued in foreign countries to enhance
portfolio yield. In the emerging market sector, we increased our Mexico and
Russia positions, anticipating relative outperformance based on their improving
credit profile. We also invested in more developed countries such as the United
Kingdom and Canada.
Market Review
The global economy continued to improve during the first six months of 2000. In
the U.S., the economy remained strong, growing 4.8% in the first quarter and
5.2% during the second quarter. Inflation and unemployment remained low. Howev-
er, the rise in commodity prices--led by oil--along with low unemployment, has
put upward pressure on U.S. inflation. Strong U.S. economic activity prompted
the Federal Reserve to increase short-term interest rates from 5.50% to 6.50%
during the period.
In the aggregate bond sector, the U.S. bond market, as represented by the
Lehman Brothers Aggregate Bond Index, posted a return of 3.99% during the six-
month period. Among the traditional sectors of the U.S. bond market, the U.S.
government sector recorded the strongest performance, at 5.0%, as a result of
the Treasury buy-back program. Faced with a growing budget surplus, the Trea-
sury began a long-term project to reduce the supply of outstanding government
debt. The yield curve inverted during the period as investors focused on
tighter monetary policy as well as the Treasury buy-back program. Two-year
Treasury yields rose from 6.24% to 6.36%, while 30-year Treasury yields fell
from 6.48% to 5.90%.
Mortgage securities benefited from a strong underlying housing sector, however,
relative performance was dampened by the Treasury buy-back program, which af-
fected all non-Treasury sectors negatively.
The emerging market debt sector returned 8.10% during the period. Most of the
strong performance occurred in the first quarter when emerging market debt re-
acted positively to improving global economic fundamentals.
Economic Outlook
Our near-term outlook for financial markets assumes that U.S. growth will mod-
erate. Elsewhere, global growth appears to be on solid footing. Although there
remains a risk of additional monetary tightening in the U.S, the Federal Re-
serve interest rate hikes in 1999 and the first half of 2000 already seem to be
taking effect.
The U.S. government budget surplus and the related Treasury buy-back program
has improved the environment for U.S. government bonds. We expect technical
supply considerations to play an increasing role in shaping the U.S. Treasury
yield curve. In the period immediately ahead, we expect the curve to remain in-
verted, reflecting the likelihood of further tightening by the Federal Reserve.
In addition, the superior quality and liquidity features of the mortgage-backed
security market, cou- pled with low prepayment risk at current interest rate
levels, continue to make this sector attractive. In the emerging markets, we
believe that most emerging-market governments remain committed to necessary
economic and financial reforms. We believe this asset class will continue to
produce attractive returns, albeit with considerable volatility, over the me-
dium term.
--------------------------------------------------------------------------------
2.ACM GOVERNMENT INCOME FUND
<PAGE>
LETTER TO SHAREHOLDERS
Notice to Shareholders
On July 20, 2000, the Board of Directors of the Fund approved the acquisition
by ACM Government Income Fund of the assets of ACM Government Securities Fund,
ACM Government Spectrum Fund and ACM Government Opportunity Fund.
The proposed acquisitions, which are not contingent on each other, are subject
to stockholder approval, and concurrent special stockholder meetings to con-
sider the acquisitions have been scheduled for November 14, 2000. You should
be receiving a proxy statement concerning the proposed acquisitions shortly.
Those acquisitions that receive stockholder approval are expected to be com-
pleted during the fourth quarter of this year. The Fund's Board of Directors
believes that consolidation of these very similar funds is in the stockhold-
ers' best interests. It is expected that, under current conditions, the acqui-
sitions will be fully protective of ACM Government Income's earning power and
distribution rate.
Under each proposed acquisition, stockholders of the Fund whose assets are ac-
quired will receive shares of ACM Government Income equivalent in aggregate
net asset value to the shares they hold immediately prior to the acquisition.
Stockholders participating in a fund's dividend reinvestment plan will receive
full and fractional ACM Government Income shares. Other stockholders will re-
ceive cash in lieu of fractional shares.
Thank you for your continued interest and investment in ACM Government Income
Fund. We look forward to reporting its progress to you in the future.
Sincerely,
/s/John D. Carifa
John D. Carifa
Chairman
/s/Wayne D. Lyski
Wayne D. Lyski
President
John D.
Carifa
[PHOTO]
Wayne D.
Lyski
[PHOTO]
Portfolio Manager, Wayne
D. Lyski, has over 26
years of investment ex-
perience.
-------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.3
<PAGE>
PERFORMANCE UPDATE
PERFORMANCE UPDATE
ACM GOVERNMENT INCOME FUND
HISTORY OF RETURNS
YEARLY PERIODS ENDED 6/30
<TABLE>
<CAPTION>
ACM Government Income Fund (NAV) -- Yearly Periods Ended 6/30
---------------------------------------------------------------------------------------------
ACM Government Lehman Brothers
Income Fund (NAV) Aggregate Bond Index
---------------------------------------------------------------------------------------------
<S> <C> <C>
6/30/91 11.34% 10.70%
6/30/92 16.27% 14.04%
6/30/93 20.12% 11.78%
6/30/94 -7.36% -1.30%
6/30/95 12.02% 12.55%
6/30/96 13.14% 5.02%
6/30/97 22.50% 8.15%
6/30/98 7.81% 10.54%
6/30/99 -10.95% 3.15%
6/30/00 11.28% 4.56%
</TABLE>
Past performance is no guarantee of future results. The Fund's investment re-
sults represent total returns and are based on the net asset value. All fees
and expenses related to the operation of the Fund have been deducted. Returns
for the Fund include the reinvestment of any distributions paid during the pe-
riod.
The unmanaged Lehman Brothers (LB) Aggregate Bond Index is composed of the LB
Mortgage-Backed Securities Index, the LB Asset-Backed Securities Index and the
LB Government/Corporate Bond Index. An investor cannot invest directly in an
index, and its results are not indicative of any specific investment, including
ACM Government Income Fund.
--------------------------------------------------------------------------------
4.ACM GOVERNMENT INCOME FUND
<PAGE>
PERFORMANCE UPDATE
PERFORMANCE UPDATE
ACM GOVERNMENT INCOME FUND (NAV)
GROWTH OF A $10,000 INVESTMENT
6/30/90 TO 6/30/00
[GRAPH]
Lehman Brothers
ACM Government Aggregate
Income Fund (NAV) Bond Index
6/30/90 10,000 10,000
6/30/91 11,134 11,070
6/30/92 12,946 12,624
6/30/93 15,551 14,112
6/30/94 14,408 13,928
6/30/95 16,139 15,676
6/30/96 18,260 16,462
6/30/97 22,368 17,804
6/30/98 24,115 19,681
6/30/99 21,474 20,300
6/30/00 23,896 21,227
This chart illustrates the total value of an assumed $10,000 investment in ACM
Government Income Fund at net asset value (NAV) (from 6/30/90 to 6/30/00) as
compared to the performance of an appropriate index. The chart assumes the re-
investment of dividends and capital gains. Past performance is not indicative
of future results, and is not representative of future gain or loss in capital
value or dividend income.
The unmanaged Lehman Brothers (LB) Aggregate Bond Index is composed of the LB
Mortgage-Backed Securities Index, the LB Asset-Backed Securities Index and the
LB Government/Corporate Bond Index. An investor cannot invest directly in an
index and its results are not indicative of any specific investment, including
ACM Government Income Fund.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.5
<PAGE>
PORTFOLIO SUMMARY
June 30, 2000
PORTFOLIO SUMMARY
INCEPTION DATE PORTFOLIO STATISTICS
8/28/87 Net Assets: ($mil): $468.1
[GRAPH]
SECURITY TYPE
Treasury 69.1%
Sovereign 18.5%
Corporate 6.6%
Preferred Stock 3.1%
ST-Repo 2.7%
[GRAPH]
COUNTRY BREAKDOWN
United States 75.7%
Argentina 0.9%
Brazil 3.3%
Mexico 5.8%
Phillipine 1.2%
Russia 6.8%
South Africa 0.5%
Canada 0.5%
India 2.0%
United Kingdom 3.3%
All data as of June 30, 2000. The Fund's security type and country breakdown
may vary over time. These breakdowns are expressed as a percentage of total
investments.
--------------------------------------------------------------------------------
6.ACM GOVERNMENT INCOME FUND
<PAGE>
PORTFOLIO OF INVESTMENTS
June 30, 2000 (unaudited)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Principal
Amount
(000) U.S. $ Value
<S> <C> <C>
-------------------------------------------------------------------------------
U.S. Government Obligations - 94.9%
U.S. Treasury Bonds - 43.6%
8.125%, 8/15/19(a)..................................... $ 59,900 $ 72,413,709
8.75%, 8/15/20(a)...................................... 1,450 1,864,149
12.00%, 8/15/13(a)..................................... 24,250 32,737,500
13.25%, 5/15/14(a)..................................... 9,925 14,479,682
14.00%, 11/15/11(a).................................... 59,500 82,630,625
------------
204,125,665
------------
U.S. Treasury Note - 5.5%
6.50%, 2/15/10(a)...................................... 25,000 25,855,500
------------
U.S. Treasury Strips - 45.8%
Zero coupon, 5/15/10(a)................................ 85,000 46,423,600
Zero coupon, 5/15/12(a)................................ 183,750 88,267,988
Zero coupon, 8/15/12................................... 35,000 16,563,750
Zero coupon, 5/15/17(a)................................ 55,000 19,462,300
Zero coupon, 2/15/19(a)................................ 60,000 19,095,000
Zero coupon, 11/15/21(a)............................... 90,000 24,389,100
------------
214,201,738
------------
Total U.S. Government Obligations (cost $456,794,700)... 444,182,903
------------
Sovereign Debt Obligations - 25.4%
Argentina - 1.2%
Republic of Argentina
7.875%, 3/31/23 FRN(b)................................. 2,050 1,647,790
11.75%, 6/15/15(b)..................................... 4,339 3,937,642
------------
5,585,432
------------
Brazil - 4.6%
Republic of Brazil
Global Bonds
12.75%, 1/15/20(b)..................................... 22,500 21,431,250
------------
Mexico - 8.0%
United Mexican States
9.875%, 2/01/10(b)..................................... 3,375 3,493,125
11.375%, 9/15/16(b).................................... 29,750 33,953,675
------------
37,446,800
------------
Philippines - 1.6%
Republic of Philippines
10.625%, 3/16/25(b).................................... 9,000 7,717,500
------------
Russia - 9.3%
City of St. Petersburgh
9.50%, 6/18/02(c)...................................... 11,700 9,874,800
</TABLE>
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.7
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares or
Principal
Amount
(000) U.S. $ Value
<S> <C> <C>
-------------------------------------------------------------------------------
Ministry of Finance
3.00%, 5/14/03(b)..................................... $ 13,500 $ 5,872,500
Russian Federation WI
2.25%, 3/31/30(c)..................................... 73,525 27,663,781
------------
43,411,081
------------
South Africa - 0.7%
Republic of South Africa
9.125%, 5/19/09(b).................................... 3,375 3,299,063
------------
Total Sovereign Debt Obligations
(cost $118,730,703)................................... 118,891,126
------------
Corporate Debt Obligations - 9.0%
Canada - 0.6%
Clearnet Communications Inc.
10.40%, 5/15/08(b)(d)................................. CAD 4,950 2,023,480
11.75%, 8/13/07(b).................................... 2,250 1,052,787
------------
3,076,267
------------
India - 2.7%
Reliance Industries Ltd.
10.50%, 8/06/46(c).................................... $ 13,900 12,575,511
------------
United Kingdom - 1.7%
NTL Communications Corp.
9.75%, 4/15/09(c)..................................... GBP 10,050 7,907,459
------------
United States - 4.0%
Dresdner Funding Trust
8.151%, 6/30/31(c).................................... $ 21,250 18,559,516
------------
Total Corporate Debt Obligations
(cost $45,258,875).................................... 42,118,753
------------
Preferred Stock - 4.3%
Abbey National PLC(b)(e)............................... 4,000 7,232,616
Bank of Scotland(b)(e)................................. 3,300 6,079,256
Centaur Funding Corp., Series B(c)..................... 6,750 6,653,245
------------
Total Preferred Stock
(cost $25,097,567).................................... 19,965,117
------------
</TABLE>
--------------------------------------------------------------------------------
8.ACM GOVERNMENT INCOME FUND
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Principal
Amount
(000) U.S. $ Value
<S> <C> <C>
-------------------------------------------------------------------------------
Repurchase Agreement - 3.7%
Merrill Lynch, Inc. 6.50%, dated 6/30/00, due 7/03/00
in the amount of $17,509,479 (cost $17,500,000;
collateralized by $17,765,000 FNMA 6.50%, 8/15/04,
value $17,853,825).................................. $17,500 $ 17,500,000
-------------
Total Investments - 137.3%
(cost $663,381,845)................................. 642,657,899
Other assets less liabilities - (37.3%).............. (174,536,203)
-------------
Net Assets - 100.0%.................................. $ 468,121,696
-------------
</TABLE>
(a) Securities, or portions thereof, have been segregated to collateralize the
loan outstanding. Total value of segregated securities amounted to
$380,232,215 at June 30, 2000.
(b) Securities, or portions thereof, have been segregated to collateralize open
forward foreign currency contracts. Total value of segregated securities
amounted to $97,740,684 at June 30, 2000.
(c) Security 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 June 30, 2000,
these securities amounted to $83,234,312 or 17.8% of net assets.
(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) Denominated in British Pounds.
Glossary of Terms:
FNMA - Federal National Mortgage Association
FRN - Floating Rate Note
WI - When Issued
See notes to financial statements.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (unaudited)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost $663,381,845)......... $642,657,899
Interest receivable............................................. 9,481,815
Prepaid expenses................................................ 109,975
------------
Total assets.................................................... 652,249,689
------------
Liabilities
Loan payable.................................................... 90,000,000
Payable for investment securities purchased..................... 90,459,930
Loan interest payable........................................... 2,146,039
Payable to custodian............................................ 790,775
Advisory fee payable............................................ 360,114
Unrealized depreciation on forward exchange currency contracts.. 97,004
Administrative fee payable...................................... 77,870
Accrued expenses................................................ 196,261
------------
Total liabilities............................................... 184,127,993
------------
Net Assets...................................................... $468,121,696
------------
Composition of Net Assets
Capital stock, at par........................................... $ 587,448
Additional paid-in capital...................................... 627,252,123
Distributions in excess of net investment income................ (2,619,236)
Accumulated net realized loss on investments, swap contracts and
foreign currency transactions.................................. (136,277,689)
Net unrealized depreciation of investments and foreign currency
transactions................................................... (20,820,950)
------------
$468,121,696
------------
Net Asset Value Per Share
(based on 58,744,751 shares outstanding)....................... $7.97
------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
10.ACM GOVERNMENT INCOME FUND
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (unaudited)
<TABLE>
<S> <C> <C>
Investment Income
Interest............................................. $27,535,928
Dividends (net of foreign taxes withheld of
$53,104)............................................ 477,932 $28,013,860
-----------
Expenses
Advisory fee......................................... 1,951,158
Administrative fee................................... 404,008
Transfer agency...................................... 110,876
Custodian............................................ 90,503
Reports and notices to shareholders.................. 74,255
Audit and legal...................................... 44,990
Registration fee..................................... 26,434
Directors' fees...................................... 21,958
Miscellaneous........................................ 68,301
-----------
Total expenses before interest....................... 2,792,483
Interest expense..................................... 3,005,476
-----------
Total expenses....................................... 5,797,959
-----------
Net investment income................................ 22,215,901
-----------
Realized and Unrealized Gain (Loss) on Investments,
Swap Contracts and Foreign Currency Transactions
Net realized loss on investment transactions......... (3,383,941)
Net realized gain on swap contracts.................. 8,781,973
Net realized gain on foreign currency transactions... 1,757,340
Net change in unrealized appreciation/depreciation
of:
Investments and swap contracts....................... 13,640,065
Foreign currency transactions........................ 105,068
-----------
Net gain on investments, swap contracts and foreign
currency transactions............................... 20,900,505
-----------
Net Increase in Net Assets from Operations........... $43,116,406
-----------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31,
(unaudited) 1999
---------------- ------------
<S> <C> <C>
Increase (Decrease) in Net Assets from
Operations
Net investment income........................... $ 22,215,901 $ 45,991,552
Net realized gain (loss) on investments, swap
contracts and foreign currency transactions.... 7,155,372 (70,950,391)
Net change in unrealized
appreciation/depreciation of investments, swap
contracts and foreign currency transactions.... 13,745,133 6,797,462
------------ ------------
Net increase (decrease) in net assets from
operations..................................... 43,116,406 (18,161,377)
Dividends and Distributions to Shareholders
Dividends from net investment income............ (22,215,901) (45,991,552)
Distributions in excess of net investment
income......................................... (1,865,285) (3,151,911)
Capital Stock Transactions
Reinvestment of dividends resulting in issuance
of Common Stock................................ 351,782 3,743,746
------------ ------------
Total increase (decrease)....................... 19,387,002 (63,561,094)
Net Assets
Beginning of period............................. 448,734,694 512,295,788
------------ ------------
End of period................................... $468,121,696 $448,734,694
------------ ------------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
12.ACM GOVERNMENT INCOME FUND
<PAGE>
STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2000 (unaudited)
<TABLE>
<S> <C> <C>
Increase (Decrease) in Cash from Operating
Activities:
Interest and dividends received................ $ 18,456,383
Interest expense paid.......................... (2,563,621)
Operating expenses paid........................ (2,086,380)
---------------
Net increase in cash from operating
activities.................................... $ 13,806,382
Investing Activities:
Purchases of long-term investments............. (1,937,142,091)
Proceeds from disposition of long-term
investments................................... 1,941,497,670
Proceeds from disposition of short-term
investments--net.............................. 5,567,313
---------------
Net increase in cash from investing
activities.................................... 9,922,892
Financing Activities*:
Cash dividends paid............................ (23,729,404)
------------
Net decrease in cash........................... (130)
Cash at beginning of period.................... 130
------------
Cash at end of period.......................... $ 0
------------
------------------------------------------------------------------------------
Reconciliation of Net Increase in Net Assets
from Operations to Net Increase in Cash from
Operating Activities:
Net increase in net assets from operations..... $ 43,116,406
Adjustments:
Increase in interest receivable................ $ (418,225)
Accretion of bond discount..................... (9,139,252)
Increase in accrued expenses................... 1,147,958
Net gain on investments........................ (20,900,505)
---------------
Total adjustments.............................. (29,310,024)
------------
Net Increase in Cash from Operating
Activities..................................... $ 13,806,382
------------
</TABLE>
*Non-cash financing activities not included herein consist of reinvestment of
dividends.
See notes to financial statements.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (unaudited)
NOTE A
Significant Accounting Policies
ACM Government Income Fund, Inc. (the "Fund") is registered under the Invest-
ment Company Act of 1940 as a non-diversified, closed-end management invest-
ment company. The financial statements have been prepared in conformity with
accounting principles generally accepted in the United States which require
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities in the financial statements and amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are gener-
ally valued at the last reported sale price or, if there was no sale on such
day, the last bid price quoted on such day. If no bid prices are quoted, then
the security is valued at the mean of the bid and asked prices as obtained on
that day from one or more dealers regularly making a market in that security.
Securities traded on the over-the-counter market, securities listed on a for-
eign securities exchange whose operations are similar to the United States
over-the-counter market and securities listed on a national securities ex-
change whose primary market is believed to be over-the-counter are valued at
the mean of the closing bid and asked price provided by two or more dealers
regularly making a market in such securities. U.S. government securities and
other debt securities which mature in 60 days or less are valued at amortized
cost unless this method does not represent fair value. Securities for which
market quotations are not readily available are valued at fair value as deter-
mined in good faith by, or in accordance with procedures approved by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. Listed put and call options pur-
chased by the Fund are valued at the last sale price. If there is no sale on
that day, such securities are valued at the closing bid prices on that day.
2. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its in-
vestment company taxable income and net realized gains, if any, to sharehold-
ers. Therefore, no provisions for federal income or excise taxes are required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Dividend income is recorded on the ex-
dividend date. Investment transactions are accounted for on the date securi-
ties are purchased or sold. Investment gains and losses are determined on the
identified cost basis. The Fund accretes discounts as adjustments to interest
income.
-------------------------------------------------------------------------------
14.ACM GOVERNMENT INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at the rates of
exchange prevailing when accrued. Net realized gain or loss on foreign cur-
rency transactions represents foreign exchange gains and losses from sales and
maturities of foreign securities, holding of foreign currencies, options on
foreign currencies, closed forward exchange currency contracts, exchange gains
and losses realized between the trade and settlement dates on foreign security
transactions, and the difference between the amounts of interest and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar equivalent
of the amounts actually received or paid. Net foreign currency gains and
losses from valuing foreign currency denominated assets and liabilities at pe-
riod end exchange rates are reflected as a component of net unrealized depre-
ciation of investments and foreign currency transactions.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance
with accounting principles generally accepted in the United States. To the ex-
tent these differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary differ-
ences, do not require such reclassification.
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") a monthly advisory fee in an amount
equal to the sum of 1/12th of .30% of the Fund's average weekly net assets up
to $250 million, 1/12th of .25% of the Fund's average weekly net assets in ex-
cess of $250 million, and 5.25% of the daily gross income (i.e., income other
than gains from the sale of securities and foreign currency transactions or
gains realized from options and futures contracts less interest on money bor-
rowed by the Fund) accrued by the Fund during the month. However, such monthly
advisory fee shall not exceed in the aggregate 1/12th of 1% of the Fund's av-
erage weekly net assets during the month (approximately 1% on an annual ba-
sis).
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Adviser, the Fund reimburses AFS
for costs relating to servicing phone inquiries on behalf of the Fund. During
the six months ended June 30, 2000, the Fund reimbursed AFS $4,525.
-------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Under the terms of an Administrative Agreement, the Fund pays its Administra-
tor, Mitchell Hutchins Asset Management Inc., a monthly fee equal to the
annualized rate of .20 of 1% of the Fund's average weekly net assets up to $100
million, .18 of 1% of the Fund's next $200 million of average weekly net as-
sets, and .16 of 1% of the Fund's average weekly net assets in excess of $300
million. The Administrator prepares financial and regulatory reports for the
Fund and provides other clerical services.
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $362,411,179 and $335,599,827, re-
spectively, for the six months ended June 30, 2000. There were purchases of
$1,555,837,209 and sales of $1,606,187,651 of U.S. government and government
agency obligations for the six months ended June 30, 2000.
At June 30, 2000, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes. According-
ly, gross unrealized appreciation of investments was $28,303,716, and gross
unrealized depreciation was $49,027,662, resulting in net unrealized deprecia-
tion of $20,723,946 (excluding foreign currency transactions).
At December 31, 1999, the Fund had a capital loss carryforward of $102,590,879
of which $43,891,547 expires in the year 2006 and $58,699,332 expires in the
year 2007.
1. Forward Exchange Currency Contracts
The Fund enters into forward exchange currency contracts to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio hold-
ings, to hedge certain firm purchase and sale commitments denominated in for-
eign currencies and for investment purposes. A forward exchange currency con-
tract is a commitment to purchase or sell a foreign currency at a future date
at a negotiated forward rate. The gain or loss arising from the difference be-
tween the original contract and the closing of such contract is included in net
realized gain or loss on foreign currency transactions.
Fluctuations in the value of open forward exchange currency contracts are re-
flected for financial reporting purposes as a component of net unrealized de-
preciation of investments and foreign currency transactions.
The Fund's custodian places and maintains liquid assets in a separate account
of the Fund having a value at least equal to the aggregate amount of the Fund's
commitments under forward exchange currency contracts entered into with respect
to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. At June 30, 2000, the Fund had outstand-
ing forward exchange currency contracts as follows:
--------------------------------------------------------------------------------
16.ACM GOVERNMENT INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. Option Transactions
For hedging purposes, the Fund purchases and writes (sells) 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 premium and change in market value should the counterparty not per-
form 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 op-
tion written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gain from options
written. The difference between the premium received and the amount paid on ef-
fecting a closing pur-
<TABLE>
<CAPTION>
U.S. $
Forward Exchange Contract Value on U.S. $ Unrealized
Currency Sale Amount Origination Current Appreciation
Contracts (000) Date Value (Depreciation)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
British Pounds, settling
8/08/00...................... 17,239 $25,996,628 $26,104,001 $(107,373)
Canadian Dollars, settling
7/07/00...................... 4,782 3,242,034 3,231,665 10,369
---------
$ (97,004)
---------
</TABLE>
chase transaction, including brokerage commissions, is also treated as a real-
ized gain, or if the premium is less than the amount paid for the closing pur-
chase transaction, as a realized loss. If a call option is exercised, the pre-
mium is added to the proceeds from the sale of the underlying security or cur-
rency in determining whether the Fund has realized a gain or loss. If a put op-
tion is exercised, the premium reduces the cost basis of the security or cur-
rency 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 under-
lying the option written. Exercise of an option written by the Fund could re-
sult in the Fund selling or buying a security or currency at a price different
from the current market value.
For the six months ended June 30, 2000, the Fund did not have any written op-
tion transactions.
3. Swap Agreements
The Fund enters into swaps on sovereign debt obligations to protect itself from
interest rate fluctuations on the underlying debt instruments and for invest-
ment 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 refer-
ence to changes in specified
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 con-
tract. 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 creditwor-
thiness 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 in-
terest income or expense expected to be received or paid during the interest
period. Net interest received or paid on these contracts is recorded as inter-
est 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 and swap con-
tracts.
At June 30, 2000, the Fund did not have any swap agreements outstanding.
NOTE D
Capital Stock
There are 300,000,000 shares of $0.01 par value common stock authorized, of
which 58,744,751 shares were outstanding at June 30, 2000. During the six
months ended June 30, 2000 and the year ended December 31, 1999, the Fund is-
sued 47,092 and 458,154 shares, respectively, in connection with the Fund's
dividend reinvestment plan.
NOTE E
Concentration of Risk
Investing in securities of foreign governments involves special risks which in-
clude changes in foreign exchange rates and the possibility of future adverse
political and economic developments which could adversely affect the value of
such securities. Moreover, securities of many foreign governments and their
markets may be less liquid and their prices more volatile than those of the
United States Government.
NOTE F
Bank Borrowing
On August 11, 1999, the Fund entered into a 364-day renewable credit facility
for a commercial paper asset securitization program with Societe Generale
("SG"), as Administrative Agent, and Barton Capital Corporation, as lender. The
SG program provides the Fund with $90,000,000 in available financing. Under the
SG Program, Barton will fund advances to the Fund through the issuance of com-
mercial paper rated A-1+ by Standard & Poor's Ratings Services and P-1 by
Moody's Investors Service, Inc. The collateral value must be at least 171% of
outstanding borrowings. The borrowings under the SG program are secured by the
pledging of the Fund's portfolio securities as collateral. The interest rate on
the Fund's borrowings is based on the interest rate carried by the commercial
paper. The weighted average interest rate for the six months ended June 30,
2000 was 6.54% and the average borrowing was $90,000,000. At June 30, 2000, the
interest rate in effect was 6.11% and the amount of borrowings outstanding was
$90,000,000.
--------------------------------------------------------------------------------
18.ACM GOVERNMENT INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE G
Subsequent Event
On July 20, 2000, the Fund's Directors approved the acquisition of the assets
of the ACM Government Securities Fund, ACM Government Spectrum Fund and ACM
Government Opportunity Fund by the Fund. The proposed acquisitions, which are
not contingent on each other, are subject to stockholder approval at a special
stockholder meeting scheduled for November 9, 2000. A proxy statement relating
to this meeting will be mailed to all stockholders of record in the upcoming
weeks. Those acquisitions that receive stockholder approval are expected to be
completed during the fourth quarter of this year.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.19
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30,
2000 ----------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $7.64 $8.80 $10.51 $10.29 $9.77 $8.45
-------------------------------------------------------------------
Income From Investment
Operations
Net investment
income(a).............. .38 .79 .88 .94 .94 .99
Net realized and
unrealized gain (loss)
on investments, swap
contracts, options
written and foreign
currency transactions.. .36 (1.11) (1.71) .54 .55 1.30
-------------------------------------------------------------------
Net increase (decrease)
in net asset value from
operations............. .74 (.32) (.83) 1.48 1.49 2.29
-------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income...... (.38) (.79) (.88) (.92) (.94) (.97)
Distributions in excess
of net investment
income................. (.03) (.05) -0- -0- (.03) -0-
Distributions from net
realized gains......... -0- -0- -0- (.34) -0- -0-
-------------------------------------------------------------------
Total dividends and
distributions.......... (.41) (.84) (.88) (1.26) (.97) (.97)
-------------------------------------------------------------------
Net asset value, end of
period................. $7.97 $7.64 $8.80 $10.51 $10.29 $9.77
-------------------------------------------------------------------
Market value, end of
period................. $7.188 $6.50 $9.125 $11.00 $10.25 $9.125
-------------------------------------------------------------------
Total Investment Return
Total investment return
based on:(b)
Market value............ 17.00% (20.84)% (9.25)% 20.73% 24.15% 11.37%
Net asset value......... 10.37% (3.53)% (8.38)% 15.08% 16.40% 28.73%
Ratios/Supplemental Data
Net assets, end of
period (000's
omitted)............... $468,122 $448,735 $512,296 $605,664 $590,173 $557,525
Ratio of expenses to
average net assets..... 2.55%(c) 2.37 % 2.09 % 2.03% 2.17% 2.08%
Ratio of expenses to
average net assets
excluding interest
expense(d)............. 1.23%(c) 1.19 % 1.12 % 1.11% 1.18% 1.29%
Ratio of net investment
income to average net
assets................. 9.76%(c) 9.80 % 9.04 % 9.02% 9.78% 11.10%
Portfolio turnover
rate................... 301% 368 % 409 % 304% 349% 380%
</TABLE>
See footnote summary on page 21.
--------------------------------------------------------------------------------
20.ACM GOVERNMENT INCOME FUND
<PAGE>
FINANCIAL HIGHLIGHTS
(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 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 for a period
of less than one year is not annualized.
(c) Annualized
(d) Net of interest expense of 1.32%, 1.18%, .97%, .92%, .99% and .79%,
respectively, on borrowings (see Note F).
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.21
<PAGE>
ADDITIONAL INFORMATION
ADDITIONAL INFORMATION
Supplemental Proxy Information
The Annual Meeting of Shareholders of the ACM Government Income Fund was held
on Tuesday, March 28, 2000. The description of each proposal and number of
shares voted at the meeting are as follows:
<TABLE>
<CAPTION>
Voted
Abstain/
Voted Authority
For Withheld
--------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
1. To elect directors: Class Three Directors
(terms expire in 2003)
Ruth Block 47,514,433 1,366,564
John D. Carifa 47,537,630 1,343,368
Robert C. White 47,441,761 1,439,237
<CAPTION>
Voted
Abstain/
Voted Voted Authority
For Against Withheld
--------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
2. To ratify the selection of Ernst & Young
LLP as the Fund's independent auditors for
the fiscal year ending December 31, 2000: 47,964,768 389,610 526,620
</TABLE>
--------------------------------------------------------------------------------
22.ACM GOVERNMENT INCOME FUND
<PAGE>
GLOSSARY OF INVESTMENT TERMS
GLOSSARY OF INVESTMENT TERMS
asset-backed securities (ABS)
Bonds or notes backed by loan paper or accounts receivable originated by banks,
credit card companies or other providers of credit and often enhanced by a bank
letter of credit or by insurance coverage provided by an institution other than
the issuer.
basis point (bp)
One basis point equals 0.01%.
benchmark
A standard by which a fund's performance can be measured. A benchmark is usu-
ally an unmanaged index, such as the Standard & Poor's 500 Stock Index or the
Lehman Brothers Aggregate Bond Index.
commercial mortgage-backed securities (CMBS)
Similar to mortgage-backed securities in that they are securities or certifi-
cates backed by mortgages, except that investors receive payments out of the
interest and principal of commercially-owned real estate, rather than residen-
tial real estate.
Consumer Price Index (CPI)
An index that measures the cost of living. The CPI is published by the U.S. Bu-
reau of Labor Statistics.
Federal Reserve Board
The seven-member board that oversees Federal Reserve Banks, establishes mone-
tary policy and monitors the country's economic state.
government bond
A bond that is issued by the U.S. government or its agencies.
index
A compilation of securities of similar types of companies that is used to meas-
ure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.
investment-grade bond
A bond that is rated BBB or higher by a credit agency.
mortgage-backed securities (MBS)
Securities or certificates backed by mortgages. Typically issued by institu-
tions such as the Federal National Mortgage Association (FNMA), Government Na-
tional Mortgage Association (GNMA) and the Federal Home Loan Mortgage Corpora-
tion (FHLMC). Investors receive payments out of the interest and principal of
the underlying mortgages.
net asset value (NAV)
The value of a mutual fund's total assets, minus its liabilities, divided by
the number of shares outstanding.
price-to-earnings (P/E) ratio
What an investor pays for a security versus a company's earnings per share of
outstanding stock.
Treasuries
Negotiable U.S. government debt obligations, backed by the full faith and
credit of the U.S. government. Treasuries are issued either as bills, notes or
bonds depending on the maturity. Treasuries are exempt from state and local
taxes.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.23
<PAGE>
ALLIANCE CAPITAL
The Investment Professional's Choice
ALLIANCE CAPITAL
Alliance Capital is a leading global investment management firm with nearly $388
billion in assets under management. In recognition of our far-reaching invest-
ment capabilities, Alliance Capital has been selected by employee benefit plans
for 29 of the FORTUNE 100 companies and public retirement funds in 33 states as
well as by hundreds of foundations, endowments and foreign institutions. By
sharing this institutional money management experience with millions of mutual
fund investors as well, Alliance stands out as a "manager
of choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 282 in-
vestment professionals in 22 investment offices worldwide. Our commitment to
this process means that our mutual fund shareholders have their portfolios man-
aged by the same experienced analysts and portfolio managers who manage the
pension funds of some of America's largest institutional investors.
All information on Alliance Capital is as of 6/30/00.
--------------------------------------------------------------------------------
24.ACM GOVERNMENT INCOME FUND
<PAGE>
BOARD OF DIRECTORS
BOARD OF DIRECTORS
John D. Carifa, Chairman
Ruth Block(/1/)
David H. Dievler(/1/)
James H. Dobkin(/1/)
William H. Foulk, Jr.(/1/)
Dr. James M. Hester(/1/)
Clifford L. Michel(/1/)
Donald J. Robinson(/1/)
Robert C. White(/1/)
OFFICERS
Wayne D. Lyski, President
Kathleen A. Corbet, Senior Vice President
Paul J. DeNoon, Vice President
Christian G. Wilson, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Juan J. Rodriguez, Controller
<TABLE>
<S> <C>
Administrator Independent Auditors
Mitchell Hutchins Ernst & Young LLP
Asset Management Inc. 787 Seventh Avenue
1285 Avenue of the Americas New York, NY 10019
New York, NY 10019
Custodian, Dividend Paying Legal Counsel
Agent, Transfer Agent and Seward & Kissel LLP
Registrar One Battery Park Plaza
State Street Bank New York, NY 10004
and Trust Company
225 Franklin Street
Boston, MA 02110
</TABLE>
(1) Member of the Audit Committee.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase from time to time at market
prices shares of its Common Stock in the open market.
This report, including the financial statements herein, is transmitted to
the shareholders of ACM Government Income Fund for their information. This
financial information included herein is taken from the records of the
Fund. This is not a prospectus, circular or representation intended for use
in the purchase of shares of the Fund or any securities mentioned in this
report.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.25
<PAGE>
ALLIANCE CAPITAL FAMILY OF FUNDS
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Balanced Shares
Conservative Investors Fund
Disciplined Value Fund
Growth & Income Fund
Growth Fund
Growth Investors Fund
Health Care Fund
Premier Growth Fund
Quasar Fund
Real Estate Investment Fund
Technology Fund
The Alliance Fund
Utility Income Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privalization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Closed-End Funds
The Spain Fund
ACM Municipal Securities Income Fund
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Government Opportunity Fund
ACM Managed Income Fund
The Southern Africa Fund
The Austria Fund
Alliance World Dollar Government Fund
ACM Managed Dollar Income Fund
The Korean Investment Fund
Alliance World Dollar Government Fund II
Alliance also offers AFD Exchange Reserves, which
serves as the money market fund exchange vehicle for
the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund,
call your investment professional, or call Alliance at
(800) 227-4818.
--------------------------------------------------------------------------------
26.ACM GOVERNMENT INCOME FUND
<PAGE>
SUMMARY OF GENERAL INFORMATION
SUMMARY OF GENERAL INFORMATION
ACM Government Income Fund
Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 432-5523. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper Inc., Morningstar, Inc. and Bloomberg.
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of newspapers under the designation
"ACMIn." The Fund's NYSE trad-ing symbol is "ACG." Weekly comparative net asset
value (NAV) and market price information about the Fund is published each Monday
in The Wall Street Journal and each Sunday in The New York Times and other
newspapers in a table called "Closed-End Bond Funds."
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains distributions in additional Fund shares. The Plan also allows you
to make optional cash investments in Fund Shares through the Plan Agent. If you
wish to participate in the Plan and your shares are held in your name, simply
complete and mail the enrollment form in the brochure. If your shares are held
in the name of your brokerage firm, bank or other nominee, you should ask them
whether or how you can participate in the Plan.
For questions concerning shareholder account information, or if you would like
a brochure describing the Dividend Reinvestment Plan, please call State Street
Bank and Trust Company at (800) 219-4218.
--------------------------------------------------------------------------------
ACM GOVERNMENT INCOME FUND.27
<PAGE>
PMT UPDATE
This page intentionally blank
--------------------------------------------------------------------------------
28. ACM GOVERNMENT INCOME FUND
<PAGE>
ACM Government Income Fund
1345 Avenue of the Americas
New York, New York 10105
[LOGO OF ALLIANCE CAPITAL]
(R) These registered
service Marks used
under license from the
owner, Alliance Capital
Management L.P.
INCSR600
