<PAGE>
Letter To Shareholders ACM Government Spectrum Fund, Inc.
================================================================================
August 19, 1996
Dear Shareholder:
Throughout 1995, the U.S. bond market enjoyed a sustained, broad-based rally
which lasted into January 1996. However, since February, domestic bond market
returns have generally been negative. The market has been reacting to stronger-
than-expected data on the U.S. economy and the belief that the Federal Reserve
may raise interest rates to reduce inflationary pressures. Although U.S.
Treasury securities showed a negative return during the period, mortgage
obligations were able to post a modest gain as prepayment expectations
stabilized. Across all major sectors of the U.S. fixed-income market, shorter-
duration securities outperformed longer-duration securities as interest rates
for all maturities increased. Outside the United States, economic conditions in
Europe and gradually improving economies in Latin America helped to support
rising debt prices.
INVESTMENT RESULTS
Over the six months and twelve months ended June 30, 1996, the ACM Government
Spectrum Fund achieved a cumulative total return, on a net asset value basis,
was -2.35% and 7.62%, respectively. The Fund's performance over the most recent
six-month reporting period was hurt by rising domestic interest rates, as
virtually every sector of the domestic bond market showed negative returns.
However, continued strong performance in emerging-market debt and good
developed-country selection for non-U.S. issuers helped to offset poor domestic
market returns.
ECONOMIC REVIEW
The U.S. economy has rebounded from an inventory-related slowdown during the
second half of 1995. Real growth accelerated to 2.2% during the first quarter of
1996, while final demand increased by a healthy 3.3%. The re-strengthening
continued in the second quarter, led by a rapidly improving labor market.
Employment gains averaged 265,000 per month during the second quarter, and total
hours worked climbed by an annualized 5.6%. Consumer confidence remained
elevated and real household spending continued to grow at a healthy clip. These
factors combined to produce overall growth in gross domestic product of 4.2%
during the quarter.
Inflation was boosted this past spring by rising food and energy prices.
However, the less volatile "core" rate of inflation, estimated at 2.7%, hovered
near a 30-year low. More recently, Federal Reserve policy makers left short-term
interest rates unchanged, betting that a slowdown in the economy later this year
will keep inflation in check.
INVESTMENT OUTLOOK
We believe the U.S. economy will slow during the second half of 1996 following
fairly robust second-quarter growth. Our forecast calls for gross domestic
product growth of 2.0% to 2.5% in the second half of the year. In our view, such
growth would not prompt an increase in interest rates by the Federal Reserve.
However, if the economy does not show consistent signs of the expected slowdown,
the Federal Reserve is likely to pursue a more restrictive monetary policy.
Given the expected slowdown in economic activity, we anticipate a fairly stable
interest-rate environment. In our view, interest rates should not move more than
25 basis points above or below their current level. In this environment, a
moderate shift away from U.S. Treasury issues and into mortgage-backed
securities should be expected. In addition, we would anticipate that both
emerging- market and high-yield debt would continue to perform well.
Outside the United States, we remain optimistic on emerging- and developed-
market debt securities. Moderate economic growth in the United States, stable
inflation, and relatively steady bond price
1
<PAGE>
ACM Government Spectrum Fund, Inc.
================================================================================
increases provide a strong positive environment for this segment of the fixed-
income market. In the developed foreign markets, continued focus on by policy
makers on fiscal issues should support additional gains in debt prices.
Thank you for your continued interest and investment in ACM Government Spectrum
Fund. We look forward to reporting its progress to you in the coming months.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Christian Wilson
Christian Wilson
2
<PAGE>
Portfolio Of Investments
June 30, 1996 (unaudited) ACM Government Spectrum Fund, Inc.
================================================================================
<TABLE>
<CAPTION>
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS--77.9%
U.S. TREASURY
SECURITIES--67.0%
U.S. Treasury Bonds
Zero coupon, 11/15/09 ................ US$ 35,000 $ 13,884,500
Zero coupon, 2/15/15 ................. 110,630 29,658,797
6.25%, 8/15/23 (a) ................... 11,000 9,972,160
10.75%, 8/15/05 (a) .................. 21,250 26,977,512
14.00%, 11/15/11 (a) ................. 29,300 44,691,583
U.S. Treasury Notes
6.125%, 7/31/00 (a) .................. 14,500 14,339,195
7.875%, 11/15/04 (a) ................. 30,000 32,245,200
-------------
Total U.S. Treasury Securities
(cost $173,499,125) .................. 171,768,947
-------------
FEDERAL AGENCY
SECURITIES--10.9%
Student Loan Marketing
Association
15.00%, 9/17/96
(cost $29,953,093) ................... 27,450 28,003,392
-------------
Total U.S. Government and
Agency Obligations
(cost $203,452,218) .................. 199,772,339
-------------
SOVEREIGN DEBT
OBLIGATIONS--30.2%
AUSTRALIA--7.5%
Commonwealth of Australia
8.75%, 8/15/08
(cost $18,851,456) ................... AU$ 24,800 19,199,195
-------------
CANADA--19.4%
Canadian Government
7.00%, 12/01/06 ...................... CA$ 17,625 $ 12,272,554
7.50%, 3/01/01 ....................... 38,000 28,403,253
8.00%, 6/01/27 ....................... 12,500 9,030,790
-------------
Total Canadian Securities
(cost $49,368,365) ................... 49,706,597
-------------
SWEDEN--3.3%
Kingdom of Sweden
10.25%, 5/05/00
(cost $8,528,166) .................... SEK 51,000 8,499,538
-------------
Total Sovereign
Debt Obligations
(cost $76,747,987) ................... 77,405,330
-------------
TIME DEPOSIT--0.3%
State Street Bank & Trust Co.,
Grand Cayman Islands
5.00%, 7/01/96
(cost $670,000) ...................... US$ 670 670,000
-------------
TOTAL INVESTMENTS--108.4%
(cost $280,870,205) .................. 277,847,669
Other assets less
liabilities--(8.4%) .................. (21,459,380)
-------------
NET ASSETS--100% ..................... $ 256,388,289
=============
- --------------------------------------------------------------------------------
</TABLE>
(a) Security, or portion thereof, has been segregated to collateralize open
forward exchange currency contracts. Total value of segregated securities
amounted to $128,225,650 at June 30, 1996.
See notes to financial statements.
3
<PAGE>
Statement Of Assets And Liabilities
June 30, 1996 (unaudited) ACM Government Spectrum Fund, Inc.
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $280,870,205). $277,847,669
Cash ................................................... 803,561
Receivable for investment securities sold .............. 9,544,116
Interest receivable .................................... 5,101,434
Net unrealized appreciation of forward
exchange currency contracts .......................... 810,878
Net unrealized appreciation of swap contract ........... 153,659
Prepaid expenses ....................................... 28,728
------------
Total assets ........................................... 294,290,045
------------
LIABILITIES
Payable for investment securities purchased ............ 37,423,459
Advisory fee payable ................................... 166,676
Administrative fee payable ............................. 39,557
Accrued expenses ....................................... 272,064
------------
Total liabilities ...................................... 37,901,756
------------
NET ASSETS ............................................... $256,388,289
============
COMPOSITION OF NET ASSETS
Capital stock, at par .................................. $ 370,280
Additional paid-in capital ............................. 329,390,331
Distributions in excess of net
investment income .................................... (3,142,992)
Accumulated net realized loss .......................... (68,255,874)
Net unrealized depreciation of investments, swap
contract and foreign currency denominated
assets and liabilities ............................... (1,973,456)
------------
$ 256,388,289
============
NET ASSET VALUE PER SHARE (based on 37,028,027 shares
outstanding) ........................................... $6.92
=====
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
4
<PAGE>
Statement Of Operations
Six Months Ended June 30, 1996 (unaudited) ACM Government Spectrum Fund, Inc.
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest ........................................ $12,254,014
EXPENSES
Advisory fee .................................... $ 1,011,166
Administrative fee .............................. 246,357
Reports and notices to shareholders ............. 66,785
Transfer agency ................................. 64,850
Custodian ....................................... 61,485
Audit and legal ................................. 30,420
Directors' fees ................................. 14,959
Registration fee ................................ 14,838
Taxes ........................................... 6,444
Miscellaneous ................................... 61,274
-----------
Total expenses .................................. 1,578,578
-----------
Net investment income ........................... 10,675,436
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, SWAP CONTRACTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized loss on investments ................ (11,090,834)
Net realized gain on foreign currency
transactions .................................. 2,346,033
Net change in unrealized appreciation of:
Investments and swap contracts ................ (9,462,192)
Foreign currency denominated assets
and liabilities ............................. 611,286
-----------
Net realized and unrealized loss on investments,
swap contracts and foreign currency
transactions .................................. (17,595,707)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS ........ $(6,920,271)
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1996 Year Ended
(unaudited) December 31, 1995
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ................ $ 10,675,436 $ 26,016,233
Net realized loss on investments,
options written and foreign ........ (8,744,801) (17,697,294)
Net change in unrealized appreciation
(depreciation) of investments, options
written, swap contracts and foreign
currency denominated assets and
liabilities ........................ (8,850,906) 42,151,113
------------ ------------
Net increase (decrease) in net assets
from operations .................... (6,920,271) 50,470,052
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income . (10,675,436) (26,016,233)
Distribution in excess of net
investment income .................. (2,654,411) (585,140)
Tax return of capital distribution ... -0- (2,454,561)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting
in issuance of Common Stock ........ -0- 607,990
------------ ------------
Total increase (decrease) ............ (20,250,118) 22,022,108
NET ASSETS
Beginning of year .................... 276,638,407 254,616,299
------------ ------------
End of period ........................ $256,388,289 $276,638,407
============ ============
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
5
<PAGE>
Notes To Financial Statements
June 30, 1996 (unaudited) ACM Government Spectrum Fund, Inc.
================================================================================
NOTE A: Significant Accounting Policies
ACM Government Spectrum Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end management
investment company. The following is a summary of significant accounting
policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Listed securities not
traded and securities traded in the over-the-counter market, including listed
debt securities whose primary market is believed to be over-the-counter, are
valued at the mean between the most recently quoted bid and asked prices
provided by the principal market makers. The U.S. dollar value of forward
exchange currency contracts is determined using forward currency exchange rates
supplied by a quotation service. Options are valued at market value or fair
value using methods determined by the Board of Directors. Securities for which
market quotations are not readily available and restricted securities which are
subject to limitations as to their resale are valued in good faith at fair value
using methods determined by the Board of Directors. Readily marketable fixed-
income securities are valued on the basis of prices provided by a pricing
service when such prices are believed by Alliance Capital Management L.P. (the
"Adviser") to reflect the fair value of such securities. Securities which mature
in 60 days or less are valued at amortized cost, which approximates market
value, unless this method does not represent fair value.
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
investment company taxable income and net realized gains, if ap- plicable, to
shareholders. Therefore, provisions for federal income or excise taxes are not
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on a
trade date basis. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
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 rates of exchange
prevailing when accrued. Net realized gain on foreign currency 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 currency gains and losses from
valuing foreign currency denominated assets and liabilities at period end
exchange rates are reflected as a component of net unrealized depreciation of
investments and options, swap contracts and foreign currency denominated assets
and liabilities.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend date
and are determined in accordance with federal income tax regulations.
Distributions in excess of net investment income result from timing differences
in the treatment of dividends paid between federal income tax and accounting
purposes.
6
<PAGE>
ACM Government Spectrum Fund, Inc.
================================================================================
NOTE B: Advisory and Administrative Fees
Under the terms of an Investment Advisory Agreement, the Fund pays its Adviser a
monthly advisory fee in an amount equal to the sum of the annualized rate of .30
of 1% of the Fund's average weekly net assets up to $250 million, .25 of 1% of
the Fund's average weekly net assets in excess 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) 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 average weekly
net assets during the month (approximately 1% on an annual basis).
The Fund entered into a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS") whereby the Fund reimburses AFS for costs relating to
servicing calls for the Fund. During the Six months ended June 30, 1996 there
was no reimbursement paid to AFS.
Under the terms of an Administrative Agreement, the Fund pays its Administrator,
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 assets, 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 $255,171,713 and $236,105,397,
respectively, for the six months ended June 30, 1996.
At June 30, 1996, the cost of investments was $280,870,205. Accordingly, gross
unrealized appreciation of investments was $1,880,950 and gross unrealized
depreciation of investments was $4,903,486, resulting in net unrealized
depreciation of $3,022,536 (excluding foreign currency transactions) on a
federal income tax basis.
At December 31, 1995 the Fund had a capital loss carryforward of $59,211,422, of
which $27,163,499 expires in the year 2002 and $32,047,923 expires in the year
2003. Capital and foreign currency losses incurred after October 31 within the
fiscal year are deemed to arise on the first business day of the Fund's next
fiscal year. In accordance with the Internal Revenue Code, the Fund incurred and
will elect to defer net foreign currency and capital losses of approximately
$195,127 and $151,188, respectively, until fiscal 1996.
1. Forward Exchange Currency Contracts
The Fund enters into forward exchange currency contracts for investment purposes
and in order to hedge its exposure to changes in foreign currency exchange rates
on its foreign portfolio holdings and to hedge certain firm purchase and sale
commitments denominated in foreign currencies. A forward exchange currency
contract 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
between 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
recorded for financial reporting purposes as unrealized gains or losses.
The Fund's custodian will place and maintain cash not available for investment
or U.S. Government securities in a separate account of the Fund having a value
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 foreign
currencies relative to the U.S. dollar. The value on origination date, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
7
<PAGE>
<TABLE>
<CAPTION>
Notes To Financial Statements (cont.) ACM Government Spectrum Fund, Inc.
================================================================================================================================
At June 30, 1996, the Fund had outstanding
forward exchange currency contracts as follows:
Contract Value on U.S. $ Unrealized
Settlement Amount Origination Current Appreciation
Foreign Currency Buy Contracts: Date (000) Date Value (Depreciation)
- ------------------------------ ---------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Australian Dollars .................. 8/14/96 7,500 $ 5,904,600 $ 5,877,748 $ (26,852)
Deutsche Marks ...................... 7/5/96 - 8/5/96 28,210 18,522,226 18,574,517 52,291
Danish Kroner ....................... 7/19/96 55,465 9,482,250 9,476,102 (6,148)
Italian Liras ....................... 7/12/96 - 8/5/96 18,248,626 11,556,758 11,891,794 335,036
Japanese Yen ........................ 9/17/96 868,750 8,340,198 8,034,623 (305,575)
New Zealand Dollars ................. 8/14/96 20,000 13,675,000 13,677,907 2,907
Spanish Pesetas ..................... 8/13/96 2,428,995 18,829,883 18,927,547 97,664
Foreign Currency Sale Contracts:
- -------------------------------
Australian Dollars .................. 8/14/96 7,500 5,921,700 5,877,747 43,953
Canadian Dollars .................... 7/22/96 - 8/30/96 87,135 63,837,436 63,870,612 (33,176)
Deutsche Marks ...................... 7/5/96 - 8/13/96 67,729 44,304,705 44,632,744 (328,039)
Danish Kroner ....................... 7/19/96 55,465 9,489,469 9,476,102 13,367
Italian Liras ....................... 7/12/96 - 8/5/96 18,248,626 11,845,752 11,891,794 (46,042)
Japanese Yen ........................ 9/17/96 868,750 9,059,303 8,034,623 1,024,680
Swedish Kronor ...................... 7/31/96 57,124 8,612,294 8,625,482 (13,188)
-------------
$ 810,878
=============
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note D: Interest Rate Swap Agreements
The Fund enters into swaps on sovereign debt obligations to protect itself from
interest rate fluctuations on the underlying floating rate debt instruments and
for investment purposes. A swap is an agreement that obligates two parties to
exchange a series of cash flows at specified intervals based upon or calculated
by reference to changes in specified prices or rates for a specified amount of
an underlying asset. The payment flows are usually netted against each other,
with the difference being paid by one party to the other.
Risks may arise as a result of the failure of another party to the swap contract
to comply with the terms of the swap contract. The loss incurred by the failure
of a counterparty is generally limited to the net interest payment to be
received by the Fund, and/or the termination value at the end of the contract.
Therefore, the Fund considers the creditworthiness of each counterparty to a
swap contract in evaluating potential credit risk. Additionally, risks may arise
from unanticipated movements in interest rates or in the value of the underlying
securities.
The Fund records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as interest
income (or as an offset to interest income). Fluctuations in the value of swap
contracts are recorded for financial statement purposes as unrealized
appreciation or depreciation on swap contracts.
At June 30, 1996 the Fund had an outstanding interest rate swap contract with
the following terms:
<TABLE>
<CAPTION>
Rate Type
---------------------------------
Swap Notional Amount Termination Payments made Payments received Unrealized
Counterparty (000) Date by the Fund by the Fund Appreciation
- ------------ --------------- ---------- ------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
J.P.Morgan ITL 23,000,000 4/30/01 LIBOR+ 9.18% $153,659
========
</TABLE>
+ LIBOR- London Interbank Offered Rate.
8
<PAGE>
ACM Government Spectrum Fund, Inc.
================================================================================
NOTE E: Capital Stock
There are 300,000,000 shares of $0.01 par value com- mon stock authorized, of
which 37,028,027 shares were outstanding at June 30, 1996. During the six months
ended June 30, 1996, the Fund did not issue shares in connection with the
dividend reinvestment plan. During the year ended December 31, 1995, the Fund
issued 89,035 shares in connection with the Fund's dividend reinvestment plan.
9
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights ACM Government Spectrum Fund, Inc.
====================================================================================================================================
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Six Months
Ended Year Ended December 31,
June 30, 1996 -------------------------------------------------------------------------
(unaudited) 1995 1994 1993 1992 1991
------------- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 7.47 $ 6.89 $ 9.49 $ 8.89 $9.15 $8.76
------ ------ ------ ------ ----- -----
Income From Investment Operations
- ---------------------------------
Net investment income (a) .............. .28 .70 .74 .95 .87 .96
Net realized and unrealized gain (loss)
on investments, options written, swap
contracts and foreign currency
transactions ......................... (.47) .66 (2.46) 1.19 (.27) .44
------ ------ ------ ------ ----- -----
Net increase (decrease) in net asset
value from operations ................ (.19) 1.36 (1.72) 2.14 .60 1.40
------ ------ ------ ------ ----- -----
Dividends and Distributions
- ---------------------------
Dividends from net investment income.... (.28) (.70) (.70) (.96) (.86) (1.01)
Distributions in excess of net
investment income .................... (.08) (.01) -0- -0- -0- -0-
Distributions from net realized gains... -0- -0- -0- (.35) -0- -0-
Tax return of capital distributions..... -0- (.07) (.18) -0- -0- -0-
------ ------ ------ ------ ----- -----
Total dividends and distributions....... (.36) (.78) (.88) (1.31) (.86) (1.01)
------ ------ ------ ------ ----- -----
Capital Share Transactions
- --------------------------
Dilutive effect of rights offering...... -0- -0- -0- (.22) -0- -0-
Offering costs charged to additional
paid-in capital ...................... -0- -0- -0- (.01) -0- -0-
------ ------ ------ ------ ----- -----
Total capital share transactions........ -0- -0- -0- (.23) -0- -0-
------ ------ ------ ------ ----- -----
Net asset value, end of period.......... $ 6.92 $ 7.47 $ 6.89 $ 9.49 $8.89 $9.15
====== ====== ====== ====== ===== =====
Market value, end of period ............ $6.375 $6.625 $7.125 $10.00 $9.00$ $9.00
====== ====== ====== ====== ===== =====
Total Investment Return
- -----------------------
Total investment return based on:(b)
Market value ......................... 1.44% 4.32% (20.44)% 26.88% 10.17% 20.53%
====== ====== ====== ====== ===== =====
Net asset value ...................... (2.35) 21.64 (18.93)% 21.90% 7.04% 17.15%
====== ====== ====== ====== ===== =====
Ratios/Supplemental Data
- ------------------------
Net assets, end of period
(000's omitted)....................... $256,388 $276,638 $254,616 $345,547 $282,282 $288,664
Ratio of expenses to average
net assets............................ 1.21%(c) 1.31% 1.21% 1.21% 1.27% 1.35%
Ratio of net investment income to
average net assets ................... 8.18%(c) 10.07% 9.58% 9.77% 9.79% 11.05%
Portfolio turnover rate ................ 243% 377% 294% 445% 471% 442%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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.
10
<PAGE>
Additional Information ACM Government Spectrum Fund, Inc.
================================================================================
Supplemental Proxy Information
The Annual Meeting of Shareholders of the ACM Government Spectrum Fund, Inc. was
held on Friday, May 24, 1996. The description of each proposal and number of
shares voted at the meeting are as follows:
<TABLE>
<CAPTION>
Shares Shares Voted
Voted For Without Authority
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect directors: Class Two Directors
(term expires in 1999)
David H. Dievler 33,626,050 778,914
Dr. James M. Hester 33,633,331 771,633
The Hon. James D. Hodgson 33,600,534 804,430
<CAPTION>
Shares Shares Shares Voted
Voted For Voted Against Abstain
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP
as the Fund's independent auditors for the Fund's
fiscal year ending December 31, 1996: 33,849,830 187,992 367,142
</TABLE>
11
<PAGE>
ACM Government Spectrum Fund, Inc.
================================================================================
<TABLE>
<S> <C>
Board Of Directors
John D. Carifa, Chairman Dr. James M. Hester (1)
Ruth Block (1) Hon. James D. Hodgson (1)
David H. Dievler (1) Clifford L. Michel (1)
James R. Greene (1) Robert C. White (1)
Officers
Wayne D. Lyski, President Edmund P. Bergan, Jr., Secretary
Kathleen A. Corbet, Senior Vice President Mark D. Gersten, Treasurer & Chief Financial Officer
Paul J. DeNoon, Vice President Joseph J. Mantineo, Controller
Susan Peterson, Vice President
ADMINISTRATOR INDEPENDENT AUDITORS
Mitchell Hutchins Asset Management Inc. Ernst & Young LLP
1285 Avenue of the Americas 787 Seventh Avenue New
New York, NY 10019 York, NY 10019
CUSTODIAN, DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
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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 Spectrum Fund, Inc. 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.
(1) Member of the Audit Committee.
12
<PAGE>
ACM Government Spectrum Fund, Inc.
Summary of General Information
The Fund
ACM Government Spectrum Fund, Inc. is a closed-end investment company whose
shares trade on the New York Stock Exchange. The Fund seeks to provide high
current income consistent with preservation of capital. The Fund invests
principally in U.S. Government obligations. The Fund may also invest up to 35%
of its assets in securities of foreign governments. Additionally, the Fund may
utilize other investment techniques, including options and futures. The
investment adviser of the Fund is Alliance Capital Management L.P.
Shareholder Information
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction Section of newspapers under the designation
"ACMSP". The Fund's NYSE trading symbol is "SI". Weekly comparative net asset
value (NAV) and market price information about the Fund is published each Monday
in The Wall Street Journal, each Sunday in The New York Times and each Saturday
in Barron's and other newspapers in a table called "Closed-End Bond Funds."
Dividend Reinvestment Plan
A Dividend Reinvestment Plan is available to shareholders in the Fund, which
provides automatic reinvestment of dividends and capital gain distributions in
additional Fund shares. The Plan also allows you to make optional cash
investments in Fund shares through the Plan Agent. A brochure describing the
Plan is available from the Plan Agent, State Street Bank and Trust Company, by
calling 1-800-219-4218.
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.
ACM Government Spectrum Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Alliance Capital [LOGO](R)
Investing without the Mystery.(SM)
(R)These registered service marks used under license from the owner, Alliance
Capital Management L.P.
SPCSR
ACM
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Government
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Spectrum
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Fund
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Semi-Annual
Report
June 30, 1996
Alliance(R) [LOGO]
Investing without the Mystery.(SM)
