This is filed pursuant to Rule 497(b).
File Nos. 333-137559 and 811-05207.





[LOGO]

ALLIANCEBERNSTEIN
Investments

                     ACM GOVERNMENT OPPORTUNITY FUND, INC.
                          1345 Avenue of the Americas
                           New York, New York 10105

                                                               October 27, 2006

Dear Stockholders:

   The Board of Directors (the "Directors") of ACM Government Opportunity Fund
("ACM Government Opportunity") is pleased to invite you to a Special Meeting of
Stockholders of ACM Government Opportunity (the "Meeting") to be held on
Tuesday, December 12, 2006. At this Meeting, we are asking you to approve the
acquisition of the assets and the assumption of the liabilities of ACM
Government Opportunity by ACM Income Fund, Inc. ("ACM Income") and the
dissolution of ACM Government Opportunity. The proposed acquisition is
described in more detail in the attached Prospectus/Proxy Statement.

   ACM Income is much larger and somewhat more diversified than ACM Government
Opportunity. We anticipate that the proposed acquisition will result in
benefits to the stockholders of ACM Government Opportunity as more fully
discussed in the Prospectus/Proxy Statement.

   The Directors of ACM Government Opportunity have given careful consideration
to the proposed acquisition and have concluded that the acquisition is in the
best interests of ACM Government Opportunity and its stockholders. The
Directors of ACM Government Opportunity recommend that you vote "for" the
proposed acquisition of ACM Government Opportunity by ACM Income.

   If the acquisition of ACM Government Opportunity by ACM Income is approved,
each ACM Government Opportunity stockholder will receive shares of ACM Income
having an aggregate net asset value ("NAV") equal to the aggregate NAV of the
stockholder's shares in ACM Government Opportunity. ACM Government Opportunity
would then cease operations. You will not be assessed any sales charges or
other stockholder fees in connection with the proposed acquisition.

   We welcome your attendance at the Meeting. If you are unable to attend, we
encourage you to authorize proxies to cast your votes. The Altman Group, Inc.
(the "Proxy Solicitor"), a proxy solicitation firm, has been selected to assist
in the proxy solicitation process. If we have not received your proxy as the
date of the Meeting approaches, you may receive a telephone call from the Proxy
Solicitor to remind you to submit your proxy. No matter how many shares you
own, your vote is important.

Sincerely,

Marc O. Mayer
President



[LOGO]

ALLIANCEBERNSTEIN
Investments

                     ACM GOVERNMENT OPPORTUNITY FUND, INC.

                          1345 Avenue of the Americas
                           New York, New York 10105
                           Toll Free (800) 221-5672

                  NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS
                        SCHEDULED FOR DECEMBER 12, 2006

To the stockholders of ACM Government Opportunity Fund, Inc. ("ACM Government
Opportunity"), a
Maryland corporation:

   Notice is hereby given that a Special Meeting of the Stockholders of ACM
Government Opportunity (the "Meeting") will be held at 1345 Avenue of the
Americas, 41st Floor, New York, New York 10105 on Tuesday, December 12, 2006,
at 11:30 a.m., Eastern Time, to consider and vote on the following proposal,
which is more fully described in the accompanying Prospectus/Proxy Statement
dated October 27, 2006:

    1. To approve an Agreement and Plan of Acquisition and Liquidation (the
       "Plan") among ACM Government Opportunity, ACM Income Fund, Inc. ("ACM
       Income"), a Maryland corporation, and AllianceBernstein L.P., providing
       for the acquisition by ACM Income of all of the assets and assumption of
       all of the liabilities of ACM Government Opportunity in exchange for
       shares of ACM Income (the "Proposal"). A vote in favor of this Proposal
       by the stockholders of ACM Government Opportunity also will constitute a
       vote in favor of the dissolution of ACM Government Opportunity and
       termination of its registration under the Investment Company Act of
       1940, as amended.

    2. To transact any other business that may properly come before the Meeting
       and any adjournments or postponements thereof.

   Any stockholder of record of ACM Government Opportunity at the close of
business on October 13, 2006 (the "Record Date") is entitled to notice of, and
to vote at, the Meeting or any adjournments or postponements thereof. Proxies
are being solicited on behalf of the Board of Directors. Each stockholder who
does not expect to attend the Meeting and vote in person is requested to
complete, date, sign and promptly return the enclosed proxy card, or to submit
voting instructions by telephone as described on the enclosed proxy card.

                                                  By Order of the Board of
                                                  Directors,

                                                  Marc O. Mayer
                                                  President

New York, New York
October 27, 2006

                            YOUR VOTE IS IMPORTANT

   Please indicate your voting instructions on the enclosed proxy card, sign
and date it, and return it in the envelope provided, which needs no postage if
mailed in the United States. Your vote is very important no matter how many
shares you own. In order to save any additional costs of further proxy
solicitation and to allow the Meeting to be held as scheduled, please complete,
date, sign and return your proxy card promptly.

--------------------------------------------------------------------------------

AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.



                          PROSPECTUS/PROXY STATEMENT

        Acquisition of the Assets and Assumption of the Liabilities of

                     ACM GOVERNMENT OPPORTUNITY FUND, INC.

                      By, and in Exchange for Shares of,

                             ACM INCOME FUND, INC.

                               October 27, 2006

                               TABLE OF CONTENTS


                                                                                     
Questions and Answers                                                                          4
Proposal   --  Approval of an Agreement and Plan of Acquisition and Liquidation among ACM
               Income, ACM Government Opportunity and AllianceBernstein L.P.                   6
Summary                                                                                        7
   Comparison of Current Investment Advisory Fees                                              7
   Fee Table and Comparison of Expenses                                                        7
   Comparison of Investment Objectives and Policies                                           10
   Principal Risks                                                                            11
   Federal Income Tax Consequences                                                            11
   Comparison of Stockholder Services                                                         12
   Service Providers                                                                          12
   Comparison of Business Structures                                                          12
Information about the Proposed Transaction                                                    12
   Introduction                                                                               12
   Description of the Plan                                                                    12
   Reasons for the Acquisition                                                                13
   Description of Securities to be Issued                                                     16
   Dividends and Other Distributions                                                          16
   Surrender and Exchange of ACM Government Opportunity Stock Certificates                    16
   Federal Income Tax Consequences                                                            16
   Capitalization Information                                                                 17
   Trading History and Share Price Data                                                       17
Information about the Funds                                                                   17
   Management of the Funds                                                                    17
   Advisory Agreement and Fees                                                                18
   Administrator                                                                              18
   Other Service Providers                                                                    18
Voting Information                                                                            19
Legal Matters                                                                                 20
Experts                                                                                       20
Financial Highlights                                                                          20
Appendix A --  Comparison of Investment Objectives and Policies                               21
Appendix B --  Description of Principal Risks of the Funds                                    28
Appendix C --  Other Information                                                              30
Appendix D --  Form of Agreement and Plan of Acquisition and Liquidation Relating to the
               Acquisition of all of the Assets and Liabilities of ACM Government Opportunity
               Fund, Inc.                                                                     34
Appendix E --  Existing and Pro Forma Capitalization                                          49


                                      2




                                                       
            Appendix F --  Trading History and Share Price Data 50
            Appendix G --  Legal Proceedings                    51
            Appendix H --  Share Ownership Information          53
            Appendix I --  Financial Highlights Table           54


                                      3



                             QUESTIONS AND ANSWERS

The following questions and answers provide an overview of key features of the
proposed acquisition and of the information contained in this Prospectus/Proxy
Statement. Please review the full Prospectus/Proxy Statement prior to casting
your vote.

1. What is this document and why did we send it to you?

This is a combined Prospectus/Proxy Statement that provides you with
information about the proposed acquisition (the "Acquisition") of the assets
and liabilities of ACM Government Opportunity Fund, Inc. ("ACM Government
Opportunity") by ACM Income Fund, Inc. ("ACM Income") and the subsequent
dissolution of ACM Government Opportunity (ACM Government Opportunity and ACM
Income are each a "Fund" and collectively, the "Funds"). This document also
solicits your vote on the Acquisition by requesting that you approve the
Agreement and Plan of Acquisition and Liquidation dated as of September 20,
2006 (the "Plan"), among ACM Government Opportunity, ACM Income and
AllianceBernstein L.P. (the "Adviser").

On September 13, 2006, the Directors approved and declared advisable the
Acquisition of ACM Government Opportunity by ACM Income and the subsequent
dissolution of ACM Government Opportunity and directed that the Acquisition and
dissolution be submitted to stockholders of ACM Government Opportunity for
approval at a Special Meeting of Stockholders to be held on December 12, 2006,
11:30 a.m., Eastern Time (the "Meeting"). You are receiving this
Prospectus/Proxy Statement because you own shares of ACM Government
Opportunity. Each stockholder of record of ACM Government Opportunity as of the
close of business on the Record Date has the right under applicable legal and
regulatory requirements to vote on the Acquisition and dissolution. The
Acquisition will not occur unless it is approved by ACM Government Opportunity
stockholders. This Prospectus/Proxy Statement contains the information you
should know before voting on the proposed Acquisition.

You may contact a Fund at 1-800-221-5672 or write to a Fund at 1345 Avenue of
the Americas, New York, NY 10105.

2. Who is eligible to vote on the Acquisition?

Stockholders of record of ACM Government Opportunity at the close of business
on October 13, 2006 (the "Record Date") are entitled to notice of and to vote
at the Meeting or any adjournment or postponement of the Meeting. If you owned
shares of ACM Government Opportunity on the Record Date, you have the right to
vote even if you subsequently sold your shares.

Each share is entitled to one vote. Shares represented by properly executed
proxies, unless revoked before or at the Meeting, will be voted according to
stockholders' instructions. If you sign and return a proxy card but do not fill
in a vote, your shares will be voted "FOR" the Acquisition. If any other
business properly comes before the Meeting, your shares will be voted at the
discretion of the persons named as proxies.

3. How will the Acquisition work?

The Plan provides for (i) the transfer of all of the assets of ACM Government
Opportunity to ACM Income, (ii) the assumption by ACM Income of all of the
liabilities of ACM Government Opportunity and the subsequent redemption of
shares of ACM Government Opportunity, (iii) the liquidating distribution to ACM
Government Opportunity stockholders of shares of ACM Income equal in aggregate
net asset value ("NAV") to the NAV of their former ACM Government Opportunity
shares, and (iv) the dissolution of ACM Government Opportunity.

As a result of the Acquisition, stockholders of ACM Government Opportunity will
no longer hold shares of ACM Government Opportunity, and instead, will become
stockholders of ACM Income having the same aggregate NAV as the shares of ACM
Government Opportunity that they held immediately before the Acquisition.
Please note that ACM Government Opportunity stockholders who do not participate
in ACM Government Opportunity's Dividend Reinvestment Plan will receive cash in
lieu of fractional shares. You will not be assessed any sales charges or other
stockholder fees in connection with the proposed Acquisition. ACM Government
Opportunity will bear the cost of the Acquisition and certain other costs. The
Acquisition will not occur unless it is approved by the stockholders of ACM
Government Opportunity.

                                      4



4. Why is the Acquisition being proposed?

Based on the recommendation of the Adviser, the Board of Directors of ACM
Government Opportunity (the "Board") concluded that participation by ACM
Government Opportunity in the proposed Acquisition is in the best interests of
ACM Government Opportunity and its stockholders. The Board also concluded that
the proposed Acquisition would not dilute stockholders' interests. In reaching
this conclusion, the Board considered, among other things, the Funds'
investment objectives and investment policies, the expense benefits, exclusive
of interest expense, for ACM Government Opportunity stockholders expected to
result from the Acquisition, the leverage employed by ACM Government
Opportunity and ACM Income, the investment performance and trading history of
the Funds, the costs of the Acquisition, and the tax-free nature of the
Acquisition.

5. When will the Acquisition take place?

If the stockholders of ACM Government Opportunity approve the Acquisition, then
the Acquisition is expected to occur in the first quarter of 2007.

6. Where may I find additional information regarding the Funds?

Additional information about the Funds is available in the Statement of
Additional Information ("SAI") dated October 27, 2006 that has been filed with
the Securities and Exchange Commission ("SEC") in connection with this
Prospectus/Proxy Statement. The SAI and each Fund's Annual Report to
Stockholders, which contains audited financial statements for the Fund's
respective fiscal year, are incorporated by reference into this
Prospectus/Proxy Statement. In addition, the Semi-Annual Reports for ACM Income
and ACM Government Opportunity for the six months ended June 30, 2006 and
January 31, 2006, respectively, are also incorporated by reference into
this Prospectus/Proxy Statement. To request a copy of any of these documents,
please call AllianceBernstein Investments, Inc. at (800) 227-4618.

All of this information is filed with the SEC. You may view or obtain these
documents from the SEC:


                 
In Person:          at the SEC's Public Reference Room in Washington, D.C.

By Phone:           1-202-551-8090 (for information on the operations of the Public
                    Reference Room only)

By Mail:            Public Reference Section, Securities and Exchange Commission,
                    Washington, DC 20549-0102 (duplicating fee required)

By Electronic Mail: publicinfo@sec.gov (duplicating fee required)

On the Internet:    www.sec.gov


The shares of the Funds are listed and publicly traded on the New York Stock
Exchange ("NYSE") under the following symbols: ACM Government Opportunity -
"AOF" and ACM Income - "ACG". Reports, proxy statements and other information
concerning the Funds may be inspected at the offices of the NYSE. Additional
copies of the annual and semi-annual reports, as well as the Prospectus/Proxy
Statement and SAI, are available upon request without charge by writing to or
calling the address and telephone number listed below.


                     
              By Mail:  AllianceBernstein Investor Services, Inc.
                        P.O. Box 786003
                        San Antonio, TX 78278-6003

              By Phone: For Information: 1-800-221-5672
                        For Literature: 1-800-227-4618


Other Important Things to Note:

  .   You may lose money by investing in the Fund.

  .   The SEC has not approved or disapproved these securities or passed upon
      the adequacy of this Prospectus/Proxy Statement. Any representation to
      the contrary is a criminal offense.

                                      5



                                   PROPOSAL
       APPROVAL OF AN AGREEMENT AND PLAN OF ACQUISITION AND LIQUIDATION
                               AMONG ACM INCOME,
              ACM GOVERNMENT OPPORTUNITY AND ALLIANCEBERNSTEIN LP

   On September 13, 2006, the Board of Directors of ACM Government Opportunity
declared advisable and voted to approve the Plan and the Acquisition, subject
to the approval of the stockholders of ACM Government Opportunity. The Plan
provides for: (i) the transfer of all of the assets of ACM Government
Opportunity to ACM Income, (ii) the assumption by ACM Income of all of the
liabilities of ACM Government Opportunity, (iii) the liquidating distribution
to ACM Government Opportunity stockholders of shares of ACM Income equal in
aggregate NAV to the NAV of their former ACM Government Opportunity shares, and
(iv) the dissolution of ACM Government Opportunity.

   Each holder of ACM Government Opportunity shares will receive the number of
full shares of ACM Income, plus fractional shares for stockholders that
participate in a Dividend Reinvestment and Cash Purchase Plan ("DRIP") and cash
in lieu of any fractional shares for non-DRIP participating stockholders,
having an aggregate NAV that is equal to the aggregate NAV of the stockholder's
shares of ACM Government Opportunity. With respect to this receipt of shares of
ACM Income as a result of the Acquisition, stockholders of ACM Government
Opportunity will recognize no gain or loss, except with respect to any cash
received in lieu of fractional ACM Income shares by non-DRIP participating
stockholders. If approved by stockholders of ACM Government Opportunity, the
Acquisition is expected to occur in the first quarter of 2007.

   An exchange of ACM Government Opportunity shares for ACM Income shares at
NAV may result in ACM Government Opportunity stockholders' receiving ACM Income
shares with an aggregate market value on the date of exchange that is higher or
lower than the market value of their shares immediately prior to the exchange.
The reason for this difference is that the market price for shares of the Funds
in relation to their NAVs may be different, i.e., a Fund's shares may trade at
different discounts or premiums to its NAV.

   The stockholders of ACM Government Opportunity must approve the Acquisition
for it to occur. Approval of the Acquisition requires the affirmative vote of
the holders of a majority of the votes entitled to be cast. The Acquisition
does not require approval of the stockholders of ACM Income.

   A quorum for the transaction of business by stockholders of ACM Government
Opportunity at the Meeting will consist of the presence in person or by proxy
of the holders of a majority of the shares of ACM Government Opportunity
entitled to vote at the Meeting.

   The Board of Directors of ACM Government Opportunity concluded that
participation by ACM Government Opportunity in the proposed Acquisition is in
the best interests of ACM Government Opportunity and its stockholders. The
Board also concluded that the proposed Acquisition would not dilute
stockholders' interests. In reaching this conclusion, the Board considered,
among other things, the Funds' investment objectives and investment policies,
the expense benefits, exclusive of interest expense, for ACM Government
Opportunity stockholders expected to result from the Acquisition, and the cost
and the tax-free nature of the Acquisition.

   For a more complete discussion of the factors considered by the Board in
approving the Acquisition, see "Reasons for the Acquisition" in Information
About the Proposed Transaction.

                                      6



                                    SUMMARY

   The following summary highlights differences between the Funds. This summary
is not complete and does not contain all of the information that you should
consider before voting on the Acquisition. For more complete information,
please read this entire document. Note that certain information is presented as
of March 31, 2006. At the September 13, 2006, Special Meeting of the Board of
Directors of ACM Government Opportunity referred to below (the "September 13
Special Meeting"), the Adviser represented to the Board that, if the
information was updated, it would not differ in any material respect.

Comparison of Current Investment Advisory Fees

   The current management fees of the Funds are shown in the table below. As
indicated in the table, we expect that ACM Income on a pro forma basis would
have a lower management fee after the Acquisition than the current management
fee of ACM Government Opportunity.



                                            Management Fee
                                           --------------
                                        
                ACM Government Opportunity      .75%
                ACM Income                      .65%
                Combined Fund                   .65% (pro forma)


   ACM Income's management fee is a combination of a base fee of .30% on the
first $250 million of net assets and .25% on net assets in excess of $250
million thereafter, plus 4.75% of daily gross income, subject to the limitation
that the total management fee will not exceed .95%. The management fee for ACM
Income shown above is based on the current and, after the Acquisition, pro
forma income of ACM Income but the fee has varied significantly in the past and
can be expected to vary in the future based on ACM Income's gross income, which
may be affected by, among other things, interest rate levels and the amount of
leverage employed.

Fee Table and Comparison of Expenses

   The Fee Table, shown below, describes the fees and expenses of each Fund as
of March 31, 2006 and includes expenses for the Combined Fund on a pro forma
basis assuming that the Acquisition is approved by stockholders of ACM
Government Opportunity.

                                      7



                                   Fee Table

   The purpose of the table below is to assist an investor in understanding the
various costs and expenses that a stockholder bears directly and indirectly
from an investment in the Funds. The table allows you to compare the sales
charges, expenses of each Fund and the estimates for ACM Income on a pro forma
basis in the first year following the Acquisition. The information is presented
as of March 31, 2006.



                                                       ACM
                                                   Government              ACM Income
                                                   Opportunity  ACM Income Pro Forma
                                                   -----------  ---------- ----------
                                                                  
Stockholder Transaction Expenses
   Sales Load (as a percentage of offering price)     None         None       None
   Dividend Reinvestment Plan Fees(a)                 None         None       None
Annual Expenses (as a percentage of net assets
  attributable to common shares)
   Management Fees                                     .75%         .65%       .65%
   Interest Payments on Borrowed Funds                1.30%        2.15%      2.15%
   Other Expenses                                      .60%         .11%       .11%(b)
Total Annual Expenses                                 2.65%        2.91%      2.91%
   Waiver and/or Expense Reimbursement(c)             (.10)%(c)    None       None
Net Annual Expenses Reflecting Waiver(d)              2.55%        2.91%      2.91%

--------
(a)There are no charges with respect to shares issued directly by a Fund to
   satisfy the dividend reinvestment requirements. However, each participant
   will pay a pro-rata share of brokerage commissions incurred with respect to
   a Fund's dividend reinvestment plan agent's open market purchases of shares.
   In each case, the cost per share of shares purchased for each stockholder's
   account will be the average cost, including brokerage commissions, of any
   shares purchased in the open market plus the cost of any shares issued by a
   Fund.
(b)Based on estimated expenses.
(c)Reflects the Adviser's voluntary waiver of a portion of its administrative
   fee since February 11, 2005.
(d)If interest expenses were excluded net annual expenses reflecting waiver and
   net of interest expense on borrowed funds would be 1.25%, .76% and .76%,
   respectively.

                                      8



                                    Example

   You would pay the following on a $1,000 investment assuming a 5% annual
return. The Example assumes the reinvestment of all dividends and distributions
at net asset value and reflects all recurring and nonrecurring fees.



                                  ACM
                               Government    ACM Income ACM Income
                            Opportunity Fund    Fund    Pro Forma
                            ---------------- ---------- ----------
                                               
             After 1 Year         $ 27          $ 29       $ 29
             After 3 Years        $ 82          $ 90       $ 90
             After 5 Years        $141          $153       $153
             After 10 Years       $299          $323       $323


   The projected post-Acquisition pro forma Annual Fund Expenses and Example
presented above are based upon numerous material assumptions, including that
(1) the current contractual agreements will remain in place and (2) certain
fixed costs involved in operating ACM Government Opportunity are eliminated.
Although these projections represent good faith estimates, there can be no
assurance that any particular level of expenses or expense savings will be
achieved, because expenses depend on a variety of factors, including the future
level of fund assets, many of which are beyond the control of ACM Income or the
Adviser. Consequently, the Example should not be considered a representation of
future expenses. Actual expenses may be greater or less than those shown.

Comparison of Expenses

   As indicated in the Fee Table above, both ACM Government Opportunity and ACM
Income make interest payments as a result of their use of leverage. Since ACM
Income currently uses significantly more leverage than ACM Government
Opportunity, its total annual expense ratio is higher than that of ACM
Government Opportunity even though its expenses other than interest expense are
significantly lower than those of ACM Government Opportunity. The level of
interest expense of a fund in any particular period varies significantly
depending on the amount and type of leverage employed and on interest rate
levels. Also, the Adviser does not employ leverage unless it expects the
leverage to increase a Fund's total returns. The table below illustrates the
expected effect of the Acquisition on expenses other than interest expenses as
well as on total expenses.



                                 Expenses Including
                              Management Fees and Other
                               Operating Expenses Only  Total Annual Expenses
                              ------------------------- ---------------------
                                                  
   ACM Government Opportunity      1.35%*                 2.65%
   ACM Income                      0.76%                  2.91%
   Combined Fund                   0.76% (pro forma)      2.91% (pro forma)

--------
   * After waiver, the expenses were 1.25%.

   The Acquisition would, as indicated in the Table above, provide a sizeable
reduction in Management Fees and Other Operating Expenses for ACM Government
Opportunity. With its significantly smaller asset size, ACM Government
Opportunity has higher expenses exclusive of interest expense, which is
predominantly due to higher Other Operating Expenses. ACM Government
Opportunity has "Other Operating Expenses" of 0.60% (0.50% after the waiver of
0.10% of administration fees), while ACM Income has "Other Operating Expenses"
of 0.11%. Total expenses including interest expense would be higher after the
Acquisition than the current total annual expenses of ACM Government
Opportunity but it would be the same as ACM Income's current total annual
expense ratio. As noted above, this is because ACM Income currently uses
leverage to a significantly greater extent than ACM Government Income and
accordingly, has higher interest expense. Interest expense of a fund varies
from period to period depending on the amount and type of leverage employed and
interest rate levels.

                                      9



   The Acquisition would, as indicated, provide a sizeable reduction in
Management Fees and Other Operating Expenses for ACM Government Opportunity.
Even were ACM Income to earn the maximum income component of its fee and,
therefore, its maximum management fee of .95%, the expenses of ACM Income on a
pro forma basis would be 1.06%. This level of expenses exclusive of interest
would still remain significantly below ACM Government Opportunity's current
expenses and the Adviser believes that ACM Government Opportunity's
stockholders would benefit from the Acquisition even under a maximum management
fee scenario.

Comparison of Investment Objectives and Policies

   ACM Income is a fund of significantly larger size and scale that employs
investment strategies similar to ACM Government Opportunity although ACM Income
has greater investment flexibility than ACM Government Opportunity. Both Funds
primarily invest in U.S. Government securities. The following table shows the
Funds' investment objectives and certain principal investment strategies.



                                    Investment Objective               Principal Investment Strategies
                           -------------------------------------- -----------------------------------------
                                                            
ACM Income                 ACM Income's investment objective      ACM Income invests at least 65% of
                           is high current income consistent with its total assets in obligations issued or
                           preservation of capital.               guaranteed by the U.S. Government,
                                                                  its agencies or instrumentalities
                                                                  ("U.S. Government securities") and
                                                                  repurchase agreements pertaining to
                                                                  U.S. Government securities. ACM
                                                                  Income may invest up to 35% of its
                                                                  total assets in sovereign debt secu-
                                                                  rities, corporate debt securities and
                                                                  high yield debt securities.

ACM Government Opportunity ACM Government Opportunity's           ACM Government Opportunity in-
                           primary investment objective is high   vests at least 65% of its total assets in
                           current income consistent with pru-    U.S. Government securities. ACM
                           dent investment risk. The Fund's       Government Opportunity may invest
                           secondary investment objective is      up to 35% of its total assets in sover-
                           growth of capital.                     eign debt securities.


   As the table above shows, the Funds have similar investment strategies of
investing at least 65% of their assets in U.S. Government securities and the
balance at least partially in sovereign debt securities. ACM Government
Opportunity's stockholders should benefit from the somewhat broader strategy of
ACM Income because ACM Income may invest up to 35% of its assets in sectors
other than sovereign debt, such as corporate investment grade and high yield
debt securities, while ACM Government Opportunity may invest its other assets
only in sovereign debt securities. A more detailed comparison of the Funds'
existing investment strategies and policies is provided in Appendix A. You can
find additional information on the Funds in the SAI.

   ACM Income has historically had a higher rate of portfolio turnover than ACM
Government Opportunity. For example, in fiscal 2005, ACM Income's portfolio
turnover rate was 160% compared to 64% for ACM Government Opportunity. A higher
rate of portfolio turnover increases transaction expenses, which are borne by
the Fund and its stockholders. Higher portfolio turnover also may result in the
realization of net short-term capital gains, which, when distributed are
taxable at ordinary income rates to stockholders.

   In connection with the Acquisition, at the September 13 Special Meeting, the
Board of Directors approved the elimination of ACM Government Opportunity's
policy to invest at least 80% of its net assets in securities issued by any
government. The Directors adopted a new policy to permit ACM Government
Opportunity to invest up to 35% of its net assets in corporate debt securities
(including collateralized mortgage obligations) and securities rated below BBB
by S&P or Baa by Moody's or, if not rated, of comparable investment quality as
determined by the Adviser. In addition to the adoption of that policy, the
Directors also approved a change in the

                                      10



Fund's name from "ACM Government Opportunity Fund, Inc." to "ACM Opportunity
Fund, Inc." The Board of Directors also granted the Adviser the authority to
operate ACM Government Opportunity pursuant to the same investment policies and
restrictions that govern ACM Income. Each of the foregoing changes is subject
to ACM Government Opportunity stockholders approving the Acquisition.

   The intent of these changes is to allow the repositioning of ACM Government
Opportunity's portfolio to align it with the broader investment strategies of
ACM Income prior to the effective date of the Acquisition. The costs of this
portfolio repositioning are expected to be approximately $112,500. The
portfolio repositioning costs on a per share basis is approximately $0.01 per
share. It is anticipated that there will be no capital gain consequences
attributable to the portfolio repositioning. Upon the recommendation of the
Adviser, the Board of Directors determined that it would be appropriate for ACM
Government Opportunity to pay the costs of the portfolio repositioning because
ACM Government Opportunity's stockholders would derive the greatest benefits
from the Acquisition.

Principal Risks

   Each Fund is subject to market risk, interest rate risk, credit risk,
leverage risk, foreign risk, and currency risk. A description of each of these
and other risks is provided in Appendix B. ACM Income may invest up to 35% of
its assets in high yield debt securities, whereas ACM Government Opportunity
does not have this investment flexibility. Investments in fixed-income
securities with lower ratings have greater credit risks because they tend to
have a higher probability that the issuer will default or fail to meet its
payment obligations. In addition, because ACM Income uses leverage to a greater
extent, ACM Income is riskier than ACM Government Opportunity. Leverage may
make a Fund's portfolio more volatile because leverage tends to exaggerate the
effect of any increase or decrease in the value of a Fund's investments.

Federal Income Tax Consequences

   No gain or loss will be recognized by ACM Government Opportunity as a result
of the Acquisition. With respect to this receipt of shares of ACM Income, no
gain or loss will be recognized by the ACM Government Opportunity stockholders
except with respect to cash received in lieu of fractional shares of ACM Income
by non-DRIP stockholders, as a result of the Acquisition. The aggregate tax
basis of the shares of ACM Income received by a stockholder of ACM Government
Opportunity (including any fractional shares to which the stockholder may be
entitled) will be the same as the aggregate tax basis of the stockholder's
shares of ACM Government Opportunity. The holding period of the shares of ACM
Income received by a stockholder of ACM Government Opportunity (including any
fractional shares to which the stockholder may be entitled) will include the
holding period of the shares of ACM Government Opportunity held by the
stockholder, provided that such shares are held as capital assets by the
stockholder of ACM Government Opportunity at the time of the Acquisition. The
holding period and tax basis of each asset of ACM Government Opportunity in the
hands of ACM Income as a result of the Acquisition will be the same as the
holding period and tax basis of each such asset in the hands of ACM Government
Opportunity prior to the Acquisition. Any gain or loss realized by a
stockholder of ACM Government Opportunity upon receipt of cash in lieu of
fractional shares of ACM Income by non-DRIP stockholders will be recognized by
the stockholder and measured by the difference between the amount of cash
received and the basis of the fractional share and, provided that the ACM
Government Opportunity shares surrendered constitute capital assets in the
hands of the stockholder, will be capital gain or loss. This tax information is
based on the advice of Seward & Kissel LLP, counsel to the Fund. It is a
condition to the closing of the Acquisition that such advice be confirmed in a
written opinion of counsel. An opinion of counsel is not binding on the
Internal Revenue Service.

   ACM Government Opportunity has realized capital gains and no capital loss
carryforwards. It is anticipated that ACM Government Opportunity will make a
distribution of capital gains to its stockholders prior to the closing of the
Acquisition.

   The per share amount of capital loss carryforwards of ACM Income before the
Acquisition, as of March 31, 2006, was $1.44 per share and, after giving effect
to the Acquisition as if it occurred on such date, the per share amount of
capital loss carryforwards of ACM Income on a pro forma basis after the
Acquisition would be $1.36

                                      11



per share. The decrease in per share amount is due to the spreading of losses
remaining available over the merged share base based on the estimated share
conversion ratio. ACM Government Opportunity's stockholders would potentially
benefit from the increased amount of loss carryforwards available to offset
gains. As a practical matter, the availability of the loss carryforwards in ACM
Income on a pro forma basis after the Acquisition is unlikely to be meaningful
for stockholders because, depending on, among other things, market conditions,
it is uncertain whether ACM Income would be able to use the capital loss
carryforwards. The Fund's investment strategy focuses on achieving high income,
which may mean that its portfolio managers will not sell appreciated securities
to recognize gains that would be offset by capital loss carryforwards where it
would otherwise be advantageous to retain those securities.

Comparison of Stockholder Services

   The stockholder services of each Fund are generally the same. The DRIP,
which is available to the Funds' stockholders, provides automatic reinvestment
of dividends and capital gain distributions in additional Fund shares. The DRIP
also allows stockholders to make optional cash investments in Fund shares
through a plan agent. Assuming the Acquisition is approved, the DRIP
stockholders of ACM Government Opportunity will automatically be enrolled in
the DRIP for ACM Income. A more detailed discussion of the DRIP and other
stockholder services and procedures is provided in Appendix C.

Service Providers

   The Funds have the same service providers, which will continue in their
capacity after the Acquisition, with one exception. State Street Bank and Trust
Company, which is ACM Income's custodian, will serve in that capacity after the
Acquisition in lieu of ACM Government Opportunity's current custodian, which is
The Bank of New York.

Comparison of Business Structures

   Each Fund is organized as a Maryland corporation and is governed by its
Charter, Bylaws and Maryland law. Generally, there are no significant
differences between the Funds in terms of their respective corporate
organizational structure. For more information on the comparison of the
business structure of the Funds, see Appendix C.

                  INFORMATION ABOUT THE PROPOSED TRANSACTION

Introduction

   This Prospectus/Proxy Statement is provided to you to solicit your proxy for
exercise at the Meeting to approve the acquisition of the assets and assumption
of the liabilities of ACM Government Opportunity by ACM Income and the
subsequent liquidation and dissolution of ACM Government Opportunity. The
Meeting will be held at 1345 Avenue of the Americas, 41st Floor, New York, New
York 10105 at 11:30 a.m., Eastern Time, on December 12, 2006. This
Prospectus/Proxy Statement, the accompanying Notice of a Special Meeting of
Stockholders and the enclosed proxy card are being mailed to stockholders of
ACM Government Opportunity on or about October 27, 2006.

Description of the Plan

   As provided in the Plan, ACM Income will acquire all the assets and assume
all the liabilities of ACM Government Opportunity at the effective time of the
Acquisition (the "Effective Time"). In return, ACM Income will issue, and ACM
Government Opportunity will distribute to its stockholders, a number of full
and fractional shares of ACM Income (and cash in lieu of fractional shares for
non-DRIP stockholders), determined by dividing the net value of all the assets
of ACM Government Opportunity by the NAV of one share of ACM Income. For this
purpose, the Plan provides the times for and methods of determining the net
value of the assets of each Fund. The Plan provides that stockholders of ACM
Government Opportunity will be credited with shares of ACM Income (or cash in
lieu of fractional shares for non-DRIP stockholders) corresponding to the
aggregate NAV of the ACM Government Opportunity's shares that the stockholder
holds of record at the Effective Time.

                                      12



   Following the distribution of shares of ACM Income in full liquidation of
ACM Government Opportunity, ACM Government Opportunity will wind up its
affairs, and liquidate and dissolve as soon as is reasonably practicable after
the Acquisition. In the event the Acquisition does not receive the required
stockholder approval, ACM Government Opportunity will continue its operations
and its Directors will consider what future action, if any, is appropriate.

   The projected expenses of the Acquisition, largely those for legal,
accounting, printing and proxy solicitation expenses, are estimated to total
approximately $224,000 and will be borne by ACM Government Opportunity. The
Acquisition costs on a per share basis are approximately $0.02 per share.

   The Acquisition is expected to occur in the first quarter of 2007. The
Acquisition is conditioned upon approval of the Plan by ACM Government
Opportunity stockholders and ACM Government Opportunity satisfying the terms of
the Plan. Under applicable legal and regulatory requirements, none of ACM
Government Opportunity's stockholders will be entitled to exercise objecting
stockholders' appraisal rights, i.e., to demand the fair value of their shares
in connection with the Acquisition. Therefore, stockholders will be bound by
the terms of the Acquisition under the Plan. However, any stockholder of ACM
Government Opportunity may sell shares of the Fund's common stock on the NYSE
prior to the Acquisition. The shares of ACM Government Opportunity may cease
trading on the NYSE beginning several days prior to the date of the
Acquisition. Any cessation of trading will be accomplished in compliance with
NYSE rules, including issuance of a press release.

   After the Acquisition, ACM Government Opportunity's shares of common stock
will be removed from listing on the NYSE. In addition, ACM Government
Opportunity's shares of common stock will be withdrawn from registration under
the Securities Exchange Act of 1934 and ACM Government Opportunity will
deregister as an investment company under the Investment Company Act of 1940,
as amended (the "1940 Act") and will dissolve under Maryland law.

   Completion of the Acquisition is subject to certain conditions set forth in
the Plan, some of which may be waived by a party to the Plan. The Plan may be
amended in any mutually agreed manner, except that no amendment may be made
subsequent to stockholder approval of the Acquisition that materially alters
the obligations of either party. The parties to the Plan may terminate the Plan
by mutual consent and either party has the right to terminate the Plan under
certain circumstances. Among other circumstances, either party may at any time
terminate the Plan unilaterally upon a determination by the party's Board of
Directors that proceeding with the Plan is not in the best interests of the
Fund or its stockholders.

   A copy of a form of the Plan is attached as Appendix D.

Reasons for the Acquisition

   At the September 13 Special Meeting, the Adviser recommended that the Board
of Directors of ACM Government Opportunity approve and recommend to the Fund's
stockholders for their approval the proposed Plan and the Acquisition. The
Directors considered the factors discussed below from the point of view of the
interests of the Fund and its stockholders. After careful consideration, the
Board of Directors (including all Directors who are not "interested persons" of
the Fund, the Adviser or its affiliates) determined that the Acquisition would
be in the best interests of the Fund's stockholders and that the interests of
existing stockholders of the Fund would not be diluted as a result of the
Acquisition. The Directors of ACM Government Opportunity approved the Plan and
the Acquisition and recommended that the stockholders of ACM Government
Opportunity vote in favor of the Acquisition by approving the Plan.

   The Adviser presented the following reasons in favor of the Acquisition:

  .   The Funds date back to 1987-1988, when they were launched in close
      succession along with two other similar closed-end funds (these other
      funds were acquired by ACM Income in early 2001). All of these funds
      sought high current income, consistent with the preservation of capital,
      through investments primarily in U.S. Government securities. ACM Income
      conducted its initial public offering on August 21, 1987 and raised $512
      million in the offering. ACM Income subsequently conducted two rights
      offerings

                                      13



     raising $71 million in 1993 and $547 million in 2001. ACM Income's current
      net assets are, as of March 31, 2006, $1.87 billion. ACM Government
      Opportunity conducted its initial public offering on August 24, 1998 and
      raised $123 million in the offering. ACM Government Opportunity's current
      net assets are, as of March 31, 2006, $110 million.

      The Adviser discussed with the Board that it believes that the
      Acquisition of ACM Government Opportunity, which is a significantly
      smaller fund with higher expenses, exclusive of interest, by its larger
      counterpart, ACM Income, would benefit the Fund and its stockholders.
      Currently, ACM Income and ACM Government Opportunity have similar
      investment strategies of investing at least 65% of their assets in U.S.
      Government securities and the balance at least partially in emerging
      market government securities. The Adviser believes that ACM Government
      Opportunity's stockholders would benefit from the somewhat broader
      strategy of ACM Income because it invests up to 35% of its assets in
      sectors other than sovereign debt, such as corporate investment grade and
      high yield debt securities, while ACM Government Opportunity invests its
      other assets only in sovereign debt securities. The Adviser also
      discussed that ACM Income has had a modestly better performance track
      record. For the five-year period ended on July 31, 2006, ACM Income
      outperformed ACM Government Opportunity by approximately 0.70% on an
      annualized basis. ACM Income has outperformed ACM Government Opportunity
      on a calendar year basis in three of the last five years. The Adviser
      believes that ACM Income's performance advantage is due to its more
      broadly diversified portfolio and lower expenses.

   At the September 13 Special Meeting, the Directors (with the advice and
assistance of independent counsel) also considered, among other things:

  .   potential stockholder benefits including (i) the fact that expenses
      exclusive of interest expense of ACM Income on a pro forma basis after
      the Acquisition would be significantly lower than the current expenses
      before interest expense of ACM Government Opportunity even if ACM Income
      were to earn its maximum management fee and (ii) the potential for ACM
      Government Opportunity's stockholders to benefit from increased earnings
      of ACM Income after the Acquisition due to the repositioning of ACM
      Government Opportunity's portfolio and the higher level of leverage
      maintained by ACM Income in contrast to ACM Government Opportunity and
      the anticipation of increased returns as a result of that higher leverage;

  .   the higher total annual expense ratio of the Combined Fund as compared to
      the current total annual expense ratio of ACM Government Opportunity due
      to the higher level of leverage that will be used by the Combined Fund
      similar to the current level of leverage used by ACM Income;

  .   the amount and type of leverage used by the two Funds, including the fact
      that ACM Income has historically used significantly more leverage than
      ACM Government Opportunity and the increased interest costs and potential
      benefits associated with leverage;

  .   the current asset levels of ACM Government Opportunity and the combined
      pro forma asset levels of ACM Income;

  .   the historical investment performance of the Funds, including the fact
      that ACM Income's investment performance over time has been better than
      that of ACM Government Opportunity;

  .   the distribution and trading history of the two Funds, including the fact
      that ACM Income's dividend has consistently been higher than that of ACM
      Government Opportunity, and that the trading price of ACM Income's common
      stock compared to its NAV has, over time and currently, been somewhat
      more favorable than that of ACM Government Opportunity (trading price
      information for the two Funds in provided in Appendix F);

  .   the significantly different advisory and administration fee arrangements
      of the two Funds, including the fact that, although ACM Income's advisory
      fee rate is currently significantly lower than that of ACM Government
      Opportunity, a significant portion of the fee rate is based on ACM
      Income's gross income and the fee rate may significantly exceed that of
      ACM Government Opportunity in the future, as it has in the past;

                                      14



  .   the amount and type of leverage used by the two Funds, including the fact
      that ACM Income has historically used significantly more leverage than
      ACM Government Opportunity and the increased interest costs and potential
      benefits associated with leverage;

  .   the investment objectives and principal investment strategies of the
      Funds; and

  .   the portfolio management team of ACM Income, one member of which is also
      part of the portfolio management team of ACM Government Opportunity,
      would continue to manage ACM Income after the Acquisition.

   The Directors also considered, among other things:

  .   the historical and pro forma tax attributes of ACM Government
      Opportunity, including that ACM Government Opportunity has realized gains
      and no loss carryforwards and that ACM Income has sizeable capital loss
      carryforwards, although the availability of these capital loss
      carryforwards in ACM Income on a pro forma basis after the Acquisition
      may not be meaningful because the Fund's portfolio managers generally
      tend to retain appreciated securities as their value is related to their
      higher income rather than to recognize gains by selling those securities
      that would be offset by capital loss carryforwards;

  .   the form of the Plan and the terms and conditions of the Acquisition;

  .   the effect of the Acquisition on the advisory fees of the Funds;

  .   whether the Acquisition would result in the dilution of stockholders'
      interests;

  .   the number of stockholder accounts and average account sizes of the Funds;

  .   changes in service providers that would result from the Acquisition;

  .   the fact that realignment of the investment holdings of ACM Government
      Opportunity before the effective date of the Acquisition is anticipated
      and associated costs would be borne by ACM Government Opportunity;

  .   the benefits of the Acquisition to persons other than ACM Government
      Opportunity and its stockholders, including the Adviser in particular,
      which would benefit from the elimination of monitoring and administering
      ACM Government Opportunity, a relatively small fund, that is
      substantially duplicative of its larger counterpart, ACM Income;

  .   the fact that ACM Income will assume all the liabilities of ACM
      Government Opportunity;

  .   the expected federal income tax consequences of the Acquisition;

  .   whether the Acquisition would be preferable to acquisition by potential
      acquirers other than ACM Income, including funds that are not sponsored
      by the Adviser;

  .   the fact that the costs of the Acquisition will be borne by ACM
      Government Opportunity;

  .   the Board's understanding that ACM Government Opportunity's largest
      stockholder would be supportive of the Acquisition notwithstanding that a
      similar transaction did not secure the necessary level of stockholder
      support because of opposition from such stockholder in 2000;

  .   the tender offer/repurchase policies of the two Funds, which are very
      similar; and

  .   the fact that the Adviser has agreed to indemnify ACM Income for a
      three-year period against any undisclosed or other liability of ACM
      Government Opportunity and to reimburse ACM Income for any costs in
      connection with investigating any such liability, and to continue certain
      insurance coverage for ACM Government Opportunity for a six year period.

   Also at the September 13 Special Meeting, the Board of Directors of ACM
Income (comprised of the same persons as the Board of ACM Government
Opportunity) approved the proposed Plan. No vote of stockholders of ACM Income
is required in connection with the Acquisition.

                                      15



Description of Securities to be Issued

   Under the Plan, ACM Income will issue additional shares of common stock for
distribution to ACM Government Opportunity. Under its Charter and Bylaws, ACM
Income may issue up to 300,000,000 shares of common stock, par value $.01 per
share. Each share of ACM Income represents an equal proportionate interest with
other shares of the Fund. Each share has equal earnings, assets and voting
privileges and is entitled to dividends and other distributions out of the
income earned and gain realized on the assets belonging to the Fund as
authorized by the Board of Directors. Shares of ACM Income entitle their
holders to one vote per full share and fractional votes for fractional shares
held. Shares of ACM Income issued in the Acquisition will be fully paid and
non-assessable.

Dividends and Other Distributions

   On or before the Closing Date, as defined in the Plan, ACM Government
Opportunity will, if necessary, declare and pay as a distribution substantially
all of its undistributed net investment income, net short-term capital gain,
net long-term capital gain and net gains from foreign currency transactions, as
applicable, to maintain its treatment as a regulated investment company.

Surrender and Exchange of ACM Government Opportunity Stock Certificates

   After the Plan's Effective Time, each holder of a certificate (or
certificates) formerly representing shares of ACM Government Opportunity will
be entitled to receive, upon surrender of the certificate, a certificate
representing the number of ACM Income shares distributable as a result of the
Acquisition. Promptly, after the Plan's Effective Time, Computershare Trust
Company, N.A. will mail to ACM Government Opportunity's certificate holders
instructions and a letter of transmittal for use in surrendering the
certificates. Please do not send share certificates at this time. Although the
certificates will be deemed for all purposes to evidence ownership of the
equivalent number of ACM Income shares, no dividends will be paid to holders of
certificates of ACM Government Opportunity until the holder surrenders the
certificates in accordance with the instructions and letter of transmittal. Any
dividends on ACM Income shares payable after the Effective Time, will be paid
to the certificate holder, without interest, when that holder surrenders an ACM
Government Opportunity share certificate for exchange.

   Each ACM Government Opportunity stockholder will receive the number of full
shares of ACM Income, plus fractional shares for stockholders that participate
in a DRIP and cash in lieu of any fractional shares for non-DRIP stockholders,
having an aggregate NAV that, on the effective date of the Acquisition, is
equal to the aggregate NAV of the stockholder's shares of ACM Government
Opportunity. Stockholders of ACM Government Opportunity will recognize no gain
or loss, except with respect to any cash received in lieu of fractional ACM
Income shares by non-DRIP stockholders.

Federal Income Tax Consequences

   Subject to certain stated assumptions contained therein, the Funds will
receive an opinion of Seward & Kissel LLP, its counsel, substantially to the
following effect: (i) the Acquisition will constitute a "reorganization" within
the meaning of section 368(a) of the Code and that the Funds will each be "a
party to a reorganization" within the meaning of section 368(b) of the Code;
(ii) a stockholder of ACM Government Opportunity will recognize no gain or loss
on the exchange of the stockholder's shares of ACM Government Opportunity
solely for shares of ACM Income, except with respect to cash received in lieu
of a fractional share of ACM Income by non-DRIP stockholders in connection with
the Acquisition; (iii) neither ACM Government Opportunity nor ACM Income will
recognize any gain or loss upon the transfer of all of the assets of ACM
Government Opportunity to ACM Income in exchange for shares of ACM Income (plus
cash in lieu of certain fractional shares by non-DRIP stockholders) and the
assumption by ACM Income of the liabilities of ACM Government Opportunity
pursuant to the Plan or upon the distribution of shares of ACM Income to
stockholders of ACM Government Opportunity (and cash to non-DRIP stockholders
for their fractional shares) in exchange for shares of ACM Government
Opportunity; (iv) the holding period and tax basis of the assets of ACM
Government Opportunity acquired by ACM Income will be the same as the holding
period and tax basis that ACM Government Opportunity had in such assets
immediately prior to the Acquisition; (v) the aggregate tax basis of shares of
ACM Income received in connection with the Acquisition by each stockholder of
ACM Government Opportunity (including any fractional share to which the
stockholder may be

                                      16



entitled) will be the same as the aggregate tax basis of the shares of ACM
Government Opportunity surrendered in exchange therefor; (vi) the holding
period of shares of ACM Income received in connection with the Acquisition by
each stockholder of ACM Government Opportunity (including any fractional share
to which the stockholder may be entitled) will include the holding period of
the shares of ACM Government Opportunity surrendered in exchange therefor,
provided that such ACM Government Opportunity shares constitute capital assets
in the hands of the stockholder as of the Closing Date; (vii) ACM Income will
succeed to the capital loss carryovers of ACM Government Opportunity, if any,
under section 381 of the Code, but the use by ACM Income of any such capital
loss carryovers (and of capital loss carryovers of ACM Income) may be subject
to limitation under section 383 of the Code; and (viii) any gain or loss
realized by a non-DRIP stockholder of ACM Government Opportunity upon the
receipt of cash for a fractional share of ACM Income to which the stockholder
is entitled will be recognized to the stockholder and measured by the
difference between the amount of cash received and the basis of the fractional
share and, provided that the ACM Government Opportunity shares surrendered
constitute capital assets in the hands of the stockholder, will be capital gain
or loss. This opinion of counsel will not be binding on the Internal Revenue
Service or a court and there is no assurance that the Internal Revenue Service
or a court will not take a view contrary to those expressed in the opinion.

   Stockholders of ACM Government Opportunity are encouraged to consult their
tax advisers regarding the effect, if any, of the Acquisition in light of their
individual circumstances. Because the foregoing discussion only relates to the
federal income tax consequences of the Acquisition, those stockholders also are
encouraged to consult their tax advisers as to state and local tax
consequences, if any, of the Acquisition.

Capitalization Information

   For information on the existing and pro forma capitalization of the Funds,
see Appendix E.

Trading History and Share Price Data

   For information on the trading history and share price data for the Funds,
see Appendix F.

                          INFORMATION ABOUT THE FUNDS

   ACM Income and ACM Government Opportunity are each a diversified, closed-end
management investment companies registered under the 1940 Act and organized as
a Maryland corporation in 1987 and 1988, respectively.

Management of the Funds

   The Board of Directors of each Fund, which is comprised of the same persons,
directs the management of the business and affairs of the Fund. Each Board of
Directors approves all significant agreements between the respective Fund and
persons or companies furnishing services to it, including a Fund's agreements
with the Adviser and the Fund's administrator, custodian and transfer and
dividend disbursing agent. The day-to-day operations of a Fund are delegated to
its officers and the Fund's Adviser, subject to the Fund's investment objective
and policies and to general supervision by the Fund's Board of Directors.
Subsequent to the consummation of the Acquisition, the directors and officers
of ACM Income will continue to serve as the directors and officers of the
Combined Fund. The portfolio managers jointly and primarily for the management
of ACM Income are Messrs. Andrew M. Aran, Paul J. DeNoon, Gershon Distenfeld,
Douglas J. Peebles, and Kewjin Yuoh. Messrs. Aran and DeNoon are each a Senior
Vice President with the Adviser, with which each has been associated since
prior to 2001. Mr. Peebles is an Executive Vice President with the Adviser,
with which he has been associated since prior to 2001. Messrs. Distenfeld and
Yuoh are each a Vice President with the Adviser, with which Mr. Distenfeld has
been associated since prior to 2001 and Mr. Yuoh has been associated since
March 2003. The portfolio managers jointly and primarily responsible for the
management of ACM Government Opportunity are Messrs. Paul J. DeNoon, Michael L.
Mon, Douglas J. Peebles and Mathew S. Sheridan. Messrs. Mon and Sheridan are
each a Vice President with the Adviser, with which they have been associated
since prior to 2001. Subsequent to the Acquisition, Messrs. Aran, DeNoon,
Distenfeld, Peebles, and Yuoh will be jointly and primarily responsible for the
day-to-day management of the Combined Fund.

                                      17



   The SAI provides additional information about the portfolio managers'
compensation, other accounts managed by the portfolio managers, and the
portfolio managers' ownership of securities in ACM Income.

Advisory Agreement and Fees

   Each Fund's investment adviser is AllianceBernstein L.P., 1345 Avenue of the
Americas, New York, New York 10105. The Adviser is a leading international
investment adviser managing client accounts with assets as of June 30, 2006
totaling more than $625 billion (of which more than $88 billion represented the
assets of investment companies). As of June 30, 2006, the Adviser managed
retirement assets for many of the largest public and private employee benefit
plans (including 41 of the nations' FORTUNE 100 companies), for public employee
retirement funds in 37 states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 45 registered
investment companies managed by the Adviser, comprising 126 separate investment
portfolios, currently have approximately 4.0 million stockholder accounts.

   Under each Fund's advisory agreement with the Adviser (the "Advisory
Agreement"), the Adviser provides office space, investment advisory services,
and order placement facilities for the Fund and pays all compensation of
directors and officers of the Fund who are affiliated persons of the Adviser.
Under the Advisory Agreement of ACM Government Opportunity, the Fund pays the
Adviser, as of January 31, 2006, an investment advisory fee at an annual rate
of .75% of average daily net assets. Under the Advisory Agreement of ACM
Income, the Fund pays the Adviser, as of January 31, 2006, an investment
advisory fee of .65% of its average weekly net assets. ACM Income's advisory
fee is a combination of a base fee of .30% on the first $250 million of net
assets and .25% on net assets in excess of $250 million thereafter, plus 4.75%
of daily gross income, subject to the limitation that the total advisory fee
will not exceed .95%. Such fees are accrued daily and paid monthly.

   The Advisory Agreements by their terms continue in effect from year to year
if such continuance is specifically approved, at least annually, by a majority
vote of the directors of a Fund who neither are interested persons of the Fund
nor have any direct or indirect financial interest in the Advisory Agreement,
cast in person at a meeting called for the purpose of voting on such approval.
A discussion regarding the basis for a Board of Directors approving the
investment advisory contracts of ACM Government Opportunity and ACM Income is
available in each Fund's Annual Report to Stockholders for fiscal years ended
July 31, 2005 and December 31, 2005, respectively.

   The Adviser is the subject of certain legal proceedings instituted by the
SEC and the Office of the New York Attorney General. A discussion of those
proceedings is presented in Appendix G.

Administrator

   Under an administration agreement, Princeton Administrators, L.P. serves as
administrator for ACM Income. The Adviser serves as administrator for ACM
Government Opportunity. Under the administrative agreements, Princeton
Administrators, L.P. and the Adviser perform standard administrative services
for the Funds.

   ACM Income pays a fee at the annual rate of .02 of 1% of the Fund's average
weekly net assets. Such fee is accrued daily and paid monthly. ACM Government
Opportunity pays an administrative fee at an annual rate of .15% of the Fund's
average weekly net assets. Such fee is accrued daily and paid monthly.
Currently, the Adviser has voluntarily agreed to waive a portion of its
administrative fees so as to charge the Fund at a reduced annual rate of .05%
of the Fund's average weekly net assets.

Other Service Providers

   The Acquisition will result in a change to the custodian for ACM Government
Opportunity as described below. AllianceBernstein Investor Services, Inc.
("ABIS"), an affiliate of the Adviser, provides stockholder services for the
Funds. The Funds compensate ABIS for these services. Computershare Trust
Company, N.A. (formerly known as Equiserve Trust Company), P.O. Box 43010,
Providence, RI 02940-3010 serves as the Funds' transfer agent. The Bank of New
York, One Wall Street, New York, NY 10286 serves as the custodian for ACM
Government Opportunity. State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA 02110 serves as the custodian for ACM Income. After the
Acquisition, State Street Bank and Trust Company will serve as custodian for
the Combined Fund. Ernst & Young LLP serves as the Funds' independent
registered public accounting firm.

                                      18



                              VOTING INFORMATION

   The Board of Directors of ACM Government Opportunity has fixed the close of
business on October 13, 2006 as the Record Date for the determination of
stockholders entitled to notice of, and to vote at, the Meeting and at any
adjournments or postponements thereof. Appendix H to this Prospectus/Proxy
Statement lists the total number of ACM Government Opportunity's shares
outstanding as of August 15, 2006. It also identifies holders of more than five
percent of shares of each Fund, and contains information about the executive
officers and Directors of each Fund and their shareholdings in each Fund.

   Those stockholders who hold shares directly and not through a broker or
nominee (that is, a stockholder of record) may authorize their proxies to cast
their votes by completing a proxy card and returning it by mailing the enclosed
postage-paid envelope as well as telephoning toll free 1-800-331-5817. Owners
of shares held through a broker or nominee (who is the stockholder of record
for those shares) should follow the directions provided to the stockholder by
the broker or nominee to submit voting instructions. Instructions to be
followed by a stockholder of record to submit a proxy via telephone, including
use of the Control Number on the stockholder's proxy card, are designed to
verify stockholder identities, to allow stockholders to give voting
instructions and to confirm that stockholder instructions have been recorded
properly. Stockholders who authorize proxies by telephone should not also
return a proxy card. A stockholder of record may revoke that stockholder's
proxy at any time prior to exercise thereof by giving written notice to the
Secretary of ACM Government Opportunity at 1345 Avenue of the Americas, New
York, New York 10105, by authorizing a later-dated proxy (either by signing and
mailing another proxy card or, by telephone as indicated above), or by
personally attending and voting at the Meeting.

   Properly executed proxies may be returned with instructions to abstain from
voting or to withhold authority to vote (an "abstention") or represent a broker
"non-vote" (which is a proxy from a broker or nominee indicating that the
broker or nominee has not received instructions from the beneficial owner or
other person entitled to vote shares on a particular matter with respect to
which the broker or nominee does not have the discretionary power to vote).
Approval of the Proposal requires the affirmative vote of the holders of a
majority of the votes entitled to be cast. Abstentions and broker non-votes
will be considered present for purposes of determining the existence of a
quorum for the transaction of business but will have the effect of a vote
against the Proposal.

   On September 19, 2006, Aon Corporation/Aon Advisers, Inc. ("Aon"), which
beneficially owns 26.5% of ACM Government Opportunity's shares, disclosed in a
filing with the SEC that, based on the respective prices at which the shares of
ACM Government Opportunity and ACM Income were then trading, it intends to vote
its shares in favor of the Acquisition. Aon also disclosed that it reserves the
right to reconsider its initial determination to vote in favor of the
Acquisition should market circumstances change.

   If any proposal, other than the Proposal, properly comes before the Meeting,
the shares represented by proxies will be voted on all such proposals in the
discretion of the person or persons voting the proxies. ACM Government
Opportunity has not received notice of, and is not otherwise aware of, any
other matter to be presented at the Meeting.

   A quorum for the transaction of business by stockholders of ACM Government
Opportunity at the Meeting will consist of the presence in person or by proxy
of the holders of a majority of the shares of the Fund entitled to vote at the
Meeting. In the event that a quorum is not represented at the Meeting or, even
if a quorum is so present, in the event that sufficient votes in favor of the
position recommended by the Board of Directors on the Proposal are not timely
received, the Chairman of the Board may authorize, or the persons named as
proxies may propose and vote for, one or more adjournments of the Meeting with
no other notice than announcement at the Meeting, up to 120 days after the
Record Date, in order to permit further solicitation of proxies. Shares
represented by proxies indicating a vote against the Proposal will be voted
against adjournment.

   ACM Government Opportunity has engaged The Altman Group, Inc. (the "Proxy
Solicitor"), 60 East 42nd Street, Suite 405, New York, New York 10165 to assist
in soliciting proxies for the Meeting. The Proxy Solicitor will receive a fee
of approximately $      12,500 from the Fund for its solicitation services,
plus reimbursement of out-of-pocket expenses.

                                      19



                                 LEGAL MATTERS

   The validity of the shares offered hereby will be passed upon for the Funds
by Seward & Kissel LLP. Seward & Kissel LLP will rely upon the opinion of
Venable LLP for certain matters relating to Maryland law.

                                    EXPERTS

   The audited financial statements and financial highlights in the
Prospectus/Proxy Statement and the SAI have been included in reliance on the
report of Ernst & Young LLP, 5 Times Square, New York, NY 10036, the
independent registered public accounting firm for the Funds, given on its
authority as experts in auditing and accounting.

                             FINANCIAL HIGHLIGHTS

   Financial highlights information for the Funds is available at Appendix I.

             THE DIRECTORS OF ACM GOVERNMENT OPPORTUNITY RECOMMEND
                THAT YOU VOTE FOR THE ACQUISITION OF THE ASSETS
AND LIABILITIES OF ACM GOVERNMENT OPPORTUNITY BY ACM INCOME AND THE DISSOLUTION
                        OF ACM GOVERNMENT OPPORTUNITY.

                                      20



                                  APPENDIX A

               COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES



                  ACM Government Opportunity                ACM Income           Principal Differences
           ----------------------------------------- ------------------------ ---------------------------
                                                                     

Investment The primary investment objective of       The investment objective As a practical matter, the
Objective  the Fund is high current income con-      of the Fund is high cur- Funds' investment ob-
           sistent with prudent investment risk.     rent income consistent   jectives are the same.
           The Fund's secondary investment           with preservation of
           objective is growth of capital. (F)       capital. (F)

                                         Investment Policies/1/

Status     The Fund is a diversified closed-end      Same.                    None.
           management investment company.

80% Policy The Fund will invest, under normal        The Fund will invest,    Both Funds invest primar-
           circumstances, at least 80% of its net    under normal circum-     ily in U.S. Government
           assets in securities issued by any        stances, at least 80% of Securities (see next row).
           government.                               its net assets in income However, in accordance
                                                     producing securities.    with SEC rules, ACM
                                                                              Government Opportunity
                                                                              will invest at least 80% of
                                                                              its assets in government
                                                                              securities because the
                                                                              Fund's name includes the
                                                                              term "Government".

U.S.       The Fund will invest at least 65% of      Same. (F)                None.
Government its total assets in obligations issued or
Securities guaranteed by the U.S. Government,
           its agencies or instrumentalities
           ("U.S. Government Securities") and
           repurchase agreements pertaining to
           U.S. Government Securities. (F)

--------
/1  /Policies with the notation "F" denote fundamental policies, which mean
    they may not be changed without a stockholder vote.

                                      21





                ACM Government Opportunity                 ACM Income             Principal Differences
           ------------------------------------- ------------------------------ -------------------------
                                                                       

Other      The Fund may invest up to 35% of      The Fund may invest up to      ACM Income may invest
Securities its total assets in                   35% of its total assets in     in lower-rated debt secu-
           . obligations issued or guaranteed    securities other than U.S.     rities and corporate debt
              by a foreign government or any     Government Securities,         securities. ACM
              of its political subdivisions,     including (i) Foreign Gov-     Government Opportunity
              authorities, agencies or           ernment Securities,            does not invest in those
              instrumentalities,                 (ii) corporate debt secu-      types of securities.
           . dividend-paying equity              rities (including collateral-  ACM Government Oppor-
              securities,                        ized mortgage obligations),    tunity may invest in
           . certificates of deposit, bankers'   (iii) certificates of deposit, equity securities. ACM
              acceptances and interest-          bankers' acceptances and       Income does not invest in
              bearing savings deposits of        interest bearing savings       equity securities.
              banks having total assets of       deposits of banks having       Both Funds may invest in
              more than $1 billion and which     total assets of more than $1   Foreign Government
              are members of the FDIC,           billion and which are          Securities. ACM Income
           . commercial paper of prime qual-     members of the FDIC,           may not invest more than
              ity rated Prime-1 or higher by     (iv) commercial paper of       25% of its assets in the
              Moody's or A-1 or higher by        prime quality rated            Foreign Government
              S&P or, if not rated, issued by    Prime-1 or higher by           Securities of any one
              companies which have an out-       Moody's or A-1 or higher       country; whereas, ACM
              standing debt issue rated Aa or    by S&P or, if not rated,       Government Opportuni-
              higher by Moody's or AA or         issued by companies which      ty's investment in these
              higher by S&P, and                 have an outstanding debt       securities in any one
           . put and call options, futures       issue dated Aa or higher by    country would be subject
              contracts and options on futures   Moody's or AA or higher        to its 35% limitation.
              contracts, options on foreign      by S&P, and (v) put and
              currencies and forward foreign     call options, futures con-
              currency exchange contracts.       tracts and options on fu-
                                                 tures contracts, options on
                                                 foreign currencies, and
                                                 forward foreign currency
                                                 exchange contracts.
                                                 The Fund may maintain
                                                 up to 35% of its net assets
                                                 in securities rated below
                                                 Baa by Moody's or below
                                                 BBB by S&P or, if not
                                                 rated, of comparable in-
                                                 vestment quality as de-
                                                 termined by the Adviser.
                                                 The Fund may invest up to
                                                 35% of its total assets in
                                                 Foreign Government
                                                 Securities of issuers
                                                 considered stable by the
                                                 Adviser, although the
                                                 Fund will not invest 25%
                                                 or more of its total assets
                                                 in the Foreign Government
                                                 Securities of any one
                                                 country.


                                      22





                  ACM Government Opportunity                ACM Income             Principal Differences
           ---------------------------------------- --------------------------- ---------------------------
                                                                       

Equity     Not more than 20% of the Fund's                                      ACM Government Oppor-
Securities total assets may be invested in equity                               tunity may invest in
           securities                                                           equity securities. ACM
                                                                                Income does not invest in
                                                                                equity securities.

Options    The Fund intends to write covered        Same.                       None.
           put and call options and purchase put
           and call options on securities of the
           types in which it is permitted to in-
           vest that are traded on U.S. and for-
           eign securities exchanges. The Fund
           may also write call options for cross-
           hedging purposes. There are no spe-
           cific percentage limitations on the
           Fund's writing and purchasing of
           options.

Restricted The Fund may invest up to 20% of         The Fund may invest up      As a practical matter,
Securities its total assets in securities purchased to 20% of its total assets  there are no significant
           in direct placements.                    in illiquid securities.     differences in the Funds'
                                                    These securities include,   investments in restricted
                                                    among others, (i) direct    securities since ACM
                                                    placements or other secu-   Income's investment in
                                                    rities which are subject to restricted securities would
                                                    legal or contractual re-    primarily be comprised of
                                                    strictions on resale or for securities purchased in
                                                    which there is no readily   direct placements.
                                                    available market,
                                                    (ii) over-the-counter op-
                                                    tions and assets used to
                                                    cover over-the-counter
                                                    options, and (iii) re-
                                                    purchase agreements not
                                                    terminable within seven
                                                    days.

Securities The Fund may lend portfolio secu-        Same.                       None.
Lending    rities to brokers, dealers and finan-
           cial institutions and receive collateral
           in the form of cash or U.S. Govern-
           ment Securities. Collateral for such
           loans must be maintained at all times
           in an amount equal to at least 100%
           of the current market value of the
           loaned securities. The Fund will nei-
           ther lend portfolio securities in ex-
           cess of 30% of the value of its total
           assets nor lend its portfolio securities
           to any officer, director, employee or
           affiliate of the Fund or the Adviser.


                                      23





                    ACM Government Opportunity                ACM Income            Principal Differences
              -------------------------------------- ---------------------------- --------------------------
                                                                         

Futures       The Fund may enter into contracts      The Fund may enter into      ACM Government Oppor-
Contracts and for the purchase or sale for future    contracts for the purchase   tunity may enter into fu-
Options on    delivery of fixed-income securities    or sale for future delivery  tures contracts based on
Futures       or foreign currencies, or contracts    of U.S. and Foreign Gov-     common stocks since that
Contracts     based on financial indices, including  ernment Securities, or       Fund is permitted to in-
              any index of U.S. Government Secu-     contracts based on finan-    vest in equity securities.
  General     rities, Foreign Government Secu-       cial indices including any   ACM Income's invest-
              rities or common stocks ("futures      index of U.S. and Foreign    ments in futures contracts
              contracts") and may purchase and       Government Securities        are subject to the 5% and
              write put and call options to buy or   ("futures contracts") and    50% restrictions, which
              sell futures contracts ("options on    may purchase and write       were previously require-
              futures contracts").                   put and call options to      ments of the Commodity
                                                     buy or sell futures con-     Futures Trading Commis-
                                                     tracts ("options on futures  sion for investment com-
                                                     contracts").                 panies that invested in
                                                     Futures contracts and op-    futures contracts. As
                                                     tions on futures contracts   these requirements are no
                                                     can only be used as a        longer required, ACM
                                                     hedge and not for            Income intends to elimi-
                                                     speculation.                 nate these restrictions.
                                                     In addition, there are two   ACM Government
                                                     percentage restrictions:     Opportunity's invest-
                                                     (i) the Fund will not en-    ments in futures contracts
                                                     ter into any futures con-    are not subject to this
                                                     tracts or options on         limitation.
                                                     futures contracts if
                                                     immediately thereafter
                                                     the aggregate amount of
                                                     initial margin deposits on
                                                     all the futures contracts of
                                                     the Fund and premiums
                                                     paid on options on futures
                                                     contracts would exceed
                                                     5% of the market value of
                                                     the total assets of the
                                                     Fund; and (ii) the ag-
                                                     gregate market value of
                                                     the futures contracts pur-
                                                     chased by the Fund can-
                                                     not exceed 50% of the
                                                     market value of the total
                                                     assets of the Fund.

Futures       The Fund may not purchase or sell      The Fund may not pur-        As a practical matter,
Contracts and commodities or commodity contracts     chase or sell commodities    there is no difference in
Options on    (except currencies, currency futures,  or commodity contracts       these policies.
Futures       forward contracts or contracts for the (except currencies, cur-
Contracts     future acquisition or delivery of      rency futures, forward
              fixed income securities and related    contracts or contracts for
  Specific    options futures contracts and options  the future acquisition or
              on futures contracts and other similar delivery of fixed income
              contracts). (F)                        securities and related op-
                                                     tions and other similar
                                                     contracts). (F)


                                      24





                   ACM Government Opportunity               ACM Income             Principal Differences
             -------------------------------------- -------------------------- -----------------------------
                                                                      

Options on   The Fund may purchase and write        Same.                      None.
Foreign      put and call options on foreign cur-
Currencies   rencies for the purpose of protecting
             against declines in the U.S. dollar
             value of foreign currency denomi-
             nated portfolio securities and against
             increases in the U.S. dollar costs of
             such securities to be acquired.

Forward      The Fund may enter into forward        The Fund may enter into    As a practical matter,
Commitments  commitments for the purchase or        forward commitments for    there is no difference in
             sale of fixed-income securities.       the purchase or sale of    these policies.
                                                    securities.

Forward      The Fund may purchase or sell for-     Same.                      None.
Foreign      ward foreign currency exchange con-
Currency     tracts ("forward contracts") to
Exchange     attempt to minimize the risk to the
Contracts    Fund from adverse changes in the
             relationship between the U.S. dollar
             and foreign currencies.

Future       The Fund may, following written        The Fund may, following    ACM Income's strategy
Developments notice to stockholders, take advan-    written notice to stock-   is somewhat broader be-
             tage of opportunities in the area of   holders, take advantage of cause it is not restricted to
             options and futures contracts and      opportunities in the area  opportunities in the areas
             options on futures contracts which     of investment practices    of options and futures
             are not presently contemplated or      which are not presently    contracts and options on
             which are not currently available,     contemplated or which      futures contracts.
             consistent with the Fund's invest-     are not currently avail-
             ment objective and legally             able, consistent with the
             permissible.                           Fund's investment ob-
                                                    jective and legally
                                                    permissible.

Dollar Rolls The Fund may enter into dollar rolls.  Same.                      None.

Swaps        The Fund may use swaps.                Same.                      None.

Repurchase   The Fund may enter into repurchase     The Fund may enter into    As a practical matter, the
Agreements   agreements only pertaining to U.S.     repurchase agreements      Funds' policies on re-
             Government Securities                  pertaining to U.S.         purchase agreements are
                                                    Government Securities      the same, but ACM In-
                                                    with member banks of the   come may also invest in
                                                    Federal Reserve System     reverse repurchase
                                                    or "primary dealers" in    agreements.
                                                    such securities.
                                                    The Fund may also use
                                                    reverse repurchase
                                                    agreements.
                                                    The Fund may enter into
                                                    repurchase agreement
                                                    with respect to up to 35%
                                                    of its total assets (SAI).


                                      25





                    ACM Government Opportunity                  ACM Income             Principal Differences
              --------------------------------------- ------------------------------ --------------------------
                                                                            

Industry      The Fund will not invest 25% or         The Fund will not invest       As a practical matter, the
Concentration more of its total assets in securities  25% or more of its total       Funds' policies on in-
              of companies engaged principally in     assets in securities of com-   dustry concentration are
              any one industry, except that this re-  panies engaged principally     the same.
              striction does not apply to U.S. Gov-   in any one industry, except
              ernment and Foreign Government          that this restriction does not
              Securities. (F)                         apply to U.S. Government
                                                      Securities. (F)

Lending       The Fund will not make loans except     Same. (F)                      None.
              through (i) the purchase of debt
              obligations in accordance with its
              investment objectives and policies;
              (ii) the lending of portfolio secu-
              rities; or (iii) the use of repurchase
              agreements. (F)

Borrowing     The Fund may not borrow money,          Same. (F)                      None.
              except (i) from a bank or other entity
              in a privately arranged transaction and
              issue commercial paper, bonds, de-
              bentures or notes, in series or other-
              wise, with such interest rates,
              conversion rights and other terms and
              provisions as are determined by the
              Board, if after such borrowing or
              issuance there is asset coverage of at
              least 300% as defined in the 1940 Act
              and (ii) for temporary purposes in an
              amount not exceeding 5% of the value
              of the total assets of the Fund. (F)

Pledging of   The Fund may not pledge, hypoth-        Same. (F)                      None.
Assets        ecate, mortgage or otherwise
              encumber its assets, except to secure
              permitted borrowings. (F)

Securities    The Fund may not participate on a       Same. (F)                      None.
Trading       joint or joint and several basis in any
              securities trading account. (F)

Investing for The Fund may not invest in compa-       Same. (F)                      None.
Control       nies for the purpose of exercising
              control. (F)

Illiquid      The Fund may not invest in illiquid     Same. (F)                      None.
Securities    securities, including direct place-
              ments or other securities which are
              subject to legal or contractual re-
              strictions on resale or for which there
              is no readily available market, if
              more than 20% of the Fund's total
              assets would be invested in such
              securities. (F)


                                      26





                   ACM Government Opportunity        ACM Income    Principal Differences
             --------------------------------------- ---------- ----------------------------
                                                       

Short Sales  The Fund may not make short sales       Same. (F)  None.
             of securities or maintain a short posi-
             tion unless at all times when a short
             position is open it owns an equal
             amount of such securities or secu-
             rities convertible into or exchange-
             able for, without payment of any
             further consideration, securities of
             the same issue as, and equal in
             amount to, the securities sold short
             ("short sales against the box") and
             unless more than 10% of the Fund's
             net assets is held as collateral for
             such sales at any one time. (F)

Other        The Fund may not purchase a secu-                  As a practical matter,
Investment   rity if, as a result the Fund would                there is no difference
Companies    own any securities of an open-end                  between the Funds' abil-
             investment company or more than                    ity to invest in other in-
             3% of the total outstanding voting                 vestment companies.
             stock of any closed-end investment                 Both Funds are subject to
             company or more than 5% of the                     restrictions under the
             value of the Fund's total assets                   1940 Act, which limit an
             would be invested in securities of                 investment company's
             any closed-end investment company                  ability to invest in another
             or more than 10% of such value in                  investment company.
             closed-end investment companies in                 ACM Government
             general. (F)                                       Opportunity's policy re-
                                                                states the 1940 Act
                                                                restrictions.

Real Estate  The Fund may not purchase or sell       Same. (F)  None.
             real estate, except that it may pur-
             chase and sell securities of compa-
             nies which deal in real estate or
             interests therein. (F)

Mineral      The Fund may not invest in interests    Same. (F)  None.
Exploration  in oil, gas, or other mineral explora-
             tion or development programs. (F)

Margin       The Fund may not purchase securities    Same. (F)  None.
             on margin, except for such short-term
             credits as may be necessary for the
             clearance of transactions. (F)

Underwriting The Fund may not act as an under-       Same. (F)  None.
             writer of securities, except that the
             Fund may acquire restricted secu-
             rities under circumstances in which,
             if such securities were sold, the Fund
             might be deemed to be an under-
             writer for purposes of the Securities
             Act. (F)


                                      27



                                  APPENDIX B

                  DESCRIPTION OF PRINCIPAL RISKS OF THE FUNDS

   Among the principal risks of investing in a Fund are market risk, interest
rate risk, credit risk, leveraging risk, foreign (non-U.S.) risk, emerging
markets risk, currency risk, derivatives risk, liquidity risk and management
risk. Each of these risks is more fully described below. Each Fund could become
subject to additional risks because the types of investments made by each Fund
can change over time.


                       
Market Risk and           This is the risk that the value of a Fund's investments will fluctuate as the
Net Asset Value of Shares stock or bond markets fluctuate and that prices overall will decline over
                          shorter or longer-term periods. Shares of common stock of closed-end
                          investment companies, such as the Funds, frequently trade at a discount
                          to their NAVs. Whether an investor will realize gains or losses upon the
                          sale of shares of a Fund does not depend directly upon changes in the
                          Fund's NAV, but rather upon whether the market price of the shares at
                          the time of sale is above or below the investor's purchase price for the
                          shares. The market price of the shares of each Fund is determined by
                          such factors as relative demand for and supply of the shares in the mar-
                          ket, general market and economic conditions, changes in the Fund's
                          NAV and other factors beyond the control of the Fund. This market risk
                          is separate and distinct from the risk that each Fund's NAV may
                          decrease.

Interest Rate Risk        This is the risk that changes in interest rates will affect the yield and
                          value of a Fund's investments in fixed-income securities. When interest
                          rates rise, the value of a Fund's investments tends to fall and this de-
                          crease in value may not be offset by higher interest income from new
                          investments. Interest rate risk is generally greater for investment compa-
                          nies that invest in fixed-income securities with longer maturities or dura-
                          tions. This risk is compounded for the Fund because they invest a
                          significant portion of their assets in mortgage-related securities. The
                          value of these securities is affected more by changes in interest rates be-
                          cause when interest rates rise, the maturities of these types of securities
                          tend to lengthen and the value of the securities decreases more sig-
                          nificantly. In addition, these types of securities are subject to prepayment
                          when interest rates fall, which generally results in lower returns because
                          a Fund must reinvest its assets in debt securities with lower interest rates.

Credit Risk               This is the risk that the issuer or the guarantor of a fixed-income security,
                          or the counterparty to a derivatives or other contract, will be unable or
                          unwilling to make timely payments of interest or principal or to other-
                          wise honor its obligations. The issuer or guarantor may default causing a
                          loss of the full principal amount of a security and any accrued interest.
                          The degree of risk for a particular security may be reflected in its credit
                          rating. Investments in fixed-income securities with lower ratings tend to
                          have a higher probability that an issuer will default or fail to meet its
                          payment obligations. Because ACM Income may invest a significant
                          percentage of its assets in high yield debt securities, ACM Income may
                          be subject to greater credit risk than ACM Government Opportunity.


                                      28




                     
Leverage Risk           When a Fund borrows money or otherwise leverages its portfolio, it may
                        be more volatile because leverage tends to exaggerate the effect of any
                        increase or decrease in the value of the portfolio's investments. A Fund
                        may create leverage through the use of one or more of the following
                        techniques: reverse repurchase arrangements, forward contracts or dollar
                        rolls or by borrowing money. This risk is greater for ACM Income be-
                        cause this Fund historically has employed higher levels of leverage than
                        ACM Government Opportunity.

Foreign (Non-U.S.) Risk This is the risk of investments in issuers located in foreign countries.
                        Because the Funds may invest in foreign securities, they are subject to
                        this risk. A Fund's investments in foreign securities may experience more
                        rapid and extreme changes in value than investments in securities of U.S.
                        companies. The securities markets of many foreign countries are rela-
                        tively small, with a limited number of companies representing a small
                        number of securities. Foreign companies usually are not subject to the
                        same degree of regulation as U.S. issuers. Reporting, accounting, and
                        auditing standards of foreign countries differ, in some cases significantly,
                        from U.S. standards. Nationalization, expropriation or confiscatory tax-
                        ation, currency blockage, political changes, or diplomatic developments
                        could adversely affect a Fund's investments in a foreign country. These
                        risks are heightened for emerging market countries because there may be
                        more economic, political and social instability and investments in
                        companies in emerging markets may have more risk because these secu-
                        rities may be more volatile and less liquid. To the extent a Fund invests
                        in a particular country or geographic region, the Fund may have more
                        significant risk due to market changes or other factors affecting that
                        country or region, including political instability and unpredictable eco-
                        nomic conditions.

Emerging Markets Risk   Foreign investment risk may be particularly high to the extent a Fund
                        invests in emerging market securities of issuers based in countries with
                        developing economies. These securities may present market, credit, cur-
                        rency, liquidity, legal, political and other risks different from, or greater
                        than, the risks of investing in developed foreign (non-U.S.) countries.

Currency Risk           This is the risk that fluctuations in the exchange rates between the U.S.
                        Dollar and foreign (non-U.S.) currencies may negatively affect the value
                        of a Fund's investments or reduce the returns of a Fund.

Derivatives Risk        The Funds may use derivatives. These investment strategies may be risk-
                        ier than other investment strategies and may result in greater volatility for
                        a Fund, particularly during periods of market declines.

Liquidity Risk          Liquidity risk exists when particular investments are difficult to purchase
                        or sell, possibly preventing a Fund from selling out of these illiquid secu-
                        rities at an advantageous price. Derivatives and securities involving sub-
                        stantial market and credit risk tend to involve greater liquidity risk.

Management Risk         Each Fund is subject to management risk because it is an actively man-
                        aged investment portfolio. The Adviser will apply its investment tech-
                        niques and risk analyses in making investment decisions for each Fund,
                        but there can be no guarantee that its decisions will produce the desired
                        results.


                                      29



                                  APPENDIX C

                               OTHER INFORMATION

   The following information provides only a summary of the key features of the
organizational structure, governing documents, and stockholder services of the
Funds.

   Each Fund is organized as a Maryland corporation. The Bylaw provisions that
govern each of the Funds are the same. Unless noted below, there are no
significant differences among the Funds in terms of their respective corporate
organizational structures.

   The procedures available to a Fund's stockholders for calling stockholders'
meetings and for the removal of directors are the same. Under the Funds'
charters, a director may be removed only for cause by the affirmative vote of
two-thirds of all the votes entitled to be cast in the election of directors.
Special meetings of stockholders for any purpose may be called by a Fund's
Secretary only upon the written request of holders of shares entitled to cast
not less than a majority of the votes entitled to be cast at a meeting.

   Except as otherwise required by law, the presence in person or by proxy of
the holders of a majority of the shares entitled to be cast constitutes a
quorum at any meeting of stockholders of a Fund. Under Maryland law, a Maryland
corporation generally cannot dissolve, amend its charter, merge, sell all or
substantially all of its assets, engage in a share exchange or engage in
similar transactions outside the ordinary course of business, unless approved
by the affirmative vote of stockholders entitled to cast at least two-thirds of
the votes entitled to be cast on the matter. However, a Maryland corporation
may provide in its charter for approval of these matters by a lesser
percentage, but not less than a majority of all of the votes entitled to be
cast on the matter. Subject to various exceptions, each Fund's charter
generally provides for approval of charter amendments and extraordinary
transactions by the stockholders entitled to cast at least a majority of the
votes entitled to be cast on the matter. The Bylaws of each Fund provides that
each director shall be elected by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon. For other matters not
requiring a vote under the 1940 Act, when a quorum is present, the affirmative
vote of a majority of the votes cast shall decide any question brought before
such meeting unless a statute or charter requires a higher voting margin.

Shares of Common Stock of the Funds

   There are no subscription/preemptive or exchange rights under any of the
charters. Each share of a Fund has equal voting, dividend, distribution and
liquidation rights. Stockholders are entitled to one vote per share. All voting
rights for the election of directors are non-cumulative, which means that the
holders of more than 50% of the shares of common stock of a Fund can elect 100%
of the directors then nominated for election if they choose to do so and, in
such event, the holders of the remaining shares of common stock will not be
able to elect any directors. Under the rules of the NYSE applicable to listed
companies, each Fund is required to hold an annual meeting of stockholders each
year.

Distributions

   The Funds intend to distribute all of their net investment income. Dividends
from such net investment income will be declared and paid monthly to
stockholders. All net realized long or short-term capital gains, if any, will
be distributed at least annually. To permit a Fund to maintain a more stable
monthly distribution, a Fund may, from time to time, pay out less than the
entire amount of net investment income and net realized short-term capital
gains earned in any particular period. Any such amount retained by a Fund would
be available to stabilize future distributions. As a result, distributions paid
by a Fund for any particular period may be more or less than the amount of net
investment income and net realized short-term capital gains actually earned by
the Fund during such period. There are no assurances that a Fund will be able
to maintain a constant level of monthly distributions to stockholders.

   Distributions are taxable to stockholders as ordinary income or capital
gains. Stockholders may be proportionately liable for taxes on income and gains
of a Fund but stockholders not subject to tax on their income

                                      30



will not be required to pay tax on amounts distributed to them. A Fund
distributes written notice to stockholders regarding the tax status of all
distributions made during each calendar year.

Dividend Reinvestment Plans

   Stockholders of a Fund whose shares are registered in their own names may
elect to be participants in a Fund's Dividend Reinvestment and Cash Purchase
Plan (the "DRIP"), under which dividends and capital gain distributions to
stockholders will be paid or reinvested in additional shares of the Fund (the
"Dividend Shares"). Assuming the Acquisition is approved, the DRIP stockholders
of the ACM Government Opportunity will automatically be enrolled in the DRIP
for ACM Income. Computershare Trust Company (the "Agent") acts as the agent for
participants under the ACM Income DRIP. Stockholders whose shares are held in
the name of a broker or nominee will automatically have distributions
reinvested by the broker or nominee in additional shares under the DRIP, unless
the automatic reinvestment service is not provided by the particular broker or
nominee or the stockholder elects to receive distributions in cash.

   Stockholders who do not elect to participate in the DRIP will receive all
distributions in cash paid by check mailed directly to the stockholder of
record (or, if the shares are held in street or other nominee name, then to the
nominee) by Computershare Trust Company as dividend paying agent.

   The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.

   A stockholder who has elected to participate in the DRIP may withdraw from
the DRIP at any time. There will be no penalty for withdrawal from the DRIP and
stockholders who have previously withdrawn from the DRIP may rejoin it at any
time. Changes in elections must be in writing and should include the
stockholder's name and address as they appear on the share certificate. An
election to withdraw from the DRIP will, until such election is changed, be
deemed to be an election by a stockholder to take all subsequent distributions
in cash. An election will be effective only for a distribution declared and
having a record dated of at least 10 days after the date on which the election
is received. A stockholder whose shares are held in the name of a broker or
nominee should contact such broker or nominee concerning changes in that
stockholder's election.

   All correspondence concerning the DRIP for ACM Income should be directed to
Computershare Trust Company, P.O. Box 43011, Providence, RI 02940-3011.

Repurchase of Shares

   Each Fund's Board of Directors has determined that it would be in the
interest of stockholders of a Fund to attempt to reduce or eliminate any market
value discount should it exist. To that end, each Fund's Board of Directors
presently contemplates that a Fund would from time to time take action either
to repurchase in the open market or to make a tender offer for its own shares
at net asset value. Each Board of Directors has approved a share repurchase
program for its Fund. As of July 31, 2006, only ACM Government Opportunity has
made repurchases under this program. The Boards of Directors presently intend
each quarter to consider the making of a tender offer. A Board of Directors may
at any time, however, decide that a Fund should not make a tender offer.

   Any tender offer made by a Fund will be at a price equal to the NAV of the
shares on a date subsequent to receipt by the Fund of all tenders. Each offer
will be made and stockholders notified in accordance with the requirements of
the Securities and Exchange Act of 1934 and the 1940 Act, either by publication
or mailing or both. Each offering document will contain such information as is
prescribed by such laws and the rules and regulations promulgated thereunder.
When a tender offer is authorized to be made by a Board of Directors, a
stockholder wishing to accept the offer will be required to tender all (and not
less than all) of the shares owned by such stockholder (or attributed to the
stockholder for federal income tax purposes under Section 318 of the Code). A
Fund will purchase all shares tendered in accordance with the terms of the
offer unless it determines to accept none of them (based upon one of the
conditions set forth above). Each person tendering shares will be required to
submit a check in the amount of $25.00, payable to the Fund, which will be used
to help defray the costs associated with effecting the tender offer. This
$25.00 fee will be imposed upon each tendering stockholder any of

                                      31



whose tendered shares are purchased in the offer, and will be imposed
regardless of the number of shares purchased. A Fund expects the cost to the
Fund of effecting a tender offer will exceed the aggregate of all such fees
received from those who tender offer their shares. Costs associated with the
tender offer will be charged against capital. During the period of the tender
offer, a Fund's stockholders will be able to obtain the Fund's current net
asset value by use of a toll-free telephone number.

Possible Future Conversion to Open-End Investment Company

   ACM Government Opportunity's charter provides that if, during any fiscal
year of ACM Government Opportunity, (i) shares of ACM Government Opportunity's
common stock have traded on the principal securities exchange where listed at
an average discount from net asset value of more than 10%, determined on the
basis of the discount as of the end of the last trading day in each week during
the period of 12 calendar weeks preceding December 31 in such year, and
(ii) during such year ACM Government Opportunity receives written requests from
the holders of 10% or more of ACM Government Opportunity's outstanding shares
of common stock that such a proposal be submitted to ACM Government
Opportunity's stockholders, ACM Government Opportunity will submit to its
stockholders at the next succeeding annual meeting of stockholders a proposal,
to the extent consistent with the 1940 Act, to amend ACM Government
Opportunity's Charter. Such amendment would provide that, upon its adoption by
the holders of 66 2/3% of ACM Government Opportunity's outstanding shares of
common stock, ACM Government Opportunity will convert from a closed-end to an
open-end investment company. The 66 2/3% vote requirement is higher than the
minimum vote required under the 1940 Act. If ACM Government Opportunity
converted to an open-end investment company, it would be able to continuously
issue and offer shares of its common stock and each outstanding share of ACM
Government Opportunity's common stock could be presented to ACM Government
Opportunity at the option of the holder thereof for redemption at net asset
value per share. In such event, ACM Government Opportunity might be required to
liquidate portfolio securities to meet requests for redemption, and its shares
would no longer be listed on the NYSE.

   ACM Income's charter has similar provisions. However, the vote required to
approve a conversion is 75% of the outstanding shares of common stock.

   A Fund cannot predict whether any repurchase of shares made while the Fund
is a closed-end investment company (as described under "Repurchase of Shares"
above) would increase or decrease the discount from NAV. To the extent that any
such repurchase decreased the discount from NAV to below 10% during the
measurement period described in (i) above, a Fund would not be required to
submit to stockholders a proposal to convert the Fund to an open-end investment
company at the next annual meeting of stockholders.

Certain Anti-Takeover Provisions of the Funds' Charters and Bylaws

   The Funds presently have provisions in their Charters and Bylaws (together,
the "Charter Documents") that are intended to limit (i) the ability of other
entities or persons to acquire control of a Fund, (ii) a Fund's freedom to
engage in certain transactions, or (iii) the ability of a Fund's directors or
stockholders to amend the Charter Documents or effect changes in the Fund's
management. These provisions of the Charter Documents may be regarded as
"anti-takeover" provisions.

   The Board of Directors of each Fund is divided into three classes, each
having a term of three years. Each class of Directors serves for a three-year
term. Accordingly, only those directors in one class may be changed in any one
year, and it would require two years to change a majority of the Board of
Directors (although under Maryland law procedures are available for the removal
of directors even if they are not then standing for reelections and under SEC
regulations procedures are available for including stockholder proposals in
management's annual proxy statement). Such a system of electing directors may
have the effect of maintaining the continuity of management and, thus, make it
more difficult for a Fund's stockholders to change the majority of directors.
Generally, under a Fund's Charter, the affirmative vote of the holders of a
majority of the votes entitled to be cast is required for the consolidation of
the Fund with another corporation, a merger of the Fund with or into another
corporation (except for certain mergers in which the Fund is the successor), a
statutory share exchange in which the Fund is not the successor, a sale or
transfer of all or substantially all of the Fund's assets, the

                                      32



dissolution of the Fund and certain amendments to the Fund's Charter. In
addition, the affirmative vote of 75% (which is higher than that required under
Maryland law or the 1940 Act) of the outstanding shares of common stock of a
Fund is required generally to authorize any of the following transactions or to
amend the provisions of the Charter relating to such transactions:

    (i)merger, consolidation or statutory share exchange of the Fund with or
       into any person, corporation or other entity;

   (ii)issuance of any securities of the Fund to any person, corporation or
       other entity for cash;

  (iii)sale, lease or exchange of all or any substantial part of the assets of
       the Fund to any person, corporation or other entity (except assets
       having an aggregate fair market value of less than $1,000,000); or

   (iv)sale, lease or exchange to the Fund, in exchange for securities of the
       Fund, of any assets of any person, corporation or other entity (except
       assets having an aggregate fair market value of less than $1,000,000);

if such corporation, person or entity is directly, or indirectly through
affiliates or associates, the beneficial owner of more than 5% of the
outstanding shares of the Fund (a "principal stockholder"). However, such vote
would not be required where, under certain conditions, the Board of Directors
approves the transaction, although in certain cases involving merger,
consolidation or statutory share exchange or sale of all or substantially all
of a Fund's assets the affirmative vote of a majority of the outstanding shares
of the Fund would nevertheless be required.

   The provisions of the Charter Documents described above and a Fund's right
to repurchase or make a tender offer for its common stock could have the effect
of depriving the owners of shares of opportunities to sell their shares at a
premium over prevailing market prices, by discouraging a third party from
seeking to obtain control of the Fund in a tender offer or similar transaction.
The overall effect of these provisions is to render more difficult the
accomplishment of a merger or the assumption of control by a principal
stockholder. However, they provide the advantage of potentially requiring
persons seeking control of the Fund to negotiate with its management regarding
the price to be paid and facilitating the continuity of the Fund's management
and investment objective and policies. The Board of Directors of each Fund has
considered the foregoing anti-takeover provisions and concluded that they are
in the best interests of the Fund and its stockholders.

Indemnification and Liability of Directors and Officers

   The charters of each of the Funds generally provides for the indemnification
of its officers and directors, as applicable, to the full extent permitted by
law. This indemnification does not protect any such person against any
liability to a Fund or any stockholder thereof to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the satisfaction of
such person's office.

   Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. Each Fund's charter
contains such a provision which eliminates directors' and officers' liability
to the maximum extent permitted by Maryland law. This indemnification does not
protect any such person against any liability to a Fund or any stockholder
thereof to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the satisfaction of such person's office.

                                      33



                                  APPENDIX D

           FORM OF AGREEMENT AND PLAN OF ACQUISITION AND LIQUIDATION
       RELATING TO THE ACQUISITION OF ALL OF THE ASSETS AND LIABILITIES
                   OF ACM GOVERNMENT OPPORTUNITY FUND, INC.

   This Agreement and Plan of Acquisition and Liquidation (the "Plan") is made
as of this [  ] day of [      ], 2006, by and among       (the "Acquiring
Fund"), a Maryland corporation,       (the "Acquired Fund"), a Maryland
corporation, and AllianceBernstein L.P. (the "Adviser").

   WHEREAS, the Acquiring Fund and the Acquired Fund are closed-end management
investment companies registered with the Securities and Exchange Commission
(the "SEC") under the Investment Company Act of 1940, as amended (the "1940
Act") and the Securities Exchange Act of 1934, as amended (the "1934 Act") and
shares of common stock of each Fund are currently purchased and sold on the New
York Stock Exchange (the "NYSE");

   WHEREAS, the parties desire that the Acquiring Fund acquire the assets and
assume the liabilities of the Acquired Fund in exchange for shares of equal net
asset value of the Acquiring Fund and the distribution of such shares of the
Acquiring Fund to the stockholders of the Acquired Fund (the "Acquisition") and
that the Acquired Fund thereafter liquidate and dissolve; and

   WHEREAS, the parties intend that the Acquisition qualify as a
"reorganization" within the meaning of section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and any successor
provisions, and that with respect to the Acquisition, the Acquiring Fund and
the Acquired Fund will each be a "party to a reorganization" within the meaning
of section 368(b) of the Code;

   Now, therefore, the Acquiring Fund and the Acquired Fund agree as follows:

1. Definitions

   In addition to the terms elsewhere defined herein, each of the following
terms shall have the meaning indicated for that term as follows:


                  
1933 Act             Securities Act of 1933, as amended.

Acquiring Fund Share A share of common stock of the Acquiring Fund.

Assets               All assets of any kind and all interests, rights, privileges and powers of or
                     attributable to the Acquired Fund or its shares, as appropriate, whether or
                     not determinable at the appropriate Effective Time and wherever located,
                     including, without limitation, all cash, cash equivalents, securities, claims
                     (whether absolute or contingent, known or unknown, accrued or
                     unaccrued or conditional or unmatured), contract rights and receivables
                     (including dividend and interest receivables) owned by the Acquired
                     Fund or attributable to its shares and any deferred or prepaid expense,
                     other than unamortized organizational expenses, shown as an asset on the
                     Acquired Fund's books.

Closing Date         Shall be on such date following the date that stockholders of the
                     Acquired Fund approve the Plan, as the parties may agree.

Effective Time       5:00 p.m. Eastern Time on the Closing Date, or such other time as the
                     parties may agree to in writing.


                                      34




                         

Financial Statements        The audited financial statements of the relevant Fund for its most
                            recently completed fiscal year and, if applicable, the unaudited financial
                            statements of that Fund for its most recently completed semi-annual
                            period.

Fund                        The Acquiring Fund and/or the Acquired Fund, as the case may be.

Liabilities                 All liabilities, expenses and obligations of any kind whatsoever of the
                            Acquired Fund, whether known or unknown, accrued or unaccrued,
                            absolute or contingent or conditional or unmatured, except that expenses
                            of the Acquisition, if any, contemplated hereby to be paid by the
                            Acquired Fund pursuant to Section 25 of this Plan, which shall not be
                            assumed or paid by the Acquiring Fund and shall not fall within the
                            definition of Liabilities for purposes of this Plan.

N-14 Registration Statement The Registration Statement of the Acquiring Fund on Form N-14 under
                            the 1940 Act that will register the Acquiring Fund Shares to be issued in
                            the Acquisition and will include the proxy materials necessary for the
                            stockholders of the Acquired Fund to approve the Acquisition.

Valuation Time              The close of regular session trading on the NYSE on the Closing Date,
                            when for purposes of the Plan, the Acquiring Fund determines its net
                            asset value per Acquiring Fund Share and the Acquired Fund determines
                            the net value of the Assets.

NAV                         A Fund's net asset value is calculated by valuing and totaling assets and
                            then subtracting liabilities and then dividing the balance by the number of
                            shares that are outstanding.


2. Regulatory Filings

   The Acquiring Fund shall promptly prepare and file the N-14 Registration
Statement with the SEC, and the Acquiring Fund and the Acquired Fund also shall
make any other required or appropriate filings with respect to the actions
contemplated hereby.

3. Stockholder Action

   As soon as practicable after the effective date of the N-14 Registration
Statement, the Acquired Fund shall hold a stockholders meeting to consider and
approve the Acquisition and this Plan and such other matters as the Board of
Directors may determine. Such approval by the stockholders of the Acquired Fund
shall, to the extent necessary to permit the consummation of the transactions
contemplated herein without violating any investment objective, policy or
restriction of the Acquired Fund, be deemed to constitute approval by the
stockholders of a temporary amendment of any investment objective, policy or
restriction that would otherwise be inconsistent with or violated upon the
consummation of such transactions solely for the purpose of consummating such
transactions.

4. Transfer of the Acquired Fund's Assets.

   The Acquiring Fund and the Acquired Fund shall take the following steps with
respect to the Acquisition, as applicable:

    (a)On or prior to the Closing Date, the Acquired Fund shall pay or provide
       for the payment of all of the Liabilities, expenses, costs and charges
       of or attributable to the Acquired Fund that are known to the Acquired
       Fund and that are due and payable prior to or as of the Closing Date.

                                      35



    (b)Prior to the Effective Time, except to the extent prohibited by Rule
       19b-1 under the 1940 Act, the Acquired Fund will declare to Acquired
       Fund shareholders of record a dividend or dividends which, together with
       all previous such dividends, shall have the effect of distributing
       (a) all the excess of (i) Acquired Fund's investment income excludable
       from gross income under section 103(a) of the Code over (ii) Acquired
       Fund's deductions disallowed under section 265 and 171(a)(2) of the
       Code, (b) all of Acquired Fund's investment company taxable income (as
       defined in Code section 852), (computed in each case without regard to
       any deduction for dividends paid), and (c) all of Acquired Fund's net
       realized capital gain (as defined in Code section 1222), if any (after
       reduction for any capital loss carryover), in each case for both the
       taxable year ending on [          ], and the short taxable year
       beginning on [          ], and ending on the Closing Date. Such
       dividends will be made to ensure continued qualification of the Acquired
       Fund as a "regulated investment company" for tax purposes and to
       eliminate fund-level tax.

    (c)At the Effective Time, pursuant to Articles of Transfer accepted for
       record by the State Department of Assessments and Taxation of Maryland
       (the "SDAT"), the Acquired Fund shall assign, transfer, deliver and
       convey the Assets to the Acquiring Fund, subject to the Liabilities. The
       Acquiring Fund shall then accept the Assets and assume the Liabilities
       such that at and after the Effective Time (i) the Assets at or after the
       Effective Time shall become and be assets of the Acquiring Fund, and
       (ii) the Liabilities at the Effective Time shall attach to the Acquiring
       Fund, and shall be enforceable against the Acquiring Fund to the same
       extent as if initially incurred by the Acquiring Fund.

    (d)Within a reasonable time prior to the Closing Date, the Acquired Fund
       shall provide, if requested, a list of the Assets to the Acquiring Fund.
       The Acquired Fund may sell any asset on such list prior to the Effective
       Time. After the Acquired Fund provides such list, the Acquired Fund will
       not acquire any additional securities or permit to exist any
       encumbrances, rights, restrictions or claims not reflected on such list,
       without the approval of the Acquiring Fund. Within a reasonable time
       after receipt of the list and prior to the Closing Date, the Acquiring
       Fund will advise the Acquired Fund in writing of any investments shown
       on the list that the Acquiring Fund has determined to be inconsistent
       with its investment objective, policies and restrictions. The Acquired
       Fund will dispose of any such securities prior to the Closing Date to
       the extent practicable and consistent with applicable legal
       requirements, including the Acquired Fund's investment objectives,
       policies and restrictions. In addition, if the Acquiring Fund determines
       that, as a result of the Acquisition, the Acquiring Fund would own an
       aggregate amount of an investment that would exceed a percentage
       limitation applicable to the Acquiring Fund, the Acquiring Fund will
       advise the Acquired Fund in writing of any such limitation and the
       Acquired Fund shall dispose of a sufficient amount of such investment as
       may be necessary to avoid the limitation as of the Effective Time, to
       the extent practicable and consistent with applicable legal
       requirements, including the Acquired Fund's investment objectives,
       policies and restrictions.

    (e)The Acquired Fund shall assign, transfer, deliver and convey the Assets
       to the Acquiring Fund at the Effective Time on the following basis:

       (1)The value of the Assets less the Liabilities, both determined as of
          the Valuation Time, shall be divided by the then NAV of one Acquiring
          Fund Share, and, in exchange for the transfer of the Assets, the
          Acquiring Fund shall simultaneously issue and deliver to the Acquired
          Fund the number of full Acquiring Fund Shares so determined that are
          allocable to all shares held by or for those stockholders of the
          Acquired Fund on a stockholder by stockholder basis plus fractional
          Acquiring Fund Shares, rounded to the second decimal place or such
          other decimal place as the parties may agree to in writing, allocable
          to those stockholders of the Acquired Fund that at the Effective Time
          participate in the Acquired Fund's Dividend Reinvestment Plan ("DRIP
          Stockholders"), regardless of whether the shares of the Acquired Fund
          with respect to which such fractional Acquiring Fund Shares are to be
          issued and delivered are held by or for the DRIP Stockholders
          directly or in the Acquired Fund's Dividend Reinvestment Plan. The
          Acquiring Fund shall at the same time deliver to the Acquired Fund
          cash in lieu of any fractional Acquiring Fund Shares allocable to
          those stockholders of the Acquired Fund that are not DRIP
          Stockholders;

                                      36



       (2)The NAV of the Acquiring Fund Shares to be delivered to the Acquired
          Fund shall be determined as of the Valuation Time in accordance with
          the Acquiring Fund's then applicable valuation procedures, and the
          net value of the Assets to be conveyed to the Acquiring Fund shall be
          determined as of the Valuation Time in accordance with the then
          applicable valuation procedures of the Acquired Fund; and

       (3)The portfolio securities of the Acquired Fund shall be made available
          by the Acquired Fund to           , as custodian for the Acquiring
          Fund (the "Custodian"), for examination no later than five business
          days preceding the Valuation Time. On the Closing Date, such
          portfolio securities and all the Acquired Fund's cash shall be
          delivered by the Acquired Fund to the Custodian for the account of
          the Acquiring Fund, such portfolio securities to be duly endorsed in
          proper form for transfer in such manner and condition as to
          constitute good delivery thereof in accordance with the custom of
          brokers or, in the case of portfolio securities held in the U.S.
          Treasury Department's book-entry system or by The Depository Trust
          Company, Participants Trust Company or other third party
          depositories, by transfer to the account of the Custodian in
          accordance with Rule 17f-4, Rule 17f-5 or Rule 17f-7, as the case may
          be, under the 1940 Act and accompanied by all necessary federal and
          state stock transfer stamps or a check for the appropriate purchase
          price thereof. The cash delivered shall be in the form of currency or
          certified or official bank checks, payable to the order of
                    , the Custodian, or shall be wired to an account pursuant
          to instructions provided by the Acquiring Fund.

    (f)Promptly after the Closing Date, the Acquired Fund will deliver to the
       Acquiring Fund a Statement of Assets and Liabilities of the Acquired
       Fund as of the Closing Date.

5. Liquidation and Dissolution of the Acquired Fund, Registration of Acquiring
   Fund Shares and Access to Records.

   The Acquired Fund and the Acquiring Fund also shall take the following
steps, as applicable:

    (a)At or as soon as reasonably practical after the Effective Time, the
       Acquired Fund shall liquidate and dissolve by transferring pro rata to
       its stockholders of record, the Acquiring Fund Shares and cash it
       receives pursuant to Section 4(e)(1) of this Plan. The Acquiring Fund
       shall record on its books the ownership by the Acquired Fund's
       stockholders of the Acquiring Fund Shares so transferred to such
       stockholders, and the Acquired Fund shall simultaneously cancel on its
       books all of the issued and outstanding shares of the Acquired Fund. The
       Acquiring Fund shall not issue certificates representing Acquiring Fund
       Shares to replace certificates representing Acquired Fund shares unless
       the Acquired Fund share certificates are first surrendered to the
       Acquiring Fund.

       Following distribution by the Acquired Fund to its stockholders of all
       the Acquiring Fund Shares delivered to the Acquired Fund, the Acquired
       Fund shall wind up its affairs and shall take all steps as are necessary
       and proper to liquidate and dissolve as soon as is reasonably possible
       after the Effective Time, including filing of Articles of Dissolution
       with SDAT.

    (b)At and after the Closing Date, the Acquired Fund shall provide the
       Acquiring Fund and its transfer agent with immediate access to: (i) all
       records containing the names, addresses and taxpayer identification
       numbers of all of the Acquired Fund's stockholders and the number and
       percentage ownership of the outstanding shares of the Acquired Fund
       owned by stockholders as of the Effective Time, and (ii) all original
       documentation (including all applicable Internal Revenue Service forms,
       certificates, certifications and correspondence) relating to the
       Acquired Fund stockholders' taxpayer identification numbers and their
       liability for or exemption from back-up withholding. The Acquired Fund
       shall preserve and maintain, or shall direct its service providers to
       preserve and maintain, records with respect to the Acquired Fund as
       required by Section 31 of, and Rules 31a-1 and 31a-2 under, the 1940 Act.

                                      37



6. Certain Representations and Warranties of the Acquired Fund.

   The Acquired Fund represents and warrants to the Acquiring Fund as follows:

    (a)The Acquired Fund is a corporation duly incorporated, validly existing
       and in good standing under the laws of the State of Maryland. The
       Acquired Fund is registered with the SEC as a closed-end management
       investment company under the 1940 Act and is duly registered with the
       SEC under the 1934 Act, and such registrations will be in full force and
       effect as of the Effective Time.

    (b)The Acquired Fund has the power and all necessary federal, state and
       local qualifications and authorizations to own all of the Assets, to
       carry on its business, to enter into this Plan and to consummate the
       transactions contemplated herein.

    (c)The Board of Directors of the Acquired Fund has duly authorized the
       execution and delivery of this Plan and the transactions contemplated
       herein. Duly authorized officers of the Acquired Fund have executed and
       delivered the Plan. The Plan represents a valid and binding contract,
       enforceable in accordance with its terms, subject as to enforcement to
       bankruptcy, insolvency, reorganization, arrangement, moratorium, and
       other similar laws of general applicability relating to or affecting
       creditors' rights and to general equity principles. The execution and
       delivery of this Plan does not, and, subject to the approval of
       stockholders referred to in Section 3 hereof, the consummation of the
       transactions contemplated by this Plan will not, violate the Acquired
       Fund's Charter, its Bylaws or any material agreement to which the
       Acquired Fund is subject. Except for the approval of its stockholders,
       the Acquired Fund does not need to take any other action to authorize
       its officers to effectuate this Plan and the transactions contemplated
       herein.

    (d)The Acquired Fund has qualified as a regulated investment company under
       Part I of Subchapter M of Subtitle A, Chapter 1, of the Code, in respect
       of each taxable year since the commencement of its operations and
       intends to continue to qualify as a regulated investment company for its
       taxable year ending upon its liquidation.

    (e)The information pertaining to the Acquired Fund included within the N-14
       Registration Statement when filed with the SEC, when Part A of the N-14
       Registration Statement is distributed to stockholders, at the time of
       the stockholders meeting of the Acquired Fund for approval of the
       Acquisition and at the Effective Time shall (i) comply in all material
       respects with the applicable provisions of the 1933 Act, the 1934 Act
       and the 1940 Act, and the rules and regulations thereunder and
       applicable state securities laws, and (ii) not contain any untrue
       statement of a material fact or omit to state a material fact required
       to be stated therein or necessary to make the statements made therein
       not misleading.

    (f)The Acquired Fund has duly authorized and validly issued all of its
       issued and outstanding shares of common stock, and all such shares are
       fully paid and non-assessable and were offered for sale and sold in
       conformity with the registration requirements of all applicable federal
       and state securities laws. There are no outstanding options, warrants or
       other rights to subscribe for or purchase any of the shares of the
       Acquired Fund, nor are there any securities convertible into shares of
       the Acquired Fund.

    (g)The Acquired Fund shall operate its business in the ordinary course
       between the date hereof and the Effective Time. Such ordinary course of
       business will include the declaration and payment of customary dividends
       and distributions and any other dividends and distributions referred to
       in Section 4(b) hereof.

    (h)At the Effective Time, the Acquired Fund will have good and marketable
       title to the Assets and full right, power and authority to assign,
       transfer, deliver and convey the Assets.

    (i)The Financial Statements of the Acquired Fund, a copy of which has been
       previously delivered to the Acquiring Fund, fairly present the financial
       position of the Acquired Fund as of the Acquired Fund's most recent
       fiscal year-end and the results of the Acquired Fund's operations and
       changes in the Acquired Fund's net assets for the periods indicated.

                                      38



    (j)To the knowledge of the Acquired Fund, the Acquired Fund has no
       liabilities, whether or not determined or determinable, other than the
       Liabilities disclosed or provided for in its Financial Statements or
       Liabilities incurred in the ordinary course of business subsequent to
       the date of the most recent Financial Statement referencing Liabilities.

    (k)To the knowledge of the Acquired Fund, except as has been disclosed in
       writing to the Acquiring Fund, no claims, actions, suits, investigations
       or proceedings of any type are pending or threatened against the
       Acquired Fund or any of its properties or assets or any person whom the
       Acquired Fund may be obligated to indemnify in connection with such
       litigation, proceeding or investigation. Subject to the foregoing, there
       are no facts that the Acquired Fund has reason to believe are likely to
       form the basis for the institution of any such claim, action, suit,
       investigation or proceeding against the Acquired Fund. The Acquired Fund
       is not a party to nor subject to the provisions of any order, decree or
       judgment of any court or governmental body that adversely affects, or is
       reasonably likely to adversely affect, its financial condition, results
       of operations, or the Assets or its ability to consummate the
       transactions contemplated by the Plan.

    (l)Except for agreements entered into or granted in the ordinary course of
       its business, in each case under which no material default exists, and
       this Plan, the Acquired Fund is not a party to or subject to any
       material contract or other commitments, which if terminated, may result
       in material liability to the Acquired Fund or under which (whether or
       not terminated) any material payment for periods subsequent to the
       Closing Date will be due from the Acquired Fund.

    (m)The Acquired Fund has filed its federal income tax returns, copies of
       which have been previously made available to the Acquiring Fund, for all
       taxable years for which such returns are due and has paid all taxes
       payable pursuant to such returns. All of the Acquired Fund's tax
       liabilities will have been adequately provided for on its books. No such
       return is currently under audit and no unpaid assessment has been
       asserted with respect to such returns. To the best of the Acquired
       Fund's knowledge, it will not have any tax deficiency or liability
       asserted against it or question with respect thereto raised, and it will
       not be under audit by the Internal Revenue Service or by any state or
       local tax authority for taxes in excess of those already paid. The
       Acquired Fund will timely file its federal income tax return for each
       subsequent taxable year including its current taxable year.

    (n)For federal income tax purposes, the Acquired Fund qualifies as a
       "regulated investment company," and the provisions of section 851
       through 855 of the Code apply to the Acquired Fund for the remainder of
       its current taxable year beginning [          ], and will continue to
       apply through the Closing Date.

    (o)Since the date of the Financial Statements of the Acquired Fund, there
       has been no material adverse change in its financial condition, results
       of operations, business, or Assets. For this purpose, negative
       investment performance shall not be considered a material adverse change.

    (p)The Acquired Fund's investment operations from inception to the date
       hereof have been in compliance in all material respects with the
       investment policies and investment restrictions set forth in its
       prospectus or prospectuses and statement or statements of additional
       information as in effect from time to time, except as previously
       disclosed in writing to the Acquiring Fund.

    (q)The Acquiring Fund Shares to be issued to the Acquired Fund pursuant to
       paragraph 4(e)(1) will not be acquired for the purpose of making any
       distribution thereof other than to the Acquired Fund Stockholders as
       provided in paragraph 4(e)(1).

    (r)The Acquired Fund, or its agents, (i) holds a valid Form W-8Ben,
       Certificate of Foreign Status of Beneficial Owner for United States
       Withholding (or other appropriate series of Form W-8, as the case may
       be) or Form W-9, Request for Taxpayer Identification Number and
       Certification, for each Acquired Fund stockholder of record, which Form
       W-8 or Form W-9 can be associated with reportable payments made by the
       Acquired Fund to such stockholder, and/or (ii) has otherwise timely
       instituted the appropriate backup withholding procedures with respect to
       such stockholder as provided by Section 3406 of the Code and the
       regulations thereunder.

                                      39



7. Certain Representations and Warranties of Acquiring Fund.

   The Acquiring Fund represents and warrants to the Acquired Fund as follows:

    (a)The Acquiring Fund is a corporation duly incorporated, validly existing
       and in good standing under the laws of the State of Maryland. The
       Acquiring Fund is registered with the SEC as a closed-end management
       investment company under the 1940 Act and is duly registered with the
       SEC under the 1934 Act, and such registrations will be in full force and
       effect as of the Effective Time.

    (b)The Acquiring Fund shall operate its business in the ordinary course
       between the date hereof and the Effective Time. Such ordinary course of
       business will include the declaration and payment of customary dividends
       and distributions and any other dividends and distributions referred to
       in Section 4(b) hereof.

    (c)The Acquiring Fund has the power and all necessary federal, state and
       local qualifications and authorizations to own all of its assets, to
       carry on its business, to enter into this Plan and to consummate the
       transactions contemplated herein.

    (d)The Board of Directors of the Acquiring Fund has duly authorized
       execution and delivery of this Plan and the transactions contemplated
       herein. Duly authorized officers of the Acquiring Fund have executed and
       delivered the Plan. The Plan represents a valid and binding contract,
       enforceable in accordance with its terms, subject as to enforcement to
       bankruptcy, insolvency, reorganization, arrangement, moratorium and
       other similar laws of general applicability relating to or affecting
       creditors' rights and to general equity principles. The execution and
       delivery of this Plan does not, and the consummation of the transactions
       contemplated by this Plan will not violate the Charter of the Acquiring
       Fund, its Bylaws or any material agreement to which the Acquiring Fund
       is subject. Except for the approval of its Board, the Acquiring Fund
       does not need to take any other action to authorize its officers to
       effectuate the Plan and the transactions contemplated herein.

    (e)The Acquiring Fund has qualified as a regulated investment company under
       Part I of Subchapter M of Subtitle A, Chapter 1, of the Code, in respect
       of each taxable year since the commencement of its operations and
       qualifies and intends to continue to qualify as a regulated investment
       company for its current taxable year.

    (f)The N-14 Registration Statement, when filed with the SEC, when Part A of
       the N-14 Registration Statement is distributed to stockholders, at the
       time of the stockholder meeting of the Acquired Fund for approval of the
       Acquisition and at the Effective Time, insofar as it relates to the
       Acquiring Fund shall (i) comply in all material respects with the
       applicable provisions of the 1933 Act, the 1934 Act and the 1940 Act,
       and the rules and regulations thereunder and applicable state securities
       laws and (ii) not contain any untrue statement of a material fact or
       omit to state a material fact required to be stated therein or necessary
       to make the statements made therein, in light of the circumstances under
       which they were made, not misleading.

    (g)The Acquiring Fund has duly authorized and validly issued all issued and
       outstanding Acquiring Fund Shares, and all such shares are fully paid
       and non-assessable and were offered for sale and sold in conformity with
       the registration requirements of all applicable federal and state
       securities laws. The Acquiring Fund has duly authorized the Acquiring
       Fund Shares referred to in Section 4(e) hereof to be issued and
       delivered to the Acquired Fund as of the Effective Time. When issued and
       delivered, such Acquiring Fund Shares shall be validly issued, fully
       paid and non-assessable, and no stockholder of the Acquiring Fund shall
       have any preemptive right of subscription or purchase in respect of any
       such share. There are no outstanding options, warrants or other rights
       to subscribe for or purchase any Acquiring Fund Shares, nor are there
       any securities convertible into Acquiring Fund Shares.

    (h)To the knowledge of the Acquiring Fund, except as has been disclosed in
       writing to the Acquiring Fund, no claims, actions, suits, investigations
       or proceedings of any type are pending or threatened against the
       Acquiring Fund or any of its properties or assets or any person whom the
       Acquiring Fund

                                      40



       may be obligated to indemnify in connection with such litigation,
       proceeding or investigation. Subject to the foregoing, there are no
       facts that the Acquiring Fund currently has reason to believe are likely
       to form the basis for the institution of any such claim, action, suit,
       investigation or proceeding against the Acquiring Fund. The Acquiring
       Fund is not a party to or subject to the provisions of any order, decree
       or judgment of any court or governmental body that adversely affects, or
       is reasonably likely to adversely affect its financial condition,
       results of operations, its assets or its ability to consummate the
       transactions contemplated by this Plan.

    (i)Except for agreements entered into or granted in the ordinary course of
       its business, in each case under which no material default exists, the
       Acquiring Fund is not a party to or subject to any material contract,
       debt instrument, employee benefit plan, lease, franchise, license or
       permit of any kind or nature whatsoever.

    (j)The Acquiring Fund has filed its federal income tax returns, copies of
       which have been previously made available to the Acquired Fund, for all
       taxable years for which such returns are due and has paid all taxes
       payable pursuant to such returns. All of the Acquiring Fund's tax
       liabilities will have been adequately provided for on its books. No such
       return is currently under audit and no unpaid assessment has been
       asserted with respect to such returns. To the best of the Acquiring
       Fund's knowledge, it will not have any tax deficiency or liability
       asserted against it or question with respect thereto raised, and it will
       not be under audit by the Internal Revenue Service or by any state or
       local tax authority for taxes in excess of those already paid. The
       Acquiring Fund will timely file its federal income tax return for each
       subsequent taxable year including its current taxable year.

    (k)For federal income tax purposes, the Acquiring Fund qualifies as a
       "regulated investment company," and the provisions of section 851
       through 855 of the Code apply to the Acquiring Fund for the remainder of
       its current taxable year beginning [          ], and will continue to
       apply through the Closing Date.

    (l)The Financial Statements of the Acquiring Fund, a copy of which has been
       previously delivered to the Acquired Fund, fairly present the financial
       position of the Acquiring Fund's most recent fiscal year-end and the
       results of the Acquiring Fund's operations and changes in the Acquiring
       Fund's net assets for the period indicated.

    (m)Since the date of the Financial Statements of the Acquiring Fund, there
       has been no material adverse change in its financial condition, results
       of operations, business or assets. Negative investment performance shall
       not be considered a material adverse change.

    (n)The Acquiring Fund's investment operations from inception to the date
       hereof have been in compliance in all material respects with the
       investment policies and investment restrictions set forth in its
       prospectus or prospectuses and statement or statements of additional
       information as in effect from time to time, except as previously
       disclosed in writing to the Acquired Fund.

    (o)The Acquiring Fund will use all reasonable efforts to obtain the
       approvals and authorizations required by the 1933 Act, the 1940 Act and
       such other state securities laws as it may deem appropriate in order to
       continue its operations after the Closing Date.

8. Conditions to the Obligations of the Acquiring Fund and the Acquired Fund.

   The obligations of the Acquiring Fund and the Acquired Fund with respect to
the Acquisition shall be subject to the following conditions precedent:

    (a)The stockholders of the Acquired Fund shall have approved the
       Acquisition in the manner required by the Charter of the Acquired Fund,
       its Bylaws and applicable law. If stockholders of the Acquired Fund fail
       to approve the Acquisition as required, that failure shall release the
       Funds of their obligations under this Plan.

                                      41



    (b)The Acquiring Fund and the Acquired Fund shall have delivered to the
       other party a certificate dated as of the Closing Date and executed in
       its name by its Secretary or an Assistant Secretary, in a form
       reasonably satisfactory to the receiving party, stating that the
       representations and warranties of the Acquiring Fund or the Acquired
       Fund, as applicable, in this Plan that apply to the Acquisition are true
       and correct in all material respects at and as of the Valuation Time.

    (c)The Acquiring Fund and the Acquired Fund shall have performed and
       complied in all material respects with each of its representations and
       warranties required by this Plan to be performed or complied with by it
       prior to or at the Valuation Time and the Effective Time.

    (d)There has been no material adverse change in the financial condition,
       results of operations, business, properties or assets of the Acquiring
       Fund or the Acquired Fund since the date of the most recent Financial
       Statements. Negative investment performance shall not be considered a
       material adverse change.

    (e)The Acquiring Fund and the Acquired Fund shall have received an opinion
       of Seward & Kissel LLP reasonably satisfactory to each of them,
       substantially to the effect that for federal income tax purposes:

       (1)the Acquisition will constitute a "reorganization" within the meaning
          of section 368(a) of the Code and that the Acquiring Fund and the
          Acquired Fund will each be "a party to a reorganization" within the
          meaning of section 368(b) of the Code;

       (2)a stockholder of the Acquired Fund will recognize no gain or loss on
          the exchange of the stockholder's shares of the Acquired Fund solely
          for Acquiring Fund Shares, except with respect to cash received in
          lieu of a fractional share of the Acquiring Fund in connection with
          the Acquisition;

       (3)neither the Acquired Fund nor the Acquiring Fund will recognize any
          gain or loss upon the transfer of all of the Assets to the Acquiring
          Fund in exchange for Acquiring Fund Shares (plus cash in lieu of
          fractional shares) and the assumption by Acquiring Fund of the
          Liabilities pursuant to this Plan or upon the distribution of
          Acquiring Fund Shares and cash to stockholders of the Acquired Fund
          in exchange for their respective shares of the Acquired Fund;

       (4)the holding period and tax basis of the Assets acquired by the
          Acquiring Fund will be the same as the holding period and tax basis
          that the Acquired Fund had in such Assets immediately prior to the
          Acquisition;

       (5)the aggregate tax basis of the Acquiring Fund Shares received in
          connection with the Acquisition by each stockholder of the Acquired
          Fund (including any fractional share to which the stockholder may be
          entitled) will be the same as the aggregate tax basis of the shares
          of the Acquired Fund surrendered in exchange therefor, decreased by
          any cash received and increased by any gain recognized on the
          exchange;

       (6)the holding period of the Acquiring Fund Shares received in
          connection with the Acquisition by each stockholder of the Acquired
          Fund (including any fractional share to which the stockholder may be
          entitled) will include the holding period of the shares of the
          Acquired Fund surrendered in exchange therefor, provided that such
          Acquired Fund shares constitute capital assets in the hands of the
          stockholder as of the Closing Date;

       (7)The Acquiring Fund will succeed to the capital loss carryovers of the
          Acquired Fund, if any, under section 381 of the Code, but the use by
          the Acquiring Fund of any such capital loss carryovers (and of
          capital loss carryovers of the Acquiring Fund) may be subject to
          limitation under section 383 of the Code; and

       (8)any gain or loss realized by a stockholder of the Acquired Fund upon
          the sale of a fractional share of the Acquiring Fund to which the
          stockholder is entitled will be recognized to the stockholder and
          measured by the difference between the amount of cash received and
          the basis of the fractional

                                      42



          share and, provided that the Acquired Fund shares surrendered
          constitute capital assets in the hands of the stockholder, will be a
          capital gain or loss.

       The opinion will be based on certain factual certifications made by
       officers of the Funds and will also be based on customary assumptions
       and subject to certain qualifications. The opinion is not a guarantee
       that the tax consequences of the Acquisition will be as described above.

       Notwithstanding this subparagraph (e), Seward & Kissel LLP will express
       no view with respect to the effect of the Acquisition on any transferred
       asset as to which any unrealized gain or loss is required to be
       recognized at the end of a taxable year (or on the termination or
       transfer thereof) under federal income tax principles. Each Fund shall
       agree to make and provide additional representations to Seward & Kissel
       LLP with respect to the Funds that are reasonably necessary to enable
       Seward & Kissel LLP to deliver the tax opinion. Notwithstanding anything
       in this Plan to the contrary, neither Fund may waive in any material
       respect the conditions set forth under this subparagraph (e).

    (f)The N-14 Registration Statement shall have become effective under the
       1933 Act as to the Acquiring Fund Shares, and the SEC shall not have
       instituted and to the knowledge of the Acquiring Fund is not
       contemplating instituting, any stop order suspending the effectiveness
       of the N-14 Registration Statement.

    (g)No action, suit or other proceeding shall be threatened or pending
       before any court or governmental agency in which it is sought to
       restrain or prohibit, or obtain damages or other relief in connection
       with, the Acquisition.

    (h)The SEC shall not have issued any unfavorable advisory report under
       Section 25(b) of the 1940 Act nor instituted any proceeding seeking to
       enjoin consummation of the Acquisition under Section 25(c) of the 1940
       Act.

    (i)Neither party shall have terminated this Plan with respect to the
       Acquisition pursuant to Section 13 of this Plan.

    (j)The NYSE shall have approved, upon official notice of issuance, the
       listing of the Acquiring Fund Shares to be issued and delivered to the
       Acquired Fund pursuant hereto.

9. Conditions to the Obligations of the Acquired Fund.

   The obligations of the Acquired Fund with respect to the Acquisition shall
be subject to the following conditions precedent:

    (a)The Acquired Fund shall have received an opinion of Seward & Kissel LLP,
       counsel to the Acquiring Fund, in form and substance reasonably
       satisfactory to the Acquired Fund and dated as of the Closing Date,
       substantially to the effect that:

       (1)The Acquiring Fund is a corporation duly incorporated, validly
          existing and in good standing under the laws of the State of Maryland
          and is a closed-end, management investment company registered under
          the 1940 Act and duly registered under the 1934 Act;

       (2)This Plan has been duly authorized, executed and delivered by the
          Acquiring Fund and, assuming the N-14 Registration Statement referred
          to in Section 2 of this Plan does not contain any material
          misstatements or omissions, and assuming due authorization, execution
          and delivery of this Plan by the Acquired Fund, represents a legal,
          valid and binding contract, enforceable in accordance with its terms,
          subject to the effect of bankruptcy, insolvency, moratorium,
          fraudulent conveyance and transfer and similar laws relating to or
          affecting creditors' rights generally and court decisions with
          respect thereto, and further subject to the application of equitable
          principles in any proceeding, whether at law or in equity or with
          respect to the enforcement of provisions of the Plan and the effect
          of judicial decisions which have held that certain provisions are
          unenforceable when their enforcement would violate an implied
          covenant of good faith and fair dealing or would be commercially
          unreasonable or when default under the Plan is not material;

                                      43



       (3)The Acquiring Fund Shares to be delivered as provided for by this
          Plan are duly authorized and upon delivery will be validly issued,
          fully paid and non-assessable by the Acquiring Fund;

       (4)The execution and delivery of this Plan did not, and the consummation
          of the Acquisition will not, violate the Charter of the Acquiring
          Fund, its Bylaws or any agreement of the Acquiring Fund known to such
          counsel, after reasonable inquiry; and

       (5)To the knowledge of such counsel, no consent, approval, authorization
          or order of any federal or state court or administrative or
          regulatory agency, other than the acceptance of record of Articles of
          Transfer by the SDAT, is required for the Acquiring Fund to enter
          into this Plan or carry out its terms, except those that have been
          obtained under the 1933 Act, the 1934 Act, the 1940 Act and the rules
          and regulations under those Acts or that may be required under state
          securities laws or subsequent to the Effective Time or when the
          failure to obtain the consent, approval, authorization or order would
          not have a material adverse effect on the operation of the Acquiring
          Fund.

       In rendering such opinion, Seward & Kissel LLP may (i) rely on the
       opinion of Venable LLP as to matters of Maryland law to the extent set
       forth in such opinion, (ii) make assumptions regarding the authenticity,
       genuineness and/or conformity of documents and copies thereof without
       independent verification thereof, (iii) limit such opinion to applicable
       federal and state law, (iv) define the word "knowledge" and related
       terms to mean the knowledge of attorneys then with such firm who have
       devoted substantive attention to matters directly related to this Plan
       and (v) rely on certificates of officers or directors of the Acquiring
       Fund as to factual matters.

    (b)The Acquiring Fund shall have received a letter from the Adviser with
       respect to insurance matters in form and substance satisfactory to the
       Acquired Fund.

10.Conditions to the Obligations of the Acquiring Fund.

   The obligations of the Acquiring Fund with respect to the Acquisition shall
be subject to the following conditions precedent:

    (a)The Acquiring Fund shall have received an opinion of Seward & Kissel
       LLP, counsel to the Acquired Fund, in form and substance reasonably
       satisfactory to the Acquiring Fund and dated as of the Closing Date,
       substantially to the effect that:

       (1)The Acquired Fund is a corporation duly incorporated, validly
          existing and in good standing under the laws of the State of Maryland
          and is a closed-end management investment company registered under
          the 1940 act and duly registered under the 1934 Act;

       (2)This Plan has been duly authorized, executed and delivered by the
          Acquired Fund and, assuming the N-14 Registration Statement referred
          to in Section 2 of this Plan does not contain any material
          misstatements or omissions, and assuming due authorization, execution
          and delivery of this Plan by the Acquiring Fund, represents a legal,
          valid and binding contract, enforceable in accordance with its terms,
          subject to the effect of bankruptcy, insolvency, moratorium,
          fraudulent conveyance and transfer and similar laws relating to or
          affecting creditors' rights generally and court decisions with
          respect thereto, and further subject to the application of equitable
          principles in any proceeding, whether at law or in equity or with
          respect to the enforcement of provisions of the Plan and the effect
          of judicial decisions which have held that certain provisions are
          unenforceable when their enforcement would violate an implied
          covenant of good faith and fair dealing or would be commercially
          unreasonable or when default under the Plan is not material;

       (3)The execution and delivery of this Plan did not, and the consummation
          of the Acquisition will not, violate the Charter of the Acquired
          Fund, its Bylaws or any agreement of the Acquired Fund known to such
          counsel, after reasonable inquiry, and no approval of the Plan by
          stockholders of the Acquiring Fund is required under its Charter,
          Bylaws or applicable law; and

                                      44



       (4)To the knowledge of such counsel, no consent, approval, authorization
          or order of any federal or state court or administrative or
          regulatory agency, other than the acceptance of record of Articles of
          Transfer by the SDAT, is required for the Acquired Fund to enter into
          the Plan or carry out its terms, except those that have been obtained
          under the 1933 Act, the 1934 Act, the 1940 Act and the rules and
          regulations under those Acts or that may be required under state
          securities laws or subsequent to the Effective Time or when the
          failure to obtain the consent, approval, authorization or order would
          not have a material adverse effect on the operation of the Acquired
          Fund.

       In rendering such opinion, Seward & Kissel LLP may (i) rely on the
       opinion of Venable LLP as to matters of Maryland law , (ii) make
       assumptions regarding the authenticity, genuineness and/or conformity of
       documents and copies thereof without independent verification thereof,
       (iii) limit such opinion to applicable federal and state law,
       (iv) define the word "knowledge" and related terms to mean the knowledge
       of attorneys then with such firm who have devoted substantive attention
       to matters directly related to this Plan and (v) rely on certificates of
       officers or directors of the Acquired Fund as to factual matters.

    (b)The Acquiring Fund shall have received a letter from the Adviser
       agreeing to indemnify the Acquiring Fund in respect of certain
       liabilities of the Acquired Fund in form and substance satisfactory to
       the Acquiring Fund.

11.Closing

    (a)The Closing shall be held at the offices of the Funds, 1345 Avenue of
       the Americas, New York, New York 10105, or at such other time place as
       the parties may agree.

    (b)In the event that at the Valuation Time (a) the New York Stock Exchange
       shall be closed to trading or trading thereon shall be restricted, or
       (b) trading or the reporting of trading on said Exchange or elsewhere
       shall be disrupted so that accurate appraisal of the value of the net
       assets of the Acquired Fund or the Acquiring Fund is impracticable, the
       Closing Date shall be postponed until the first business day after the
       day when trading shall have been fully resumed and reporting shall have
       been restored; provided that if trading shall not be fully resumed and
       reporting restored within three business days of the Valuation Time,
       this Plan may be terminated by either the Acquired Fund or the Acquiring
       Fund upon the giving of written notice to the other party.

    (c)The Acquiring Fund will provide to the Acquired Fund evidence
       satisfactory to the Acquired Fund that the Acquiring Fund Shares
       issuable pursuant to the Acquisition have been credited to the Acquired
       Fund's account on the books of the Acquiring Fund. After the Closing
       Date, the Acquiring Fund will provide to the Acquired Fund evidence
       satisfactory to the Acquired Fund that such Shares have been credited
       pro rata to open accounts in the names of the Acquired Fund Stockholders.

    (d)At the Closing each party shall deliver to the other such bills of sale,
       instruments of assumption of liabilities, checks, assignments, stock
       certificates, receipts or other documents as such other party or its
       counsel may reasonably request in connection with the transfer of
       assets, assumption of liabilities and liquidation contemplated by the
       Plan.

12.Survival of Representations and Warranties.

   No representations, warranties or covenants in or pursuant to this Plan
(including certificates of officers) hereto shall survive the completion of the
transactions contemplated herein.

13.Termination of Plan.

   A majority of either Fund's Board of Directors may terminate this Plan with
respect to that Fund at any time before the applicable Effective Time if:
(i) the Fund's conditions precedent set forth in Sections 8, 9 or 10 as
appropriate, are not satisfied; or (ii) the Board of Directors determines that
the consummation of the Acquisition is not in the best interests of the Fund or
its stockholders and gives notice of such termination to the other party.

                                      45



14.Governing Law.

   This Plan and the transactions contemplated hereby shall be governed,
construed and enforced in accordance with the laws of the State of New York,
except to the extent preempted by federal law, without regard to conflicts of
law principles.

15.Brokerage Fees.

   Each party represents and warrants that there are no brokers or finders
entitled to receive any payments in connection with the transactions provided
for in the Plan.

16.Amendments.

   The parties may, by agreement in writing authorized by their respective
Board of Directors, amend this Plan at any time before or after the
stockholders of the Acquired Fund approve the Acquisition. However, after
stockholders of the Acquired Fund approve the Acquisition, the parties may not
amend this Plan in a manner that materially alters the obligations of the other
party. This Section shall not preclude the parties from changing the Closing
Date or the Effective Time by mutual agreement.

17.Waivers.

   At any time prior to the Closing Date, either party may by written
instrument signed by it (i) waive the effect of any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the agreements, covenants or conditions made for its
benefit contained herein. Any waiver shall apply only to the particular
inaccuracy or requirement for compliance waived, and not any other or future
inaccuracy or lack of compliance.

18.Indemnification of Directors.

   The Acquiring Fund agrees that all rights to indemnification and all
limitations of liability existing in favor of the Acquired Fund's current and
former Directors and officers, acting in their capacities as such, under the
Acquired Fund's Articles of Incorporation and Bylaws as in effect as of the
date of this Plan shall survive the Acquisition as obligations of the Acquiring
Fund and shall continue in full force and effect, without any amendment
thereto, and shall constitute rights which may be asserted against the
Acquiring Fund, its successors or assigns.

19.Other Matters.

   Pursuant to Rule 145 under the 1933 Act, and in connection with the issuance
of any shares to any person who at the time of the Acquisition is, to the
Acquiring Fund's knowledge, an affiliate of a party to the Acquisition pursuant
to Rule 145(c), the Acquiring Fund will cause to be affixed upon the
certificate(s) issued to such person (if any) a legend as follows:

      THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES
   ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO ACQUIRING
   FUND (OR ITS STATUTORY SUCCESSOR) UNLESS (I) A REGISTRATION STATEMENT WITH
   RESPECT TO SUCH SHARES IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR
   (II) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE FUND, SUCH
   REGISTRATION IS NOT REQUIRED.

20.Cooperation and Further Assurances.

   Each party will cooperate with the other in fulfilling its obligations under
this Plan and will provide such information and documentation as is reasonably
requested by the other in carrying out the Plan's terms. Each party will
provide such further assurances concerning the performance of its obligations
hereunder and execute all documents for or in connection with the consummation
of the Acquisition as, with respect to such assurances or documents, the other
shall deem necessary or appropriate.

                                      46



21.Updating of N-14 Registration Statement.

   If at any time prior to the Effective Time, a party becomes aware of any
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements made not
misleading in the N-14 Registration Statement, the party discovering the item
shall notify the other party and the parties shall cooperate in promptly
preparing, filing and clearing with the SEC and, if appropriate, distributing
to stockholders appropriate disclosure with respect to the item.

22.Limitation on Liabilities.

   The obligations of the Acquired Fund and the Acquiring Fund shall not bind
any of the directors, stockholders, nominees, officers, agents, employees or
agents of the Acquired Fund or the Acquiring Fund personally, but shall bind
only the Acquired Fund or Acquiring Fund, as appropriate. The execution and
delivery of this Plan by an officer of either party shall not be deemed to have
been made by the officer individually or to impose any liability on the officer
personally, but shall bind only the Acquired Fund or the Acquiring Fund, as
appropriate.

23.Termination of the Acquired Fund.

   If the parties complete the Acquisition, the Acquired Fund shall terminate
its registration under the 1940 Act, the 1933 Act, and the 1934 Act and will
liquidate and dissolve.

24.Notices.

   Any notice, report, statement, certificate or demand required or permitted
by any provision of the Plan shall be in writing and shall be given in person
or by telecopy, certified mail or overnight express courier to:

   For the Acquired Fund:

             [Acquired Fund]

             1345 Avenue of the Americas
             New York, New York 10105

             Attention: Secretary

   For the Acquiring Fund:

             [Acquiring Fund]

             1345 Avenue of the Americas
             New York, New York 10105

             Attention: Secretary

25.Expenses.

   The Acquisition expenses shall be paid by the Acquired Fund.

26.General.

   This Plan supersedes all prior agreements between the parties with respect
to the subject matter hereof and may be amended only in writing signed by both
parties. The headings contained in this Plan are for reference only and shall
not affect in any way the meaning or interpretation of this Plan. Whenever the
context so requires, the use in the Plan of the singular will be deemed to
include the plural and vice versa. Nothing in this Plan, expressed or implied,
confers upon any other person any rights or remedies under or by reason of this
Plan. Neither party may assign or transfer any right or obligation under this
Plan without the written consent of the other party.

                                      47



   In Witness Whereof, the parties hereto have executed this Plan as of the day
and year first above written.


                                         
[Acquired Fund]

Attest:


-------------------------------------      By: -------------------------------------

Name:
       --------------------------------        Name:  --------------------------------

Title:
       --------------------------------        Title: --------------------------------


                                         

[Acquiring Fund]

Attest:


-------------------------------------      By: -------------------------------------

Name:
       --------------------------------        Name:  --------------------------------

Title:
       --------------------------------        Title: --------------------------------


AllianceBernstein L.P.

By: AllianceBernstein Corporation, its General Partner


By: ---------------------------------


    Name:           -------------------------


    Title:          -------------------------

                                      48



                                  APPENDIX E

                     EXISTING AND PRO FORMA CAPITALIZATION

   The following tables set forth (i) the capitalization of the Funds and
(ii) the pro forma capitalization of ACM Income as adjusted giving effect to
the proposed acquisition of assets at net asset value as of March 31, 2006:



                          ACM
                      Government                               ACM Income
                      Opportunity    ACM Income   Adjustments  (pro forma)
                      ------------ -------------- ----------- --------------
                                                  
   Total Net Assets   $109,677,570 $1,869,167,537  $(112,500) $1,978,732,607
   Shares outstanding   12,903,932    229,436,279    554,156     242,894,367
   NAV per share      $       8.50 $         8.15         --  $         8.15


                                      49



                                  APPENDIX F

                     TRADING HISTORY AND SHARE PRICE DATA

   Shares of the Funds are traded on the NYSE under the following symbols: ACM
Government Opportunity--"AOF" and ACM Income--"ACG". Shares of closed-end
management companies frequently trade at discounts from their NAVs, and the
Funds' shares have also traded at a discount in recent times. The following
tables set forth for each Fund's fiscal quarter within the two most recent
fiscal years and each Fund's fiscal quarter since the beginning of the current
fiscal year: (a) the per share high and low sales prices as reported by the
NYSE; (b) the NAV per share, based on the Fund's computation as of 4:00 p.m. on
the last NYSE business day for the week corresponding to the dates on which the
respective high and low prices were recorded; and (c) the discount or premium
to NAV represented by the high and low sales prices shown. The range of NAVs
and of premiums and discounts for the shares during the periods shown may be
broader than is shown in this table. On September 15, 2006, the closing price
per share was $7.96 and $8.21, the NAV per share was $8.13 and $8.51 and the
discount to NAV was (2.09)% and (3.53)%, for ACM Government Opportunity and ACM
Income, respectively.

                                 FYE: July 31



                                                              (Discount) or
                                             Corresponding      Premium to
                                 Sales Price Net Asset Value Net Asset Value
                                 ----------- --------------- --------------
      ACM Government Opportunity High   Low  High     Low     High     Low
      -------------------------- ----- -----  -----   -----  -----   ------
                                                   
            Quarter Ended
            10/31/04             $8.88 $7.99 $8.41   $8.40    5.85%   (5.59)%
            1/31/05              $8.19 $7.74 $8.66   $8.50   (5.23)% (10.03)%
            4/30/05              $8.23 $7.49 $8.71   $8.34   (5.43)% (10.27)%
            7/31/05              $7.92 $7.63 $8.57   $8.42   (7.28)%  (9.68)%
            10/31/05             $7.93 $7.42 $8.63   $8.42   (7.55)% (11.88)%
            1/31/06              $7.76 $7.48 $8.58   $8.41   (9.56)% (11.57)%
            4/30/06              $7.78 $7.51 $8.70   $8.41   (9.14)% (11.30)%
            7/31/06              $7.67 $7.37 $8.46   $8.16   (7.98)% (10.63)%


                               FYE: December 31



                                                        (Discount) or
                                       Corresponding     Premium to
                           Sales Price Net Asset Value Net Asset Value
                           ----------- --------------- -------------
             ACM Income    High   Low  High     Low     High     Low
             ----------    ----- -----  -----   -----  -----   -----
                                             
             Quarter Ended
             3/31/04       $8.87 $8.47 $8.43   $8.41    5.25%   0.71%
             6/30/04       $8.75 $7.20 $8.41   $7.69    4.04%  (6.37)%
             9/30/04       $8.36 $7.88 $7.98   $7.84    4.76%  (0.50)%
             12/31/04      $8.20 $7.94 $8.15   $8.08    0.99%  (1.73)%
             3/31/05       $8.44 $7.97 $8.35   $8.05    1.58%  (1.34)%
             6/30/05       $8.31 $8.03 $8.36   $8.10    0.86%  (1.35)%
             9/30/05       $8.38 $8.22 $8.31   $8.27    0.85%  (0.84)%
             12/31/05      $8.34 $8.04 $8.30   $8.14    1.85%  (1.23)%
             3/31/06       $8.49 $8.06 $8.36   $8.14    3.07%  (0.98)%
             6/30/06       $8.14 $7.33 $8.17   $7.82   (0.25)% (7.05)%


                                      50



                                  APPENDIX G

                               LEGAL PROCEEDINGS

   The staff of the U.S. Securities and Exchange Commission ("SEC") and the
Office of the New York Attorney General ("NYAG") have been investigating
practices in the mutual fund industry identified as "market timing" and "late
trading" of mutual fund shares. Certain other regulatory authorities have also
been conducting investigations into these practices within the industry and
have requested that the Adviser provide information to them. The Adviser has
been cooperating and will continue to cooperate with all of these authorities.

   Excluding the occurrences of tender offers or stock repurchases, the shares
of a Fund are not redeemable by a Fund, but are traded on an exchange at prices
established by the market. Accordingly, the Fund and its stockholders 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 one or more of the Funds 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 a 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 stockholders 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 a Fund are not redeemable by a Fund, but are traded on an
exchange at prices established by the market. Accordingly, a Fund and its
stockholders 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 Funds are closed-end funds, they will not have their 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.

                                      51



   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. On January 26, 2006, the
Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition
for Writ of Prohibition and Order Suspending Proceedings in West Virginia state
court seeking to vacate the Summary Order and for other relief. 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 Funds were not named as defendants in the Aucoin Complaint. The
Aucoin Complaint was filed in the United States District Court for the Southern
District of New York by an alleged stockholder 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, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants. All nine of the lawsuits (i) were brought
as class actions filed in the United States District Court for the Southern
District of New York, (ii) assert claims substantially identical to the Aucoin
Complaint, and (iii) are brought on behalf of stockholders of the Funds.

   On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional lawsuits
referenced above. On October 19, 2005, the District Court dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiff's claim under Section 36(b) of the Investment Company Act. On
January 11, 2006, the District Court granted defendants' motion for
reconsideration and dismissed the remaining Section 36(b) claim. Plaintiffs
have moved for leave to amend their consolidated complaint.

   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).

   On August 7, 2006, the Mutual Fund MDL signed an Order staying the actions
(including discovery) against the Alliance defendants pending settlement.

   The Adviser believes that these matters are not likely to have a material
adverse effect on the Funds or the Adviser's ability to perform advisory
services relating to the Funds.

                                      52



                                  APPENDIX H

                          SHARE OWNERSHIP INFORMATION

Outstanding Shares

   As of August 15, 2006 each Fund had the following number of shares of common
stock outstanding.



                                                  Amount
                     Fund                       Outstanding
                     ----                       -----------
                                             
                     ACM Government Opportunity  12,903,932
                     ACM Income                 229,436,279


Share Ownership

   As of August 15, 2006, the directors and officers of each Fund as a group
beneficially owned less than 1% of the outstanding shares of common stock of
that Fund and, to the knowledge of each Fund, the following persons owned
either of record or beneficially, 5% or more of the outstanding shares of the
Fund.



                                                               Number of        Percentage of
                                                           Outstanding Shares Outstanding Shares
Fund           Name and Address of Stockholder                   Owned              Owned
----           ------------------------------------------- ------------------ ------------------
                                                                     
ACM Government Aon Corporation/Aon Advisors, Inc./Combined
  Opportunity  Insurance Company of America
               200 E. Randolph Street
               Chicago, IL 60601                               3,425,736            26.50%
               Karpus Management, Inc.
               d/b/a Karpus Investment Fund
               183 Sully's Trail
               Pittsford, NY 14534                               677,695             5.25%

ACM Income     N/A                                                   N/A              N/A


   The following table shows the percentage of ACM Income's shares on a pro
forma basis after the Acquisition to be owned by the above listed stockholders,
if the Acquisition had been consummated as of August 15, 2006.



                                                       Percentage of Outstanding Shares
Name and Address of Stockholder                       of ACM Income on a pro forma basis
-------------------------------                       ----------------------------------
                                                   
Aon Corporation/Aon Advisors, Inc./Combined Insurance
Company of America
200 E. Randolph Street
Chicago, IL 60601                                                    1.48%
Karpus Management, Inc.
d/b/a Karpus Investment Fund
183 Sully's Trail Pittsford,
NY 14534                                                             0.29%


                                      53



                                  APPENDIX I

                          FINANCIAL HIGHLIGHTS TABLE

   The financial highlights table is intended to help you understand each
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single share of a Fund. The total returns in the table
represent the rate that an investor would have earned (or lost) on an
investment in a Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Ernst & Young LLP, the
independent registered public accounting firm for the Funds, whose reports,
along with the Funds' financial statements, are included in the Funds' annual
report, which is available upon request.

                                      54



                          ACM Government Opportunity



                                            Six Months
                                               Ended
                                            January 31,                     Year Ended July 31,
                                               2006        -----------------------------------------------------
                                            (unaudited)        2005         2004       2003     2002(a)    2001
                                          -----------      --------     --------     --------  --------  -------
                                                                                       
Net asset value, beginning of period       $   8.50        $   8.30     $   8.46     $   7.95  $   7.99  $  7.90
                                           --------        --------     --------     --------  --------  -------
Income From Investment Operations
Net investment income(b)                        .24(c)          .53(c)       .57          .67       .61      .69
Net realized and unrealized gain (loss)
 on investment and foreign currency
 transactions                                   .12             .20         (.07)         .56       .13      .12
                                           --------        --------     --------     --------  --------  -------
Net increase in net asset value from
 operations                                     .36             .73          .50         1.23       .74      .81
                                           --------        --------     --------     --------  --------  -------
Less: Dividends and Distributions
Dividends from net investment income           (.24)           (.53)        (.60)        (.72)     (.61)    (.64)
Tax return of capital                           -0-             -0-          -0-          -0-      (.02)    (.08)
Distributions in excess of net investment
 income                                         -0-             -0-          -0-          -0-      (.15)     -0-
Distributions from net realized gain on
 investments                                   (.04)            -0-         (.06)         -0-       -0-      -0-
                                           --------        --------     --------     --------  --------  -------
Total dividends and distributions              (.28)           (.53)        (.66)        (.72)     (.78)    (.72)
                                           --------        --------     --------     --------  --------  -------
Net asset value, end of period             $   8.58        $   8.50     $   8.30     $   8.46  $   7.95  $  7.99
                                           --------        --------     --------     --------  --------  -------
Market value, end of period                $   7.70        $   7.83     $   8.29     $   8.50  $   9.20  $  8.67
                                           ========        ========     ========     ========  ========  =======
Premium/(Discount)                           (10.26)%         (7.88)%       (.12)%        .47%    15.72%    8.51%
Total Return
Total investment return based on:(d)
Market value                                   1.96%            .86%        5.28%         .43%    16.45%   32.38%
Net asset value                                4.66%           9.36%        5.90%       15.68%     9.30%   11.00%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)  $110,688        $109,734     $106,990     $108,339  $100,554  $99,888
Ratio to average net assets of:
    Expenses, net of waivers/
     reimbursements                            2.55%(e)        1.95%        1.54%(f)     1.83%     1.92%    2.88%
    Expenses, before waivers/
     reimbursements                            2.65%(e)        2.00%        1.54%        1.83%     1.92%    2.88%
    Expenses, excluding interest
     expense                                   1.24%(e)        1.32%        1.28%        1.35%     1.33%    1.45%
    Net investment income                      5.62%(c)(e)     6.20%(c)     6.65%        7.88%     7.58%    8.69%
Portfolio turnover rate                          34%             64%         124%         100%      173%      98%

--------
(a)As required, effective August 1, 2001, the Fund has adopted the provisions
   of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and
   began amortizing premium on debt securities for financial reporting purposes
   only. The effect of this change for the year ended July 31, 2002 was to
   decrease net investment income per share by $0.13, increase net realized and
   unrealized gain on investment transactions per share by $0.13, and decrease
   the ratio of net investment income to average net assets from 9.16% to
   7.58%. Per share, ratios and supplemental data for periods prior to
   August 1, 2001 have not been restated to reflect this change in presentation.
(b)Based on average shares outstanding.
(c)Net of expenses waived by the Adviser.
(d)Total investment return is calculated assuming a purchase of common stock on
   the opening of the first day and a sale on the closing of the last day of
   each period reported. 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 the
   net asset value will be lower than total investment return based on market
   value in periods where there is a decrease in the discount or an increase in
   the premium of the market value to the net asset value from the beginning to
   the end of such periods. Total investment return calculated for a period of
   less than one year is not annualized.
(e)Annualized.
(f)Reflects a $1,125 waiver by the Adviser which had no effect to the ratio.

                                      55



                                  ACM Income



                                                            Six Months
                                                               Ended
                                                             June 30,                        Year Ended December 31,
                                                               2006       ------------------------------------------------
                                                            (unaudited)      2005       2004(a)       2003        2002
                                                           -----------    ----------  ----------   ----------  ----------
                                                                                                
Net asset value, beginning of period                       $     8.25     $     8.27  $     8.39   $     7.91  $     7.87
                                                           ----------     ----------  ----------   ----------  ----------
Income From Investment Operations
Net investment income(c)                                          .30            .66         .67          .76         .89
Net realized and unrealized gain (loss) on investment and
 foreign currency transactions                                   (.31)           -0-        (.01)         .59         .07
                                                           ----------     ----------  ----------   ----------  ----------
Net increase in net asset value from operations                  (.01)           .66         .66         1.35         .96
                                                           ----------     ----------  ----------   ----------  ----------
Less: Dividends and Distributions
Dividends from net investment income                             (.32)          (.68)       (.78)        (.87)       (.85)
Distributions in excess of net investment income                  -0-            -0-         -0-          -0-         -0-
Tax return of capital                                             -0-            -0-         -0-          -0-        (.07)
                                                           ----------     ----------  ----------   ----------  ----------
Total dividends and distributions                                (.32)          (.68)       (.78)        (.87)       (.92)
                                                           ----------     ----------  ----------   ----------  ----------
Less: Fund Share Transactions
Dilutive effect of rights offering                                -0-            -0-         -0-          -0-         -0-
Offering costs charged to paid-in-capital in excess of par        -0-            -0-         -0-          -0-         -0-
                                                           ----------     ----------  ----------   ----------  ----------
Total fund share transactions                                     -0-            -0-         -0-          -0-         -0-
                                                           ----------     ----------  ----------   ----------  ----------
Net asset value, end of period                             $     7.92     $     8.25  $     8.27   $     8.39  $     7.91
                                                           ----------     ----------  ----------   ----------  ----------
Market value, end of period                                $     7.41     $     8.28  $     8.16   $     8.58  $     8.46
                                                           ==========     ==========  ==========   ==========  ==========
Premium/(Discount)                                              (6.44)%          .36%      (1.33)%       2.26%       6.95%
Total Investment Return
Total investment return based on:(d)
Market value                                                    (6.94)%        10.18%       4.63%       12.50%      30.60%
Net asset value                                                  (.18)%         8.32%       8.44%       17.66%      13.27%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)                  $1,817,170     $1,889,926  $1,888,272   $1,904,853  $1,785,164
Ratio to average net assets of:
   Expenses                                                      3.04%(f)       2.46%       1.66%        1.67%       1.87%
   Expenses, excluding interest expense(e)                        .74%(f)        .79%        .98%        1.10%       1.26%
   Net investment income                                         7.45%(f)       7.99%       8.27%        9.28%      11.69%
   Portfolio turnover rate                                         90%           160%        139%         276%        414%
   Asset coverage ratio                                           413%           443%        492%         559%        376%
Bank borrowing outstanding
 (in millions)                                             $      400     $      400  $      400   $      400  $      400






                                                           -----------
                                                             2001(b)
                                                           ----------
                                                        
Net asset value, beginning of period                       $     8.45
                                                           ----------
Income From Investment Operations
Net investment income(c)                                          .76
Net realized and unrealized gain (loss) on investment and
 foreign currency transactions                                   (.11)
                                                           ----------
Net increase in net asset value from operations                   .65
                                                           ----------
Less: Dividends and Distributions
Dividends from net investment income                             (.77)
Distributions in excess of net investment income                 (.07)
Tax return of capital                                             -0-
                                                           ----------
Total dividends and distributions                                (.84)
                                                           ----------
Less: Fund Share Transactions
Dilutive effect of rights offering                               (.32)
Offering costs charged to paid-in-capital in excess of par       (.07)
                                                           ----------
Total fund share transactions                                    (.39)
                                                           ----------
Net asset value, end of period                             $     7.87
                                                           ----------
Market value, end of period                                $     7.30
                                                           ==========
Premium/(Discount)                                              (7.24)%
Total Investment Return
Total investment return based on:(d)
Market value                                                     7.80%
Net asset value                                                  3.11%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)                  $1,764,895
Ratio to average net assets of:
   Expenses                                                      2.31%
   Expenses, excluding interest expense(e)                       1.18%
   Net investment income                                         9.33%
   Portfolio turnover rate                                        676%
   Asset coverage ratio                                           379%
Bank borrowing outstanding
 (in millions)                                             $      300

--------
(a)As of January 1, 2004, the Fund has adopted the method of accounting for
   interim payments on swap contracts in accordance with Financial Accounting
   Standards Board Statement No. 133. These interim payments are reflected
   within net realized and unrealized gain (loss) on swap contracts, however
   prior to January 1, 2004, these interim payments were reflected within
   interest income/expense on the statement of operations. The effect of this
   change for the year ended December 31, 2004, was to decrease net investment
   income per share and increase net realized and unrealized gain (loss) on
   investment transactions. The effect on the per share amounts was less than
   $0.005. The ratio of net investment income to average net assets was
   decreased by 0.02%.
(b)As required, effective January 1, 2001, the Fund has adopted the provisions
   of the AICPA Audit and Accounting Guide for Investment Companies, and began
   amortizing premium on debt securities for financial reporting purposes only.
   The effect of this change for the year ended December 31, 2001, was to
   decrease net investment income per share by $.05, decrease net realized and
   unrealized loss on investment transactions per share by $.05, and decrease
   the ratio of net investment income to average net assets from 9.92% to 9.33%.
(c)Based on average shares outstanding.
(d)Total investment return is calculated assuming a purchase of common stock on
   the opening of the first day and a sale of common stock on the closing of
   the last day of each period reported. Dividends and distributions, if any,
   are assumed for purposes of this calculation, to be reinvested at prices
   obtained under the Fund's Dividend Reinvestment Plan. Generally, total
   investment return based on net asset value will be higher than total
   investment return based on market value in periods where there is an
   increase in the discount or a decrease in the premium of the market value to
   the net asset value from the beginning to the end of such periods.
   Conversely, total investment return based on net asset value will be lower
   than total investment return based on market value in periods where there is
   a decrease in the discount or an increase in the premium of the market value
   to the net asset value from the beginning to the end of such periods. Total
   investment return calculated for a period of less than one year is not
   annualized.
(e)Excludes net interest expense of 1.67%, .68%, .57%, .61% and 1.13%,
   respectively, on borrowings.
(f)Annualized.

                                      56



                              ACM INCOME FUND, INC.

                           1345 Avenue of the Americas
                               New York, New York
                            Toll Free (800) 221-5672
--------------------------------------------------------------------------------

                       STATEMENT OF ADDITIONAL INFORMATION
                                October 27, 2006

This Statement of Additional  Information  relates  specifically to the proposed
Acquisition (as defined in the  Prospectus/Proxy  Statement)  wherein ACM Income
Fund,  Inc. ("ACM Income") would acquire all of the assets and assume all of the
liabilities  of  ACM  Government   Opportunity   Fund,  Inc.  ("ACM   Government
Opportunity")  in  exchange  for  shares  of ACM  Income,  and  cash  in lieu of
fractional  shares  for  those  stockholders  who  do  not  participate  in  ACM
Government  Opportunity's  Dividend Reinvestment and Cash Purchase Plan ("DRIP")
(ACM Income and ACM Government  Opportunity are each a "Fund" and  collectively,
the "Funds".)

AllianceBernstein,  L.P. (the  "Adviser")  serves as  investment  adviser to the
Funds. This Statement of Additional Information is not a prospectus,  but should
be read in conjunction with the  Prospectus/Proxy  Statement for the Funds dated
October 27, 2006. This Statement of Additional  Information does not include all
information that a prospective investor should consider before purchasing shares
of ACM  Income,  and  investors  should  obtain  and read  the  Prospectus/Proxy
Statement prior to purchasing shares. A copy of the  Prospectus/Proxy  Statement
may be obtained  without charge,  by calling  1-800-221-5672.  This Statement of
Additional  Information  incorporates  by reference the entire  Prospectus/Proxy
Statement.

                                TABLE OF CONTENTS

                                                                      Page

INVESTMENT OBJECTIVES AND POLICIES......................................2
INVESTMENT PRACTICES....................................................7
INVESTMENT RESTRICTIONS................................................12
RISK FACTORS AND SPECIAL CONSIDERATIONS................................13
MANAGEMENT OF THE FUNDS................................................17
VALUATION OF PORTFOLIO SECURITIES......................................31
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN...........................33
DESCRIPTION OF COMMON STOCK............................................35
PORTFOLIO TRANSACTIONS.................................................36
DISTRIBUTIONS..........................................................38
TAXATION...............................................................38
LEGAL MATTERS..........................................................43
EXPERTS................................................................43
FINANCIAL STATEMENTS...................................................44
APPENDIX A............................................................A-1

The following  supplements  the  information  contained in the  Prospectus/Proxy
Statement  concerning the Funds.  ACM Income and ACM Government  Opportunity are
each diversified closed-end investment companies registered under the Investment
Company Act of 1940, as amended (the "1940 Act").


                       INVESTMENT OBJECTIVES AND POLICIES

GENERAL.  The investment  objective of ACM Income is to seek high current income
consistent with preservation of capital. The primary investment objective of ACM
Government Opportunity is high current income consistent with prudent investment
risk, with a secondary  investment objective of growth of capital. In seeking to
achieve  its  investment  objectives,  each  Fund  invests  principally  in U.S.
Government  Securities (as defined below) and utilizes  certain other investment
techniques, including options and futures, intended to enhance income and reduce
market risk. The Funds may also invest in other debt securities  including those
of foreign governmental  issuers. ACM Government  Opportunity may also invest in
dividend-paying  equity  securities.  The Funds are designed  primarily for long
term  investment  and investors  should not consider any Fund to be a short-term
trading  vehicle.  As with all investment  companies,  there can be no assurance
that a Fund's objective will be achieved.

Each Fund has adopted a  fundamental  policy that it will invest at least 65% of
its total assets in U.S. Government Securities (as defined below) and repurchase
agreements  pertaining to U.S.  Government  Securities.  Each Fund's  investment
objective and fundamental  policies (and its investment  restrictions  set forth
below under "Investment  Restrictions") may be changed only with the approval of
the holders of a "majority of the Fund's outstanding  voting  securities," which
means the lesser of (i) 67% of the shares of the Fund  represented  at a meeting
at which  more  than 50% of the  outstanding  shares  are  present  in person or
represented by proxy, or (ii) more than 50% of the outstanding  shares. A Fund's
other investment policies described below, except as set forth under "Investment
Restrictions,"  are not  fundamental  and may be  changed  by the  Fund  without
stockholer  approval,  but the Fund  will not  change  its  investment  policies
without contemporaneous notice to its stockholders.

U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the United States
Government,  its  agencies  or  instrumentalities  include:  (i)  U.S.  Treasury
obligations,  which differ only in their interest rates, maturities and times of
issuance:  U.S.  Treasury bills  (maturity of one year or less),  U.S.  Treasury
notes  (maturities  of one to 10  years),  and U.S.  Treasury  bonds  (generally
maturities of greater than 10 years),  all of which are backed by the full faith
and credit of the United States,  and (ii)  obligations  issued or guaranteed by
U.S. Government agencies or  instrumentalities,  including government guaranteed
mortgage-related  securities,  same of which are  backed  by the full  faith and
credit of the U.S.  Treasury,  e.g.,  direct  pass-through  certificates  of the
Government  National  Mortgage  Association;  some of which are supported by the
right of the issuer to borrow from the U.S.  Government,  e.g.,  obligations  of
Federal Home Loan Banks,  and some of which are backed only by the credit of the
issuer itself, e.g., obligations of the Student Loan Marketing Association.

Government Guaranteed  Mortgage-Related  Securities--General.  Mortgages backing
the  securities  purchased  by  a  Fund  include,  among  others,   conventional
thirty-year  fixed rate mortgages,  graduated  payment  mortgages,  fifteen-year
mortgages and adjustable rate  mortgages.  All of these mortgages can be used to
create pass-through securities. A pass-through security is formed when mortgages
are pooled  together and undivided  interests in the pool or pools are sold. The
cash flow from the mortgages is passed  through to the holders of the securities
in the form of periodic payments of interest,  principal and prepayments (net of
a service  fee).  Prepayments  occur when the holder of an  individual  mortgage
prepays the remaining principal before the mortgages scheduled maturity date. As
a result of the  pass-through  of  prepayments  of principal  on the  underlying
securities mortgage-backed securities are often subject to more rapid prepayment
of principal than their stated maturity would  indicate.  Because the prepayment
characteristics of the underlying  mortgages vary, it is not possible to predict
accurately  the  realized  yield  or  average  life  of a  particular  issue  of
pass-through  certificates.  Prepayment  rates are  important  because  of their
effect  on the  yield  and  price  of the  securities.  Accelerated  prepayments
adversely impact yields for pass-throughs  purchased at a premium (i.e., a price
in  excess of  principal  amount)  and may  involve  additional  risk of loss of
principal  because the premium may not have been fully amortized at the time the
obligation  is repaid.  The  opposite is true for  pass-throughs  purchased at a
discount. A Fund may purchase  mortgage-related  securities at a premium or at a
discount. Principal and interest payments on the mortgage-related securities are
government  guaranteed to the extent  described  below.  Such  guarantees do not
extend to the value or yield of the mortgage-related securities themselves or of
a Fund's shares of common stock.

GNMA Certificates.  Certificates of the Government National Mortgage Association
("GNMA  Certificates")  are  mortgage-backed   securities,   which  evidence  an
undivided  interest in a pool or pools of mortgages.  GNMA  Certificates  that a
Fund purchases are the "modified pass-through" type, which entitle the holder to
receive  timely  payment  of all  interest  and  principal  payments  due on the
mortgage pool, net of fees paid to the "issuer" and GNMA,  regardless of whether
or not the mortgagor actually makes the payment.

The National  Housing Act  authorizes  GNMA to guarantee  the timely  payment of
principal  and interest in securities  backed by a pool of mortgages  insured by
the  Federal  Housing  Administration  ("FHA")  or  guaranteed  by the  Veterans
Administration ("VA"). The GNMA guarantee is backed by the full faith and credit
of the United States.  The GNMA is also  empowered to borrow without  limitation
from the U.S.  Treasury if  necessary to make any  payments  required  under its
guarantee.

The average life of a GNMA  Certificate  is likely to be  substantially  shorter
than  the  original  maturity  of  the  mortgages   underlying  the  securities.
Prepayments  of principal by mortgagors and mortgage  foreclosures  will usually
result in the return of the greater part of principal investment long before the
maturity of the mortgages in the pool.  Foreclosures impose no risk to principal
investment  because of the GNMA guarantee,  except to the extent that a Fund has
purchased the certificates above par in the secondary market.

FHLMC  Securities.  The Federal Home Loan  Mortgage  Corporation  ("FHLMC")  was
created in 1970 through enactment of Title III of the Emergency Rome Finance Act
of 1970. Its purpose is to promote development of a nationwide  secondary market
in conventional residential mortgages.

The  FHLMC  issues  two  types  of  mortgage  pass-through   securities  ("FHLMC
Certificates"),  mortgage  participation  certificates  ("PCs")  and  guaranteed
mortgage certificates  ("GMCs").  PCs resemble GNMA Certificates in that each PC
represents a pro rata share of all interest and principal payments made and owed
on the underlying pool. The FHMLC guarantees  timely monthly payment of interest
on PCs and the ultimate payment of principal.

GMCs also represent a pro rata interest in a pool of mortgages.  However,  these
instruments  pay  interest  semi-annually  and return  principal  once a year in
guaranteed  minimum  payments.  The expected average life of these securities is
approximately ten years. The FHLMC guarantee is not backed by the full faith and
credit of the United States.

FNMA  Securities.   The  Federal  National  Mortgage  Association  ("FNMA")  was
established  in 1938 to create a secondary  market in  mortgages  insured by the
FHA.

FNMA issues guaranteed mortgage pass-through certificates ("FNMA Certificates").
FNMA  Certificates  resemble  GNMA  Certificates  in that each FNMA  Certificate
represents a pro rata share of all interest and principal payments made and owed
on the underlying pool. FNMA guarantees timely payment of interest and principal
on FNMA  Certificates.  The FNMA  guarantee  is not backed by the full faith and
credit of the United States.

Zero  Coupon  Treasury  Securities.  A Fund may invest in zero  coupon  Treasury
securities.  Currently the only U.S. Treasury security issued without coupons is
the Treasury  bill.  Although the U.S.  Treasury does not itself issue  Treasury
notes and bonds without coupons, under the U.S. Treasury STRIPS program interest
and  principal  payments  on  certain  long  term  Treasury  securities  may  be
maintained  separately  in the  Federal  Reserve  book  entry  system and may be
separately  traded and  owned.  In  addition,  in the last few years a number of
banks and brokerage  firms have separated  ("stripped")  the principal  portions
("corpus")  from the coupon  portions of U.S.  Treasury bonds and notes and hold
them separately in the form of receipts or certificates  representing  undivided
interests in these instruments  (which  instruments are generally held by a bank
in a custodial  or trust  account).  The staff of the  Securities  and  Exchange
Commission  ("SEC")  has  indicated,   that,  in  its  view  these  receipts  or
certificates  should be considered as securities issued by the bank or brokerage
firm involved and, therefore,  should not be included in a Fund's categorization
of  U.S.   Government   Securities.   The  Funds   disagree   with  the  staff's
interpretation  but has  undertaken  that it will not invest in such  securities
until final resolution of the issue.  However,  if such securities are deemed to
be U.S.  Government  Securities a Fund will not be subject to any limitations on
their purchase.

Zero  coupon  Treasury  securities  do not  entitle  the holder to any  periodic
payments of interest prior to maturity.  Accordingly,  such  securities  usually
trade at a deep  discount  from  their  face or par value and will be subject to
greater fluctuations of market value in response to changing interest rates than
debt  obligations  of comparable  maturity which make current  distributions  of
interest.  Current  federal tax law requires that a holder (such as a Fund) of a
zero coupon  security accrue a portion of the discount at which the security was
purchased as income each year even though the Fund receives no interest  payment
in cash on the security during the year.

Repurchase Agreements. A Fund may enter into repurchase agreements pertaining to
U.S.  Government  Securities  with member banks of the Federal Reserve System or
"primary  dealers" (as  designated  by the Federal  Reserve Bank of New York) in
such  securities.  ACM  Income  may not  invest  more than 35% of its  assets in
repurchase  agreements.  Currently,  a  Fund  plans  to  enter  into  repurchase
agreements  only with its  Custodian  and such  primary  dealers.  A  repurchase
agreement  arises  when  a  buyer  such  as a  Fund  purchases  a  security  and
simultaneously  agrees to resell it to the vendor at an agreed-upon future date,
normally  one day or a few days  later.  The resale  price is  greater  than the
purchase price,  reflecting an agreed-upon  interest rate which is effective for
the period of time the buyer's  money is invested in the  security  and which is
related to the current  market rate rather than the coupon rate on the purchased
security.  Such agreements permit a Fund to keep all of its assets at work while
retaining  "overnight"  flexibility  in pursuit of  investments of a longer-term
nature. A Fund requires  continual  maintenance by its Custodian for its account
in the Federal  Reserve/Treasury  Book Entry System of  collateral  in an amount
equal to, or in excess of, the resale price. In the event a vendor  defaulted on
its  repurchase  obligation,  a Fund might  suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. In
the event of a vendor's  bankruptcy,  a Fund might be delayed  in, or  prevented
from, selling the collateral for the Fund's benefit. A Fund's Board of Directors
("Board") has established  procedures,  which are  periodically  reviewed by the
Board,  pursuant to which the Fund's Adviser monitor the creditworthiness of the
dealers with which the Fund enters into repurchase agreement transactions.

General.  U.S.  Government  Securities do not generally involve the credit risks
associated  with  other  types of  interest-bearing  securities  although,  as a
result, the yields available from U.S Government  Securities are generally lower
than the yields  available from other  interest-bearing  securities.  Like other
fixed-income  securities,  however,  the  values of U.S.  Government  Securities
change as interest rates fluctuate.  When interest rates decline,  the values of
U.S.  Government  Securities can be expected to increase and when interest rates
rise, the values of U.S. Government Securities can be expected to decrease.

OTHER  SECURITIES.  While  the  principal  investment  strategies  of the  Funds
emphasize investment in U.S. Government Securities, a Fund may, where consistent
with its investment  objective,  invest in securities other than U.S. Government
Securities,  including (i) Foreign  Government  Securities and (ii) put and call
options, futures contracts and options on futures contracts,  options on foreign
currencies,  and forward foreign currency exchange contracts, as discussed below
under the caption "Investment Practices."

The Funds may also invest up to 35% of their total assets in (i) certificates of
deposit,  bankers'  acceptances and  interest-bearing  savings deposits of banks
having total assets of more than $1 billion and which are members of the Federal
Deposit Insurance Corporation,  and (ii) commercial paper of prime quality rated
Prime 1 or higher by  Moody's  Investors  Service,  Inc.  ("Moody's")  or A-1 or
higher by Standard and Poor's  Corporation  ("S&P") or, if not rated,  issued by
companies which have an outstanding  debt issue rated Aa or higher by Moody's or
AA or higher by S&P.

ACM Income may also  invest up to 35% of its total  assets in  investment  grade
corporate  debt  securities  (including  collateralized  mortgage  obligations).
Investment grade debt securities are those rated Baa or higher by Moody's or BBB
or higher by S&P or, if not so rated,  of equivalent  investment  quality in the
opinion of the Adviser.  Securities  rated Baa by Moody's or BBB by S&P normally
provide higher yields than higher-rated securities but may be considered to have
speculative   characteristics.   Sustained  periods  of  deteriorating  economic
conditions  or rising  interest  rates are more likely to lead to a weakening in
the issuer's  capacity to pay interest and repay  principal  than in the case of
higher-rated securities.  ACM Income may also invest up to 35% of its net assets
in lower-rated securities. Lower-rated securities are rated below Baa by Moody's
or BBB by S&P or, if not rated, of comparable  investment  quality as determined
by the Adviser.

ACM Government  Opportunity may also invest in dividend paying equity securities
although  it may  invest  no  more  than  20%  of its  total  assets  in  equity
securities.

Foreign  Government  Securities.  Each  Fund may  invest  up to 35% of its total
assets in Foreign  Government  Securities  of issuers  considered  stable by the
Fund's Adviser.  The Funds may only invest on to 35% of their  respective  total
assets in such securities.  With respect to ACM Income, the Fund will not invest
more than 25% of its total assets in the Foreign  Government  Securities  of any
one country.

Foreign Government  Securities are obligations issued or guaranteed by a foreign
government  or any of its  political  subdivisions,  authorities,  agencies,  or
instrumentalities.  The Adviser's determination that a particular country should
be  considered  stable  depends on the  Adviser's  evaluation  of political  and
economic developments  affecting the country as well as recent experience in the
markets for Foreign  Government  Securities of the country.  Examples of foreign
governments  which the Adviser currently  considers to be stable,  among others,
are the governments of Canada,  Japan,  Sweden,  Germany, the United Kingdom and
Mexico.  The  percentage  of a Fund's  assets  invested  in  Foreign  Government
Securities  will vary depending on the relative yields of such  securities,  the
economies,  financial  markets,  and interest  rate climates of the countries in
which  the  investments  are  made  and  the  relationship  of  such  countries'
currencies to the U.S.  dollar.  Currency is judged on the basis of  fundamental
economic  criteria  (e.g.,  relative  inflation  levels and trends,  growth rate
forecasts,  balance  of  payments  status,  and  economic  policies)  as well as
technical  and  political  data.  A  Fund's  portfolio  of  Foreign   Government
Securities may include those of a number of foreign countries or, depending upon
market  conditions,  those of a single  country.  A Fund may also  hold  foreign
currency for hedging purposes.

Investing in Foreign Government Securities involves  considerations and possible
risks not typically associated with investing in U.S. Government Securities. The
value of Foreign Government  Securities  investments will be affected by changes
in currency rates or exchange  control  regulations,  application of foreign tax
laws,  including  withholding taxes,  changes in governmental  administration or
economic or monetary policy (in this country or abroad) or changed circumstances
in  dealings  between  nations.  Costs  will  be  incurred  in  connection  with
conversions  between  currencies.  Foreign  brokerage  commissions are generally
higher than in the United  States,  and foreign  securities  markets may be less
liquid,  more volatile and less subject to governmental  supervision than in the
United  States.  Investments  in foreign  countries  could be  affected by other
factors not present in the United States, including expropriation,  confiscatory
taxation,  lack of uniform  accounting  and  auditing  standards  and  potential
difficulties  in  enforcing  contractual  obligations  and could be  subject  to
settlement periods.

Collateralized  Mortgage  Obligations.  Collateralized  mortgage obligations are
debt  obligations  issued  generally by finance  subsidiaries or trusts that are
secured  by   mortgage-backed   certificate,   including  in  many  cases,  GNMA
Certificates,  FHLMC Certificates and FNMA  Certificates,  together with certain
funds and other collateral.

Scheduled  distributions on the mortgage-backed  certificates  pledged to secure
the collateralized  mortgage obligations,  together with certain funds and other
collateral,   are  sufficient  to  make  timely  payments  of  interest  on  the
collateralized  mortgage obligations,  and to retire the collateralized mortgage
obligations not later than their stated  maturity.  Since the rate of payment of
principal  of the  collateralized  mortgage  obligations  depends on the rate of
payment   (including   prepayments)   of  the   principal   of  the   underlying
mortgage-backed certificates, the actual maturity of the collateralized mortgage
obligations  can occur  significantly  earlier than their stated  maturity.  The
collateralized  mortgage  obligations may be subject to redemption under certain
circumstances.  Collateralized mortgage obligations bought at a premium (i.e., a
price in excess of  principal  amount)  may involve  additional  risk of loss of
principal in the event of unanticipated  prepayments of the underlying mortgages
because the premium may not have been fully amortized at the time the obligation
is repaid.

Although  payment  of the  principal  of  and  interest  on the  mortgage-backed
certificates  pledged to secure the collateralized  mortgage  obligations may be
guaranteed  by GNMA,  FHLMC or FNMA,  the  collateralized  mortgage  obligations
represent  obligations solely of the issuer and are not insured or guaranteed by
GNMA,  FHLMC, FNMA or any other  governmental  agency, of by any other person or
entity.  The issuers of collateralized  mortgage  obligations  typically have no
significant assets other than those pledged as collateral for the obligations.

Illiquid  Securities.  Each Fund may  invest  up to 20% of its  total  assets in
illiquid  securities.   These  securities  include,  among  others,  (i)  direct
placements  or other  securities  which  are  subject  to  legal or  contractual
restrictions on resale or for which there is no readily  available market (e.g.,
trading in the  security is  suspended  or, in the case of unlisted  securities,
market makers do not exist or will not entertain bids of offers),  including any
currency   swaps  and  any   assets   used  to  cover   currency   swaps,   (ii)
over-the-counter options and assets used to cover over-the-counter  options, and
(iii)  repurchase  agreements  not  terminable  within  seven  days.  Securities
eligible for resale under Rule 144A under the Securities Act of 1933, as amended
(the "1933 Act"), that have legal or contractual restrictions on resale but have
a readily  available  market are not deemed to be illiquid  for purposes of this
limitation.  The Adviser will monitor such securities and in reaching  decisions
concerning their marketability will consider,  among other things, the following
factors:  (i) the  frequency  of trades and quotes  for the  security;  (ii) the
number of dealers  wishing to  purchase or sell the  security  and the number of
other potential  purchasers;  (iii) dealer  undertakings to make a market in the
security;  (iv) the nature of the  security  and the  nature of the  marketplace
trades  (e.g.,  the time  needed  to  dispose  of the  security,  the  method of
soliciting offers and the mechanics of the transfer); and (v) any applicable SEC
interpretation or position with respect to such type of securities.


                              INVESTMENT PRACTICES

Options on U.S.  and  Foreign  Government  Securities.  In an effort to increase
current income and to reduce  fluctuations  in net asset value, a Fund may write
covered put and call options and purchase put and call options on  securities of
the types in which it is permitted to invest that are traded on U.S. and foreign
exchanges  and  over-the-counter.  A  Fund  may  also  write  call  options  for
cross-hedging  purposes.  There are no specific  limitations on a Fund's writing
and purchasing of options.

A put option gives the purchaser of such option, upon payment of a premium,  the
right to deliver a specified amount of a security to the writer of the option on
or  before a fixed  date at a  predetermined  price.  A call  option  gives  the
purchaser of the option,  upon payment of a premium,  the right to call upon the
writer to deliver a specified  amount of a security on or before a fixed date at
a predetermined  price. A call option written by a Fund is "covered" if the Fund
owns  the  underlying  security  covered  by the  call  or has an  absolute  and
immediate right to acquire that security without  additional cash  consideration
(or for  additional  cash  consideration  held in a  segregated  account  by its
Custodian)  upon  conversion  or  exchange  of  other  securities  held  in  its
portfolio.  A call  option is also  covered  if a Fund  holds a call on the same
security in the same principal amount as the call written and the exercise price
of the call held (a) is equal to or less than the exercise  price of the call or
(b) is greater than the exercise price of the call written and the difference is
maintained  by the Fund in cash  and  liquid  high-grade  debt  securities  in a
segregated  account  with  its  Custodian.  A put  option  written  by a Fund is
"covered" if the Fund  maintains  cash not  available  for  investment or liquid
high-grade  debt  securities  with a value  equal  to the  exercise  price  in a
segregated  amount with its Custodian,  or else holds a put on the same security
in the same  principal  amount as the put written and the exercise  price of the
put held is equal to or greater than the exercise price of the put written.  The
premium paid by the purchaser of an option  reflects,  among other  things,  the
relationship  of the exercise  price to the market price and  volatility  of the
underlying  security,  the remaining  term of the option,  supply and demand and
interest rates.

A call option is written for  cross-hedging  purposes if a Fund does not own the
underlying  security but seeks to provide a hedge  against a decline in value in
another  security  which  the Fund  owns of has the  right to  acquire.  In such
circumstances, the Fund collateralizes the option by maintaining in a segregated
account with its Custodian cash or U.S.  Government  Securities in an amount not
less than the market value of the underlying security, marked to market daily. A
Fund would write a call option for cross-hedging purposes,  instead of writing a
covered  call  option,  when the  premium to be  received  from the  cross-hedge
transaction  would  exceed that which would be received  from  writing a covered
call option, while at the same time achieving the desired hedge.

In purchasing a call option, a Fund would be in a position to realize a gain if,
during the option period,  the price of the underlying  security increased by an
amount in excess of the premium  paid.  It would  realize a loss if the price of
the underlying security declined or remained the same or did not increase during
the period by at least the amount of the premium.  In purchasing a put option, a
Fund would be in a position to realize a gain if, during the option period,  the
price of the underlying  security declined by an amount in excess of the premium
paid. It would realize a loss if the price of the underlying  security increased
or  remained  the same or did not  decrease  during  that period by at least the
amount  of the  premium.  If a put  or  call  option  purchased  by a Fund  were
permitted to expire  without being sold or exercised,  its premium would be lost
by the Fund.

If a put option  written by a Fund were exercised the Fund would be obligated to
purchase the underlying security at the exercise price. If a call option written
by a Fund were  exercised  the Fund would be  obligated  to sell the  underlying
security at the  exercise  price.  The risk  involved in writing a put option is
that there could be a decrease in the market value of the  underlying  security.
If this  occurred,  the option could be exercised  and the  underlying  security
would then be sold by the option  holder to the Fund at a higher  price than its
current  market  value.  These  risks  involved in writing a call option is that
there could be an increase in the market value or the  underlying  security.  If
this occurred,  the option could be exercised and the underlying  security would
then be sold by the Fund at a lower price than its current  market value.  These
risks could be reduced by entering  into a closing  transaction.  A Fund retains
the premium received from writing a put or call option whether or not the option
is exercised.

A Fund may purchase or write  options on  securities of the types in which it is
permitted to invest in  privately  negotiated  transactions.  A Fund will effect
such transactions only with investment dealers and other financial  institutions
(such as commercial banks or savings and loan institutions)  deemed creditworthy
by the  Adviser,  and the Adviser  has adopted  procedures  for  monitoring  the
creditworthiness  of such  entities.  Options  purchased or written by a Fund in
negotiated  transactions are illiquid and it may not be possible for the Fund to
effect a closing  transaction  at a time when the  Adviser  believes it would be
advantageous to do so.

Futures  Contracts  and  Options  on  Futures  Contracts.  A Fund may enter into
contracts  for the  purchase  or sale for future  delivery  of U.S.  and Foreign
Government  Securities,  or contracts based on financial  indices  including any
index of U.S. and Foreign Government  Securities  ("futures  contracts") and may
purchase  and  write  put and  call  options  to buy or sell  futures  contracts
("options  on  futures  contracts").  A "sale" of a futures  contract  means the
acquisition of a contractual  obligation to deliver the securities called for by
the contract at a specified price on a specified date. A "purchase" of a futures
contract  means  the  incurring  of a  contractual  obligation  to  acquire  the
securities  called for by the contract at a specified price on a specified date.
The purchaser of a futures  contract on an index agrees to take or make delivery
of an amount of cash equal to the difference between a specified dollar multiple
of the  value of the  index on the  expiration  date of the  contract  ("current
contract value") and the price at which the contract was originally  struck.  No
physical delivery of the fixed-income  securities  underlying the index is made.
Options on futures contracts to be written or purchased by a Fund will be traded
on U.S. or foreign exchanges or  over-the-counter.  These investment  techniques
are used only to hedge against  anticipated  future changes in market conditions
and interest rates which otherwise might either  adversely affect the value of a
Fund's  portfolio  securities or adversely affect the prices of securities which
the Fund intends to purchase at a later date.

Each Fund's Board has adopted the requirement that futures contracts and options
on  futures  contracts  only  be used as a  hedge  and not for  speculation.  In
addition  to this  requirement,  the Board for ACM Income has also  adopted  two
percentage  restrictions on the use of futures contracts.  The first restriction
is that a Fund will not enter into any futures  contracts  or options on futures
contracts if  immediately  thereafter  the  aggregate  amount of initial  margin
deposits on all the futures  contracts of the Fund and premiums  paid on options
on futures  contracts would exceed 5% of the market value of the total assets of
the Fund.  The second  restriction  is that the  aggregate  market  value of the
futures contracts  purchased by a Fund not exceed 50% of the market value of the
total assets of the Fund.  Neither of these  restrictions will be changed by the
Board without  considering  the policies and concerns of the various  applicable
federal and state regulatory agencies.

Options  On  Foreign  Currencies.  A Fund may  purchase  and  write put and call
options on foreign  currencies for the purpose of protecting against declines in
the U.S. dollar value of foreign currency  denominated  portfolio securities and
against increases in the U.S. dollar cost of such securities to be acquired.  As
in the case of other  kinds of options,  however,  the writing of an option on a
foreign  currency will  constitute only a partial hedge, up to the amount of the
premium  received,  and a Fund could be required  to  purchase  or sell  foreign
currencies at  disadvantageous  exchange rates,  thereby incurring  losses.  The
purchase of an option on a foreign  currency may  constitute an effective  hedge
against fluctuations in exchange rates although,  in the event of rate movements
adverse to a Fund's  position,  it may forfeit the entire  amount of the premium
plus related  transaction costs.  Options on foreign currencies to be written or
purchased  by a Fund will be traded on U.S.  and foreign  exchanges  or over the
counter.  There is no specific percentage  limitation on a Fund's investments in
options on foreign currencies.

Forward Foreign Currency Exchange Contracts. A Fund may purchase or sell forward
foreign currency exchange contracts ("forward contracts") to attempt to minimize
the risk to the Fund from adverse changes in the  relationship  between the U.S.
dollar and foreign  currencies.  A forward contract is an obligation to purchase
or sell a  specific  currency  for an agreed  price at a future  date,  which is
individually  negotiated  and  privately  traded by  currency  traders and their
customers. A Fund may enter into a forward contract, for example, when it enters
into a contract for the purchase or sale of a security  denominated in a foreign
currency  in  order  to  "lock  in"  the  U.S.  dollar  price  of  the  security
("transaction  hedge").  Additionally,  for example, when a Fund believes that a
foreign currency may suffer a substantial  decline against the U.S.  dollar,  it
may  enter  into a forward  sale  contract  to sell an  amount  of that  foreign
currency  approximating  the  value  of  some  or all of  the  Fund's  portfolio
securities  denominated in such foreign currency, or when the Fund believes that
the U.S. dollar may suffer a substantial decline against a foreign currency,  it
may enter into a forward  purchase  contract to buy that foreign  currency for a
fixed dollar amount ("position  hedge").  A Fund's Custodian will place cash not
available for investment or U.S.  Government  Securities in a segregated account
of the  Fund  having  a  value  equal  to the  aggregate  amount  of the  Fund's
commitments  under  forward  contracts  entered  into with  respect to  position
hedges.  If the  value  of the  securities  placed  in  the  segregated  account
declines,  additional cash or U.S.  Government  Securities will be placed in the
account on a daily basis so that the value of the account  will equal the amount
of a Fund's  commitments  with respect to such  contracts.  As an alternative to
maintaining  all or part of the segregated  account,  a Fund may purchase a call
option  permitting  the Fund to purchase  the amount of foreign  currency  being
hedged by a forward sale contract at a price no higher than the forward contract
price or the Fund may  purchase  a put  option  permitting  the Fund to sell the
amount of foreign currency subject to a forward purchase  contract at a price as
high or higher than the forward  contract  price.  While these contracts are not
presently  regulated by the Commodity Futures Trading Commission  ("CFTC"),  the
CFTC may in the future assert authority to regulate forward  contracts.  In such
event a Fund's  ability to  utilize  forward  contracts  in the manner set forth
above may be  restricted.  Forward  contracts  reduce the potential  gain from a
positive  change  in the  relationship  between  the  U.S.  dollar  and  foreign
currencies.  Unanticipated  changes  in  currency  prices  may  result in poorer
overall performance for the Fund than if it had not entered into such contracts.

Lending of Portfolio  Securities.  In order to increase  income, a Fund may from
time to time  lend  securities  from  its  portfolio  to  brokers,  dealers  and
financial  institutions  and  receive  collateral  in the  form  of cash of U.S.
Government Securities. Under a Fund's procedures, collateral for such loans must
be  maintained  at all times in an amount  equal to at least 100% of the current
market value of the loaned securities  (including interest accrued on the loaned
securities).  The interest  accruing on the loaned  securities will be paid to a
Fund and the Fund will  have the  right,  on  demand,  to call  back the  loaned
securities.  The risks in lending portfolio securities, as with other extensions
of  credit,  consist of  possible  loss of rights in the  collateral  should the
borrower  fail  financially.  In  determining  whether to lend  securities  to a
particular  borrower,  a Fund's  Adviser  (subject  to review by the Board) will
consider all relevant facts and circumstances, including the creditworthiness of
the borrower.  While  securities  are on loan,  the borrower will pay a Fund any
income earned  thereon and the Fund may invest any cash  collateral in portfolio
securities,  thereby earning additional income, or receive an agreed upon amount
of income from a borrower who has delivered  equivalent  collateral.  A Fund may
pay fees to arrange  the loans.  A Fund will not lend  portfolio  securities  in
excess of 30% of the value of its total assets nor lend its portfolio securities
to any officer, Director, employee or affiliate of the Fund or the Adviser.

Forward Commitments.  A Fund may enter into forward commitments for the purchase
or  sale  of  securities.   Such   transactions  may  include   purchases  on  a
"when-issued" basis or purchases or sales on a "delayed delivery" basis. In some
cases,  a  forward  commitment  may be  conditioned  upon  the  occurrence  of a
subsequent  event  such as  approval  of a  proposed  financing  by  appropriate
municipal authorities (i.e., a "when, as and if issued" trade).

When  forward  commitment  transactions  are  negotiated,  the  price,  which is
generally expressed in yield terms, is fixed at the time the commitment is made,
but  delivery  and  payment  for the  securities  take  place  at a later  date.
Normally,  the settlement  date occurs within two months after the  transaction,
but  delayed  settlements  beyond  two  months  may  be  negotiated.  Securities
purchased or sold under a forward commitment are subject to market  fluctuation,
and no interest  accrues to the purchaser  prior to the settlement  date. At the
time a Fund enters into a forward commitment, it will record the transaction and
thereafter reflect the value of the security purchased or, if sold, the proceeds
to be received,  in determining  the net asset value ("NAV") of its shares.  Any
unrealized  appreciation or depreciation reflected in such valuation of a "when,
as and if issued"  security  would be  cancelled  in the event that the required
condition did not occur and the trade was cancelled.

The use of forward  commitments  enables a Fund to protect  against  anticipated
changes  in  interest  rates and  prices.  For  instance,  in  periods of rising
interest  rate and falling  bond  prices,  a Fund might sell  securities  in its
portfolio on a forward commitment basis to limit its exposure to falling prices.
In periods of falling interest rates and rising bond prices, a Fund might sell a
security  in its  portfolio  and  purchase  the same or a similar  security on a
when-issued  or forward  commitment  basis,  thereby  obtaining  the  benefit of
currently  higher cash  yields.  However,  if a Fund's  Adviser were to forecast
incorrectly the direction of interest rate movements, the Fund might be required
to complete such when-issued of forward  transactions at prices inferior to then
current market values.  No forward  commitments  will be made by a Fund if, as a
result,  the Fund's aggregate  commitments under such transactions would be more
than 30% of the then current value of the Fund's total assets.

A Fund's right to receive or deliver a security  under a forward  commitment may
be  sold  prior  to the  settlement  date,  but the  Fund  enters  into  forward
commitments  only with the  intention of actually  receiving or  delivering  the
securities,  as the case  may be.  To  facilitate  such  transactions,  a Fund's
Custodian will  maintain,  in a segregated  account of the Fund,  cash or liquid
high-grade  debt  securities  having  value  equal  to,  or  greater  than,  any
commitments  to purchase  securities  on a forward  commitment  basis and,  with
respect to forward  commitments  to sell  portfolio  securities of the Fund, the
portfolio securities,  themselves. If a Fund, however, chooses to dispose of the
right to receive or deliver a security subject to a forward  commitment prior to
the  settlement  date of the  transaction,  it can incur a gain or loss.  In the
event the other party to a forward  commitment  transaction  were to default,  a
Fund might lose the opportunity to invest money at favorable rates or to dispose
of securities at favorable prices.

General  Information  Regarding  Futures,  Options  and Forward  Contracts.  The
successful use of the foregoing  investment  practices  draws upon the Adviser's
special  skill and  experience  with  respect to such  instruments  and  usually
depends  on the  Adviser's  ability  to  forecast  interest  and  exchange  rate
movements  correctly.  Should  interest or exchange  rates move in an unexpected
manner,  a Fund may not  achieve  the  anticipated  benefits of the use of these
techniques  or may realize  losses and thus be in a worse  position than if such
strategies had not been used. Unlike many exchange-traded  futures contracts and
options on futures  contracts,  there are no daily price fluctuation limits with
respect to forward  contracts,  and adverse  market  movements  could  therefore
continue  to an  unlimited  extent  over a period  of  time.  In  addition,  the
correlation between movements in the prices of such instruments and movements in
the price of the  securities  hedged of used for cover will not be  perfect  and
could produce unanticipated losses.

A Fund's ability to dispose of its positions in futures  contracts,  options and
forward  contracts  will depend on the  availability  of liquid  markets in such
instruments. It is impossible to predict the amount of trading interest that may
exist in various types of futures contracts, options and forward contracts. If a
secondary  market does not exist with respect to an option  purchased or written
by a Fund  over-the-counter,  it might  not be  possible  to  effect  a  closing
transaction in the option (i.e., dispose of the option) with the result that (i)
an option purchased by the Fund would have to be exercised in order for the Fund
to  realize  any  profit  and (ii)  the  Fund may not be able to sell  portfolio
securities covering an option written by the Fund until the option expires or it
delivers the underlying  security or futures contract upon exercise.  Therefore,
no assurance can be given that a Fund will be able to utilize these  instruments
at  all  or  utilize  them   effectively  for  the  purposes  set  forth  above.
Furthermore,  a Fund's ability to engage in options and futures transactions may
be limited by tax considerations.

Short  Sales.  A Fund may make short  sales of  securities  or  maintain a short
position, provided that at all times when a short position is open the Fund owns
an equal amount of such securities of the same issue as, and equal in amount to,
the securities sold short. In addition, a Fund may not make a short sale if more
than 10% of the  Fund's  net  assets  (taken at market  value)  would be held as
collateral  for short sales at any one time.  If the price of the security  sold
short increases  between the time of the short sale and the time a Fund replaces
the  borrowed  security,  the Fund will incur a loss;  conversely,  if the price
declines,  the Fund will  realize  a capital  gain.  Although  a Fund's  gain is
limited to the price at which it sold the security short,  its potential loss is
unlimited.  It is the Funds'  present  intention to make such sales only for the
purpose  of  deferring  realization  of gain  or loss  for  federal  income  tax
purposes.  Certain special federal income tax  considerations may apply to short
sales, which are entered into by a Fund.

Reverse Repurchase Agreements.  Reverse repurchase agreements involve sales by a
Fund  of  portfolio  assets  concurrently  with  an  agreement  by the  Fund  to
repurchase the same assets at a later date at a fixed price.  During the reverse
repurchase  agreement  period,  the Fund  continues  to  receive  principal  and
interest  payments  on  these  securities.  Generally,  the  effect  of  such  a
transaction  is that a Fund can recover all or most of the cash  invested in the
portfolio  securities  involved  during  the  term  of  the  reverse  repurchase
agreement,  while it will be able to keep the interest  income  associated  with
those portfolio  securities.  Such  transactions  are  advantageous  only if the
interest cost to a Fund of the reverse  repurchase  transaction is less than the
cost of otherwise obtaining the cash.

Reverse  repurchase  agreements  involve  the risk that the market  value of the
securities a Fund is obligated to  repurchase  under the  agreement  may decline
below the repurchase price. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent,  a Fund's use of
the proceeds of the agreement may be restricted  pending a determination  by the
other  party,  or its  trustee  or  receiver,  whether  to  enforce  the  Fund's
obligation to repurchase the securities.

Swap Agreements. The Funds may enter into swaps on sovereign debt obligations to
protect  themselves  from  interest rate  fluctuations  on the  underlying  debt
instruments and for investment  purposes.  A swap is an agreement that obligates
two parties to exchange a series of cash flows at specified intervals based upon
or  calculated  by  reference  to  changes  in  specified  prices or rates for a
specified  amount of an underlying  asset.  The payment flows are usually netted
against each other,  with the  difference  being paid by one party to the other.
Risks may  arise as a result  of the  failure  of the  counterparty  to the swap
contract to comply with the terms of the swap contract. The loss incurred by the
failure of a counterparty is generally limited to the net interest payment to be
received by a Fund,  and/or the  termination  value at the end of the  contract.
Therefore,  a 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.

Future  Developments.  A Fund may, following written notice to its stockholders,
take  advantage  of  other  investment   practices  which  are  not  at  present
contemplated  for use by the Fund or which currently are not available but which
may be developed,  to the extent such  investment  practices are both consistent
with the Fund's investment  objective and legally permissible for the Fund. Such
investment  practices,  if they  arise,  may  involve  risks that  exceed  those
involved in the activities described above.



                             INVESTMENT RESTRICTIONS

Each Fund has adopted the following  investment  restrictions,  which may not be
changed  without  the  approval  of the  holders  of a majority  of that  Fund's
outstanding  voting securities as defined above. The percentage  limitations set
forth below,  as well as those described in the  Prospectus/Proxy  Statement and
elsewhere in this Statement of Additional Information, apply only at the time an
investment is made or other relevant action is taken by a Fund.

     Each Fund will not:

     1.   Invest  25% or more of its  total  assets  in  securities  of  issuers
          conducting their principal  business  activities in the same industry,
          provided  that  this  limitation  shall  not  apply  with  respect  to
          investments in U.S. Government  Securities (and investments in Foreign
          Government Securities, with respect to ACM Government Opportunity);

     2.   Make loans  except  through (a) the  purchase of debt  obligations  in
          accordance with its investment objective and policies; (b) the lending
          of portfolio securities; or (c) the use of repurchase agreements;

     3.   Borrow money, except a Fund may borrow (a) from a bank or other entity
          in a privately arranged transaction and issue commercial paper, bonds,
          debentures or notes, in series or otherwise, with such interest rates,
          conversion  rights and other terms and provisions as are determined by
          the Fund's Board,  if after such  borrowing or issuance there is asset
          coverage  of at least  300% as  defined  in the 1940 Act,  and (b) for
          temporary  purposes in an amount not  exceeding 5% of the value of the
          total assets of the Fund;

     4.   Pledge, hypothecate, mortgage or otherwise encumber its assets, except
          to secure permitted borrowings;

     5.   Participate  on a joint or joint and several  basis in any  securities
          trading account;

     6.   Invest in companies for the purpose of exercising control;

     7.   Invest in illiquid  securities,  including direct  placements or other
          securities  which are subject to legal or  contractual  restriction on
          resale  or for  which  there is no  readily  available  market  (e.g.,
          trading  in the  security  is  suspended  or, in the case of  unlisted
          securities,  market makers do not exist or will not entertain  bids or
          offers),  if more than 20% of the Fund's  net assets  (taken at market
          value)  would be invested  in such  securities.  For  purposes of this
          restriction,  repurchase  agreements not terminable  within seven days
          will be deemed  illiquid.  Options  purchased by the Fund in privately
          negotiated transactions and the securities covering options written by
          the Fund in privately negotiated  transactions are not subject to this
          limitation;

     8.   Make short sales of securities or maintain a short position, unless at
          all times  when a short  position  is open it owns an equal  amount of
          such securities or securities  convertible  into or exchangeable  for,
          without payment of any further  consideration,  securities of the same
          issue as, and equal in amount to, the  securities  sold short  ("short
          sales  against  the box"),  and unless not more than 10% of the Fund's
          net  assets  (taken at market  value) is held as  collateral  for such
          sales at any one time (it is the Fund's present intention to make such
          sales only for the purpose of  deferring  realization  of gain or loss
          for federal income tax purposes); or

     9.   (a) Purchase or sell real estate, except that it may purchase and sell
          securities  of  companies  which  deal in  real  estate  or  interests
          therein;  (b)  purchase or sell  commodities  or  commodity  contracts
          (except currencies,  currency futures,  forward contracts or contracts
          for the future  acquisition or delivery of fixed income securities and
          related options and other similar contracts);  (c) invest in interests
          in oil, gas, or other mineral exploration or development programs; (d)
          purchase  securities on margin,  except for such short-term credits as
          may be necessary for the clearance of transactions;  and (e) act as an
          underwriter of securities, except that the Fund may acquire restricted
          securities under circumstances in which, if such securities were sold,
          the Fund might be deemed to be an underwriter for purposes of the 1933
          Act.

ACM Government  Opportunity has an additional investment  restriction in that it
will not  purchase a security  if, as a result  (unless the security is acquired
pursuant to a plan of  reorganization  or an offer of exchange),  the Fund would
own any  securities  of an  open-end  investment  company or more than 3% of the
total outstanding voting stock of any closed-end investment company or more than
5% of the value of the Fund's total assets  would be invested in  securities  of
any closed-end  investment  company or more than 10% of such value in closed-end
investment companies in general.

                     RISK FACTORS AND SPECIAL CONSIDERATIONS

General. The NAV of shares of a Fund varies as the aggregate value of the Fund's
portfolio securities increases or decreases. A Fund's NAV changes as the general
levels of interest rates fluctuate.  When interest rates decline, the value of a
portfolio  invested  in  fixed-income   securities  can  be  expected  to  rise.
Conversely,  when  interest  rates rise,  the value of a  portfolio  invested in
fixed-income securities can be expected to decline. If the Adviser's expectation
of changes in interest rates or its evaluation of the normal yield relationships
in the  fixed-income  markets proves to be incorrect,  a Fund's income,  NAV and
potential  capital gain may be decreased  or its  potential  capital loss may be
increased.

Although  changes in the value of a Fund's  portfolio  securities  subsequent to
their  acquisition are reflected in the Fund's NAV, such changes will not affect
the income  received by the Fund from such  securities.  The dividends paid by a
Fund  increase or  decrease in relation to the income  received by the Fund from
its  investments,   which  is  reduced  by  the  Fund's  expenses  before  being
distributed to the Fund's stockholders.

The Fund's use of  options,  futures  contracts,  options on futures  contracts,
forward  contracts and options on foreign  currencies  may result in the loss of
principal under certain market conditions.

For these  reasons,  an investment in shares of the Fund should not constitute a
complete  investment program and may not be appropriate for investors who cannot
assume the  greater  risk of capital  depreciation  inherent  in seeking  higher
income.

Borrowing. A Fund may, if and when market conditions dictate,  borrow, including
on  a  secured  basis,  from  bank  or  other  entities  in  privately  arranged
transactions to increase the money available to the Fund to invest in securities
when the Fund  believes  that the income from the  securities  financed  will be
greater than the interest expense paid on the borrowing. Such borrowings involve
additional  risk to a Fund,  since the interest  expense may be greater than the
income from or  appreciation  of the  securities  carried by the  borrowings and
since the value of the securities carried may decline below the amount borrowed.
A Fund may also borrow to finance repurchases of or tender offers for its shares
when the Fund deems it desirable in order to avoid the untimely  disposition  of
portfolio  securities.  A Fund  reserves  the  right to issue  preferred  stock,
commercial paper, bonds, debentures or notes, in series or otherwise,  with such
interest  rates,  conversion  rights  and  other  terms  and  provisions  as are
determined by the Fund's Board of Directors.

A Fund may borrow to the maximum extent  permitted  under the 1940 Act. The 1940
Act  requires a Fund to maintain  "asset  coverage" of not less than 300% of its
"senior  securities  representing  indebtedness," as those terms are defined and
used in the 1940 Act. In addition, a Fund may not make any cash distributions to
its stockholders if, after the distribution, there would be less than 300% asset
coverage  of  a  senior  security   representing   indebtedness  for  borrowings
(excluding for this purpose certain  evidences of indebtedness made by a bank or
other  entity  and  privately   arranged,   and  not  intended  to  be  publicly
distributed).  This limitation on a Fund's ability to make  distributions  could
under  certain   circumstances   impair  the  Fund's  ability  to  maintain  its
qualification for taxation as a registered investment company.

A Fund may also borrow for  temporary  purposes in an amount not exceeding 5% of
the value of the total assets of the Fund.  Such  borrowings  are not subject to
the asset coverage restrictions set forth in the preceding paragraph.

Any investment  gains made with the proceeds  obtained from borrowings in excess
or interest  paid on the  borrowings  will cause the net income per share or the
NAV per share of a Fund's common stock to be greater than would otherwise be the
case.  On the  other  hand,  if the  investment  performance  of the  additional
securities  purchased  fails to cover their cost (including any interest paid on
the money borrowed) to a Fund, then the net income per share or NAV per share of
the Fund's common stock will be less than would  otherwise be the case.  This is
the speculative factor know as "leverage."

Effects of  Leverage.  Utilization  of  leverage,  which is  usually  considered
speculative,  involves  certain  risks to  stockholders.  These include a higher
volatility  of the NAV of the  common  stock,  caused by  favorable  or  adverse
changes in currency  exchange rates.  In addition,  fluctuations in the interest
rates on a Fund's  indebtedness  will  affect the return to  stockholders,  with
increases in such rates decreasing such return.

To the extent that the current interest rate on a Fund's indebtedness approaches
the net return on the leveraged portion of the Fund's investment portfolio,  the
benefit of leverage to stockholders will be reduced, and if the current interest
rate on the  indebtedness  were to exceed the net return on such  portion of the
Funds' portfolio,  the Fund's leverage would result in a lower rate of return to
stockholders and in a lower NAV than if a Fund were not leveraged. In an extreme
case, if a Fund's current investment income were not sufficient to meet interest
requirements  on the  indebtedness  or if a Fund  failed to  maintain  the asset
coverage  required  by the  1940  Act,  it could  be  necessary  for the Fund to
liquidated  certain of its investments at a time when it may be  disadvantageous
to do so, thereby reducing its NAV.

Investments in Foreign  Government  Securities.  Investing in Foreign Government
Securities involves  considerations and possible risks not typically  associated
with investing in U.S.  Government  Securities.  The value of Foreign Government
Securities investments will be affected by changes in currency rates or exchange
control  regulations,  application  of foreign tax laws,  including  withholding
taxes, changes in governmental administration or economic or monetary policy (in
this country or abroad) or changed  circumstances  in dealings  between nations.
Costs  will  be  incurred  in  connections  with  conversions   between  various
currencies.  Foreign  brokerage  commissions  are  generally  higher than in the
United States, and foreign securities markets may be less liquid,  more volatile
and  less  subject  to  governmental  supervision  than  in the  United  States.
Investments in foreign  countries could be affected by other factors not present
in the United States,  including  expropriation,  confiscatory taxation, lack of
uniform  accounting  and  auditing  standards,  and  potential  difficulties  in
enforcing contractual  obligations,  and could be subject to extended settlement
periods.

Investments  in  Lower-Rated  Securities.  (ACM Income)  Securities  rated below
investment  grade,  i.e.,  Ba  and  lower  by  Moody's  or BB and  lower  by S&P
("lower-rated securities"), or, if not rated, determined by the Adviser to be of
equivalent  quality,  are  subject  to  greater  risk of loss of  principal  and
interest than  higher-rated  securities and are  considered to be  predominantly
speculative  with  respect to the  issuer's  capacity to pay  interest and repay
principal,   which  may  in  any  case  decline  during  sustained   periods  of
deteriorating  economic  conditions  or  rising  interest  rates.  They are also
generally  considered  to be subject to greater  market  risk than  higher-rated
securities  in  times  of  deteriorating   economic  conditions.   In  addition,
lower-rated  securities  may be more  susceptible  to real or perceived  adverse
economic conditions than investment grade securities, although the market values
of securities  rated below investment  grade and comparable  unrated  securities
tend to react less to  fluctuations  in  interest  rate  levels than do those of
higher-rated securities.  Securities rated Ba by Moody's or BB by S&P are judged
to have  speculative  characteristics  or to be  predominantly  speculative with
respect to the issuer's ability to pay interest and repay principal.  Securities
rated B by Moody's and S&P are judged to have highly speculative characteristics
or to be predominantly speculative.  Such securities may have small assurance of
interest and principal payments.

The market for  lower-rated  securities may be thinner and less active than that
for  higher-rated  securities,  which can  adversely  affect the prices at which
these  securities  can be sold.  To the  extent  that  there  is no  established
secondary market for lower-rated securities,  the Fund may experience difficulty
in valuing such securities and, in turn, the Fund's assets.

The  Adviser  will try to reduce  risk  inherent in  investment  in  lower-rated
securities  through credit  analysis,  diversification  and attention to current
developments and trends in interest rates and economic and political conditions.
However, there can be no assurance that losses will not occur. Since the risk of
default is higher for lower-rated securities,  the Adviser's research and credit
analysis are a correspondingly more important aspect of its program for managing
the  Fund's  securities  than  would be the case if the Fund did not  invest  in
lower-rated securities.

In seeking to achieve the Fund's investment objective, there will be times, such
as during periods of rising interest rates, when depreciation and realization of
capital  losses on  securities  in the  Fund's  portfolio  will be  unavoidable.
Moreover,  medium-  and  lower-rated  securities  and  non-rated  securities  of
comparable  quality  may be  subject to wider  fluctuations  in yield and market
values than  higher-rated  securities  under  certain  market  conditions.  Such
fluctuations after a security is acquired do not affect the cash income received
from that security but are reflected in the NAV of the Fund.

Ratings of securities by Moody's and S&P are a generally  accepted  barometer of
credit  risk.  They  are,  however,  subject  to  certain  limitations  from  an
investor's  standpoint.  The rating of a security  is heavily  weighted  by past
developments and does not necessarily reflect probable future conditions.  There
is  frequently  a lag between  the time a rating is assigned  and the time it is
updated.  In addition,  there may be varying degrees of difference in the credit
risk of securities within each rating category. See Appendix A for a description
of Moody's and S&P's bond ratings.

Certain lower-rated  securities in which the Fund may invest may contain call or
buy-back  features that permit the issuers  thereof to call or  repurchase  such
securities.  Such securities may present risks based on prepayment expectations.
If an issuer exercises such a provision, the Fund may have to replace the called
security with a lower yielding security, resulting in a decreased rate of return
to the Fund.

Repurchase of Shares.  In  recognition of the  possibility  that a Fund's shares
might trade at a discount to NAV, each Fund's Board has determined that it would
be in the  interest  of  stockholders  for the  Fund to  attempt  to  reduce  or
eliminate such a market value discount should it exist. To that end, each Fund's
Board  presently  contemplates  that a Fund may from  time to time  take  action
either to  repurchase  in the open market or to make a tender  offer for its own
shares at NAV. Each Fund's Board presently  intends each quarter to consider the
making of a tender  offer.  The Boards may at any time,  however,  decide that a
Fund should not make a tender offer.

Subject to a Fund's fundamental policy with respect to borrowings,  the Fund may
incur debt to finance  repurchases  and/or tender  offers.  Interest on any such
borrowing will reduce the Fund's net income.

There can be no assurance that repurchases and/or tender offers will result in a
Fund's shares trading at a price equal to their NAV. Each Fund  anticipates that
the market  price of its shares will from time to time vary from NAV. The market
price of a Fund's shares will,  among other things,  be affected by the relative
demand  for and  supply of such  shares in the  market,  the  Fund's  investment
performance,  the Fund's  dividends  and yield and  investor  perception  of the
Fund's overall attractiveness as an investment as compared with other investment
alternatives.  Nevertheless, the fact that a Fund's shares may be the subject of
tender  offers  at NAV from  time to time  may  reduce  the  spread  that  might
otherwise  exist  between  market  price and NAV. In the opinion of the Adviser,
sellers  may be less  inclined to accept a  significant  discount if they have a
reasonable  expectation  of being  able to  recover  NAV in  conjunction  with a
possible tender offer.

Although  each Fund's Board  believes that share  repurchases  and tender offers
might, in certain circumstances have a favorable effect an the market price of a
Fund's  shares,  it should be recognized  that the  acquisition of shares by the
Fund would  decrease the total assets of the Fund and therefore  have the effect
of increasing the Fund's expense ratio. Even if a tender offer has been made, it
is a Board's policy, which may be changed by the Board, not to accept tenders or
effect repurchases if (1) such transactions if consummated,  would (a) result in
the  delisting of the Fund's  shares from the New York Stock  Exchange  ("NYSE")
(the NYSE  having  advised  the Fund  that it would  consider  delisting  if the
aggregate market value of the Fund's outstanding shares is less than $5,000,000,
the  number of  publicly  held  shares  falls  below  600,000  or the  number of
round-lot  holders  fall below  1,200),  or (b)  impair  the Fund's  status as a
regulated investment company under the Code (which would make the Fund a taxable
entity, causing the Fund's income to be taxed at the corporate level in addition
to the taxation of stockholders  who receive  dividends from the Fund);  (2) the
Fund would not be able to liquidate  portfolio  securities in an orderly  manner
and  consistent  with the Fund's  investment  policies and objective in order to
repurchase  shares; or (3) there is, in the Board's  judgment,  any material (a)
legal  action  or  proceeding   instituted  or   threatened   challenging   such
transactions  or  otherwise   materially   adversely  affecting  the  Fund,  (b)
suspension of or limitation  on prices for trading  securities  generally on the
NYSE of any  foreign  exchange  on which  portfolio  securities  of the Fund are
traded,  (c)  declaration of a banking  moratorium by federal,  state or foreign
authorities or any suspension of payment by banks in the United States, New York
State or foreign countries in which the Fund invests,  (d) limitation  affecting
the Fund or the issuers of its portfolio securities imposed by federal, state or
foreign authorities on the extension of credit by lending institutions or on the
exchange of foreign  currency,  (e)  commencement  of war, armed  hostilities or
other  international or national calamity  directly or indirectly  involving the
United States or other countries in which the Fund invests or (f) other event or
condition  which  would  have a  material  adverse  effect  on the  Fund  or its
stockholders if shares were repurchased.  A Board may modify these conditions in
light of experience.

Any tender  offer made by ACM Income  will be at a price equal to the NAV of the
shares on a date  subsequent  to the Fund's  receipt of all tenders.  Any tender
offer made by ACM Government Opportunity will be at a price equal to the NAV per
share determined at the close of business on the day the offer terminates.  Each
offer will be made and stockholders notified in accordance with the requirements
of the Securities  Exchange Act of 1934, as amended and the 1940 Act,  either by
publication  or  mailing or both.  Each  offering  document  will  contain  such
information  as is  prescribed  by such  laws  and  the  rules  and  regulations
promulgated thereunder. When a tender offer is authorized to be made by a Fund's
Board, a stockholder wishing to accept the offer will be required to tender all
(but not less thin all) of the shares owned by such  stockholder  (or attributed
to the  stockholder  for federal  income tax purposes  under  Section 318 of the
Code). A Fund will purchase all shares  tendered in accordance with the terms of
the offer  unless it  determines  to accept  none of them (based upon one of the
conditions set forth above).  Each person  tendering  shares will be required to
submit a check in the amount of $25.00,  payable to the Fund, which will be used
to help defray the costs associated with effecting the tender offer. This $25.00
fee will be imposed upon each tendering stockholder any of whose tendered shares
are  purchased  in the offer,  and will be imposed  regardless  of the number of
shares  purchased.  A Fund  expects  the cost to the Fund of  effecting a tender
offer will exceed the  aggregate of all such fees received from those who tender
offer  their  shares.  Costs  associated  with the tender  offer will be charged
against  capital.  During the period of the tender offer, a Fund's  stockholders
will be able to obtain the Fund's  current NAV by use of a  toll-free  telephone
number.

If a Fund must liquidate  portfolio  securities in order to purchase Fund shares
tendered,  the Fund may realize gains and losses.  If the  portfolio  securities
sold are "Section 998" items, a Fund's distributable net investment income could
be positively or adversely  affected.  The portfolio turnover rate of a Fund may
or may not be affected by the Fund's  repurchase of shares  pursuant to a tender
offer.

Possible Future Conversion to Open-End Investment Company. If, during any fiscal
year of a Fund,  (i)  shares  of the  Fund's  common  stock  have  traded on the
principal securities exchange where listed at an average discount from net asset
value of more than 10%, determined on the basis of the discount as of the end of
the last  trading  day in each  week  during  the  period of 12  calendar  weeks
preceding  December 31 in such year, and (ii) during such year the Fund receives
written  requests  from the  holders  of 10% or more of the  Fund's  outstanding
shares  of  common  stock  that  such a  proposal  be  submitted  to the  Fund's
stockholders,  the Fund will submit to its  stockholders  at the next succeeding
annual meeting of  stockholders a proposal,  to the extent  consistent  with the
1940 Act, to amend the Fund's  Charter.  Such amendment would provide that, upon
its adoption by the holders of 66 2/3% of a Fund's  outstanding shares of common
stock,  the Fund  will  convert  from a  closed-end  to an  open-end  investment
company.  The 66 2/3% vote  requirement is higher than the minimum vote required
under the 1940 Act. If a Fund converted to an open-end  investment  company,  it
would be able to  continuously  issue and offer  shares of its common  stock and
each outstanding share of the Fund's common stock could be presented to the Fund
at the option of the holder thereof for redemption at net asset value per share.
In such event,  a Fund might be required to liquidate  portfolio  securities  to
meet  requests for  redemption,  and its shares would no longer be listed on the
NYSE.

A Fund cannot predict  whether any repurchase of shares made while the Fund is a
closed-end  investment company (as described under "Repurchase of Shares" above)
would  increase or decrease the  discount  from NAV. To the extent that any such
repurchase  decreased the discount from NAV to below 10% during the  measurement
period  described  in (i)  above,  the Fund would not be  required  to submit to
stockholders a proposal to convert the Fund to an open-end investment company at
the next annual meeting of stockholders.

                             MANAGEMENT OF THE FUNDS

Directors and Officers

The Directors and principal  officers of a Fund and their principal  occupations
during the past five years are set forth below. Unless otherwise specified,  the
address of each such person is 1345 Avenue of the Americas,  New York, NY 10105.
Each  Director and officers is  affiliated as such with one or more of the other
registered investment companies sponsored by the Adviser.

Directors
---------

                                  Fund                           Principal Occupation During
Name, Address and                 First Year                     the Past Five Years and Other
Date of Birth                     Elected          Office        Affiliations
-------------                     -------          ------        ------------
                                                        
Marc O. Mayer*                    2003             President     Executive Vice President of the
1345 Avenue of the Americas                                      Adviser since 2001 and Executive
New York, NY 10105                                               Managing Director of
10/2/57                                                          AllianceBernstein Investments, Inc.
                                                                 ("ABI") since 2003; prior thereto, he
                                                                 was head of AllianceBernstein
                                                                 Institutional Investments, a unit of
                                                                 the Adviser, from 2001-2003; prior
                                                                 thereto, Chief Executive Officer of
                                                                 Sanford C. Bernstein & Co., LLC
                                                                 (institutional research and brokerage
                                                                 arm of Bernstein & Co. LLC ("SCB &
                                                                 Co.")) and its predecessor since
                                                                 prior to 2001.  He is a Director of
                                                                 SCB Partners, Inc. and SCB, Inc.

William H. Foulk, Jr., +**        1988             Chairman      Investment Adviser and an independent
P.O. Box 5060                                      Director      consultant. He was formerly Senior
Greenwich, CT 06831-0505                                         Manager of Barrett Associates, Inc.,
9/7/32                                                           a registered investment adviser, with
                                                                 which he had been associated since
                                                                 prior to 2001.  He was formerly
                                                                 Deputy Comptroller and Chief
                                                                 Investment Officer of the State of
                                                                 New York and, prior thereto, Chief
                                                                 Investment Officer of the New York
                                                                 Bank for Savings.

David H. Dievler, +               ACM Income -     Director      Independent Consultant. Until
P.O. Box 167                      1987                           December 1994, he was Senior Vice
Spring Lake, NJ 07762             ACM Government                 President of Alliance Capital
10/23/29                          Opportunity -                  Management Corporation ("ACMC")
                                  1988                           responsible for mutual fund
                                                                 administration. Prior to joining ACMC
                                                                 in 1984, he was Chief Financial
                                                                 Officer of Eberstadt Asset Management
                                                                 since 1968.  Prior to that, he was a
                                                                 Senior Manager at Price Waterhouse &
                                                                 Co. Member of the American Institute
                                                                 of Certified Public Accountants since
                                                                 1953.

John H. Dobkin, +                 1988             Director      Consultant. Formerly President of
P.O. Box 12                                                      Save Venice, Inc. (preservation
Annandale, NY 12504                                              organization) from 2001 - 2002, a
2/19/42                                                          Senior Advisor from June 1999 - June
                                                                 2000 and President of Historic Hudson
                                                                 Valley (historic preservation) from
                                                                 December 1989 - May 1999. Previously,
                                                                 Director of the National Academy of
                                                                 Design and during 1988 - 1992,
                                                                 Director and Chairman of the Audit
                                                                 Committee of ACMC.

Michael J. Downey, +              2005             Director      Consultant since January 2004.
c/o AllianceBernstein L.P.                                       Formerly managing partner of
Attention: Philip L. Kirstein                                    Lexington Capital, LLC (investment
1345 Avenue of the Americas                                      advisory firm) from December 1997
New York, NY 10105                                               until December 2003. Prior thereto,
1/26/44                                                          Chairman and CEO of Prudential Mutual
                                                                 Fund Management from 1987 to 1993.
                                                                 Director of Asia Pacific Fund, Inc.
                                                                 and The Merger Fund.

D. James Guzy, +                  2005             Director      Chairman of the Board of PLX
P.O. Box 128                                                     Technology (semi-conductors) and of
Glenbrook, NV 89413                                              SRC Computers Inc., with which he has
3/7/36                                                           been associated since prior to 2001.
                                                                 He is also President of the Arbor
                                                                 Company (private family
                                                                 investments).  He is a director of
                                                                 Intel Corporation (semi-conductors),
                                                                 Cirrus Logic Corporation
                                                                 (semi-conductors),  and the Davis
                                                                 Selected Advisors Group of Mutual
                                                                 Funds.

Nancy P. Jacklin, +               2006             Director      Formerly, U.S. Executive Director of
4046 Chancery Court, NW                                          the International Monetary Fund
Washington, DC  20007                                            (December 2002-May 2006); partner,
5/22/48                                                          Clifford Chance (1992-2002); Senior
                                                                 Counsel, International Banking and
                                                                 Finance, and Associate General
                                                                 Counsel, Citicorp (1985-1992);
                                                                 Assistant General Counsel
                                                                 (International), Federal Reserve
                                                                 Board of Governors (1982-1985); and
                                                                 Attorney Advisor, U.S. Department of
                                                                 the Treasury (1973-1982).  Member of
                                                                 the Bar of the District of Columbia
                                                                 and of New York; member of the
                                                                 Council on Foreign Relations.

Marshall C. Turner, Jr., +        2005             Director      Principal of Turner Venture
220 Montgomery Street                                            Associates since before 2001.  From
Penthouse 10                                                     2003 until May 31, 2006, he was CEO
San Francisco, CA                                                of Toppan Photomasks, Inc., Austin,
94104-3402                                                       Texas.  (Semi-conductor manufacturing
10/10/41                                                         services).  He is also a director of
                                                                 the George Lucas Educational
                                                                 Foundation and National Datacast, Inc.


*    "Interested  person" as defined in the  Investment  Company Act of 1940, as
     amended, of each Fund because of an affiliation with each Fund's investment
     adviser,  AllianceBernstein  L.P.

+    Member of the Audit Committee,  the Governance and Nominating Committee and
     the Independent Directors Committee.

**   Member of the Fair Value Pricing Committee.

During a Fund's fiscal year ended in 2005,  the Board of ACM Income met 10 times
and the Board of ACM Government Opportunity met 9 times. The Funds do not have a
policy that requires a Director to attend annual meetings of stockholders.

Each Fund's Board has four standing committees: an Audit Committee, a Governance
and Nominating Committee,  an Independent Directors Committee,  and a Fair Value
Pricing  Committee.  The members of the Committees  are identified  above in the
table listing the Directors. The function of the Audit Committee of each Fund is
to assist the Board in its oversight of a Fund's  financial  reporting  process.
The members of the Audit Committee are  "independent"  as required by applicable
listing  standards of the New York Stock  Exchange.  During a Fund's fiscal year
ended in 2005,  the Audit  Committee of each of the Funds met 3 times.  During a
Fund's fiscal year ended in 2005, the Governance and Nominating Committee of ACM
Income met 7 times and of ACM Government Opportunity met 6 times.

Each Fund's  Board of  Directors  has adopted a charter for its  Governance  and
Nominating  Committee,  a copy of which may be found on the  Adviser's  website,
http://www.alliancebernstein.com    (click    on    Investor    Solutions/Mutual
Funds/Closed-End).  Pursuant to the  charter of the  Governance  and  Nominating
Committee,  the  Governance  and  Nominating  Committee  assists  each  Board in
carrying  out its  responsibilities  with  respect to  governance  of a Fund and
identifies, evaluates and selects and nominates candidates for that Board.
 The  Committee  also may set standards or  qualifications  for  Directors.  The
Committee  may consider  candidates as Directors  submitted by a Fund's  current
Board members, officers,  investment adviser, stockholders and other appropriate
sources.

The Governance and Nominating  Committee will consider candidates submitted by a
stockholder  or group of  stockholders  who have owned at least 5% of the Fund's
outstanding  common stock for at least two years at the time of  submission  and
who timely provide specified information about the candidates and the nominating
stockholder  or group.  To be timely for  consideration  by the  Committee,  the
submission,  including all required information, must be submitted in writing to
the attention of the Secretary at the principal  executive offices of a Fund not
less than 120 days  before  the date of the  proxy  statement  for the  previous
year's annual  meeting of  stockholders.  The  Committee  will consider only one
candidate  submitted by such a stockholder  or group for nomination for election
at  an  annual  meeting  of  stockholders.   The  Committee  will  not  consider
self-nominated candidates.

The Governance and  Nominating  Committee will consider and evaluate  candidates
submitted  by  stockholders  on the basis of the same  criteria as those used to
consider and evaluate  candidates  submitted from other sources.  These criteria
include the  candidate's  relevant  knowledge,  experience,  and expertise,  the
candidate's  ability to carry out his or her duties in the best  interests  of a
Fund and the candidate's ability to qualify as a disinterested Director.

The function of each Fund's Fair Value  Pricing  Committee  is to  consider,  in
advance if possible,  any fair  valuation  decision of the  Adviser's  Valuation
Committee  relating  to a security  held by a Fund made  under  unique or highly
unusual  circumstances not previously  addressed by the Valuation Committee that
would  result in a change in the  Fund's  net asset  value  ("NAV") by more than
$0.01 per share.  The Fair Value Pricing  Committee did not meet during a Fund's
most recently completed fiscal year.

The function of each Fund's Independent  Directors  Committee is to consider and
take action on matters that the Board or Committee  believes should be addressed
in executive session of the disinterested Directors, such as review and approval
of the  Advisory  Agreements.  During a Fund's  fiscal  year ended in 2005,  the
Independent Directors Committee of ACM Income met 11 times and of ACM Government
Opportunity met 6 times.


Officers
--------

Name, Address* and                              Principal Occupation During the Past Five
Date of Birth            Office                 Years and Other Affiliations
-------------            ------                 -----------------------------------------
                                           
Marc O. Mayer            President and           See biography above.
10/2/57                  Chief
                         Executive
                         Officer

Philip L. Kirstein       Senior Vice             Senior Vice President and Independent
5/29/45                  President and           Compliance Officer of the
                         Independent             AllianceBernstein Funds, with which he has
                         Compliance              been associated since October 2004.  Prior
                         Officer                 thereto, he was Of Counsel to Kirkpatrick
                                                 & Lockhart, LLP from October 2003 to
                                                 October 2004, and General Counsel of
                                                 Merrill Lynch Investment Managers, L.P.
                                                 since prior to 2001 until March 2003.

Andrew M. Aran           Vice President          Senior Vice President of the Adviser**,
4/24/57                                          with which he has been associated since
                                                 prior to 2001.
Paul J. DeNoon           Vice President          Senior Vice President of the Adviser**,
4/18/62                                          with which he has been associated since
                                                 prior to 2001.

Gershon Distenfeld       Vice President          Vice President of the Adviser**, with
12/30/75                                         which he has been associated since prior
                                                 to 2001.
Michael L. Mon           Vice President          Senior Vice President of the Adivser**,
3/2/69                                           with which has been associated since prior
                                                 to 2001.

Douglas J. Peebles       Vice President          Executive Vice President of the Adviser**,
8/10/65                                          with which he has been associated since
                                                 prior to 2001.

Kewjin Yuoh              Vice President          Vice President of the Adviser** since
3/11/71                                          March 2003.  Prior thereto, he was a Vice
                                                 President of Credit Suisse Asset
                                                 Management since prior to 2001.
Emilie D. Wrapp          Secretary               Senior Vice President, Assistant General
11/13/55                                         Counsel and Assistant Secretary of ABI**,
                                                 with which she has been associated since
                                                 prior to 2001.

Joseph J. Mantineo       Treasurer and           Senior Vice President of ABIS**, with
3/28/50                  Chief                   which he has been associated since prior
                         Financial               to 2001.
                         Officer

Vincent S. Noto          Controller              Vice President of ABIS**, with which he
12/14/64                                         has been associated since prior to 2001.

--------------------

*    The address for each of the Funds' officers is 1345 Avenue of the Americas,
     New York, NY 10105.

**   The Adviser, ABI and ABIS are affiliates of the Fund.

A Fund does not pay any fees to, or reimburse expenses of, any Director during a
time when such  Director is considered  an  "interested  person" of the Fund, as
defined by the 1940 Act. The aggregate compensation paid by each Fund to each of
its  Directors  during it  respective  fiscal year ended in 2005,  the aggregate
compensation  paid to each of the Directors  during calendar year 2005 by all of
the investment  companies in the  AllianceBernstein  Fund Complex, and the total
number of investment companies (and separate investment  portfolios within those
companies) in the  AllianceBernstein  Fund Complex with respect to which each of
the Directors serves as a director or trustee,  are set forth below. Neither the
Funds nor any other  investment  company in the  AllianceBernstein  Fund Complex
provides  compensation  in the form of pension or retirement  benefits to any of
its directors or trustees.



                                                                Total           Total
                                                                Number of       Number of
                                                                Investment      Investment
                                              Total             Companies       Portfolios
                                              Compensation      in the          within the
                                              from the          Alliance-       Alliance-
                                              Alliance-         Bernstein       Bernstein
                                              Bernstein         Fund            Fund
                          Aggregate           Fund              Complex,        Complex,
                          Compensation        Complex,          Including       Including
                          from Each           Including         the Funds,      the Funds,
                          Fund During         the Funds,        as to which     as to which
                          its Fiscal          During            the Director    the Director
                          Year Ended          Calendar          is a Director   is a Director
Name of Director          in 2005             Year 2005         or a Trustee    or a Trustee
----------------          -------             ---------         ------------    ------------
                                                                    
Marc O. Mayer             $            0      $       0             41              111
                          ACM Income
                          $            0
                          ACM Government
                          Opportunity

William H. Foulk, Jr.     $        8,113       $487,625             43              113
                          ACM Income
                          $        7,464
                          ACM Government
                          Opportunity

David H. Dievler          $        4,724       $269,125             42              112
                          ACM Income
                          $        4,631
                          ACM Government
                          Opportunity

John H. Dobkin            $        5,365       $263,125             41              111
                          ACM Income
                          $        4,805
                          ACM Government
                          Opportunity

Michael J. Downey         $        4,797       $240,625             41              111
                          ACM Income
                          $        2,228
                          ACM Government
                          Opportunity

D. James Guzy*            $            0       $ 32,000             41              111
                          ACM Income
                          $            0
                          ACM Government
                          Opportunity

Nancy P. Jacklin*         $            0      $       0             41              111
                          ACM Income
                          $            0
                          ACM Government
                          Opportunity

Marshall C. Turner, Jr.*  $            0        $28,500             41              111
                          ACM Income
                          $            0
                          ACM Government


*    Messrs.  Guzy and  Turner  did not  become  Directors  for the Funds  until
     December   15,  2005  and  were   directors   for  only  one  fund  in  the
     AllianceBernstein  Fund Complex prior to November 15, 2005. Ms. Jacklin did
     not become a Director for the Funds until June 14, 2006.

As of January 27, 2006, each of the Directors of each Fund owned less than 1% of
the shares of such Fund and the  Directors  and officers of each Fund as a group
owned less than 1% of the  shares of each such Fund.  During  each  Fund's  most
recently  completed  fiscal  year,  none of the  Funds'  Directors  engaged in a
purchase  or sale of the  securities  of the  Adviser  or any of its  parents or
subsidiaries in an amount exceeding 1% of the relevant class of securities.

The  dollar  range  of the  Funds'  securities  owned by each  Director  and the
aggregate dollar range of securities owned in the AllianceBernstein Fund Complex
are set forth below.

                                                                   Aggregate Dollar
                                                                   Range of Equity
                                                                   Securities in the
                                                                   Funds in the
                                                                   AllianceBernstein
                                                                   Fund Complex
                          Dollar Range of Equity Securities        as of
Name of Director          in a Fund as of January 27, 2006         January 27, 2006
----------------          --------------------------------         ----------------
                                                             
Marc O. Mayer             None                                     over $100,000

William H. Foulk, Jr.     $10,001-$50,000 ACM Income               over $100,000
                          $1-$10,000 ACM Government Opportunity

David H. Dievler          $10,001-$50,000 ACM Income               over $100,000
                          $1-$10,000 ACM Government Opportunity

John H. Dobkin            None                                     over $100,000

Michael J. Downey         $50,001-$100,000 ACM Income              over $100,000
                          None  ACM Government Opportunity

D. James Guzy*            None                                     $50,000 - $100,000

Nancy P. Jacklin*         None                                     $0

Marshall C. Turner, Jr.*  None                                     over $100,000


*    Messrs.  Guzy and  Turner  did not  become  Directors  for the Funds  until
     December   15,  2005  and  were   directors   for  only  one  fund  in  the
     AllianceBernstein  Fund Complex prior to November 15, 2005. Ms. Jacklin did
     not become a Director for the Funds until June 14, 2006.

Each Fund, the Adviser and each Fund's principal underwriter have adopted a Code
of Ethics  under Rule  17j-1 of the 1940 Act.  These  Codes do permit  personnel
subject to the Codes to invest in securities,  including  securities that may be
purchased  or held by the Fund.  These Codes may be  reviewed  and copied at the
SEC's Public Reference Room in Washington,  DC. For information on the operation
of the Public Reference Room call the SEC at 1-202-551-8090.  In addition, these
Codes are  available on the SEC's  Internet site at  http://www.sec.gov  or upon
request   (for  a   duplicating   fee)   at  the   following   E-mail   address:
publicinfo@sec.gov or by writing the SEC's Public Reference Section, Washington,
DC 20549-0102

Adviser

The Funds'  investment  adviser,  AllianceBernstein  L.P. (the "Adviser"),  1345
Avenue  of  the  Americas,  New  York,  NY  10105,  is a  leading  international
investment  adviser  managing  client  accounts  with assets as of June 30, 2006
totaling more than $625 billion (of which more than $88 billion  represented the
assets of  investment  companies).  As of June 30,  2006,  the  Adviser  managed
retirement  assets for many of the largest public and private  employee  benefit
plans (including 41 of the nations' FORTUNE 100 companies),  for public employee
retirement funds in 37 states,  for investment  companies,  and for foundations,
endowments,   banks  and  insurance  companies  worldwide.   The  45  registered
investment companies managed by the Adviser,  comprising 126 separate investment
portfolios, currently have approximately 4.0 million stockholder accounts.

The Adviser is a registered investment adviser under the Investment Advisers Act
of 1940,  as  amended.  As of June 30,  2006,  AllianceBernstein  Holding,  L.P.
("Holding"),  a Delaware limited  partnership,  owned approximately 32.7% of the
issued and  outstanding  units of limited  partnership  interest  in the Adviser
("AllianceBernstein   Units").  Units  representing  assignments  of  beneficial
ownership of limited  partnership  interests in Holding  ("Holding Units") trade
publicly on the Exchange under the ticker symbol "AB".  AllianceBernstein  Units
do not trade publicly and are subject to significant  restrictions  on transfer.
AllianceBernstein  Corporation  ("AB Corp.") is the general  partner of both the
Adviser and Holding.  AB Corp. owns 100,000 general partnership units in Holding
and a 1% general  partnership  interest in the Adviser.  AB Corp. is an indirect
wholly-owned  subsidiary of AXA Financial,  Inc. ("AXA  Financial"),  a Delaware
corporation.

As of June 30, 2006,  AXA, AXA Financial,  AXA Equitable Life Insurance  Company
("AXA Equitable") and certain  subsidiaries of AXA Equitable  beneficially owned
approximately   59.6%  of  the  issued  and   outstanding   Alliance  Units  and
approximately 1.7% of the issued and outstanding  Holding Units that,  including
the general  partnership  interests  in the Adviser and  Holding,  represent  an
economic  interest of approximately  60.6% in the Adviser.  As of June 30, 2006,
SCB Partners Inc., a wholly-owned  subsidiary of SCB, Inc.,  beneficially  owned
approximately 6.3% of the issued and outstanding AllianceBernstein Units.

AXA, a French  company,  is the holding  company for an  international  group of
companies and a worldwide leader in financial  protection and wealth management.
AXA operates  primarily in Western  Europe,  North America and the  Asia/Pacific
region and, to a lesser  extent,  in other  regions  including  the Middle East,
Africa and South America.  AXA has five operating  business  segments:  life and
savings,  property and casualty insurance,  international  insurance  (including
reinsurance),  asset management and other financial services. AXA Financial is a
wholly-owned  subsidiary  of AXA.  AXA  Equitable  is an  indirect  wholly-owned
subsidiary of AXA Financial.

The Advisory  Agreements for ACM Income,  and ACM Government  Opportunity became
effective on April 21, 1988 and August 25, 1988. Each Fund's Advisory  Agreement
was approved by the vote, cast in person, of the Fund's Directors  including the
Directors who are not parties to the Advisory Agreement or interested persons as
defined in the 1940 Act,  of any such  party,  at a meeting  called and held for
that purpose.

The Adviser provides investment advisory services and order placement facilities
for each of the Fund's and pays all  compensation  of Directors  and officers of
the  Fund  who  are  affiliated  persons  of the  Adviser.  The  Adviser  or its
affiliates  also furnish a Fund,  without  charge,  management  supervision  and
assistance and office  facilities and provide  persons  satisfactory to a Fund's
Board to serve as the  Fund's  officers.  Each  Fund  has,  under  the  Advisory
Agreement, assumed obligation to pay for all other expenses. As to the obtaining
of services other than those specifically provided to a Fund by the Adviser, the
Fund may employ its own personnel.  For such services, the Fund may also utilize
personnel  employed by the  Adviser or its  affiliates  and, in such event,  the
services will be provided to the Fund at cost and the payments therefore must be
specifically approved by the Fund's Board.

Under  their  Advisory  Agreements,  the Funds  pay the  Adviser  the  following
management fees:

     ACM Income:  the Fund pays the Adviser a monthly  advisory fee in an amount
     equal to the sum of 1/12th of .30 of 1% of the  Fund's  average  weekly net
     assets up to $250 million, 1/12th of .25 of 1% of the Fund's average weekly
     net assets in excess of $250 million,  and, 4.75% of the Fund's 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 borrowed by the Fund) accrued by the Fund
     during the month (the "Income  Component").  The monthly advisory fee shall
     not exceed in the aggregate 1/12th of .95% of the Fund's average weekly net
     assets  during  each  respective  month  (approximately  .95% on an  annual
     basis).

     ACM Government  Opportunity:  the Fund pays the Adviser a monthly  advisory
     fee equal to .0625% of the Fund's  average  weekly  net  assets  during the
     month (equal to an annual fee of  approximately  .75% of the average weekly
     net assets). Such fee is accrued daily and paid monthly.

For the fiscal years ended  December 31,  2005,  2004 and 2003,  ACM Income paid
advisory fees to the Adviser that, in the  aggregate,  amounted to  $12,868,827,
$14,791,745 and  $15,753,531,  respectively.  For the fiscal year ended July 31,
2005,  2004 and 2003,  ACM  Government  Opportunity  paid  advisory  fees to the
Adviser that,  in the  aggregate,  amounted to $824,374,  $827,555 and $809,457,
respectively.

For  purposes  of the  calculation  of the fee payable to the  Adviser,  average
weekly net assets are  determined  on the basis of the  average  net assets of a
Fund for each weekly period (ending on Fridays) ending during the month. The net
assets for each weekly  period are  determined  by  averaging  the net assets on
Friday of such weekly  period  with the net assets on Friday of the  immediately
preceding  weekly  period.  When a Friday is not a Fund  business  day, then the
calculation  will be based on the net assets of a Fund on the Fund  business day
immediately  preceding  such Friday.  This advisory fee may be greater than that
paid by most funds.  In addition to payments to the Adviser  under the  Advisory
Agreement, the Fund pays certain other costs.

As to the obtaining of services other than those specifically provided to a Fund
by the Adviser, a Fund may employ its own personnel.  For such services, it also
may  utilize  personnel  employed  by the  Adviser or by other  subsidiaries  of
Equitable.  In such event,  the services  will be provided to a Fund at cost and
the payments specifically approved by the Fund's Board.

Each Fund's  Advisory  Agreement is terminable with respect to that Fund without
penalty on 60 days  written  notice by a vote of a majority  of the  outstanding
voting  securities  of  such  Fund  or by a vote  of a  majority  of the  Fund's
Directors,  or by the Adviser on 60 days written notice,  and will automatically
terminate  in the  event  of its  assignment.  Each  Fund's  Advisory  Agreement
provides  that in the  absence  of  willful  misfeasance,  bad  faith  or  gross
negligence  on  the  part  of  the  Adviser,  or of  reckless  disregard  of its
obligations  thereunder,  the  Adviser  shall  not be liable  for any  action or
failure to act in accordance with its duties thereunder.

The Advisory  Agreements  for the Funds  continue in effect,  provided that such
continuance is  specifically  approved at least annually by a vote of a majority
of the Fund's outstanding voting securities or by the Fund's Board, including in
either case  approval by a majority of the  Directors who are not parties to the
Advisory  Agreement or interested persons of such parties as defined by the 1940
Act.  Most  recently,  continuance  of the  Advisory  Agreement of each Fund was
approved by the Board, including a majority of the Directors who are not parties
to the Advisory Agreements or interested persons of any such party, at a Meeting
held on December 14, 2005.

Portfolio Managers

The  dollar  ranges  of  ACM  Income's  equity   securities  owned  directly  or
beneficially  by the Fund's  portfolio  managers as of December 31, 2005 are set
forth below.

                 DOLLAR RANGE OF EQUITY SECURITIES IN ACM INCOME

         Andrew M. Aran                  $0
         Paul J. DeNoon                  $0
         Gershon Distenfeld              $0
         Douglas J. Peebles              $0
         Kewjin Yuoh                     $0

ACM Income
----------

The  following  tables  provide  information   regarding  registered  investment
companies  other  than the Fund,  other  pooled  investment  vehicles  and other
accounts  over  which  the  Fund's  portfolio   managers  also  have  day-to-day
management  responsibilities.  The tables  provide the numbers of such accounts,
the total  assets in such  accounts  and the number of accounts and total assets
whose fees are based on  performance.  The  information  is  provided  as of the
Fund's fiscal year ended December 31, 2005.

REGISTERED INVESTMENT COMPANIES
(excluding ACM Income)

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                                                      Investment    Investment
                     Total Number    Total Assets     Companies     Companies
                     of Registered   of Registered    Managed       Managed
                     Investment      Investment       with          with
                     Companies       Companies        Performance-  Performance-
Portfolio Manager    Managed         Managed          based Fees    based Fees
-----------------    -------         -------          ----------    ----------

Andrew M. Aran          1              118,855,462      None          None
Paul J. DeNoon          8            3,310,093,819      None          None
Gershon Distenfeld      3              179,831,060      None          None
Douglas J. Peebles      2              758,722,802      None          None
Kewjin Yuoh             3            1,636,205,821      None          None


POOLED INVESTMENT VEHICLES

                                                                   Total
                                                     Number        Assets
                                                     of Pooled     of Pooled
                     Total           Total           Investment    Investment
                     Number          Assets          Vehicles      Vehicles
                     of Pooled       of Pooled       Managed       Managed
                     Investment      Investment      with          with
                     Vehicles        Vehicles        Performance-  Performance-
Portfolio Manager    Managed         Managed         based Fees    based Fees
-----------------    -------         -------         ----------    ----------

Andrew M. Aran         None           None              None           None
Paul J. DeNoon         4              7,282,230,675     None           None
Gershon Distenfeld     5              2,299,529,494     None           None
Douglas J. Peebles     3                829,324,752     None           None
Kewjin Yuoh           None            None              None           None


OTHER ACCOUNTS

                                                                   Total
                                                     Number of     Assets
                                                     Other         of Other
                     Total           Total           Accounts      Accounts
                     Number          Assets          Managed       Managed
                     of Other        of Other        with          with
                     Accounts        Accounts        Performance-  Performance-
Portfolio Manager    Managed         Managed         based Fees    based Fees
-----------------    -------         -------         ----------    ----------

Andrew M. Aran           2             188,111,810     2           188,111,810
Paul J. DeNoon           None        None             None           None
Gershon Distenfeld       None        None             None           None
Douglas J. Peebles       1              42,911,309    None           None
Kewjin Yuoh              8           1,044,424,636    1            515,977,908

Investment Professional Conflict of Interest Disclosure
-------------------------------------------------------

As an  investment  adviser  and  fiduciary,  the  Adviser  owes its  clients and
stockholders  an  undivided  duty of loyalty.  We  recognize  that  conflicts of
interest are inherent in our business and  accordingly  have developed  policies
and procedures (including oversight  monitoring)  reasonably designed to detect,
manage and mitigate the effects of actual or potential  conflicts of interest in
the area of employee personal  trading,  managing multiple accounts for multiple
clients,  including  AllianceBernstein  Mutual Funds, and allocating  investment
opportunities.   Investment  professionals,  including  portfolio  managers  and
research  analysts,  are subject to the  above-mentioned  policies and oversight
monitoring  to ensure  that all  clients  are  treated  equitably.  We place the
interests  of our clients  first and expect all of our  employees  to meet their
fiduciary duties.

     Employee  Personal  Trading.  The  Adviser  has  adopted a Code of Business
Conduct and Ethics that is designed to detect and prevent  conflicts of interest
when  investment  professionals  and other  personnel of the Adviser own, buy or
sell securities which may be owned by, or bought or sold for, clients.  Personal
securities  transactions  by an  employee  may  raise a  potential  conflict  of
interest  when an  employee  owns or  trades  in a  security  that is  owned  or
considered for purchase or sale by a client, or recommended for purchase or sale
by an  employee to a client.  Subject to the  reporting  requirements  and other
limitations of its Code of Business Conduct and Ethics,  the Adviser permits its
employees to engage in personal securities transactions, and also allows them to
acquire  investments  in  the  AllianceBernstein  Mutual  Funds  through  direct
purchase,  401K/profit  sharing plan investment  and/or notionally in connection
with deferred  incentive  compensation  awards. The Adviser's Code of Ethics and
Business Conduct requires disclosure of all personal accounts and maintenance of
brokerage accounts with designated  broker-dealers  approved by the Adviser. The
Code also requires  preclearance  of all securities  transactions  and imposes a
one-year  holding  period for  securities  purchased by employees to  discourage
short-term trading.

     Managing Multiple Accounts for Multiple Clients. The Adviser has compliance
policies  and  oversight  monitoring  in place to address  conflicts of interest
relating to the management of multiple accounts for multiple clients.  Conflicts
of interest may arise when an investment  professional has  responsibilities for
the investments of more than one account because the investment professional may
be unable to devote equal time and  attention to each  account.  The  investment
professional  or  investment   professional  teams  for  each  client  may  have
responsibilities  for managing all or a portion of the  investments  of multiple
accounts  with  a  common  investment   strategy,   including  other  registered
investment  companies,  unregistered  investment vehicles,  such as hedge funds,
pension plans, separate accounts,  collective trusts and charitable foundations.
Among other things, the Adviser's policies and procedures provide for the prompt
dissemination  to  investment  professionals  of initial  or changed  investment
recommendations by analysts so that investment  professionals are better able to
develop  investment  strategies  for all  accounts  they  manage.  In  addition,
investment decisions by investment professionals are reviewed for the purpose of
maintaining  uniformity  among  similar  accounts and ensuring that accounts are
treated  equitably.  No investment  professional  that manages  client  accounts
carrying  performance  fees is  compensated  directly  or  specifically  for the
performance of those accounts.  Investment professional  compensation reflects a
broad  contribution in multiple  dimensions to long-term  investment success for
our clients and is not tied  specifically  to the  performance of any particular
client's  account,  nor is it  directly  tied to the level or change in level of
assets under management.

     Allocating   Investment   Opportunities.   The  Adviser  has  policies  and
procedures  intended to address conflicts of interest relating to the allocation
of  investment  opportunities.  These  policies and  procedures  are designed to
ensure  that  information  relevant  to  investment  decisions  is  disseminated
promptly within its portfolio management teams and investment  opportunities are
allocated equitably among different clients. The investment professionals at the
Adviser routinely are required to select and allocate  investment  opportunities
among accounts.  Portfolio  holdings,  position  sizes,  and industry and sector
exposures  tend to be similar  across  similar  accounts,  which  minimizes  the
potential  for  conflicts of interest  relating to the  allocation of investment
opportunities.   Nevertheless,   investment   opportunities   may  be  allocated
differently among accounts due to the particular  characteristics of an account,
such as size of the account,  cash  position,  tax status,  risk  tolerance  and
investment restrictions or for other reasons.

The Adviser's  procedures  are also designed to prevent  potential  conflicts of
interest that may arise when the Adviser has a particular  financial  incentive,
such  as  a  performance-based  management  fee,  relating  to  an  account.  An
investment  professional  may perceive that he or she has an incentive to devote
more time to developing and analyzing investment strategies and opportunities or
allocating  securities  preferentially  to accounts for which the Adviser  could
share in investment gains.

To address these  conflicts of interest,  the Adviser's  policies and procedures
require,   among  other   things,   the  prompt   dissemination   to  investment
professionals of any initial or changed investment  recommendations by analysts;
the aggregation of orders to facilitate  best execution for all accounts;  price
averaging for all aggregated orders; objective allocation for limited investment
opportunities  (e.g.,  on a  rotational  basis)  to  ensure  fair and  equitable
allocation among accounts;  and limitations on short sales of securities.  These
procedures  also  require  documentation  and review of  justifications  for any
decisions  to  make  investments  only  for  select  accounts  or  in  a  manner
disproportionate to the size of the account.

Portfolio Manager Compensation

The Adviser's  compensation program for investment  professionals is designed to
be competitive  and effective in order to attract and retain the highest caliber
employees.  The compensation program for investment professionals is designed to
reflect their ability to generate long-term  investment success for our clients,
including  stockholders  of  the  AllianceBernstein   Mutual  Funds.  Investment
professionals do not receive any direct  compensation  based upon the investment
returns of any individual  client account,  nor is compensation tied directly to
the  level  or  change  in  level  of  assets   under   management.   Investment
professionals' annual compensation is comprised of the following:

     (i)  Fixed  base  salary:   This  is  generally  the  smallest  portion  of
compensation. The base salary is a relatively low, fixed salary within a similar
range for all  investment  professionals.  The base salary is  determined at the
outset of employment based on level of experience, does not change significantly
from year-to-year and hence, is not particularly sensitive to performance.

     (ii)  Discretionary  incentive  compensation  in the form of an annual cash
bonus:  The  Adviser's  overall  profitability  determines  the total  amount of
incentive  compensation available to investment  professionals.  This portion of
compensation is determined  subjectively  based on qualitative and  quantitative
factors.   In  evaluating   this  component  of  an  investment   professional's
compensation,  the  Adviser  considers  the  contribution  to  his/her  team  or
discipline as it relates to that team's  overall  contribution  to the long-term
investment success,  business results and strategy of the Adviser.  Quantitative
factors considered include, among other things,  relative investment performance
(e.g.,  by comparison  to  competitor  or peer group funds or similar  styles of
investments,  and  appropriate,  broad-based or specific  market  indices),  and
consistency  of  performance.  There are no specific  formulas used to determine
this part of an investment  professional's  compensation and the compensation is
not tied to any  pre-determined  or specified level of performance.  The Adviser
also considers qualitative factors such as the complexity and risk of investment
strategies  involved  in the style or type of assets  managed by the  investment
professional;  success  of  marketing/business  development  efforts  and client
servicing; seniority/length of service with the firm; management and supervisory
responsibilities; and fulfillment of the Adviser's leadership criteria.

     (iii) Discretionary  incentive compensation in the form of awards under the
Adviser's Partners Compensation Plan ("deferred awards"):  the Adviser's overall
profitability  determines  the total  amount of  deferred  awards  available  to
investment  professionals.  The deferred awards are allocated  among  investment
professionals  based on criteria  similar to those used to determine  the annual
cash bonus.  There is no fixed formula for determining  these amounts.  Deferred
awards,  for which there are various investment  options,  vest over a four-year
period and are  generally  forfeited  if the  employee  resigns  or the  Adviser
terminates his/her employment. Investment options under the deferred awards plan
include many of the same  AllianceBernstein  Mutual Funds offered to mutual fund
investors, thereby creating a close alignment between the financial interests of
the investment  professionals and those of the Adviser's clients and mutual fund
stockholders  with respect to the performance of those mutual funds. The Adviser
also permits  deferred award  recipients to allocate up to 50% of their award to
investments in the Adviser's publicly traded equity securities.(1)

-------------------
(1)  Prior  to  2002,   investment   professional   compensation  also  included
     discretionary  long-term  incentive  in the form of  restricted  grants  of
     Alliance Capital's Master Limited Partnership Units.


     (iv)  Contributions  under the Adviser's  Profit  Sharing/401(k)  Plan: The
contributions are based on the Adviser's overall  profitability.  The amount and
allocation  of the  contributions  are  determined  at the  sole  discretion  of
Adviser.

The  Adviser  may act as an  investment  adviser  to  other  persons,  firms  or
corporations,  including  investment  companies,  and is  investment  adviser to
AllianceBernstein Balanced Shares, Inc., AllianceBernstein Blended Style Series,
Inc.,  AllianceBernstein  Bond Fund,  Inc.,  AllianceBernstein  Cap Fund,  Inc.,
AllianceBernstein  Emerging Market Debt Fund, Inc.,  AllianceBernstein  Exchange
Reserves, AllianceBernstein Fixed-Income Shares, Inc., AllianceBernstein Focused
Growth & Income Fund, Inc.,  AllianceBernstein  Global  Government Income Trust,
Inc.,  AllianceBernstein Global Health Care Fund, Inc., AllianceBernstein Global
Research Growth Fund,  Inc.,  AllianceBernstein  Global  Strategic Income Trust,
Inc.,  AllianceBernstein Global Technology Fund, Inc., AllianceBernstein Greater
China  '97  Fund,  Inc.,   AllianceBernstein   Growth  and  Income  Fund,  Inc.,
AllianceBernstein High Yield Fund, Inc., AllianceBernstein  Institutional Funds,
Inc.,  AllianceBernstein  International  Growth  Fund,  Inc.,  AllianceBernstein
International  Research  Growth Fund,  Inc.,  AllianceBernstein  LargeCap Growth
Fund,  Inc.,  AllianceBernstein  Mid-Cap  Growth Fund,  Inc.,  AllianceBernstein
Municipal  Income  Fund,  Inc.,  AllianceBernstein  Municipal  Income  Fund  II,
AllianceBernstein  Real Estate  Investment Fund, Inc.,  AllianceBernstein  Short
Duration  Portfolio,   AllianceBernstein  Tax-Managed  International  Portfolio,
AllianceBernstein   Trust,   AllianceBernstein   Utility   Income  Fund,   Inc.,
AllianceBernstein Variable Products Series Fund, Inc., Sanford C. Bernstein Fund
II, Inc., The  AllianceBernstein  Pooling  Portfolios and The  AllianceBernstein
Portfolios,  all registered open-end investment companies; and to ACM Government
Opportunity  Fund,  Inc., ACM Income Fund, Inc., ACM Managed Dollar Income Fund,
Inc., ACM Managed Income Fund, Inc., ACM Municipal Securities Income Fund, Inc.,
Alliance All-Market  Advantage Fund, Inc., Alliance California  Municipal Income
Fund, Inc.,  Alliance  National  Municipal Income Fund, Inc.,  Alliance New York
Municipal  Income Fund,  Inc.,  Alliance  World Dollar  Government  Fund,  Inc.,
Alliance  World Dollar  Government  Fund II, Inc. and The Spain Fund,  Inc., all
registered closed-end investment companies.

Administrator

Under  administration  agreements,  Princeton  Administrators,  L.P.,  a limited
partnership  with principal  offices in Princeton,  N.J. serves as administrator
for  ACM  Income.  The  Adviser  serves  as  administrator  for  ACM  Government
Opportunity. Under the administrative agreements, Princeton Administrators, L.P.
and the Adviser perform standard administrative services for the Funds.

     Under  the  administration  agreements,  the  Funds  pay the fees set forth
     below:

     ACM  Income:  The Fund  pays a fee at the  annual  rate of .02 of 1% of the
     Fund's  average  weekly  net  assets.  Such fee is  accrued  daily and paid
     monthly.

     ACM  Government  Opportunity:  The Fund  pays an  administrative  fee at an
     annual rate of .15% of the Fund's  average  weekly net assets.  Such fee is
     accrued  daily and paid  monthly.  Currently,  the Adviser has  voluntarily
     agreed to waive a portion  of its  administrative  fees so as to charge the
     Fund at a reduced  annual  rate of .05% of the  Fund's  average  weekly net
     assets.

For the fiscal years ended  December 31,  2005,  2004 and 2003,  ACM Income paid
administrative  fees to Princeton  Administrators,  L.P. that, in the aggregate,
amounted to $376,793,  $1,603,136 and $2,845,210,  respectively.  For the fiscal
years  ended July 31,  2005,  2004 and 2003,  ACM  Government  Opportunity  paid
administrative fees to the Adviser that, in the aggregate, amounted to $164,875,
$165,511 and $161,892, respectively.

Stockholder Servicing

AllianceBernstein Investor Services, Inc. ("ABIS"), an affiliate of the Adviser,
provides  stockholder services for the Funds. The Funds reimburse ABIS for these
services.  For these  services and for the fiscal years ended December 31, 2005,
2004 and 2003 ACM Income paid ABIS $9,660, $7,850 and $13,060, respectively. For
these  services and for its fiscal years ended July 31, 2005,  2004 and 2003 ACM
Government Opportunity paid ABIS $445, $360 and $3,710, respectively.

Custodian and Transfer Agent

State Street Bank and Trust  Company  ("State  Street"),  225  Franklin  Street,
Boston, MA 02110, serves as custodian for ACM Income. Bank of New York, One Wall
Street,  New  York,  NY  10286  serves  as  the  custodian  for  ACM  Government
Opportunity.  Equiserve Trust Company,  N.A ("Equiserve") serves as the transfer
agent for ACM Income. Computershare Trust Company, N.A. ("Computershare"),  P.O.
Box  43010,  Providence,  RI  02940-3010  serves as the  transfer  agent for ACM
Opportunity.

For these  services and for the fiscal years ended  December 31, 2005,  2004 and
2003.   ACM  Income  paid  State  Street   $543,446,   $566,993  and   $580,491,
respectively;   and  paid  and  Equiserve   $324,137,   $401,260  and  $375,095,
respectively.  For these  services and for the fiscal years ended July 31, 2005,
2004 and 2003, ACM  Opportunity,  paid Bank of New York  $187,777,  $157,660 and
$175,687, respectively; and paid and Computershare $56,677, $48,545 and $53,488,
respectively.

                        VALUATION OF PORTFOLIO SECURITIES

Each Fund calculates and makes  available for weekly  publication the NAV of its
shares of common stock. The NAV per share of a Fund's common stock is determined
as of the close of trading on the NYSE each Friday or, when Friday is not a Fund
business  day, on the  immediately  preceding  Fund  business day, by adding the
market  value of all  securities  in the  Fund's  portfolio  and  other  assets,
subtracting  liabilities incurred or accrued and dividing by the total number of
the Fund's shares of common stock then outstanding.

In accordance with applicable rules under the 1940 Act, portfolio securities are
valued at current  market value or at fair value as  determined in good faith by
the Board of  Directors.  The Board of  Directors  has  delegated to the Adviser
certain of the Board's duties with respect to the following procedures.  Readily
marketable securities listed on the 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 valued,  except as indicated
below, at the last sale price reflected on the consolidated tape at the close of
the  Exchange  or, in the case of a  foreign  securities  exchange,  at the last
quoted sale price,  in each case on the  business  day as of which such value is
being  determined.  If there has been no sale on such day,  the  securities  are
valued at the quoted bid prices on such day. If no bid prices are quoted on such
day,  then the security is valued at the mean of the bid and asked prices at the
close of the Exchange on such day as obtained from one or more dealers regularly
making a market in such  security.  Where a bid and asked  price can be obtained
from only one such  dealer,  such  security is valued at the mean of the bid and
asked price  obtained from such dealer  unless it is determined  that such price
does not represent  current  market value,  in which case the security  shall be
valued in good faith at fair value by, or pursuant to procedures established by,
the Board of Directors.  Securities for which no bid and asked price  quotations
are  readily  available  are  valued  in good  faith at faire  value  by,  or in
accordance  with  procedures  established  by, the Board of  Directors.  Readily
marketable  securities  not listed on the  Exchange  or on a foreign  securities
exchange are valued in like manner.  Portfolio securities traded on the Exchange
and on one or more other foreign or other  national  securities  exchanges,  and
portfolio  securities  not  traded  on the  Exchange  but  traded on one or more
foreign or other  national  securities  exchanges are valued in accordance  with
these procedures by reference to the principal  exchange on which the securities
are traded.

Readily  marketable  securities  traded  only  in the  over-the-counter  market,
securities listed on a foreign securities  exchange whose operations are similar
to those of the  United  Stated  over-the-counter  market,  and debt  securities
listed on a U.S. national  securities  exchange whose primary market is believed
to be  over-the-counter,  are valued at the mean of the bid and asked  prices at
the  close of the  Exchange  on such day as  obtained  from two or more  dealers
regularly  making a market in such security.  Where a bid and asked price can be
obtained  from only one such dealer,  such security is valued at the mean of the
bid and asked price obtained from such dealer unless it is determined  that such
price does not represent  current market value, in which case the security shall
be valued in good  faith at fair  value by,  or in  accordance  with  procedures
established by, the Board of Directors.

Listed  put and call  options  purchased  by a Fund are  valued at the last sale
price.  If there has been no sale on that day, such securities will be valued at
the closing bid prices on that day.

Open  futures  contracts  and options  thereon  will be valued using the closing
settlement  price or, in the absence of such a price, the most recent quoted bid
price. If there are no quotations available for the day of valuations,  the last
available closing settlement price will be used.

U.S.  Government  Securities and other debt  instruments  having 60 days or less
remaining until maturity are valued at amortized cost if their original maturity
was 60 days or less, or by amortizing  their fair value as of the 61st day prior
to  maturity if their  original  term to  maturity  exceeded 60 days  (unless in
either  case  the  Board of  Directors  determines  that  this  method  does not
represent fair value.)

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.  The prices provided by a pricing service take into account
may  factors,   including  institutional  size  trading  in  similar  groups  of
securities and any developments related to specific securities.  Mortgage backed
and asset backed securities may be valued at prices obtained from a bond pricing
service or at a price obtained from one or more of the major  broker/dealers  in
such securities.  In cases where broker/dealers quotes are obtained, the Adviser
may establish procedures whereby changes in market yields or spreads are used to
adjust, on a daily basis, a recently obtained quoted bid price on a security.

All other  assets of a Fund are  valued  in good  faith at fair  value by, or in
accordance with procedures established by, the Board of Directors.

Trading in  securities  on Far Eastern and  European  securities  exchanges  and
over-the-counter  markets is normally competed well before the close of business
of each Fund business day. In addition,  trading in foreign markets may not take
place on all Fund business days. Furthermore,  trading may take place in various
foreign markets on days that are not Fund business days. A Fund's calculation of
the  net  asset  value  per  share,  therefore,   does  not  always  take  place
contemporaneously  with the most recent determination of the prices of portfolio
securities in these  markets.  Events  affecting  the values of these  portfolio
securities that occur between the time their prices are determined in accordance
with the above procedures and the close of the Exchange will not be reflected in
the Fund's  calculation  of net asset value  unless  these prices do not reflect
current market value,  in which case the securities will be valued in good faith
by fair value by, or in accordance with procedures  established by, the Board of
Directors.

The Board of Directors may suspend the determination of a Fund's net asset value
subject to the rules of the SEC and other governmental rules and regulations, at
a time when:  (1) the  Exchange  is closed,  other than  customary  weekend  and
holiday  closings,  (2) an  emergency  exists  as a  result  of  which it is not
reasonably  practicable for the Fund to dispose of securities  owned by it or to
determine fairly the value of its net assets.

For purposes of  determining a Fund's net asset value per share,  all assets and
liabilities  initially  expressed in a foreign  currency will be converted  into
U.S.  Dollars at the mean of the current bid and asked  prices of such  currency
against  the  U.S.  Dollar  last  quoted  by a  major  bank  that  is a  regular
participant in the relevant foreign exchange market or on the basis of a pricing
service  that takes into  account the quotes  provided by a number of such major
banks. If such quotations are not available as of the close of the Exchange, the
rate of exchange will be determined in good faith by, or under the direction of,
the Board of Directors.

                  DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

Stockholders  of each Fund whose  shares are  registered  in their own names may
elect to be participants in each Fund's DRIP,  under which dividends and capital
gain  distributions  to  stockholders  will be paid or  reinvested in additional
shares of a Fund (the "Dividend Shares").  Equiserve (the "Agent") serves as the
agent for participants under the DRIP for ACM Income.


Stockholders  who do not  elect to  participate  in the DRIP  will  receive  all
distributions in cash paid by check mailed directly to the stockholder of record
(or,  if the  shares  are held in  street  or other  nominee  name,  then to the
nominee) by the Agent, as dividend disbursing agent.

The  automatic  reinvestment  of dividends  and  distributions  will not relieve
participants  of any  income  taxes  that  may be  payable  (or  required  to be
withheld) on dividends and  distributions.  The federal  income tax treatment of
reinvestment is described under "Taxation."

A stockholder  who has elected to  participate in the DRIP may withdraw from the
DRIP at any time.  There will be no  penalty  for  withdrawal  from the DRIP and
stockholders  who have  previously  withdrawn from the DRIP may rejoin it at any
time.   Changes  in  elections  must  be  in  writing  and  should  include  the
stockholders  name and  address  as they  appear  on the share  certificate.  An
election  to withdraw  from the DRIP will,  until such  election is changed,  be
deemed to be an election by a stockholder to take all  subsequent  distributions
in cash.  An election  will be effective  only for a  distribution  declared and
having a record date of at least 10 days after the date on which the election is
received. A stockholder whose shares are held in the name of a broker or nominee
should contact such broker or nominee  concerning  changes in that stockholder's
election.

Under a DRIP and commencing not more than five business days before the dividend
payment date,  purchases of a Fund's shares may be made by the Agent,  on behalf
of the  participants  in the  DRIP,  from  time  to  time  to  satisfy  dividend
reinvestments  under  the DRIP.  Such  purchases  by the Agent on or before  the
dividend  payment date may be made on the NYSE or elsewhere at any time when the
price plus  estimated  commissions of a Fund's common stock on the NYSE is lower
than the Fund's most recently calculated NAV per share.

If the Agent  determines on the dividend  payment date that the shares purchased
as  of  such  date  are  insufficient  to  satisfy  the  dividend   reinvestment
requirements,  the Agent, on behalf of the participants in the DRIP, will obtain
the  necessary  additional  shares as follows.  To the extent  that  outstanding
shares are not  available  at a cost of less than per share NAV,  the Agent,  on
behalf of the participants in the DRIP, will accept payment of the dividend,  or
the remaining  portion  thereof,  in authorized but unissued shares of a Fund on
the dividend payment date. Such shares will be issued at a per share price equal
to the higher of (1) the NAV per share on the  payment  date,  or (2) 95% of the
closing market price per share on the payment date. If the closing sale or offer
price,  plus  estimated  commissions,  of the  common  stock  on the NYSE on the
payment  date is less than a Fund's  NAV per  share on such day,  then the Agent
will purchase additional outstanding shares on the NYSE or elsewhere.  If before
the Agent has  completed  such  purchases,  the market  price  plus  commissions
exceeds the NAV of a Fund share,  the average per share  purchase  price paid by
the Agent may exceed the NAV of the Fund's shares,  resulting in the acquisition
of fewer shares than if shares had been issued by the Fund.

Participants in a DRIP have the option of making additional cash payments to the
Agent,  semi-annually,  in any amount of $100 or more for investment in a Fund's
shares.  The Agent uses all funds  received from  participants  to purchase Fund
shares in the open market on or about each January 15 and July 15. Participants'
cash  payments are also used to acquire Fund shares under the same  procedure as
that used for reinvestment of dividends and  distributions.  To allow ample time
for receipt and processing by the Agent,  participants  should send in voluntary
cash  payments  to be received  by the Agent not later than five  business  days
before each  January 15 and July 15. To avoid  unnecessary  cash  accumulations,
cash payments  received after that time and cash payments  received more than 30
days prior to these dates will be returned by the Agent and interest will not be
paid on any  uninvested  cash payments.  A participant  may withdraw a voluntary
cash payment by written notice,  if the notice is received by the Agent not less
than 48 hours before such payment is to be invested.

The Agent will maintain all stockholders' accounts in a DRIP and furnish written
confirmation of all transactions in the account, including information needed by
stockholders  for tax  records.  Shares in the account of each DRIP  participant
will  be  held  by  the  Agent  in  non-certificated  form  in the  name  of the
participant, and each stockholder's proxy will include those shares purchased or
received pursuant to the DRIP.

In the case of  stockholders  such as banks,  brokers  or  nominees,  which hold
shares for others who are the beneficial  owners,  the Agent will administer the
DRIP on the basis of the number of shares  certificated from time to time by the
record  stockholders as representing  the total amount  registered in the record
stockholders'  name and held for the  account  of  beneficial  owners who are to
participate in the DRIP.

There will be no brokerage charges with respect to shares issued directly by the
Fund  to  satisfy  the  dividend   reinvestment   requirements.   However,  each
participant  will pay a pro rata share of brokerage  commissions  incurred  with
respect to the Agent's open market  purchases of shares.  In each case, the cost
per share of shares purchased for each stockholder's account will be the average
cost,  including  brokerage  commissions,  of any shares  purchased  in the open
market plus the cost of any shares issued by the Fund. A  participant  also will
pay brokerage  commissions  incurred in purchases  from  voluntary cash payments
made by the participant.

Stockholders  participating  in a DRIP may receive  benefits  not  available  to
stockholders  not  participating in a Plan. If the market price plus commissions
of a Fund's shares is above the NAV,  participants in a DRIP will receive shares
of a Fund at a discount of up to 5% from the current market value.  However,  if
the market price plus  commissions is below the NAV,  participants  will receive
distributions  in  shares  with  a NAV  greater  than  the  value  of  any  cash
distribution they would have received on their shares. There may be insufficient
shares  available in the market to make  distributions in shares at prices below
NAV.  Also,  since a Fund does not redeem it shares,  the price on resale may be
more or less than the NAV.

In the case of foreign  participants  whose dividends are subject to U.S. income
tax  withholding  and in the case of any  participants  subject  to 31%  federal
backup  withholding,  the Agent will reinvest  dividends  after deduction of the
amount required to be withheld.

Experience under a DRIP may indicate that changes are desirable.  Accordingly, a
Fund reserves the right to amend or terminate a DRIP as applied to any voluntary
cash payments made and any dividend or  distribution  paid subsequent to written
notice of the change  sent to  participants  in the DRIP at least 90 days before
the record date for such dividend or distribution. A DRIP may also be amended or
terminated by the Agent on at least 90 days' written notice to  participants  in
the DRIP. There is no service charge to participants in a DRIP;  however, a Fund
reserves the right to amend the DRIP to include a service  charge payable to the
Agent by the  participants.  All  correspondence  concerning  the  DRIPs for ACM
Income  should be directed to Equiserve  Trust  Company,  N.A.,  P.O. Box 43011,
Providence,  RI 02940-3011 or for ACM Government Opportunity at PFPC, Inc., P.O.
Box 8030, Boston, MA 02266-8030.

                           DESCRIPTION OF COMMON STOCK

Common Stock of the Funds

Each Fund is authorized to issue up to 300,000,000  shares of common stock,  par
value  $.01 per  share.  As of August 15,  2006,  ACM Income and ACM  Government
Opportunity had 229,436,279 and 12,903,932 shares outstanding, respectively. The
Funds' shares have no  preemptive,  conversion,  exchange or redemption  rights.
Each share has equal voting, dividend,  distribution and liquidation rights. The
shares of each Fund outstanding  are, and the shares of ACM Income,  when issued
upon the Acquisitions  will be, fully paid and  nonassessable.  Stockholders are
entitled to one vote per share.  All voting rights for the election of Directors
are  noncumulative,  which means that the holders of more than 50% of the shares
of common stock of a Fund can elect 100% of the  Directors  then  nominated  for
election  if  they  choose  to do so and,  in such  event,  the  holders  of the
remaining shares of common stock will not be able to elect any Directors.  Under
the rules of the NYSE applicable to listed  companies,  each Fund is required to
hold an annual meeting of stockholders each year.

Certain   Anti-Takeover   Provisions   of  the  Fund's   Charters   Articles  of
Incorporation and By-Laws

The Funds presently have provisions in their  Charters,  and By-Laws  (together,
the  "Charter  Documents")  that are  intended to limit (i) the ability of other
entities  or persons to  acquired  control of a Fund,  (ii) a Fund's  freedom to
engage in certain  transactions,  or (iii) the ability of a Fund's  Directors or
stockholders  to amend the  Charter  Documents  or effect  changes in the Fund's
management.  These  provisions  of the  Charter  Documents  may be  regarded  as
"anti-takeover"  provisions. The Board of Directors of each Fund is divided into
three  classes,  each having a term of three  years.  At each annual  meeting of
stockholders,  the term of one class of  Directors  expires.  Accordingly,  only
those Directors in one class maybe changed in any one year, and it would require
two  years to  change a  majority  of the  Board of  Directors  (although  under
Maryland law  procedures are available for the removal of Directors even if they
are not then standing for reelections  and under SEC regulations  procedures are
available  for including  stockholders  proposals in  management's  annual proxy
statement). Such system of electing Directors may have the effect of maintaining
the continuity of management  and,  thus,  make it more difficult for the Fund's
stockholders  to change the  majority of  Directors.  Under  Maryland  law and a
Fund's Charter,  the affirmative  vote of the holders of a majority of the votes
entitles to be cast is required for the  consolidation  of the Fund with another
corporation,  a merger of the Fund with or into another  corporation (except for
certain mergers in which the Fund is the successor),  a statutory share exchange
in  which  the  Fund  is  not  the  successor,  a  sale  or  transfer  of all or
substantially  all of the  Fund's  assets,  the  dissolution  of  the  Fund  and
amendment to the Fund's Charter. In addition, the affirmative vote of 75% (which
is  higher  than  that  required  under  Maryland  law or the  1940  Act) of the
outstanding  shares of common stock of a Fund is required generally to authorize
any of the following  transactions or to amend the provisions of the Articles of
Incorporation relating to such transactions:

          (i)  merger,  consolidation  or statutory  share  exchange of the Fund
               with or into any other corporation;

          (ii) issuance  of any  securities  of the Fund to any person or entity
               for cash;

         (iii) sale,  lease ore exchange of all or any substantial  part of the
               assets of the Fund to any entity or person  (except assets having
               an aggregate fair market value of less than $1,000,000); or

          (iv) sale,  lease or exchange to the Fund, in exchange for  securities
               of the Fund, of any assets of any entity or person (except assets
               having an aggregate fair market value of less than $1,000,000);

If such  corporation,  person or  entity  is  directly,  or  indirectly  through
affiliates,  the beneficial  owner of more than 5% of the outstanding  shares of
the Fund (a "principal  stockholder").  However, such vote would not be required
where, under certain condition, the Board of Directors approves the transaction,
although in certain cases  involving  merger,  consolidation  or statutory share
exchange  or  sale  of  all  or  substantially  all of  the  Fund's  assets  the
affirmative  vote  of a  majority  of the  outstanding  shares  of a Fund  would
nevertheless be required.

The provisions of the Charter  Documents  described  above and a Fund's right to
repurchase  or make a tender offer for its common stock could have the effect of
depriving  the  owners of  shares of  opportunities  to sell  their  shares at a
premium  over  prevailing  market  prices,  by  discouraging  a third party from
seeking to obtain  control of a Fund in a tender  offer or similar  transaction.
The  overall  effect  of  these  provisions  is to  render  more  difficult  the
accomplishment  of a  merger  or  the  assumption  of  control  by  a  principal
stockholder.  However,  they  provide the  advantage  of  potentially  requiring
persons seeking control of a Fund to negotiate with its management regarding the
price to be paid and  facilitating  the continuity of the Fund's  management and
investment  objective  and  policies.  The Board of  Directors  of each Fund has
considered the foregoing anti-takeover provisions and concluded that they are in
the best interests of the Fund and its stockholders.

                             PORTFOLIO TRANSACTIONS

Subject to the general supervision of a Fund's Board, the Adviser is responsible
for  the   investment   decisions  and  the  placing  of  orders  for  portfolio
transactions for the Fund. A Fund's portfolio  transactions occur primarily with
issuers,  underwriters or major dealers acting as principals.  Such transactions
are  normally  on a net basis,  which  does not  involve  payment  of  brokerage
commissions.  The  cost of  securities  purchased  from an  underwriter  usually
includes a commission paid by the issuer to the underwriters;  transactions with
dealers normally  reflect the spread between bid and asked prices.  Premiums are
paid with respect to options  purchased by a Fund and brokerage  commissions are
payable with respect to transactions in exchange-traded futures contracts.

A Fund has no obligation to enter into transactions in portfolio securities with
any dealer,  issuer,  underwriter or other entity.  In placing orders, it is the
policy of each Fund to obtain the best price and execution for its transactions.
Where best price and execution  may be obtained  from more than one dealer,  the
Adviser may, in its discretion, purchase and sell securities through dealers who
provide  research,  statistical  and  other  information  to the  Adviser.  Such
services may be used by the Adviser for all of its investment  advisory accounts
and, accordingly, not all such services may be used by the Adviser in connection
with a Fund. The supplemental  information received from a dealer is in addition
to the  services  required to be  performed  by the Adviser  under the  Advisory
Agreement,  and the expenses of the Adviser will not necessarily be reduced as a
result of the  receipt of such  information.  Consistent  with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and subject to
seeking best price and  execution,  a Fund may  consider  sales of shares of the
Fund  as  a  factor  in  the  selection  of  dealers  to  enter  into  portfolio
transactions with the Fund.

Brokerage Allocation and Other Practices

Neither a Fund nor the Adviser has entered  into  agreements  or  understandings
with any brokers or dealers  regarding the placement of securities  transactions
because of research or  statistical  services they  provide.  To the extent that
such persons or firms supply  investment  information  to the Adviser for use in
rendering  investment  advice to a Fund, such  information may be supplied at no
cost to the Adviser and, therefore, may have the effect of reducing the expenses
of the Adviser in rendering  advice to the Fund. While it is impossible to place
an actual  dollar  value on such  investment  information,  its  receipt  by the
Adviser  probably  does not reduce the  overall  expenses  of the Adviser to any
material extent.

The investment  information provided to the Adviser is of the types described in
Section  28(e)(3)  of the  Securities  Exchange  Act of 1934 and is  designed to
augment  the   Adviser's   own  internal   research  and   investment   strategy
capabilities.  Research and  statistical  services  furnished by brokers through
whom a Fund effects securities  transactions are used by the Adviser in carrying
out its investment  management  responsibilities  with respect to all its client
accounts but not all such  services may be utilized by the Adviser in connection
with the Fund. A Fund will deal in some  instances in equity  securities,  which
are  not  listed  on  a  national   stock   exchange   but  are  traded  in  the
over-the-counter market. Where transactions are executed in the over-the-counter
market,  a Fund will  seek to deal  with the  primary  market  makers,  but when
necessary in order to obtain the best price and  execution,  it will utilize the
services  of  others.  In all  cases,  a Fund will  attempt  to  negotiate  best
execution.

A Fund may from time to time place orders for the purchase or sale of securities
(including listed call options) with SCB & Co., an affiliate of the Adviser.  In
such  instances,  the  placement of orders with such broker would be  consistent
with a Fund's  objective  of  obtaining  the best  execution  and  would  not be
dependent  upon the fact that SCB & Co. is an  affiliate  of the  Adviser.  With
respect to orders placed with SCB & Co. for  execution on a national  securities
exchange,  commissions  received must conform to Section 17(e)(2)(A) of the 1940
Act and Rule 17e-1 thereunder, which permit an affiliated person of a registered
investment company (such as a Fund), or any affiliated person of such person, to
receive a brokerage commission from such registered  investment company provided
that such commission is reasonable and fair compared to the commissions received
by other brokers in connection with comparable  transactions  involving  similar
securities during a comparable period of time.

The  following   table  shows  the  brokerage   commission  paid  on  investment
transactions for the last three fiscal years:

       Fund                                 Brokerage Commission Paid ($)
       ----                                 -----------------------------

  ACM Income (Fiscal Year End -
  December 31)
       2005                                           $0
       2004                                           $0
       2003                                           $0
  ACM Government Opportunity
  (Fiscal Year End - July 31)
       2005                                           $0
       2004                                           $0
       2003                                           $0

                                  DISTRIBUTIONS

Each  Fund  intends  to  distribute  monthly  its  net  investment  income.  Net
short-term capital gains, if any, will normally be distributed quarterly and net
long-term capital gains, if any, will normally be distributed annually.

                                    TAXATION

The following  summary addresses only the principal United States federal income
tax  considerations  pertinent to a Fund and to  stockholders  of the Fund. This
summary does not address the United States  federal income tax  consequences  of
owning shares to all  categories  of investors,  some of which may be subject to
special  rules.  This summary is based upon the advice of counsel for a Fund and
upon current law and interpretations  thereof. No confirmation has been obtained
from the relevant tax  authorities.  There is no assurance  that the  applicable
laws and interpretations will not change.

In view of the  individual  nature  of tax  consequences,  each  stockholder  is
advised  to  consult  the  stockholder's  own tax  adviser  with  respect to the
specific tax consequences of being a stockholder of a Fund, including the effect
and applicability of federal,  state, local,  foreign and other tax laws and the
effects of changes therein.

General

Each Fund intends for each  taxable  year to qualify as a "regulated  investment
company"  under the Code. To so qualify,  a Fund must,  among other things,  (i)
derive at least 90% of its gross  income in each  taxable  year from  dividends,
interest,  payments  with respect to  securities  loans,  gains from the sale or
other  disposition  of stock or  securities or foreign  currency,  certain other
income  (including  but not limited to, gains from options,  futures and forward
contracts)  derived  with  respect  to  its  business  of  investing  in  stock,
securities or currency or net income derived from interests in certain qualified
publicly  traded  partnerships;  and (ii) diversify its holdings so that, at the
end of each quarter of its taxable year,  the following two  conditions are met:
(a) at least 50% of the value of the Fund's assets is represented by cash,  cash
items,  U.S.  Government  Securities,  securities of other regulated  investment
companies and other  securities  with respect to which the Fund's  investment is
limited,  in respect of any one issuer,  to an amount not greater than 5% of the
value of the Fund's  assets and to not more than 10% of the  outstanding  voting
securities  of such  issuer and (b) not more than 25% of the value of the Fund's
assets  is  invested  in (i)  securities  of any one  issuer  (other  than  U.S.
Government  Securities or securities of other regulated  investment  companies),
(ii) securities (other than securities of other regulated investment  companies)
of any two or more issuers  which the Fund controls and which are engaged in the
same or similar trades or businesses or related  trades or businesses,  or (iii)
securities of one or more qualified publicly traded partnerships.

If a Fund qualifies as a regulated  investment  company for any taxable year and
makes timely  distributions to its stockholders of 90% or more of its investment
company  taxable  income  for that year  (calculated  without  regard to its net
capital gain,  i.e.,  the excess of its net long-term  capital gain over its net
short-term  capital  loss),  it will not be subject to federal income tax on the
portion of its taxable income for the year (including any net capital gain) that
it distributes to stockholders.

The  information set forth in the  Prospectus/Proxy  Statement and the following
discussion  relate solely to the significant  United States federal income taxes
on dividends and  distributions by a Fund and assumes that the Fund qualifies to
be taxed as a regulated  investment  company.  An investor should consult his or
her own tax advisor with respect to the  specific  tax  consequences  of being a
stockholder in a Fund, including the effect and applicability of federal, state,
local  and  foreign  tax  laws to his or her own  particular  situation  and the
possible effects of changes therein.

Dividends and Distributions

Each Fund intends to make timely  distributions of its taxable income (including
any net  capital  gain) so that the Fund will not be subject  to federal  income
taxes. Each Fund also intends to declare and distribute dividends in the amounts
and at the times necessary to avoid the application of the 4% federal excise tax
imposed on certain  undistributed  income of regulated investment  companies.  A
Fund  will be  required  to pay the 4%  excise  tax to the  extent  it does  not
distribute to its  stockholders  during any calendar year an amount equal to the
sum of (i) 98% of its ordinary taxable income for the calendar year, (ii) 98% of
its capital  gain net income and foreign  currency  gains for the twelve  months
ended  October 31 of such year (or December 31 if elected by the Fund) and (iii)
any ordinary income or capital gain net income from the preceding  calendar year
that was not  distributed  during such year.  For this  purpose,  income or gain
retained by a Fund that is subject to corporate income tax will be considered to
have been distributed by the Fund by year-end. For federal income and excise tax
purposes,  dividends declared and payable to stockholders of record as of a date
in October,  November or December but actually paid during the following January
will be taxable to these  stockholders  for the year  declared,  and not for the
subsequent  calendar  year in  which  the  stockholders  actually  received  the
dividend.

Dividends of a Fund's net ordinary income and  distributions of any net realized
short-term  capital gain are taxable to stockholders as ordinary  income.  Since
each Fund expects to derive  substantially  all of its gross income from sources
other  than  dividends,  it is  expected  that none of the Fund's  dividends  or
distributions   will   qualify   for  the   dividends-received   deduction   for
corporations. Furthermore, it is expected that none of a Fund's distributions be
treated as "qualified dividend income," which is taxable to individuals,  trusts
and estates at preferential tax rates if paid on or before December 31, 2010.

Distributions of net capital gain by a Fund to its stockholders  will be taxable
to the  stockholders as long-term  capital gains,  irrespective of the length of
time a stockholder  may have held his Fund shares.  Any dividend or distribution
received by a  stockholder  on shares of a Fund will have the effect of reducing
the  NAV of  such  shares  by the  amount  of  such  dividend  or  distribution.
Furthermore,  a dividend or distribution made shortly after the purchase of such
shares  by a  stockholder,  although  in  effect a  return  of  capital  to that
particular  stockholder,  would be taxable to him as described above.  Dividends
are taxable in the manner  discussed  regardless of whether they are paid to the
stockholder in cash or are reinvested in additional shares of a Fund.

After the end of the  taxable  year,  a Fund  will  notify  stockholders  of the
federal income tax status of any distributions  made by the Fund to stockholders
during such year.

Sales

Any gain or loss  arising from a sale of Fund shares  generally  will be capital
gain or loss if the  Fund  shares  are  held as a  capital  asset,  and  will be
long-term capital gain or loss if such stockholder has held such shares for more
than one year at the time of the sale;  otherwise it will be short-term  capital
gain or loss. However, if a stockholder has held shares in a Fund for six months
or less and during that period has received a distribution  of net capital gain,
any loss  recognized by the  stockholder  on the sale of those shares during the
six-month  period will be treated as a long-term  capital  loss to the extent of
such  distribution.  In  determining  the holding period of such shares for this
purpose, any period during which a stockholder's risk of loss is offset by means
of options, short sales or similar transactions is not counted.

Any loss  realized  by a  stockholder  on a sale or exchange of shares of a Fund
will be  disallowed to the extent the shares  disposed of are replaced  within a
period of 61 days  beginning  30 days before and ending 30 days after the shares
are sold or exchanged. For this purpose,  acquisitions pursuant to a Fund's DRIP
would  constitute a replacement if made within the period.  If  disallowed,  the
loss will be  reflected  in an  upward  adjustment  to the  basis of the  shares
acquired.

Backup Withholding

A Fund  generally  will be required to withhold tax  (currently,  at the rate of
28%) of reportable  payments (which may include  dividends and  distributions of
net capital gain) payable to a noncorporate  stockholder  unless the stockholder
certified on his  subscription  application that the social security or taxpayer
identification  number provided is correct and that the stockholder has not been
notified  by  the  Internal  Revenue  Service  that  he  is  subject  to  backup
withholding.

United States Federal Income Taxation of a Fund

The following  discussion  relates to certain  significant United States federal
income  tax  consequences  to a Fund with  respect to the  determination  of its
"investment  company taxable  income" each year. This discussion  assumes that a
Fund will be taxed as a  regulated  investment  company  for each of its taxable
years.

Currency Fluctuations --"Section 988" Gains or Losses

Under the Code,  gains or losses  attributable to fluctuations in exchange rates
which occur  between the time a Fund accrues  interest or other  receivables  or
accrues expenses or other liabilities  denominated in a foreign currency and the
time the Fund actually  collects such  receivables or pays such  liabilities are
treated as ordinary income or ordinary loss. Similarly, gains or losses from the
disposition  of foreign  currencies,  from the  disposition  of debt  securities
denominated in a foreign currency, or from the disposition of a forward contract
denominated in a foreign  currency which are attributable to fluctuations in the
value of the foreign  currency  between the date of acquisition of the asset and
the date of disposition also are treated as ordinary income or loss. These gains
or losses, referred to under the Code as "section 988" gains or losses, increase
or decrease the amount of a Fund's  investment  company taxable income available
to be distributed to its stockholders as ordinary income, rather than increasing
or  decreasing  the amount of the Fund's net capital gain.  Because  section 988
losses  reduce  the  amount of  ordinary  dividends  a Fund will be  allowed  to
distribute  for a taxable  year,  such section 988 losses may result in all or a
portion of prior dividend distributions for such year being recharacterized as a
non-taxable  return of  capital  to  stockholders,  rather  than as an  ordinary
dividend,  reducing each  stockholder's  basis in his Fund shares. To the extent
that such distributions exceed such stockholder's basis, each will be treated as
a gain from the sale of shares.

Options Futures Contracts, and Forward Foreign Currency Contracts

Certain  listed  options,  regulated  futures  contracts,  and  forward  foreign
currency  contracts are considered  "section 1256  contracts" for federal income
tax purposes.  Section 1256  contracts held by a Fund at the end of each taxable
year will be "marked to market" and treated for federal  income tax  purposes as
though sold for fair market value on the last business day of such taxable year.
Gain or loss  realized by a Fund on section  1256  contracts  other than forward
foreign  currency  contracts will be considered 60% long-term and 40% short-term
capital  gain or  loss.  Gain  or loss  realized  by a Fund on  forward  foreign
currency  contracts  will be  treated  as  section  988  gain or loss  and  will
therefore  be  characterized  as  ordinary  income or loss and will  increase or
decrease  the  amount  of the  Fund's  net  investment  income  available  to be
distributed to stockholders as ordinary  income,  as described above. A Fund can
elect to exempt its section 1256 contracts which are part of a "mixed  straddle"
(as described below) from the application of section 1256.

The Treasury Department has the authority to issue regulations that would permit
or require a Fund either to  integrate a foreign  currency  hedging  transaction
with the investment that is hedged and treat the two as a single transaction, or
otherwise to treat the hedging  transaction in a manner that is consistent  with
the hedged  investment.  The regulations  issued under this authority  generally
should not apply to the type of hedging  transactions in which a Fund intends to
engage.

With  respect to  over-the-counter  put and call  options  or options  traded on
certain  foreign  exchanges,  gain or loss  realized by a Fund upon the lapse or
sale of such  options held by the Fund will be either  long-term  or  short-term
capital gain or loss  depending  upon the Fund's  holding period with respect to
such option.  However,  gain or loss  realized  upon the lapse or closing out of
such  options that are written by a Fund will be treated as  short-term  capital
gain or loss. In general,  if a Fund  exercises an option,  or if an option that
the  Fund has  written  is  exercised,  gain or loss on the  option  will not be
separately  recognized but the premium  received or paid will be included in the
calculation  of gain or loss upon  disposition  of the property  underlying  the
option.

Gain or loss  realized by a Fund on the lapse or sale of put and call options on
foreign  currencies  which are traded  over-the-counter  or on  certain  foreign
exchanges  will be  treated as section  988 gain or loss and will  therefore  be
characterized  as ordinary  income or loss and will  increase  or  decrease  the
amount of the  Fund's net  investment  income  available  to be  distributed  to
stockholders as ordinary income,  as described above. The amount of such gain or
loss shall be  determined  by  subtracting  the amount paid, if any, for or with
respect to the option  (including any amount paid by a Fund upon  termination of
an option  written by the Fund) from the amount  received,  if any,  for or with
respect  to  the  option  (including  any  amount  received  by  the  Fund  upon
termination of an option held by the Fund). In general, if a Fund exercises such
an option on a foreign currency,  or such an option that the Fund has written is
exercised,  gain or loss on the option will be  recognized in the same manner as
if the Fund had sold the  option  (or paid  another  person to assume the Fund's
obligation to make delivery under the option) on the date on which the option is
exercised,  for the fair market value of the option.  The  foregoing  rules will
also apply to other put and call options which have as their underlying property
foreign  currency and which are traded  over-the-counter  or on certain  foreign
exchanges  to  the  extent  gain  or  loss  with  respect  to  such  options  is
attributable to fluctuations in foreign currency exchange rates.

Tax Straddles

Any option, futures contract,  forward foreign currency contract,  other forward
contract,  or other position  entered into or held by a Fund in conjunction with
any other  position  held by the Fund may  constitute a  "straddle"  for federal
income  tax  purposes.  A  straddle  of  which at least  one,  but not all,  the
positions  are section 1256  contracts  may  constitute a "mixed  straddle."  In
general,  straddles  are subject to certain  rules that may affect the character
and timing of a Fund's  gains and losses with  respect to straddle  positions by
requiring,  among other  things,  that (i) loss realized on  disposition  of one
position  of a  straddle  not be  recognized  to the  extent  that  the Fund has
unrealized  gains with respect to the other position in such straddle;  (ii) the
Fund's  holding  period in straddle  positions be  suspended  while the straddle
exists  (possibly  resulting in gain being  treated as  short-term  capital gain
rather than long-term  capital gain);  (iii) losses  recognized  with respect to
certain  straddle  positions  which are part of a mixed  straddle  and which are
non-section  1256  positions  be treated  as 60%  long-term  and 40%  short-term
capital loss; (iv) losses recognized with respect to certain straddle  positions
which  would  otherwise  constitute  short-term  capital  losses be  treated  as
long-term capital losses; and (v) the deduction of interest and carrying charges
attributable  to  certain  straddle  positions  may be  deferred.  The  Treasury
Department is authorized to issue regulations providing for the proper treatment
of a mixed straddle where at least one position is capital.  No such regulations
have yet been  issued.  Various  elections  are  available  to a Fund  which may
mitigate the effects of the straddle rules,  particularly  with respect to mixed
straddles.  In general,  the straddle rules  described above do not apply to any
straddles  held by a Fund all of the  offsetting  positions of which  consist of
section 1256 contracts.

Zero Coupon Treasury Securities

Under current federal tax law, a Fund will receive net investment  income in the
form of interest by virtue of holding Treasury bills,  notes and bonds, and will
recognize interest attributable to it under the original issue discount rules of
the Code from holding zero coupon Treasury  securities.  Current federal tax law
requires  that a  holder  (such as a Fund) of a zero  coupon  security  accrue a
portion of the discount at which the security was  purchased as income each year
even though the Fund receives no interest payment in cash on the security during
the  year.  Accordingly,  a  Fund  may be  required  to  pay  out  as an  income
distribution  each year an amount which is greater than the total amount of cash
interest the Fund actually  received.  Such  distributions will be made from the
cash assets of a Fund or by liquidation of portfolio securities, if necessary. A
Fund may  realize a gain or loss from such sales.  In the event a Fund  realizes
net capital gains from such transactions,  its stockholders may receive a larger
capital gain distribution,  if any, than they would have received in the absence
of such transactions.

Government Guaranteed Mortgage Pass-Through Securities

Mortgage pass-through  securities such as GNMA Certificates,  FNMA Certificates,
and FHLMC  Certificates  generally are taxable as trusts for Federal  income tax
purposes,  with the  certificate  holders  treated  as the  owners  of the trust
involved. As a result,  payments of interest,  principal and prepayments made on
the underlying mortgage pool are taxed directly to certificate holders such as a
Fund.  Payments of interest,  principal and  prepayments  made on the underlying
mortgage pool will therefore generally maintain their character when received by
a Fund.

Foreign Taxes

Investment income received by a Fund from foreign  government  securities may be
subject to foreign income taxes,  including  taxes  withheld at the source.  The
United  States has entered into tax treaties with many foreign  countries  which
entitles a Fund to a reduced rate of such taxes or exemption  from taxes on such
income.  It is  impossible  to determine  the  effective  rate of foreign tax in
advance  since the  amount  of a Fund's  assets to be  invested  within  various
countries is not known.

Other Taxation

The foregoing is a brief summary of the federal tax laws applicable to investors
in the Funds.  Investors may also be subject to state and local taxes,  although
distributions of a Fund that are derived from interest on certain obligations to
the U.S.  Government  and  agencies  thereof  may be exempt from state and local
taxes in certain states.

                                  PROXY VOTING

You may obtain a description of a Fund's proxy voting  policies and  procedures,
and  information  regarding  how the Fund voted  proxies  relating to  portfolio
securities during the most recent 12-month period ended June 30, without charge.
Simply visit AllianceBernstein's web site at www.alliancebernstein.com, or go to
the  Securities  and  Exchange  Commission's  (the  "Commission")  web  site  at
www.sec.gov, or call AllianceBernstein at (800) 227-4618.

The Fund files its complete  schedule of portfolio  holdings with the Commission
for the first and third  quarters of each  fiscal  year on Form N-Q.  The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov.  The Fund's
Forms N-Q may also be reviewed and copied at the  Commission's  Public Reference
Room in Washington,  DC;  information  on the operation of the Public  Reference
Room may be obtained by calling (800) SEC-0330.

                                  LEGAL MATTERS

Certain  legal  matters  concerning  the Funds and  their  participation  in the
Acquisition,   the  issuance  of  ACM  Income  shares  in  connection  with  the
Acquisition and the tax  consequences of the Acquisition  will be passed upon by
Seward & Kissel LLP, One Battery Park Plaza, New York, NY 10004,  counsel to the
Funds.

                                     EXPERTS

The audited financial information in the Prospectus/Proxy  Statement and the SAI
has  been  included  in  reliance  on the  report  of  Ernst  & Young  LLP,  the
independent registered public accounting firm for the Funds, 787 Seventh Avenue,
New  York,  NY  10019,  given  on its  authority  as  experts  in  auditing  and
accounting.



-------------------------------------------------------------------------------

                              FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

The Financial Statements required under Item 14 of Form N-14 are incorporated by
reference herein from the:

1.   ACM Income Fund, Inc. Annual Report for the period ended December 31, 2005,
     filed with the SEC on March 10, 2006 (File No. 811-05207).

2.   ACM Income  Fund,  Inc.,  Semi-Annual  Report for the period ended June 30,
     2006, filed with the SEC on September 7, 2006 (File No. 811-05207).

3.   ACM Government  Opportunities Fund, Inc. Annual Report for the period ended
     July 31, 2005 filed with the SEC on October 11, 2005 (File No. 811-05595).

4.   ACM Government  Opportunities Fund, Inc.  Semi-Annual Report for the period
     ended  January  31,  2006  filed  with the SEC on April 11,  2006 (File No.
     811-05595).

                                   APPENDIX A

--------------------------------------------------------------------------------

                                  BOND RATINGS
-------------------------------------------------------------------------------

Moody's Investors Service, Inc.
-------------------------------

Aaa                  Bonds which are rated Aaa are judged to be of the
                     best quality.  They carry the smallest  degree of
                     investment risk and are generally  referred to as
                     "gilt edge." Interest payments are protected by a
                     large or by an  exceptionally  stable  margin and
                     principal is secure. While the various protective
                     elements  are likely to change,  such  changes as
                     can be visualized are most unlikely to impair the
                     fundamentally strong position of such issues.

Aa                   Bonds which are rated Aa are judged to be of high
                     quality by all  standards.  Together with the Aaa
                     group they comprise  what are generally  known as
                     high grade  bonds.  They are rated lower than the
                     best bonds because  margins of protection may not
                     be as large as in Aaa  securities or  fluctuation
                     of   protective   elements   may  be  of  greater
                     amplitude or there may be other elements  present
                     which make the  long-term  risks appear  somewhat
                     larger than the Aaa securities.

A                    Bonds  which are rated A possess  many  favorable
                     investment attributes and are to be considered as
                     upper-medium-grade  obligations.  Factors  giving
                     security to principal and interest are considered
                     adequate  but  elements  may  be  present   which
                     suggest a susceptibility  to impairment some time
                     in the future.

Baa                  Bonds  which  are  rated  Baa are  considered  as
                     medium-grade obligations,  i.e., they are neither
                     highly  protected  nor poorly  secured.  Interest
                     payments and principal  security  appear adequate
                     for the present but certain  protective  elements
                     may  be  lacking  or  may  be  characteristically
                     unreliable  over any great  length of time.  Such
                     bonds lack outstanding investment characteristics
                     and in fact have speculative  characteristics  as
                     well.

Ba                   Bonds  which  are  rated  Ba are  judged  to have
                     speculative  elements;  their  future  cannot  be
                     considered as well-assured.  Often the protection
                     of interest  and  principal  payments may be very
                     moderate and thereby not well safeguarded  during
                     both  good  and  bad  times   over  the   future.
                     Uncertainty  of position  characterizes  bonds in
                     this class.

B                    Bonds   which   are   rated  B   generally   lack
                     characteristics  of  the  desirable   investment.
                     Assurance of interest and  principal  payments or
                     of  maintenance  of other  terms of the  contract
                     over any long period of time may be small.

Caa                  Bonds  which are rated Caa are of poor  standing.
                     Such  issues  may be in  default  or there may be
                     present   elements  of  danger  with  respect  to
                     principal or interest.

Ca                   Bonds  which are rated Ca  represent  obligations
                     which  are  speculative  in a high  degree.  Such
                     issues are often in default or have other  marked
                     shortcomings.

C                    Bonds  which  are  rated C are the  lowest  rated
                     class  of  bonds  and  issues  so  rated  can  be
                     regarded as having  extremely  poor  prospects of
                     ever attaining any real investment standing.

Absence of Rating    When no rating has been  assigned  or where a rating
                     has been  suspended  or  withdrawn,  it may be for
                     reasons unrelated to the quality of the issue.

      Should no rating be assigned, the reason may be one of the following:
      ---------------------------------------------------------------------

1.   An application for rating was not received or accepted.

2.   The issue or issuer  belongs to a group of securities or companies that are
     unrated as a matter of policy.

3.   There is a lack of essential data pertaining to the issue or issuer.

4.   The issue was privately  placed,  in which case the rating is not published
     in Moody's publications.

Suspension or withdrawal may occur if new and material  circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable  up-to-date  data to permit a  judgment  to be  formed;  if a bond is
called for redemption; or for other reasons.

Note                  Moody's applies numerical  modifiers,  1, 2 and 3
                      in each  generic  rating  classification  from Aa
                      through B in its  corporate  bond rating  system.
                      The modifier 1 indicates  that the security ranks
                      in the higher end of its generic rating category;
                      the modifier 2 indicates a mid-range ranking; and
                      the modifier 3 indicates  that the issue ranks in
                      the lower end of its generic rating category.

Standards & Poor's Ratings Services

AAA                   Debt  rated  AAA has the  highest  rating  assigned  by
                      S&P.  Capacity to pay  interest  and repay  principal is
                      extremely strong.

AA                    Debt rated AA has a very  strong  capacity to pay
                      interest and repay principal and differs from the
                      highest rated issues only in small degree.

A                     Debt  rated  A  has  a  strong  capacity  to  pay
                      interest  and  repay  principal  although  it  is
                      somewhat more  susceptible to the adverse effects
                      of  changes   in   circumstances   and   economic
                      conditions than debt in higher rated categories.

BBB                   Debt  rated  BBB   normally   exhibits   adequate
                      protection parameters.  However, adverse economic
                      conditions  or  changing  circumstances  are more
                      likely  to lead  to a  weakened  capacity  to pay
                      interest  and  repay  principal  for debt in this
                      category than in higher rated categories.

BB, B, CCC, CC, C     Debt  rated BB, B, CCC,  CC or C is  regarded  as
                      having significant  speculative  characteristics.
                      BB indicates the lowest degree of speculation and
                      C the  highest.  While such debt will likely have
                      some  quality  and  protective   characteristics,
                      these are  outweighed by large  uncertainties  or
                      major exposures to adverse conditions.

BB                    Debt rated BB is less  vulnerable  to  nonpayment
                      than other  speculative debt.  However,  it faces
                      major  ongoing   uncertainties   or  exposure  to
                      adverse    business,    financial   or   economic
                      conditions  which  could  lead  to an  inadequate
                      capacity to pay interest and repay principal.

B                     Debt  rated B is more  vulnerable  to  nonpayment
                      than debt rated BB, but there is  capacity to pay
                      interest and repay principal.  Adverse  business,
                      financial  or  economic  conditions  will  likely
                      impair  the  capacity  or   willingness   to  pay
                      principal or repay interest.

CCC                   Debt  rated  CCC  is  currently   vulnerable   to
                      nonpayment,   and  is  dependent  upon  favorable
                      business,  financial  and economic  conditions to
                      pay interest and repay principal. In the event of
                      adverse    business,    financial   or   economic
                      conditions, there is not likely to be capacity to
                      pay interest or repay principal.

CC                    Debt  rated CC is currently highly  vulnerable to
                      nonpayment.

C                     The C  rating  may be used to  cover a  situation
                      where a  bankruptcy  petition  has been  filed or
                      similar  action has been taken,  but payments are
                      being continued.

D                     The  D  rating,   unlike other  ratings,  is not
                      prospective;  rather,  it i s  used only where a
                      default has actually occurred.

Plus (+) or Minus (-) The ratings  from AA to CCC may be modified  by the
                      addition of a plus or minus sign to show  relative
                      standing within the major rating categories.

NR                    Not rated.

Fitch Ratings

AAA                   Bonds  considered to be  investment  grade and of
                      the highest  credit  quality.  The obligor has an
                      exceptionally  strong ability to pay interest and
                      repay principal, which is unlikely to be affected
                      by reasonably foreseeable events.

AA                    Bonds  considered to be  investment  grade and of
                      very high credit quality.  The obligor's  ability
                      to pay  interest  and  repay  principal  is  very
                      strong,  although  not  quite as  strong as bonds
                      rated AAA.  Because bonds rated in the AAA and AA
                      categories  are not  significantly  vulnerable to
                      foreseeable future developments,  short-term debt
                      of these issuers is generally rated F- 1+.

A                     Bonds  considered to be  investment  grade and of
                      high credit quality. The obligor's ability to pay
                      interest and repay  principal is considered to be
                      strong,  but may be more  vulnerable  to  adverse
                      changes in economic  conditions and circumstances
                      than bonds with higher ratings.

BBB                   Bonds  considered to be  investment  grade and of
                      satisfactory   credit   quality.   The  obligor's
                      ability to pay  interest  and repay  principal is
                      considered  to be  adequate.  Adverse  changes in
                      economic  conditions and circumstances,  however,
                      are more likely to have  adverse  impact on these
                      bonds, and therefore  impair timely payment.  The
                      likelihood  that the  ratings of these bonds will
                      fall below  investment  grade is higher  than for
                      bonds with higher ratings.

BB                    Bonds are considered  speculative.  The obligor's
                      ability to pay interest and repay  principal  may
                      be  affected   over  time  by  adverse   economic
                      changes.    However,   business   and   financial
                      alternatives can be identified which could assist
                      the  obligor  in  satisfying   its  debt  service
                      requirements.

B                     Bonds are considered  highly  speculative.  While
                      bonds in this class are  currently  meeting  debt
                      service   requirements,    the   probability   of
                      continued   timely   payment  of  principal   and
                      interest reflects the obligor's limited margin of
                      safety and the need for  reasonable  business and
                      economic  activity  throughout  the  life  of the
                      issue.

CCC                   Bonds have certain  identifiable  characteristics
                      which, if not remedied,  may lead to default. The
                      ability   to   meet   obligations   requires   an
                      advantageous business and economic environment.

CC                    Bonds are minimally  protected.  Default in payment
                      of interest  and/or  principal  seems probable over
                      time.

C                     Bonds are in imminent default in payment of interest
                      or principal.

DDD, DD, D            Bonds  are  in  default  on  interest  and/or
                      principal  payments.  Such  bonds  are  extremely
                      speculative  and should be valued on the basis of
                      their  ultimate  recovery value in liquidation or
                      reorganization of the obligor. DDD represents the
                      highest  potential  for  recovery on these bonds,
                      and  D  represents   the  lowest   potential  for
                      recovery.

Plus (+) Minus (-)    Plus and minus  signs are used with a rating  symbol
                      to  indicate  the  relative  position  of a credit
                      within the rating  category.  Plus and minus  signs,
                      however,  are not used in the AAA,  DDD,  DD or D
                      categories.

NR                    Indicates that Fitch does not rate the specific issue.

Dominion Bond Rating Service Limited

Each  rating  category  is denoted by the  subcategories  "high" and "low".  The
absence of either a "high" or "low"  designation  indicates the rating is in the
"middle"  of the  category.  The AAA and D  categories  do not  utilize  "high",
"middle", and "low" as differential grades.

AAA--Long-term   debt  rated  AAA  is  of  the  highest  credit  quality,   with
exceptionally  strong  protection  for the timely  repayment  of  principal  and
interest. Earnings are considered stable, the structure of the industry in which
the entity  operates  is strong,  and the outlook  for future  profitability  is
favorable.  There are few qualifying factors present that would detract from the
performance  of the entity.  The  strength of liquidity  and coverage  ratios is
unquestioned  and the entity has established a credible track record of superior
performance.  Given the  extremely  high standard that Dominion has set for this
category, few entities are able to achieve a AAA rating.

AA--Long-term  debt rated AA is of superior  credit  quality,  and protection of
interest  and  principal  is  considered  high.  In many cases they  differ from
long-term debt rated AAA only to a small degree. Given the extremely restrictive
definition  Dominion  has for the  AAA  category,  entities  rated  AA are  also
considered to be strong credits,  typically exemplifying  above-average strength
in key areas of  consideration  and  unlikely  to be  significantly  affected by
reasonably foreseeable events.

A--Long-term  debt rated "A" is of satisfactory  credit  quality.  Protection of
interest and principal is still substantial,  but the degree of strength is less
than that of AA rated entities.  While "A" is a respectable rating,  entities in
this  category  are  considered  to be  more  susceptible  to  adverse  economic
conditions and have greater cyclical tendencies than higher-rated securities.

BBB--Long-term  debt rated BBB is of  adequate  credit  quality.  Protection  of
interest  and  principal  is  considered  acceptable,  but the  entity is fairly
susceptible to adverse  changes in financial and economic  conditions,  or there
may be other adverse  conditions present which reduce the strength of the entity
and its rated securities.

BB--Long-term  debt  rated BB is defined to be  speculative  and  non-investment
grade,  where the  degree of  protection  afforded  interest  and  principal  is
uncertain, particularly during periods of economic recession. Entities in the BB
range typically have limited access to capital markets and additional  liquidity
support.  In many cases,  deficiencies  in critical mass,  diversification,  and
competitive strength are additional negative considerations.

B--Long-term  debt  rated B is  considered  highly  speculative  and  there is a
reasonably  high  level of  uncertainty  as to the  ability of the entity to pay
interest  and  principal  on a  continuing  basis in the future,  especially  in
periods of economic recession or industry adversity.

CCC, CC and  C--Long-term  debt rated in any of these  categories is very highly
speculative and is in danger of default of interest and principal. The degree of
adverse  elements  present is more severe than long-term debt rated B. Long-term
debt rated  below B often have  features  which,  if not  remedied,  may lead to
default. In practice, there is little difference between these three categories,
with CC and C normally  used for lower  ranking debt of companies  for which the
senior debt is rated in the CCC to B range.

D--A security rated D implies the issuer has either not met a scheduled  payment
of interest or  principal or that the issuer has made it clear that it will miss
such a payment in the near  future.  In some cases,  Dominion may not assign a D
rating under a bankruptcy announcement scenario, as allowances for grace periods
may exist in the underlying  legal  documentation.  Once assigned,  the D rating
will  continue as long as the missed  payment  continues  to be in arrears,  and
until such time as the  rating is  suspended,  discontinued,  or  reinstated  by
Dominion.


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