# UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549

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# FORM 10-Q

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# (Mark One)

# QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934

# For the quarterly period ended June 30, 2001

# OR

# TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934

# For the transition period from     
                 to

# Commission file number            0-19244

# Krupp Government Income Trust

# Massachusetts
(State or other jurisdiction of incorporation or organization)

# 04-3089272
(IRS employer identification no.)

# One Beacon Street, Boston, Massachusetts
(Address of principal executive offices)

# 02108(Zip Code)

# (617) 523-0066
(Registrant's telephone number, including area code)

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

# Part I.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

---

This Form 10-Q contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual
results could differ materially from those projected in the forward-looking
statements as a result of a number of factors, including those identified
herein.

`KRUPP GOVERNMENT INCOME TRUST

                                                     BALANCE SHEETS


                                                         ASSETS
                                                                                   June 30,           December 31,
                                                                                   2001                    2000
                                                                            -------------------    --------------------
Participating Insured Mortgage Investments
 ("PIMIs") (Note 2)
  Insured Mortgages                                                         $   59,551,393         $    59,752,085
  Additional Loans, net of impairment provision of $2,162,618                    8,350,990               8,350,990
Participating Insured Mortgages ("PIMs")(Note 2)                                46,659,083              46,892,234
Mortgage-Backed Securities and insured
 mortgage loan ("MBS") (Note 3)                                                 15,800,724              16,536,498
                                                                            --------------         ---------------

           Total mortgage investments                                          130,362,190             131,531,807

Cash and cash equivalents                                                        6,159,914               5,359,041
Interest receivable and other assets                                               944,788               1,082,412
Prepaid acquisition fees and expenses, net
  of accumulated amortization of $7,217,694
  and $6,841,714, respectively                                                   1,115,767               1,491,747
Prepaid participation servicing fees, net of
  accumulated amortization of $2,251,097 and
  $2,112,209, respectively                                                         526,652                 665,540
                                                                            --------------         ---------------

           Total assets                                                     $  139,109,311         $   140,130,547
                                                                            ==============         ================


                                          LIABILITIES AND SHAREHOLDERS' EQUITY

Deferred income on Additional Loans                                         $    3,366,717         $     3,550,485
Other liabilities                                                                   45,287                  20,980
                                                                            --------------         ---------------

           Total liabilities                                                     3,412,004               3,571,465
                                                                            --------------         ---------------

Shareholders' equity (Note 4) Common stock, no par value; 17,510,000 Shares
   authorized; 15,053,135 Shares
   issued and outstanding                                                      135,181,706             136,114,206
Accumulated comprehensive income                                                   515,601                 444,876
                                                                            --------------         ----------------

           Total Shareholders' equity                                          135,697,307             136,559,082
                                                                            --------------          ---------------

           Total liabilities and Shareholders' equity                       $  139,109,311         $   140,130,547
                                                                            ==============         ===============




                                         The accompanying notes are an integral
                                            part of the financial statements.`

`KRUPP GOVERNMENT INCOME TRUST

                                      STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



                                                For the Three Months                 For the Six Months
                                                    Ended June 30,                      Ended June 30,
                                            ------------------------------     -------------------------------

                                                2001              2000               2001             2000
                                            ------------      ------------     ---------------    ------------

Revenues:
   Interest income - PIMs and PIMIs:
      Basic interest                        $  2,044,820      $  2,026,783        $  4,119,434    $  4,044,827
      Additional Loan interest (Note 5)          185,938           141,088             371,877         282,501
      Participation interest (Note 5)            118,968            68,762             251,850         145,730
   Interest income - MBS                         317,954           346,268             643,543         699,674
   Interest income - cash and
   cash equivalents                               63,458            77,556             140,179         145,039
                                            ------------      ------------        ------------    ------------ -

         Total revenues                        2,731,138         2,660,457           5,526,883       5,317,771
                                            ------------      ------------        ------------    ------------

Expenses:
   Asset management fee to an affiliate          247,593           250,993             493,669         502,893
   Expense reimbursements to affiliates           65,531            66,906             112,040         122,747
   Amortization of prepaid fees and
     expenses                                    257,434           257,434             514,868         514,868
   General and administrative                    115,393           120,256             220,740         184,936
                                            ------------      ------------        ------------    ------------


         Total expenses                          685,951           695,589           1,341,317       1,325,444
                                            ------------      ------------        ------------    ------------

Net income                                     2,045,187         1,964,868           4,185,566       3,992,327

Other comprehensive income:
   Net change in unrealized gain
     on MBS                                       18,847           (18,839)             70,725         (42,817)
                                            ------------      ------------        ------------    ------------

Total comprehensive income                  $  2,064,034      $  1,946,029        $  4,256,291     $ 3,949,510
                                            ============      ============        ============    ============

Basic earnings per Share                    $        .14      $        .14        $        .28    $       .27
                                            ============      ============        ============    ============

Weighted average Shares outstanding                   15,053,135                          15,053,135
                                                      ==========                          ==========


                                                     The accompanying notes are an integral
                                                        part of the financial statements.`

`KRUPP GOVERNMENT INCOME TRUST

                                             STATEMENTS OF CASH FLOWS


                                                                                          For the Six Months
                                                                                             Ended June 30,
                                                                               -----------------------------------------

                                                                                      2001                  2000
                                                                               -------------------  --------------------
Operating activities:
   Net income                                                                   $    4,185,566      $    3,992,327
   Adjustments to reconcile net income to
    net cash provided by operating activities:
      Amortization of premiums and (discounts)                                           1,082                (715)
      Amortization of prepaid fees and expenses                                        514,868             514,868
      Changes in assets and liabilities:
         Decrease in interest receivable
            and other assets                                                           137,624             273,403
         Decrease in deferred income
           on Additional Loans                                                        (183,768)            (94,066)
         Increase (decrease) in other liabilities                                       24,307             (12,513)
                                                                                --------------      --------------

         Net cash provided by operating activities                                   4,679,679           4,673,304
                                                                                --------------      --------------

Investing activities:
    Principal collections on MBS                                                       805,417             576,083
    Principal collections on PIMs and Insured Mortgages                                433,843             400,176
                                                                                --------------      --------------

         Net cash provided by investing activities                                   1,239,260             976,259
                                                                                --------------      --------------
Financing activity:
   Dividends                                                                        (5,118,066)         (5,118,066)
                                                                                --------------      --------------

Net increase in cash and cash equivalents                                              800,873             531,497

Cash and cash equivalents, beginning of period                                       5,359,041           4,627,499
                                                                                 -------------      --------------

Cash and cash equivalents, end of period                                        $    6,159,914      $    5,158,996
                                                                                ==============      ==============

Non Cash Activities:
   Increase (decrease) in Fair Value of MBS                                     $       70,725      $      (42,817)
                                                                                ==============      ==============


                     The accompanying notes are an integral
                        part of the financial statements.`

`KRUPP GOVERNMENT INCOME TRUST

                          NOTES TO FINANCIAL STATEMENTS

1.    Accounting Policies


Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted in this report on Form 10-Q pursuant to the Rules
and  Regulations  of the  Securities and Exchange  Commission.  However,  in the
opinion   of   Berkshire    Mortgage    Advisors   Limited    Partnership   (the
"Advisor"), which is the advisor to Krupp Government Income Trust (the
"Trust"),  the  disclosures  contained  in this report are adequate to
make the information presented not misleading. See Notes to Financial Statements
in the  Trust's  Form  10-K  for the  year  ended  December  31,  2000  for
additional  information relevant to significant  accounting policies followed by
the Trust.

In the opinion of the Advisor of the Trust, the accompanying unaudited financial
statements  reflect  all  adjustments   (consisting  of  only  normal  recurring
accruals) necessary to present fairly the Trusts  financial position as of
June 30, 2001, results of its operations for the three and six months ended June
30, 2001 and 2000 and its cash flows for the six months  ended June 30, 2001 and
2000.

The results of  operations  for the three and six months ended June 30, 2001 are
not  necessarily  indicative  of the results  which may be expected for the full
year. See  Management's  Discussion and Analysis of Financial Condition and
Results of Operations included in this report.


2.    PIMs and PIMIs

At June 30, 2001, the Trust's PIMs and PIMIs,  including Additional Loans, had a
fair value of $117,302,241  and gross  unrealized gains and losses of $2,799,700
and $58,925.  The PIMs and PIMIs have  maturities  ranging from 2002 to 2034. At
June 30, 2001, there are no insured mortgage loans within the Trust's  portfolio
that are delinquent of principal or interest.

Lifestyle and Mountain View have been  adversely  affected by their  competitive
rental housing markets. The Advisor recorded an impairment provision against the
Additional  Loans in 1998 of $1,130,346 and $984,000 for Lifestyles and Mountain
View,  respectively and an additional  provision of $48,272 for Mountain View in
1999. Based on the Advisors analysis of the property operations underlying
the PIMIs, the Trust continues to maintain these provisions.


3.    MBS

At June 30, 2001, the Trust's MBS portfolio had an amortized cost of $10,428,262
and unrealized gains of $515,601. At June 30, 2001, the Trust's insured mortgage
loan had an amortized cost of $4,856,861.  The portfolio has maturities  ranging
from 2008 to 2035.


4.    Changes in Shareholders' Equity

      A summary of changes in shareholders' equity for six months ended
      June 30, 2001 is as follows:

                                          Total                                  Accumulated
                                          Common               Retained         Comprehensive         Shareholders'
                                          Stock                Earnings            Income                Equity
                                      --------------        --------------       ------------        ---------------
Balance at December 31, 2000          $  136,114,206        $       -            $    444,876        $   136,559,082

Net income                                   -                   4,185,566              -                  4,185,566

Dividends                                   (932,500)           (4,185,566)             -                 (5,118,066)

Change in unrealized
gain on MBS                                  -                      -                  70,725                 70,725
                                      --------------        --------------       ------------        ---------------

Balance at June 30, 2001              $  135,181,706        $       -            $    515,601        $   135,697,307
                                      ==============        ==============       ============        ===============


                                    Continued`

`KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued




5.       Related Party Transactions


The Trust received  $86,609 of Additional  Loan Interest during the three months
ended June 30, 2000 from an affiliate of the  Advisor.  The Trust also  received
participation interest $68,762 from an affiliate of the Advisor during the three
months ended June 30, 2000.

The Trust received  $86,609 and $86,935 of Additional  Loan Interest  during the
six months ended June 30, 2001 and 2000,  respectively  from  affiliates  of the
Advisor. The Trust also received  participation  interest of $50,750 and $68,762
from an affiliate  of the Advisor  during the six months ended June 30, 2001 and
2000, respectively.


6.       Subsequent Event


On July 23, 2001,  the Trust  received a prepayment of The Seasons  Subordinated
Promissory  Note and the  Seasons  Additional  Loan  Note.  The  Trust  received
$1,924,649 of the Additional Loan principal,  $238,656 of surplus cash, $847,450
of unpaid preferred interest,  $1,052,455 of unpaid contingent interest, $11,390
of unpaid Base Interest on Additional  Loans and $1,299,562 which represents its
portion of the residual split.  The Trust received  $8,567,890  representing the
principal  proceeds on the first  mortgage  note on July 26,  2001.  The Advisor
expects to pay a special  dividend of $0.93 per share  during the third  quarter
from the proceeds of the Seasons PIMI prepayment.

The payoff of the Seasons PIMI was a result of a sale of the underlying property
by the borrower,  Maryland  Associates Limited  Partnership  (MALP),
which is an  affiliate of the Adviser,  to an affiliate of  MALPs  general
partner.  Because the sale of the underlying  property was to an affiliate,  the
Independent  Trustees of the Trust were  required  to approve  the  transaction,
which they did based upon a number of factors,  including  an  appraisal  of the
underlying  property prepared by an independent  third party MAI appraiser.  The
purchase  price  paid by the  affiliate  for the  underlying  property  was $1.6
million greater than the value indicated by such appraisal.`

Certain statements in this
Managements Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere in this quarterly report on Form 10-Q constitute
forward-looking statements within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the Trusts actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by these forward-looking statements. These factors include, among other
things, federal, state or local regulations; adverse changes in general economic
or local conditions; the inability of the borrower to meet financial obligations
on additional loans; pre-payments of mortgages; failure of borrowers to pay
participation interests due to poor operating results at properties underlying
the mortgages; uninsured losses and potential conflicts of interest between the
Trust and its Affiliates, including the Advisor.

At June 30, 2001, the Trust
had liquidity consisting of cash and cash equivalents, of approximately $6.2
million as well as the cash inflows provided by PIMs, PIMIs, MBS, cash and cash
equivalents. The Trust may also receive additional cash flow from the
participation features of its PIMs and PIMIs. The Trust anticipates that these
sources will be adequate to provide the Trust with sufficient liquidity to meet
its obligations, including providing dividends to its investors.

The most significant demand
on the Trusts liquidity is quarterly dividends, paid to investors of
approximately $2.6 million, and special dividends. Funds for dividends come from
interest income received on PIMs, PIMIs, MBS, cash and cash equivalents net of
operating expenses and the principal collections received on PIMs, PIMIs and
MBS. The portion of dividends funded from principal collections reduces the
capital resources of the Trust. As the capital resources of the Trust decrease,
the total cash flows to the Trust will also decrease which may result in
periodic adjustments to the dividends paid to the investors.

The Advisor periodically
reviews the dividend rate to determine whether an adjustment is necessary based
on projected future cash flows. The current dividend rate is $.17 per Share per
quarter. The Trustees, based on the Advisors recommendations, generally
set a dividend rate that provides for level quarterly dividends. To the extent
quarterly dividends do not fully utilize the cash available for distribution and
cash balances increase, the Advisor may adjust the dividend rate or distribute
such funds through a special dividend.

The Trusts PIMIs
funded the construction or significant rehabilitation of multifamily housing,
which requires time to achieve stabilized operations following the completion of
the work. With this in mind, the Trust required those borrowers to escrow a
portion of the Additional Loan proceeds in reserves so funds would be available
for the PIMI Additional Loan payments during the construction and lease-up
periods. As these reserves become depleted, full payment of the Additional Loan
interest becomes primarily dependent on whether the underlying property
generates sufficient operating cash flow to make such payments.

In addition to providing
guaranteed or insured monthly principal and interest payments, the Trusts
investments in PIMs and PIMIs also may provide additional income through the
interest on the Additional Loan portion of the PIMIs as well as participation
income based on operating cash flow and an increase in the value realized upon
the sale or refinance of the underlying properties. However, these payments are
neither guaranteed nor insured and depend upon the successful operations of the
underlying properties.

On July 23, 2001, the Trust
received a prepayment of the Seasons Subordinated Promissory Note and the
Seasons Additional Loan Note. The Trust received $1,924,649 of the Additional
Loan principal, $238,656 of surplus cash, $847,450 of unpaid preferred interest,
$1,052,455 of unpaid contingent interest, $11,390 of unpaid Base Interest on
Additional Loan and $1,299,562 which represents its portion of the residual
split. The Trust received $8,567,890 representing the principal proceeds on the
first mortgage note on July 26, 2001. The Advisor expects to pay a special
dividend of $0.93 per share during the third quarter from the proceeds of the
Seasons PIMI prepayment.

The Trust received the
first installment of Additional Loan interest due in 2001 from two of its PIMI
investments, Red Run and The Seasons. Two other PIMI investments, Mountain View
and Windward Lakes operate under workout agreements with the Trust that require
Additional Loan interest payments only if Surplus Cash, as defined by HUD, is
generated through property operations. Neither of these properties generated
Surplus Cash for the year ended December 31, 2000; consequently, the Trust did
not receive any Additional Loan interest.

The Trust received
participation interest based on cash flow generated by property operations from
four of its investments during the first half of 2001. Waterford Townhomes, paid
$60,502, Red Run paid $21,630, The Seasons paid $50,750 and Lifestyles paid
$118,968.

Three properties operate
under workout agreements with the Trust. Windward Lakes operating results
deteriorated during 1995 and 1996, and in early 1997 the independent Trustees
approved a workout with the borrower of the Windward Lakes PIMI, an affiliate of
the Advisor of the Trust. In the workout, the Trust agreed to reduce the
effective basic interest rate on the insured first mortgage by 2% per annum for
1997 and 1% per annum for 1998, 1999 and 2000. The borrower made an equity
contribution of $133,036 to the property and agreed to cap the annual management
fee paid to an affiliate at 3% of revenues. The Trusts participation in
current operations is 50% of any Surplus Cash as determined under HUD
guidelines, and the Additional Loan interest is payable out of its share of
Surplus Cash. Any unpaid Additional Loan interest accrues at 7.5% per annum.
When the property is sold or refinanced, the Trust will receive 50% of any net
proceeds remaining after repayment of the insured mortgage, the Additional Loan,
the interest rate relief, accrued and unpaid Additional Loan interest and the
Borrowers equity up to the point that the Trust has received a cumulative,
non-compounded 10% preferred return on its investment in the PIMI.

Lifestyles operating
results deteriorated during 1995, and the Trust approved a two-year workout that
effectively reduced the interest rate on the insured mortgage by 1%. When that
workout ended in 1997, the property was not able to generate sufficient revenues
to maintain the property and service the original interest rate. Consequently,
the borrower on the Lifestyles PIMI defaulted on its May 1, 1998 debt service
payment on the insured first mortgage. The Trust agreed to a new workout that
runs through 2007. Under its terms, the Trust agreed to reduce the effective
interest rate on the insured first mortgage by 1.75% retroactively for 1998 to
clear the default, by 1.75% for 1999, and by 1.5% each year thereafter until the
property is sold or refinanced. An affiliate of the Advisor refunds
approximately .25% per annum to the Trust related to the interest reduction. The
borrower made a $550,000 equity contribution, which has been escrowed, for the
exclusive purpose of correcting deferred maintenance and making capital
improvements to the property. The escrow has been used up for paint, building
repairs, parking lot repairs, a new fitness facility, clubhouse remodeling and
landscaping. Any Surplus Cash that is generated by property operations will be
split evenly between the Trust and the borrower. When the property is sold or
refinanced, the first $1,100,000 of any proceeds remaining after the insured
mortgage is paid off will be split 50% / 50% between the Trust and the borrower;
the next $1,690,220 of proceeds will be split 75% to the Trust and 25% to the
borrower; and any remaining proceeds will be split 50% / 50%. The
borrowers new equity and the reduction in the effective interest rate on
the insured first mortgage will provide funds for repairs and improvements that
should help reposition Lifestyles so it can compete more effectively for new
residents and rental rates. As a result of the factors described above, the
Trust determined that the Additional Loan collateralized by the Lifestyles asset
was impaired, and recorded a valuation allowance of $1,130,346 in the fourth
quarter of 1998 and continues to maintain that allowance.

Mountain View has
experienced problems similar to Lifestyles with respect to competitive market
conditions. In June 1999, the Trust approved a second workout that runs through
2004. Under its terms, the Trust agreed to reduce the effective interest rate on
the insured first mortgage by 1.25% retroactively for 1999 and each year
thereafter until the property is sold or refinanced, and to change the
participation terms. The workout eliminated the preferred return feature,
forgave $288,580 of previous accruals of Additional Loan interest related to the
first workout, and changed the Trusts participation in Surplus Cash
generated by the property. The Trust will receive 75% of the first $130,667 of
Surplus Cash and 50% of any remaining Surplus Cash on an annual basis to pay
Additional Loan interest. Unpaid Additional Loan interest related to the second
workout will accrue and be payable if there are sufficient proceeds from a sale
or refinancing of the property. In addition, the borrower repaid $153,600 of the
Additional Loan and funded approximately $54,000 to a reserve for property
improvements. As a result of the factors described above, the Advisor determined
that the Additional Loan collateralized by the Mountain View asset was impaired
and has recorded a valuation allowance of $1,032,272 and continues to maintain
that allowance.

Whether the operating
performance at any of the properties mentioned above provide sufficient cash
flow from operations to pay either the Additional Loan interest or participation
income will depend on factors over which the Trust has little or no control
over. Should the properties be unable to generate sufficient cash flow to pay
the Additional Loan interest, it would reduce the Trusts distributable
cash flow and could affect the value of the Additional Loan collateral.

There are contractual
restrictions on the repayment of the PIMs and PIMIs. During the first five years
of the investment, borrowers are prohibited from repayment. During the second
five years, the PIM borrowers can prepay the insured first mortgage by paying
the greater of a prepayment premium or the participation due at the time of the
prepayment. Similarly, the PIMI borrowers can prepay the insured first mortgage
and the Additional Loan by satisfying the Preferred Return obligation. The
participation features and Additional Loans are neither insured nor guaranteed.
If the prepayment of the PIM or PIMI results from the foreclosure on the
underlying property or an insurance claim, the Trust would probably not receive
any participation income or any amounts due under the Additional Loan.

The Trust has the option to
call certain PIMs and all the PIMIs by accelerating their maturity if the loans
are not prepaid by the tenth year after permanent funding. The Advisor will
determine the merits of exercising the call option for each PIM and PIMI as
economic conditions warrant. Such factors as the condition of the asset, local
market conditions, the interest rate environment and available financing will
have an impact on these decisions.

Net income of the Trust
increased for the three and six months ended June 30, 2001 as compared to the
same periods in 2000 due to increases in interest income on PIMs and PIMIs. This
is partially offset by a decrease in the MBS interest income. Additional loan
interest increased due to an increase in the 2001 amortization of deferred
income on the Red Run PIMI. Basic interest on PIMs and PIMIs increased due to
the expiration of the interest rate reduction for the Windward Lakes PIMI on
December 31, 2000. Participation interest increased primarily due to the surplus
cash received from the Lifestyles PIMI. MBS interest income decreased due to
principal payments reducing the asset base.

Assessment of Credit Risk

The Trusts
investments in insured mortgages and MBS are guaranteed or insured by Fannie
Mae, the Federal Home Loan Mortgage Corporation (FHLMC), the Government National
Mortgage Association (GNMA) and the Department of Housing and Urban Development
(HUD) and therefore the certainty of their cash flows and the risk of material
loss of the amounts invested depends on the creditworthiness of these entities.

Fannie Mae is a federally
chartered private corporation that guarantees obligations originated under its
programs. FHLMC is a federally chartered corporation that guarantees obligations
originated under its programs and is wholly-owned by the twelve Federal Home
Loan Banks. These obligations are not guaranteed by the U.S. Government or the
Federal Home Loan Bank Board. GNMA guarantees the full and timely payment of
principal and basic interest on the securities it issues, which represents
interest in pooled mortgages insured by HUD. Obligations insured by HUD, an
agency of the U.S. Government, are backed by the full faith and credit of the
U.S. Government.

The Trusts Additional
Loans have similar risks as those associated with higher risk debt instruments,
including: reliance on the owners operating skills, ability to maintain
occupancy levels, control operating expenses, ability to maintain the properties
and obtain adequate insurance coverage. Operations also may be effected by
adverse changes in general economic conditions, adverse local conditions, and
changes in governmental regulations, real estate zoning laws, or tax laws, and
other circumstances over which the Trust may have little or no control.

At June 30, 2001 the Trust
included in cash and cash equivalents approximately $6.2 million held in a money
market fund which invests in securities which are primarily direct obligations
of the U.S. Government or securities issued by agencies and instrumentalities of
the U.S. Government which may be guaranteed, supported or backed by the credit
of the U.S. Government or agencies thereof.

The Trusts primary
market risk exposure is to interest rate risk, which can be defined as the
exposure of the Trusts net income, comprehensive income or financial
condition to adverse movements in interest rates. At June 30, 2001, the
Trusts PIMs, PIMIs and MBS comprise the majority of the Trusts
assets. As such, decreases in interest rates may accelerate the prepayment of
the Trusts investments. The Trust does not utilize any derivatives or
other instruments to manage this risk as the Trust plans to hold all of its
investments to expected maturity.

The Trust monitors
prepayments and considers prepayment trends, as well as distribution
requirements of the Trust, when setting regular dividend policy. For MBS, the
fund forecasts prepayments based on trends in similar securities as reported by
statistical reporting entities such as Bloomberg. For PIMs and PIMIs, the Trust
incorporates prepayment assumptions into planning as individual properties
notify the Trust of the intent to prepay or as they mature.

`KRUPP GOVERNMENT INCOME TRUST

                                              PART II - OTHER INFORMATION


Item 1.       Legal Proceedings
              Response:  None

Item 2.       Changes in Securities
              Response:  None

Item 3.       Defaults upon Senior Securities
              Response:  None

Item 4.       Submission of Matters to a Vote of Security Holders
              Response:  None

Item 5.       Other Information
              Response:  None

Item 6.       Exhibits and Reports on Form 8-K
               Reponse: None`

`SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                               Krupp Government Income Trust
                               -----------------------------
                                       (Registrant)



                               BY:    / s / Robert A. Barrows
                               --------------------------------------------

                               Robert A. Barrows
                               Treasurer and Chief Accounting Officer
                               of Krupp Government Income Trust














DATE:    August 3, 2001`

`Unaudited amounts in thousands, except per Share amounts


                                                                           Six Months                Inception
                                                                              Ended                   Through
                                                                             6/30/01                  6/30/01
                                                                           ------------             ------------
      Distributable Cash Flow (a):
      ---------------------------

      Net income                                                           $      4,187             $    137,404
      Items not requiring or providing the
       use of operating funds:

        Provision for impaired mortgage loan                                 -                             2,163
        Amortization of prepaid fees and
         expenses and organization costs                                            514                   16,372
        Additional Loan Interest Deferred                                          (184)                   3,367

                                                                           ------------             ------------
        Total Distributable Cash Flow ("DCF")                                     4,517                  159,306
                                                                           ------------             ------------

      DCF per Share based on Shares
       outstanding at June 30, 2001                                        $       0.30             $     10.58   (d)
                                                                           ============             ===========

      Dividends:

       Total dividends to Shareholders                                     $      5,118 (b)         $    284,848  (c)
                                                                           ============             ============
       Average dividend per Share based
        on Shares outstanding at
        June 30, 2001                                                      $       0.34 (b)         $      18.92  (c)(d)
                                                                           ============             ============


         (a)    Distributable Cash Flow consists of income before provision for
                 impaired mortgage loans, amortization of prepaid fees and
                 expenses and organization costs and includes deferred interest
                 on Additional Loans. The Trust believes Distributable Cash Flow
                 is an appropriate supplemental measure of operating performance,
                 however, it should not be considered as a substitute for net
                 income as an indication of operating performance or cash flows
                 as a measure of liquidity.
         (b)    Represents  all  dividends  paid through June 2001 except the
                 February  2001  dividend and includes an estimate of the
                 August 2001 dividend.
         (c)    Includes as estimate of the August 2001 dividend.
         (d)    Shareholders average per Share return of capital on a cash basis
                 as of June 2001 is $8.34 [$18.92- $10.58]. Return of capital
                 represents that portion of the dividends which is not funded
                 from DCF such as principal collections received from MBS and
                 PIMs.`