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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A

(MARK ONE)

/X/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

           For the fiscal year ended December 31, 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
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Massachusetts                                  04-3089272
--------------------------------------------------------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

    One Beacon Street, Boston, Massachusetts               02108
--------------------------------------------------------------------------------
    (Address of principal executive offices)             (Zip Code)

(Registrant's telephone number, including area code) (617) 523-0066
Securities registered pursuant to Section 12(b) of the Act:

           Title                            Name of Exchange On Which Registered
-----------------------------               ------------------------------------
SHARES OF BENEFICIAL INTEREST                 NONE

Securities registered pursuant to Section 12(g) of the Act: None

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.
Yes  /X/    No  / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /.

Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act).
Yes  / /    No  /X/

Aggregate market value of voting securities held by non-affiliates: Not
applicable.

Documents incorporated by reference: see Item 15

The exhibit index is located on pages 12-17

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                                     PART I

This Form 10-K 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.

ITEM 1.  BUSINESS

Krupp Government Income Trust (the "Trust") was formed on November 1, 1989 by
filing a Declaration of Trust in the Commonwealth of Massachusetts. The Trust is
authorized to sell and issue not more than 17,510,000 shares of beneficial
interest ("the Shares"). The Trust raised approximately $300 million through a
public offering of Shares of beneficial interest and used the proceeds available
for investment primarily to acquire participating insured mortgages ("PIMs"),
participating insured mortgage investments ("PIMIs") and mortgage-backed
securities ("MBS"). The Trust considers itself to be engaged in only one
industry segment, investment in mortgages.

The Trust has elected to be treated as a real estate investment trust ("REIT"),
under the Internal Revenue Code of 1986, as amended. The Trust shall terminate
on December 31, 2029 unless earlier terminated by the affirmative vote of
holders of a majority of the outstanding Shares entitled to vote thereon. See
Note A of Notes to Financial Statements included in Appendix A of this report
for additional information.

The Trust's investments in PIMs on multi-family residential properties consist
of (1) a MBS or an insured mortgage loan (collectively, the "insured mortgage")
guaranteed or insured as to principal and basic interest, and (2) a
participating mortgage. The insured mortgages were issued or originated under or
in connection with the housing programs of Fannie Mae, the Government National
Mortgage Association ("GNMA"), or the Federal Housing Administration ("FHA")
under the authority of the Department of Housing and Urban Development ("HUD").
PIMs provide the Trust with monthly payments of principal and basic interest and
may also provide for Trust participation in the current revenue stream and in
residual value, if any, from a sale or other realization of the underlying
property. The borrower conveys the participation rights to the Trust through a
subordinated promissory note and mortgage. The participation features are
neither insured nor guaranteed.

The PIMIs consist of (1) an insured mortgage issued by GNMA or originated under
the lending program of the FHA, (2) an additional loan ("Additional Loan") to
the borrower or owners of the borrower in excess of mortgage amounts insured or
guaranteed under GNMA or FHA programs that increases the Trust's total financing
with respect to that property and (3) a participating mortgage. Additional Loans
associated with insured mortgages issued or originated in connection with HUD
insured programs cannot, under government regulations, be collateralized by a
mortgage on the underlying property. These Additional Loans are typically
collateralized by a security interest satisfactory to Berkshire Mortgage
Advisors Limited Partnership ("the Advisor"). The Additional Loans are neither
insured nor guaranteed. In addition, the participation features related to the
participating mortgage are neither insured nor guaranteed. Additional Loans
provide the Trust with semi-annual interest payments and may provide additional
interest in the future while the participating mortgage provides for Trust
participation in the net income and residual value, if any, of the underlying
property.

The Trust also has investments in MBS collateralized by single-family and
multi-family mortgage loans issued or originated by GNMA, FHA, Fannie Mae, the
Federal Home Loan Mortgage Corporation ("FHLMC"). Fannie Mae and FHLMC guarantee
the principal and basic interest of the Fannie Mae and FHLMC MBS, respectively.
GNMA guarantees the timely payment of principal and interest on its MBS, and HUD
insures the pooled mortgage loans underlying the GNMA MBS and FHA mortgage
loans.

The Trust will distribute all proceeds from prepayments or other realizations of
mortgage assets to investors either through quarterly dividends or special
dividends.

Although the Trust will terminate no later than December 31, 2029, the value of
the PIMs and PIMIs may be realized by the Trust through repayment or sale as
early as ten years from the dates of the closings of the permanent loans, and
the Trust may realize the value of all of its other investments within that time
frame thereby resulting in a dissolution of the Trust significantly prior to
December 31, 2029.

The Trust anticipates that there will be sufficient cash flow from the mortgages
to meet cash requirements. To the extent that the Trust's cash flow should be
insufficient to meet the Trust's operating expenses and liabilities, it will be
necessary for the Trust to obtain additional funds by liquidating its investment
in one or more mortgages or by borrowing. The Trust may pledge mortgages as
security for any permitted borrowing.

The Trust may not borrow funds in connection with the acquisition or origination
of mortgages. However, it may borrow funds to meet working capital requirements
of the Trust. In this event, the Trust may borrow funds from third parties on a
short-term basis. The declaration of trust limits the amount that may be
borrowed by the Trust. Borrowing agreements between the Trust and a

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lender may also restrict the amount of indebtedness that the Trust may incur.
The declaration of trust prohibits the Trust from issuing debt securities to
institutional lenders and banks, and the Trust may not issue debt securities to
the public except in some circumstances. The Trust, under some circumstances,
may borrow funds from the advisor, a trustee or an affiliate of the Trust or any
trustee. However, a majority of the independent trustees, not otherwise
interested in such transaction, must approve the transaction as being fair,
competitive and commercially reasonable and no less favorable to the Trust than
loans between unaffiliated lenders and borrowers under the same circumstances.
The Trust has not borrowed any funds during the past and does not intend to do
so in the future.

The FHA coinsurance loan program under Section 221(d)(4) of the National Housing
Act provides for loans with 40 year terms. However, this program allows for a
call option at any time after ten years, upon one year's notice. The Fannie Mae
Delegated Underwriting and Servicing program provides for loans with seven, ten
or 15 year terms and an amortization period of 35 years. The subordinated
promissory notes and subordinated mortgages that secure the participation
feature of the insured mortgages and PIMs and the notes that evidence the
additional loans provide for acceleration of maturity at the earlier of the sale
of the underlying property or the call date.

From time to time, the Trust expects that it may realize the principal and
participation in residual value, if any, of its mortgages before maturity. It is
expected that the mortgages will be repaid after a period of ownership of
approximately ten years from the dates of the closings of the permanent loans.
Realization of the value of mortgages may, however, be made at an earlier or
later date.

The Trust will not underwrite securities of other issuers, offer securities in
exchange for property or invest in securities of other issuers for the purpose
of exercising control and has not engaged in any of these actives during the
past. The declaration of trust does not permit the Trust to issue senior
securities. The Trust has not repurchased or reacquired any of its shares from
shareholders in the past. The Trust may not make loans to the advisor, any
trustee, any affiliate of the advisor or any trustee or any other person, other
than mortgage investments of the type described above. The Trust has not made
any loans other than mortgage investments during the past.

The Trust's investments are not expected to be subject to seasonal fluctuations,
although net income may vary somewhat from quarter to quarter based upon the
participation features of its investments. The requirements for compliance with
federal, state and local regulations to date have not adversely affected the
Trust's operations, and the Trust anticipates no adverse effect in the future.

To qualify as a REIT for federal income tax purposes, the Trust made a valid
election to be so treated and must continue to satisfy a range of complex
requirements including criteria related to its ownership structure, the nature
of its assets, the sources of its income and the amount of its dividends to
shareholders. The Trust intends to qualify as a REIT in each year of operation,
however, certain factors may have an adverse effect on the Trust's REIT status.
If for any taxable year, the Trustees and the Advisor determine that any of the
asset, income, or dividend tests are not likely to be satisfied, the Trust may
be required to borrow money, dispose of mortgages or take other action to avoid
loss of REIT status.

Additionally, if the Trust does not qualify as a REIT for any taxable year, it
will be subject to federal income tax as if it were a corporation and the
shareholders will be taxed as shareholders of a corporation. If the Trust were
taxed as a corporation, the payment of such tax by the Trust would substantially
reduce the funds available for dividends to shareholders. To the extent that
dividends had been made in anticipation of the Trust's qualification as a REIT,
the Trust might be required to borrow additional funds or to liquidate certain
investments in order to pay the applicable tax. Moreover, should the Trust's
election to be taxed as a REIT be terminated or voluntarily revoked, the Trust
may not be able to elect to be treated as a REIT for the following five-year
period.

As of December 31, 2001, there were no personnel directly employed by the Trust.

ITEM 2.  PROPERTIES

None.

ITEM 3.  LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Trust, any director, officer
or affiliate of the Trust is a party to which would have a material effect on
the Trust and there are no material pending legal proceedings which any of its
investments are subject to.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
         MATTERS

There currently is no established public trading market for the Shares.

The number of investors holding Shares as of December 31, 2001 is approximately
11,200.

The Trust has and intends to continue declaring and paying dividends on a
quarterly basis. The Trustees established a dividend rate per Share per quarter
of $.17 per Share per quarter for 2000 and 2001. The Trustees expect to maintain
that rate for 2002.

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth selected financial information regarding the
Trust's financial position and operating results. This information should be
read in conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Financial Statements and
Supplementary Data, which are included in Item 7 and Item 8 (Appendix A) of this
report, respectively.

<Table>
<Caption>
                                         (Amounts in thousands, except for per Share amounts)

                                  2001           2000           1999            1998             1997
                               ----------     ----------     ----------      ----------       ----------
<S>                            <C>            <C>            <C>             <C>              <C>
Total revenues                 $   18,532     $   11,076     $   15,632      $   21,922       $   17,618

Net income                     $   15,972     $    8,429     $   12,317      $   14,836       $   12,899

Net income per Share           $     1.06     $      .56     $      .82      $      .99       $      .86

Weighted average Shares
 outstanding                       15,053         15,053         15,053          15,053           15,053
Total assets at
 December 31                   $  130,786     $  140,131     $  142,096      $  171,422       $  221,779

Average dividends
 per Share                     $     1.61     $      .68     $     2.60      $     4.16       $     2.22
</Table>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Form 10-K 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.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2001 the Trust had liquidity consisting of cash and cash
equivalents, of approximately $13.2 million as well as the cash inflows provided
by PIMs, PIMIs, MBS, cash and cash equivalents. The Trust may also receive
additional cash flow

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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 Trustees may
adjust the dividend rate or distribute such funds through a special dividend.

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.

The Trust received both installments of Additional Loan interest due in 2001
from the Red Run PIMI. 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 periods ending December 31, 2000 or June 30, 2001; consequently, the
Trust did not receive any Additional Loan interest.

The Trust received participation interest based on cash flow generated by
property operations from six of its investments during the twelve months ended
December 31, 2001. Waterford Townhomes paid $60,502, Red Run paid $72,841, The
Seasons paid $50,750, Lifestyles paid $118,968, Rivergreens paid $69,067 and
Lincoln Green paid $223,873.

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.

In May 1998, the borrower on the Lifestyles PIMI defaulted on its 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 was 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 have provided funds for repairs and improvements that have helped
reposition Lifestyles. As a result of the performance of the property, the Trust
had initially established a valuation allowance of $1,130,316 on the Additional
Loan in 1998. During 2001, the Trust received a payment of $118,968 which was
recorded as a reduction in the principal balance of the Additional Loan and
related impairment provision. Based on improved market conditions and property
operations, the Trust has further reduced the impairment provision by $344,389
to $666,539 in the fourth quarter of 2001.

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Mountain View is 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 maintains a valuation allowance of $1,032,272.

Each of the above restructurings were to interest rate levels that were at the
then prevailing rate for similar instruments and therefore did not meet the
criteria for a troubled debt restructuring.

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 that 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 any
contractual obligations. 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.

On January 2, 2002, the Trust received a prepayment of the Waterford Apartments
Subordinate Promissory note. The Trust received $379,725 of Minimum Additional
Interest and $425,643 of Shared Appreciation Interest. On January 17, 2002, the
Trust received $6,625,742 representing the principal proceeds on the first
mortgage. In addition, the Trust received a prepayment premium of $66,257 from
the payoff. The Advisor has declared a special dividend of $0.51 per share from
the proceeds of the Waterford Apartments PIM prepayment which will be paid in
the first quarter of 2002.

On December 31, 2001, the Trust received a prepayment of the Red Run Additional
Loan. The Trust received $2,900,000 of Additional Loan principal, $238,369 of
Shared Appreciation Interest, $3,506,952 of preferred interest and $67,667 of
Base Interest on the Additional Loan. In addition, the Trust recognized $702,259
of Additional Loan interest that had been previously received and recorded in
deferred income on additional loans. On January 3, 2002, the Trust received
$18,330,825 representing the principal proceeds on the first mortgage note. The
Advisor declared a special dividend of $1.68 per share from the proceeds of the
Red Run PIMI prepayment which was paid on January 16, 2002.

On July 23, 2001, the Trust received a prepayment of the Seasons Subordinated
Promissory Note and the Seasons Additional Loan. The Trust received $1,924,649
of Additional Loan principal, $180,916 of surplus cash, $847,450 of preferred
interest, $1,052,455 of contingent interest, $69,129 of Base Interest on the
Additional Loan and $1,299,562 which represents the Trust's portion of the
residual split. The Trust received $8,567,890 representing the principal
proceeds on the first mortgage note on July 26, 2001. In addition, the Trust
recognized $180,633 of Additional Loan interest that had been previously
received and recorded in deferred income on additional loans. On August 17,
2001, the Advisor paid a special dividend of $0.93 per share from the proceeds
of the Seasons PIMI prepayment.

The payoff of the Seasons PIMI was a result of the 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. Both the Trustees and the Advisor
believed that the market capitalization rate utilized in the appraisal was too
high based on their knowledge of recent sales in the market and agreed that the
true fair value was the ultimate purchase price paid by the affiliate.

                                        6
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During the third quarter of 1999, the Trust received a prepayment of the Audubon
Villas PIMI when the property was refinanced. The Trust received the prepayment
of the principal balance of the insured mortgage of $14,861,957, the principal
balance of the Additional Loan of $2,691,000, and participation income of
$1,966,901. Also, $1,962,261 was recognized as Additional Loan interest income
which was previously recorded as deferred income. On August 18, 1999, the
Advisor declared a special dividend of $1.30 per share that was paid on
September 17, 1999 from the payoff of the Audubon Villas PIMI.

The Trust has the option to call certain PIMs and all the PIMIs by accelerating
their maturity. If the call feature is exercised for the whole PIM or PIMI then
the insurance feature of the loan will be canceled. Therefore, 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.

CRITICAL ACCOUNTING POLICIES

The Trust's critical accounting policies relate primarily to revenue recognition
related to the participation features of the Trust's PIM and PIMI investments as
well as the recognition of deferred interest income on the Additional Loans. The
Trust's policies are as follows:

Basic interest is recognized based on the stated rate of the Department of
Housing and Urban Development ("HUD") Insured Mortgage loan (less the servicer's
fee) or the coupon rate of the Government National Mortgage Association ("GNMA")
or Fannie Mae MBS. The Trust recognizes interest related to the participation
features when the amount becomes fixed and the transaction that gives rise to
such amount is finalized, cash is received and all contingencies are
resolved. This could be the sale or refinancing of the underlying real
estate, which results in a cash payment to the Trust or a cash payment made
to the Trust from surplus cash relative to the participation feature. The
Trust defers the recognition of Additional Loan interest payments as income
to the extent these interest payments were from escrows established with the
proceeds of the Additional Loan. When the properties underlying the PIMI's
generate sufficient cash flow to make the required Additional Loan interest
payments and the Additional Loan value is deemed collectible, the Trust
recognizes income as earned and commences amortization of the deferred
interest amounts into income over the remaining estimated term of the
Additional Loan. During periods where mortgage loans are impaired the Trust
suspends amortizing deferred interest.

The Trust also fully reserves the portion of any Additional Loan interest
payment satisfied through the issuance of an operating loan and any associated
interest due on such operating loan. The Trust will recognize the income related
to the operating loan when the borrower repays amounts due under the operating
loan.

ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSESSMENT OF CREDIT RISK

The Trust's investments in insured mortgages and MBS are guaranteed and/or
insured by Fannie Mae, FHLMC, GNMA and 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. These
obligations are not guaranteed by the U.S. Government or the Federal Home Loan
Bank Board. However, Fannie Mae and FHLMC are two of the largest corporations in
the United States with significant experience in mortgage securitizations. In
addition, their MBS instruments carry the highest credit rating given to
financial instruments. 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.

Collection of the principal and interest of the Additional Loans and interest on
the participation features 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.

The Trust's investments also include cash and cash equivalents of approximately
$6.2 million of Agency paper, which is issued by Government Sponsored
Enterprises with a credit rating equal to the top rating category of a
nationally recognized statistical rating organization.

                                        7
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INTEREST RATE RISK

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 December 31,
2001, the Trust's PIMs, PIMIs and MBS comprise the majority of the Trust's
assets. 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 its PIM and PIMI investments to
expected maturity while it is expected that substantially all of the MBS will
prepay over the same time period, thereby mitigating any potential interest rate
risk to the disposition value of any remaining MBS.

The Trust monitors prepayments and considers prepayment trends, as well as
dividend 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 are scheduled to
mature.

The following table provides information about the Trust's financial instruments
that are sensitive to changes in interest rates. For mortgage investments, the
table presents principal cash flows and related weighted average interest rates
("WAIR") by expected maturity dates. The expected maturity date is contractual
maturity adjusted for expectations of prepayments.

<Table>
<Caption>
                                                      Expected maturity dates ($ in thousands)
                              ------------------------------------------------------------------------------------------------
                                                                                                    Total
                                2002       2003       2004       2005      2006     Thereafter    Face Value     Fair Value(1)
                              ------------------------------------------------------------------------------------------------
<S>                           <C>        <C>        <C>       <C>        <C>        <C>           <C>             <C>
Interest-sensitive assets:

MBS                           $    900   $    744   $    621  $     524  $   448    $   11,354    $    14,591     $   15,299
WAIR                              8.17%      8.17%      8.17%      8.17%    8.17%         8.17%          8.17%

PIMS                            29,467        133        144        157      170        16,345         46,416         47,803
WAIR                              8.07%      8.07%      8.07%      8.07%    8.07%         8.07%          7.67%

PIMIS                           18,556        245        266        290      315        31,140         50,812         51,828
WAIR                              7.59%      7.59%      7.59%      7.94%    7.94%         7.94%          7.69%

Additional Loans                 2.471      1,400          -          -        -         1,818          5,689          3,871
WAIR                              4.98%      3.05%         0%         0%       0%            0%          4.98%
                              --------   --------   --------   --------  -------    ----------    -----------     ----------

Total Interest-
Sensitive Assets              $ 51,394   $  2,522   $  1,031   $    971  $   933    $   60,657    $   117,508     $  118,801
                              ========   ========   ========   ========  =======    ==========    ===========     ==========
</Table>

(1)  The methodology used by the Trust to estimate the fair value of each class
     of financial instrument is described in Note J to the Trust's financial
     statements presented in Appendix A to this report. As described in that
     note, the Trust does not include an estimate of value for the participation
     interest associated with its PIM and PIMI investments.

                                        8
<Page>

OPERATIONS

The following discussion relates to the operations of the Trust during the years
ended December 31, 2001, 2000 and 1999. Dollars are stated in thousands, except
for per Share amounts.

<Table>
<Caption>
                                                            Years Ended December 31,
                                         ---------------------------------------------------------------
                                           2001                  2000                  1999
                                         ---------------------------------------------------------------
                                           Per                   Per                   Per
                                          Amount     Share      Amount      Share     Amount     Share
                                         --------   --------   --------   --------   --------   --------
<S>                                      <C>        <C>        <C>        <C>        <C>        <C>
Interest income on PIMs
  and PIMIs:
    Basic interest                       $  7,901   $    .52   $  8,087   $    .54   $  8,789   $    .58
    Additional Loan interest                1,515        .10        744        .05      2,535        .18
    Participation interest                  7,603        .51        505        .03      2,269        .15
Interest income on MBS                      1,251        .08      1,376        .09      1,531        .10
Interest income on cash
  and cash equivalents                        262        .02        365        .02        508        .03
Trust expenses                             (1,671)      (.11)    (1,618)      (.10)    (1,595)      (.11)
Amortization of prepaid
  fees and expenses                        (1,353)      (.09)    (1,030)      (.07)    (1,672)      (.11)
Reduction of (provision for) impaired
  Additional Loans                            464        .03          -          -        (48)         -
                                         --------   --------   --------   --------   --------   --------

Net income                               $ 15,972   $   1.06   $  8,429   $    .56   $ 12,317   $    .82
                                         ========   ========   ========   ========   ========   ========

Weighted average Shares outstanding          15,053,135             15,053,135            15,053,135
                                             ==========             ==========            ==========
</Table>

The Trust's net income increased in 2001 when compared to 2000 due primarily to
increases in Additional Loan and participation interest and a decrease in
provision for impaired mortgage loans. Additional Loan interest increased
primarily due to the recognition of deferred revenue from the Season's and the
Red Run Additional Loan payoffs. Participation interest increased due to the
collection of participation interest from the Season's and Red Run payoffs (see
discussion above). The provision for impaired mortgage loans decreased due to an
improvement in the performance of the Lifestyles apartments.

The Trust's net income decreased by approximately $3.9 million for 2000 when
compared to 1999 due primarily to decreases in interest income net of decreases
in amortization expense and asset management fees due to an affiliate. Basic
interest on PIMs and PIMIs, Additional Loan Interest, and participation interest
decreased by $4.3 million in 2000 primarily due to the payoff of the Audubon
Villas PIMI in the third quarter of 1999. Interest income on MBS will continue
to decline as principal collections reduce the MBS investment balance. Interest
income on cash and cash equivalents decreased due to lower average cash
balances. Amortization expense decreased due to the payoff of the Audubon Villas
PIMI. The decrease in asset management fees is due to the Trust's asset base
declining.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Appendix A to this report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                        9
<Page>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  Information as to the Trustees and Executive Officers of Krupp Government
  Income Trust is as follows:

<Table>
<Caption>
                                    Position with Krupp                          Date of            Term
             Name and Age           Government Income Trust                      Election           Expires
       ---------------------------  ------------------------------------------   ---------------    ---------
       <S>                          <C>                                          <C>                <C>
         Douglas Krupp (55)         Chairman of Board of Trustees and Trustee    May, 1996          May, 2002
       * Charles N. Goldberg (60)   Trustee                                      March, 1990        May, 2002
       * J. Paul Finnegan (77)      Trustee                                      March, 1990        May, 2002
       * Stephen Puleo (67)         Trustee                                      February, 2001     May, 2002
         Robert A. Barrows (44)     Treasurer                                    August, 1995       N/A
         Scott D. Spelfogel (41)    Clerk                                        July, 1990         N/A
         MaryBeth Bloom (28)        Assistant Clerk                              November, 2000     N/A
</Table>

* Independent Trustee

Douglas Krupp co-founded and serves as Co-Chairman and Chief Executive Officer
of The Berkshire Group, an integrated real estate financial services firm
engaged in real estate acquisition and property management, investment
sponsorship, venture capital investing, mortgage banking, financial management,
and ownership of two operating companies through private equity investments. Mr.
Krupp has held the position of Co-Chairman since The Berkshire Group was
established as The Krupp Companies in 1969 and he has served as the Chief
Executive Officer since 1992. He is a graduate of Bryant College where he
received an honorary Doctor of Science in Business Administration in 1989.

Charles N. Goldberg is currently a partner of Oppel, Goldberg and Saenz, LLC.
Prior to that, he was of counsel to the law firm of Broocks, Baker & Lange,
L.L.P., which position he held from December of 1997 to May of 2000. Prior to
joining Broocks, Baker & Lange, L.L.P., Mr. Goldberg was a partner in the law
firm of Hirsch & Westheimer from March of 1996 to December of 1997. Prior to
Hirsch & Westheimer, he was the Managing Partner of Goldberg Brown, Attorneys at
Law from 1980 to March of 1996. He received a B.B.A. degree and a J.D. degree
from the University of Texas. He is a member of the State Bar of Texas and is
admitted to practice before the U.S. Court of Appeals, Fifth Circuit and U.S.
District Court, Southern District of Texas. He currently serves as a Trustee of
Krupp Government Income Trust and Krupp Government Income Trust II.

J. Paul Finnegan retired as a partner of Coopers & Lybrand in 1987. Since then,
he has been engaged in business as a consultant, director, and arbitrator. Mr.
Finnegan holds a B.A. degree from Harvard College, a J.D. degree from Boston
College Law School and an ASA degree from Bentley College. Mr. Finnegan is a
Certified Public Accountant and an attorney. Mr. Finnegan currently serves as a
Trustee of Krupp Government Income Trust and Krupp Government Income Trust II
and as director of Scituate Federal Savings Bank.

Stephen Puleo is currently engaged in business as a consultant and director. He
retired as a director of Coopers & Lybrand, an international accounting and
consulting firm where he worked from 1995 to 1997 primarily servicing real
estate industry clients. From 1993 to 1994, Mr. Puleo was a tax director for
Deloitte & Touche. From 1984 to 1993, Mr. Puleo held the positions of Executive
Vice President and Chief Financial Officer of a predecessor to The Berkshire
Group. Prior to that, Mr. Puleo was the Chairman of the National Real Estate
Industry Group of Coopers & Lybrand where he provided various real estate
services and was a senior tax partner in charge of the Northeast Region. He is a
graduate of McNeese State University and attended the Executive Development
Program at the Tuck School of Business at Dartmouth College. He is a Certified
Public Accountant and currently serves as director of Simpson Housing Limited
Partnership of Denver, Colorado. He currently serves as a Trustee of Krupp
Government Income Trust and Krupp Government Income Trust II.

Robert A. Barrows is the Treasurer of the Trust, Senior Vice President and Chief
Financial Officer of Berkshire Mortgage Finance. Mr. Barrows has held several
positions within The Berkshire Group since joining the company in 1983 and is
currently responsible for accounting, financial reporting and treasury functions
for Berkshire Mortgage Finance. Prior to joining The Berkshire Group, he was an
audit supervisor for Coopers & Lybrand L.L.P. in Boston. He received a B.S.
degree from Boston College and is a Certified Public Accountant.

Scott D. Spelfogel is the Clerk of the Trust, Senior Vice President and General
Counsel to The Berkshire Group. Prior to 1997, he served as Vice President and
Assistant General Counsel. Before joining the firm in November 1988, he was a
litigator in private practice in Boston. He received a Bachelor of Science
degree in Business Administration from Boston University, a Juris Doctor

                                       10
<Page>

Degree from Syracuse University's College of Law, and a Master of Laws degree in
Taxation from Boston University Law School. He is admitted to practice law in
Massachusetts and New York, is a member of the American, Boston, Massachusetts
and New York State bar associations and is a licensed real estate broker in
Massachusetts.

MaryBeth Bloom is the Assistant Clerk of the Trust and is Assistant General
Counsel to The Berkshire Group. Prior to joining the company in August, 2000,
she was an attorney with John Hancock Financial Services. She received a B.A.
degree from the College of the Holy Cross in 1995 and a J.D. degree from New
England School of Law in 1998. She is admitted to practice law in Massachusetts
and New York and is a member of the American Bar Association.

In addition, the following are deemed to be Executive Officers of the
registrant:

George Krupp (age 57) is the Co-Founder and Co-Chairman of The Berkshire Group,
an integrated real estate financial services firm engaged in real estate
acquisition and property management, investment sponsorship, venture capital
investing, mortgage banking, financial management, and ownership of two
operating companies through private equity investments. Mr. Krupp has held the
position of Co-Chairman since The Berkshire Group was established as The Krupp
Companies in 1969. Mr. Krupp has been an instructor of history at the New Jewish
High School in Waltham, Massachusetts since September of 1997. Mr. Krupp
attended the University of Pennsylvania and Harvard University and holds a
Master's Degree in History from Brown University. Douglas and George Krupp are
brothers.

Peter F. Donovan (age 48) is Chief Executive Officer of Berkshire Mortgage
Finance which position he has held since January of 1998 and in this capacity,
he oversees the strategic growth plans of this mortgage banking firm. Berkshire
Mortgage Finance is the 10th largest in the United States based on servicing and
asset management of an $14.1 billion loan portfolio. Previously he served as
President of Berkshire Mortgage Finance from January of 1993 to January of 1998
and in that capacity he directed the production, underwriting, servicing and
asset management activities of the firm. Prior to that, he was Senior Vice
President of Berkshire Mortgage Finance and was responsible for all
participating mortgage originations. Before joining the firm in 1984, he was
Second Vice President, Real Estate Finance for Continental Illinois National
Bank & Trust, where he managed a $300 million construction loan portfolio of
commercial properties. Mr. Donovan received a B.A. from Trinity College and an
M.B.A. degree from Northwestern University. Mr. Donovan is currently a member of
the Advisory Council for Fannie Mae.

Ronald Halpern (age 60) is President and Chief Operating Officer of Berkshire
Mortgage Finance. He has served in these positions since January of 1998 and in
this capacity, he is responsible for the overall operations of the Company.
Prior to January of 1998, he was Executive Vice President, managing the
underwriting, closing, portfolio management and servicing departments for
Berkshire Mortgage Finance. Before joining the firm in 1987, he held senior
management positions with the Department of Housing and Urban Development in
Washington D.C. and several HUD regional offices. Mr. Halpern has over 30 years
of experience in real estate finance which includes his experience as prior
Chairman of the MBA Multifamily Housing Committee. He holds a B.A. degree from
the University of the City of New York and a J.D. degree from Brooklyn Law
School.

Carol J.C. Mills (age 52) is Senior Vice President for Loan Management of
Berkshire Mortgage Finance and in this capacity, she is responsible for the Loan
Servicing and Asset Management functions of Berkshire Mortgage Finance. She
manages the estimated $14.1 billion portfolio of loans. Ms. Mills joined
Berkshire in December 1997 as Vice President and was promoted to Senior Vice
President in January 1999. From January 1989 through November 1997, Ms. Mills
was Vice President of First Winthrop Corporation and Winthrop Financial
Associates, in Cambridge, MA. Ms. Mills earned a B.A. degree from Mount Holyoke
College and a Master of Architecture degree from Harvard University. Ms. Mills
is a member of the Real Estate Finance Association, New England Women in Real
Estate and the Mortgage Bankers Association. Ms. Mills is currently a member of
the Servicing Advisory Council for Freddie Mac.

ITEM 11. EXECUTIVE COMPENSATION

Except for the Independent Trustees as described below, the Trustees and
Officers of the Trust have not been and will not be compensated by the Trust for
their services. However, the Officers will be compensated by the Advisor or an
affiliate of the Advisor.

COMPENSATION OF TRUSTEES

The Trust paid each of the Independent Trustees (Charles N. Goldberg, J. Paul
Finnegan and Stephen Puleo) a fee of $25,000 in 2001.

                                       11
<Page>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of January 8, 2002, no person owned of record or was known by the Advisor to
own beneficially more than 5% of the Trust's 15,053,135 outstanding Shares. The
only shares held by the Advisor or any of its affiliates consist of the original
10,000 Shares.

<Table>
<Caption>
Class of       Name of Beneficial      Amount and Nature of    Percent
 Stock               Owner             Beneficial Interest     of Class
----------     -------------------     --------------------    --------
<S>            <C>                     <C>                     <C>
Shares of      Douglas Krupp
Beneficial     One Beacon Street
Interest       Boston, Mass. 02108     10,000 Shares**         ***

Shares of
Beneficial     All Directors and
Interest        Officers               10,000 Shares           ***
</Table>

     ** Mr. Krupp is a beneficial owner of the 10,000 shares held by Berkshire
Mortgage Advisors Limited Partnership, the Advisor to the Company, by virtue of
being a director of Berkshire Funding Corporation, the general partner of
Berkshire Mortgage Advisors Limited Partnership. In each case where Mr. Krupp is
a beneficial owner of shares he has shared voting and investment powers.

     *** The amount owned does not exceed one percent of the shares of
beneficial interest of the Trust outstanding as of January 8, 2002.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Under the terms of the Advisory Service Agreement, the Advisor receives an Asset
Management Fee equal to .75% per annum of the value of the Trust's actual and
committed invested assets payable quarterly. During 2001, the Advisor received
$950,966 related to the Asset Management Fee.

The Trust also reimburses affiliates of the Advisor for certain costs incurred
in connection with maintaining the books and records of the Trust, the
preparation and mailing of financial reports, tax information and other
communications to investors and legal fees and expenses. During 2001, The
Berkshire Companies Limited Partnership and Berkshire Mortgage Finance Limited
Partnership, affiliates of the Advisor, received a total of $255,142 in
reimbursements.

During the year ended December 31, 2001, the Trust received interest collections
on the Seasons Additional Loan of $155,738. In addition, the Trust received
$3,431,133 in 2001 related to Participating Interest Income on the Seasons
PIMI. Maryland Associates Limited Partnership was the owner of the Seasons.
The Krupp Company Limited Partnership-IV, the general partner of Maryland
Associates Limited Partnership, is an affiliate of the Advisor.

ITEM 14. CONTROLS AND PROCEDURES

Not applicable.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  1.     Financial Statements - see Index to Financial Statements, Schedule
            and Supplementary Data included under Item 8, Appendix A, on page
            F-2 of this report.

     2.     Financial Statement Schedule - see Index to Financial Statements,
            Schedule and Supplementary Data included under Item 8, Appendix A,
            on page F-2 of this report. All other schedules are omitted as they
            are not applicable, not required or the information is provided in
            the Financial Statements or the Notes thereto.

(b)  REPORTS ON FORM 8-K

     During the last quarter of the year ended December 31, 2001, the Trust
     did not file any reports on Form 8-K.

(c)  Exhibits:

     NUMBER AND DESCRIPTION
     UNDER REGULATION S-K

                                       12
<Page>

     The following reflects all applicable Exhibits required under Item 601 of
     Regulation S-K:

     (4)    Instruments defining the rights of security holders including
            indentures:

            (4.1)   Second Amended and Restated Declaration of Trust filed with
                    The Massachusetts Secretary of State on April 12, 1990
                    [Included as Exhibit 4.4 to Prospectus included in
                    Pre-effective Amendment No. 3 to Registrant's Registration
                    Statement on Form S-11 dated April 16, 1990 (File No.
                    33-31942)].*

            (4.2)   Subscription Agreement Specimen [Included as Exhibit C to
                    Prospectus included in Pre-effective Amendment No. 2 to
                    Registrant's Registration Statement on Form S-11 dated March
                    23, 1990 (File No. 33-31942)].*

     (10)   Material Contracts:

            (10.1)  Advisory Services Agreement dated October 22, 1990 between
                    the Trustee and Krupp Mortgage Advisors Limited Partnership.
                    [Exhibit 10.1 to Registrant's report on Form 10-K for the
                    year ended December 31, 1994 (File No. 0-19244)].*

            (10.2)  Assignment and Assumption Agreement dated December 29, 1994
                    by and between Berkshire Realty Advisors Limited Partnership
                    (formerly known as Krupp Realty Advisors Limited Partnership
                    ("Assignor") and Berkshire Mortgage Advisors Limited
                    Partnership ("Assignee") [Exhibit 10.2 to Registrant's
                    report on Form 10-K for the year ended December 31, 1994
                    (File No. 0-19244)].*

            LIFESTYLES APARTMENTS

            (10.3)  Subordinated Promissory Note dated December 11, 1990 between
                    Lifestyles At Boot Ranch (the "Mortgagor") and Krupp
                    Government Income Trust (the "Holder") [Exhibit 10.1 to
                    Registrant's Annual Report on Form 10-K for the fiscal year
                    ended December 31, 1990 (File No. 33-31942)].*

            (10.4)  Agreement RE Subordinated Note dated December 11, 1990
                    between Krupp Government Income Trust and Krupp Mortgage
                    Corporation [Exhibit 10.2 to Registrant's Annual Report on
                    Form 10-K for the fiscal year ended December 31, 1990 (File
                    No. 33-31942)].*

            (10.5)  Subordinated Multifamily Mortgage dated December 11, 1990
                    between Lifestyles at Boot Ranch (the "Mortgagor") and Krupp
                    Government Income Trust (the "Mortgagee") [Exhibit 10.3 to
                    Registrant's Annual Report on Form 10-K for the fiscal year
                    ended December 31, 1990 (File No. 33-31942)].*

            (10.6)  Additional Loan Agreement dated December 11, 1990 between
                    FL-Tampa, Inc. and M & D Palm Harbor, Inc (collectively, the
                    "Borrowers") and Krupp Government Income Trust (the
                    "Holder") [Exhibit 10.4 to Registrant's Annual Report on
                    Form 10-K for the fiscal year ended December 31, 1990 (File
                    No. 33-31942)].*

            (10.7)  Additional Loan Note dated December 11, 1990 between
                    FL-Tampa, Inc and M & D Palm Harbor, Inc. (collectively, the
                    "Borrowers") and Krupp Government Income Trust (the
                    "Holder") [Exhibit 10.5 to Registrant's Annual Report on
                    Form 10-K for the fiscal year ended December 31, 1990 (File
                    No. 33-31942)].*

            (10.8)  Mortgage Note dated December 11, 1991 between Lifestyles at
                    Boot Ranch (the "Borrower") and Krupp Mortgage Corporation
                    (the "Holder"). [Exhibit 10.6 to Registrant's Annual Report
                    on Form 10-K for the fiscal year ended December 31, 1991
                    (File No. 0-19244)].*

            (10.9)  GNMA Purchase Agreement dated December 11, 1991 between
                    Krupp Government Income Trust and Krupp Mortgage
                    Corporation. [Exhibit 10.7 to Registrant's Annual Report on
                    Form 10-K for the fiscal year ended December 31, 1991 (File
                    No. 0-19244)].*

            (10.10) Modification Agreement by and between Krupp Government
                    Income Trust and Lifestyles at Boot Ranch and M&D Palm
                    Harbor, and FL-Tampa Inc. [Exhibit 10.1 to Registrant's
                    report on Form 10-Q for the quarter ended September 30, 1996
                    (File No. 0-19244)].*

                                       13
<Page>

            (10.11) Escrow Deposit Agreement by and between Krupp Government
                    Income Trust and M&D Palm Harbor, and FL-Tampa Inc. the
                    general partners of Lifestyles at Boot Ranch. [Exhibit 10.2
                    to Registrant's report on Form 10-Q for the quarter ended
                    September 30, 1996 (File No. 0-19244)].*

            (10.12) Second Modification Agreement by and between Krupp
                    Government Income Trust and Lifestyles at Boot Ranch and M&D
                    Palm Harbor Partnership and FL-Tampa, Inc. [Exhibit 10.1 to
                    Registrant's report on Form 10-K for the fiscal year ended
                    December 31, 1999 (File No. 0-19244)].*

            WINDWARD LAKES APARTMENTS

            (10.13) Subordinated Promissory Note dated December 28, 1990 between
                    the McNab-K C 3 Limited Partnership (the "Mortgagor") and
                    Krupp Government Income Trust (the "Holder") [Exhibit 10.6
                    to Registrant's Annual Report on Form 10-K for the fiscal
                    year ended December 31, 1990 (File No. 33-31942)].*

            (10.14) Additional Loan Agreement dated December 28, 1990 between
                    George Krupp, Douglas Krupp and Krupp GP, Inc.
                    (collectively, the "Borrowers") and Krupp Government Income
                    Trust (the "Holder") [Exhibit 10.7 to Registrant's Annual
                    Report on Form 10-K for the fiscal year ended December 31,
                    1990 (File No. 33-31942)].*

            (10.15) Additional Loan Note dated December 28, 1990 between Krupp
                    GP, Inc., George Krupp and Douglas Krupp (collectively, the
                    "Borrowers") and Krupp Government Income Trust (the
                    "Holder") [Exhibit 10.8 to Registrant's Annual Report on
                    Form 10-K for the fiscal year ended December 31, 1990 (File
                    No. 33-31942)].*

            (10.16) Agreement RE Subordinated Note dated December 28, 1990
                    between Krupp Government Income Trust and Love Funding
                    Corporation. [Exhibit 10.11 to Registrant's Annual Report on
                    Form 10-K for the fiscal year ended December 31, 1991 (File
                    No. 0-19244)].*

            (10.17) Subordinated Multi-family Mortgage dated December 28, 1991
                    between McNab-KC3 Limited Partnership (the "Borrower") and
                    Krupp Government Income Trust (the "Lender"). [Exhibit 10.12
                    to Registrant's Annual Report on Form 10-K for the fiscal
                    year ended December 31, 1991 (File No. 0-19244)].*

            (10.18) GNMA Purchase Agreement dated December 28, 1991 between
                    Krupp Government Income Trust and Love Funding Corporation.
                    [Exhibit 10.13 to Registrant's Annual Report on Form 10-K
                    for the fiscal year ended December 31, 1991 (File No.
                    0-19244)].*

            (10.19) Modification Agreement between Krupp Government Income
                    Trust, Love Funding Corporation, McNab-KC3 Limited
                    Partnership, and Krupp GP, Inc. [Exhibit 10.19 to
                    Registrant's report on Form 10-K for the fiscal year ended
                    December 31, 1999 (File No. 0-19244)].*

            RIVER VIEW APARTMENTS

            (10.20) Subordinated Promissory Note dated April 2, 1991 between
                    Sterling Partners III Limited Partnership (the "Mortgagor")
                    and Krupp Government Income Trust (the "Holder") [Exhibit
                    19.1 to Registrant's report on Form 10-Q for the quarter
                    ended June 30, 1991 (File No. 0-19244)].*

            (10.21) Agreement RE Subordinated Promissory Note dated April 2,
                    1991 between Krupp Government Income Trust and Love Funding
                    Corporation [Exhibit 19.2 to Registrant's report on Form
                    10-Q for the quarter ended June 30, 1991 (File No.
                    0-19244)].*

            (10.22) Subordinated Multifamily Mortgage dated April 2, 1991
                    between Sterling Partners III Limited Partnership (the
                    "Mortgagor") and Krupp Government Income Trust (the
                    "Mortgagee") [Exhibit 19.3 to Registrant's report on Form
                    10-Q for the quarter ended June 30, 1991 (File No.
                    0-19244)].*

            (10.23) Supplement to Prospectus dated May 1, 1991 for Government
                    National Mortgage Association Pool Number 280840 [Exhibit
                    19.4 to Registrant's report on Form 10-Q for the quarter
                    ended June 30, 1991 (File No. 0-19244)].*

                                       14
<Page>

            MILL POND APARTMENTS

            (10.24) Subordinated Promissory Note dated May 28, 1991 between Mill
                    Pond Limited Partnership (the "Mortgagor") and Krupp
                    Government Income Trust (the "Holder") [Exhibit 19.5 to
                    Registrant's report on Form 10-Q for the quarter ended June
                    30, 1991 (File No. 0-19244)].*

            (10.25) Agreement RE Subordinated Promissory Note dated May 28, 1991
                    between Krupp Government Income Trust and Krupp Mortgage
                    Corporation [Exhibit 19.6 to Registrant's report on Form
                    10-Q for the quarter ended June 30, 1991 (File No.
                    0-19244)].*

            (10.26) Subordinated Multifamily Mortgage dated May 28, 1991 between
                    Mill Pond Limited Partnership (the "Mortgagor") and Krupp
                    Government Income Trust (the "Mortgagee") [Exhibit 19.7 to
                    Registrant's report on Form 10-Q for the quarter ended June
                    30, 1991 (File No. 0-19244)].*

            (10.27) Mortgage Note dated May 28, 1991 between Krupp Mortgage
                    Corporation (the "Holder") and Mill Pond Apartments (the
                    "Borrower") [Exhibit 19.8 to Registrant's report on Form
                    10-Q for the quarter ended June 30, 1991 (File No.
                    0-19244)].*

            (10.28) Participation Agreement dated May 28, 1991 between Krupp
                    Mortgage Corporation (the "Mortgagee") and Krupp Government
                    Income Trust [Exhibit 19.9 to Registrant's report on Form
                    10-Q for the quarter ended June 30, 1991 (File No.
                    0-19244)].*

            (10.29) Assignment of Open End Mortgage Deed and Security Agreement
                    dated May 28, 1991 between Krupp Mortgage Corporation (the
                    "Assignor") and Krupp Government Income Trust (the
                    "Assignee") [Exhibit 19.1 to Registrants report on Form 10-Q
                    for the quarter ended September 30, 1991 (File No.
                    0-19244)].*

            RIVERGREENS APARTMENTS

            (10.30) Subordinated Promissory Note dated November 14, 1991 between
                    Rivergreens Associates Limited Partnership (the "Mortgagor")
                    and Krupp Government Income Trust (the "Holder"). [Exhibit
                    10.33 to Registrant's Annual Report on Form 10-K for the
                    fiscal year ended December 31, 1991 (File No. 0-19244)].*

            (10.31) Agreement Re-Subordinated Promissory Note dated November 14,
                    1991 between Krupp Government Income Trust and Krupp
                    Mortgage Corporation. [Exhibit 10.34 to Registrant's Annual
                    Report on Form 10-K for the fiscal year ended December 31,
                    1991 (File No. 0-19244)].*

            (10.32) Subordinated Multifamily Deed of Trust dated November 14,
                    1991 between Rivergreens Associates Limited Partnership (the
                    "Borrower"), Oregon Title Insurance Company (the "Trustee")
                    and Krupp Government Income Trust (the "Lender"). [Exhibit
                    10.35 to Registrant's Annual Report on Form 10-K for the
                    fiscal year ended December 31, 1991 (File No. 0-19244)].*

            (10.33) Mortgage Note dated November 14, 1991 between Krupp Mortgage
                    Corporation and Rivergreens Associates Limited Partnership.
                    [Exhibit 10.36 to Registrant's Annual Report on Form 10-K
                    for the fiscal year ended December 31, 1991 (File No.
                    0-19244)].*

            (10.34) Participation Agreement dated November 14, 1991 between
                    Krupp Mortgage Corporation and Krupp Government Income
                    Trust. [Exhibit 10.37 to Registrant's Annual Report on Form
                    10-K for the fiscal year ended December 31, 1991 (File No.
                    0-19244)].*

            MOUNTAIN VIEW APARTMENTS

            (10.35) Subordinated Promissory Note dated April 21, 1992 between
                    Mountain View Ltd. (the "Mortgagor") and Krupp Government
                    Income Trust (the "Holder"). [Exhibit 19.1 to Registrant's
                    report on Form 10-Q for the quarter ended June 30, 1992
                    (File No. 0-19244)].*

                                       15
<Page>

            (10.36) Agreement RE Subordinated Promissory Note dated April 21,
                    1992 between Krupp Government Income Trust and Krupp
                    Mortgage Corporation. [Exhibit 19.2 to Registrant's report
                    on Form 10-Q for the quarter ended June 30, 1992 (File No.
                    0-19244)].*

            (10.37) Subordinated Multifamily Mortgage dated April 21, 1992
                    between Mountain View Ltd. (the "Mortgagor") and Krupp
                    Government Income Trust (the "Mortgagee"). [Exhibit 19.3 to
                    Registrant's report on Form 10-Q for the quarter ended June
                    30, 1992 (File No. 0-19244)].*

            (10.38) Additional Loan Agreement dated April 21, 1992 between
                    Philip P. Mulkey, Henry V. Bragg and Gregory V. Bragg
                    (collectively, the "Borrowers") and Krupp Government Income
                    Trust (the "Holder"). [Exhibit 19.4 to Registrant's report
                    on Form 10-Q for the quarter ended June 30, 1992 (File No.
                    0-19244)].*

            (10.39) Additional Loan Note dated April 21, 1992 between Philip P.
                    Mulkey, Henry V. Bragg and Gregory V. Bragg (collectively,
                    the "Borrowers") and Krupp Government Income Trust (the
                    "Holder"). [Exhibit 19.5 to Registrant's report on Form 10-Q
                    for the quarter ended June 30, 1992 (File No. 0-19244)].*

            (10.40) Mortgage Note dated April 21, 1992 between Mountain View
                    Ltd. (the "Borrower") and Krupp Mortgage Corporation (the
                    "Holder"). [Exhibit 19.6 to Registrant's report on Form 10-Q
                    for the quarter ended June 30, 1992 (File No. 0-19244)].*

            (10.41) Modification Agreement by and between Krupp Government
                    Income Trust and Mountain View Ltd. [Exhibit 10.1 to
                    Registrant's report Form 10-Q for the quarter ended
                    September 30, 1995 (File No. 0-19244)].*

            (10.42) Second Modification Agreement by and between Krupp
                    Government Trust and Mountain View LTD. [Exhibit 10.1 to
                    Registrant's report Form 10-Q for the quarter ended June 30,
                    1999 (File No. 0-19244)]*

            LINCOLN GREEN APARTMENTS

            (10.43) Supplement to prospectus dated August 1, 1992 for Federal
                    National Mortgage Association pool number MX-073023.
                    [Exhibit 19.8 to Registrant's report on Form 10-Q for the
                    quarter ended September 30, 1992 (File No. 0-19244)].*

            (10.44) Subordinated promissory note dated September 15, 1992 by and
                    between Lincoln Green Associates Limited Partnership (the
                    "Mortgagor") and Krupp Government Income Trust (the
                    "Holder"). [Exhibit 19.9 to Registrant's report on Form 10-Q
                    for the quarter ended September 30, 1992 (File No.
                    0-19244)].*

            (10.45) Subordinated Multi-family Deed of Trust dated September 16,
                    1992 by and between Lincoln Green Associates Limited
                    Partnership (the "Borrower") and Krupp Government Income
                    Trust (the "Lender"). [Exhibit 19.10 to Registrant's report
                    on Form 10-Q for the quarter ended September 30, 1992 (File
                    No. 0-19244)].*

            ROSEMONT APARTMENTS

            (10.46) Participation and Servicing Agreement dated July 14, 1994,
                    by and between Rockport Mortgage Corporation (the
                    "Servicer") and Krupp Government Income Trust (the
                    "Participant") [Exhibit 10.87 to Registrant's report on Form
                    10-K for the year ended December 31, 1994 (File No.
                    0-19244)].*

            (10.47) Deed of Trust Note dated July 1, 1994 between Rosemont Ltd.
                    and Rockport Mortgage Corporation. [Exhibit 10.88 to
                    Registrant's report on Form 10-K for the year ended December
                    31, 1994 (File No. 0-19244)].*

                                       16
<Page>

            (10.48) Allonge to Deed of Trust Note dated July 1, 1994 between
                    Rosemont Ltd. and Rockport Mortgage Corporation [Exhibit
                    10.89 to Registrant's report on Form 10-K for the year ended
                    December 31, 1994 (File No. 0-19244)].*

            (10.49) Participation Certificate with Krupp Government Income Trust
                    as registered owner. [Exhibit 10.96 to Registrant's report
                    on Form 10-K for the year ended December 31, 1995 (File No.
                    0-19244)].*

     (99)   Other:

            (99.1)  Chairman of the Board Certification pursuant to 18 U.S.C.
                    Section 1350, as adopted pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.+

            (99.2)  Chief Accounting Officer Certification pursuant to 18 U.S.C.
                    Section 1350, as adopted pursuant to Section 906 of the
                    Sarbanex-Oxley Act of 2002.+

     * Incorporated by reference
     + Filed herein

                                       17
<Page>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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, on the 7th day
of January, 2003.

                                  KRUPP GOVERNMENT INCOME TRUST

                              By: /s/ Douglas Krupp
                                  -----------------
                                  Douglas Krupp, Chairman of Board of Trustees
                                  and a Trustee of Krupp Government Income Trust

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on the 7th day of January, 2003.

        SIGNATURES                                 TITLE(S)

 /s/ Douglas Krupp                    Chairman of Board of Trustees and a
----------------------------          Trustee of Krupp Government Income Trust
Douglas Krupp


 /s/ Robert A. Barrows                Treasurer of Krupp Government Income Trust
----------------------------
Robert A. Barrows


 /s/ Charles N. Goldberg              Trustee of Krupp Government Income Trust
----------------------------
Charles N. Goldberg


 /s/ J. Paul Finnegan                 Trustee of Krupp Government Income Trust
----------------------------
J. Paul Finnegan


 /s/ Stephen Puleo                    Trustee of Krupp Government Income Trust
----------------------------
Stephen Puleo

                                       18
<Page>

CERTIFICATIONS

I, Douglas Krupp, certify that:

1.   I have reviewed this Annual report on Form 10-K/A of Krupp Government
     Income Trust;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.

Date: January 7, 2003


                                           /s/ Douglas Krupp
                                         ---------------------
                                             Douglas Krupp
                                         Chairman of the Board


                                       19
<Page>

CERTIFICATIONS

I, Robert A. Barrows, certify that:

1.   I have reviewed this annual report on Form 10-K/A of Krupp Government
     Income Trust;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.

Date: January 7, 2003


                                           /s/ Robert A. Barrows
                                         ------------------------
                                             Robert A. Barrows
                                         Chief Accounting Officer


                                       20
<Page>

                                   APPENDIX A

                          KRUPP GOVERNMENT INCOME TRUST

                                   ----------


                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                               ITEM 8 of FORM 10-K

             ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                      For the Year Ended December 31, 2001

                                      F- 1
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

         INDEX TO FINANCIAL STATEMENTS, SCHEDULE AND SUPPLEMENTARY DATA

                                   ----------

<Table>
<S>                                                                                           <C>
Report of Independent Accountants                                                                    F-3

Balance Sheets at December 31, 2001 and 2000                                                         F-4

Statements of Income and Comprehensive Income for the Years Ended December 31, 2001,
2000 and 1999                                                                                        F-5

Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2001,
2000 and 1999                                                                                        F-6

Statements of Cash Flows for the Years Ended December 31, 2001, 2000
and 1999                                                                                             F-7

Notes to Financial Statements                                                                 F-8 - F-19

Schedule II - Valuation and Qualifying Accounts                                                     F-20

Supplementary Data - Selected Quarterly Financial Data (Unaudited)                                  F-21
</Table>

All other schedules are omitted as they are not applicable or not required, or
the information is provided in the financial statements or the notes thereto.

                                      F- 2
<Page>

                        REPORT OF INDEPENDENT ACCOUNTANTS

                                   ----------

To the Board of Trustees and the Shareholders of
Krupp Government Income Trust:

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Krupp
Government Income Trust (the "Trust") at December 31, 2001 and 2000, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion,
the financial statement schedule listed in the accompanying index presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial statements. These financial statements
and financial statement schedule are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP
Boston, Massachusetts
March 14, 2002

                                      F- 3
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                                 BALANCE SHEETS

                           December 31, 2001 and 2000

                                   ----------

<Table>
<Caption>
                                                                                    2001                2000
                                                                                -------------      -------------
<S>                                                                             <C>                <C>
                                     ASSETS

Participating Insured Mortgage Investments ("PIMIs") (Notes B, C and J):
    Insured Mortgages                                                           $  50,811,558      $  59,752,085
    Additional Loans, net of impairment provision of $1,698,811 and
     $2,162,618, respectively                                                       3,871,180          8,350,990
    Participating Insured Mortgages ("PIMs")
     (Notes B, D and J)                                                            46,416,493         46,892,234
Mortgage-Backed Securities and insured
 mortgage loan ("MBS") (Notes B, E and J)                                          14,971,348         16,536,498
                                                                                -------------      -------------

        Total mortgage investments                                                116,070,579        131,531,807

Cash and cash equivalents (Notes B and J)                                          13,154,231          5,359,041
Interest receivable and other assets                                                  756,832          1,082,412
Prepaid acquisition fees and expenses, net
 of accumulated amortization of $6,249,229
 and $6,841,714, respectively (Note B)                                                541,044          1,491,747
Prepaid participation servicing fees, net of
 accumulated amortization of $1,999,913
 and $2,112,209, respectively (Note B)                                                263,455            665,540
                                                                                -------------      -------------

        Total assets                                                            $ 130,786,141      $ 140,130,547
                                                                                =============      =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Deferred income on Additional Loans (Note B)                                    $   2,336,154      $   3,550,485
Other liabilities                                                                      20,485             20,980
                                                                                -------------      -------------

        Total liabilities                                                           2,356,639          3,571,465
                                                                                -------------      -------------

Commitments (Note H)

Shareholders' equity (Notes A, F, H and K):
     Common stock, no par value; 17,510,000
     Shares authorized; 15,053,135 Shares
     issued and outstanding                                                       127,850,874        136,114,206

     Accumulated comprehensive income (Note B)                                        578,628            444,876
                                                                                -------------      -------------

        Total Shareholders' equity                                                128,429,502        136,559,082
                                                                                -------------      -------------

        Total liabilities and Shareholders'
          equity                                                                $ 130,786,141      $ 140,130,547
                                                                                =============      =============
</Table>

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

                                      F- 4
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

              For the Years Ended December 31, 2001, 2000 and 1999

                                   ----------

<Table>
<Caption>
                                                                 2001                 2000                 1999
                                                            --------------        -------------         ------------
<S>                                                         <C>                   <C>                   <C>
Revenues:
    Interest income - PIMs and PIMIs:
      Basic interest                                        $    7,901,086        $   8,086,930         $  8,789,439
      Additional Loan Interest                                   1,515,330              744,080            2,534,790
      Participation interest                                     7,602,737              504,612            2,268,505
    Interest income - MBS                                        1,251,710            1,375,643            1,531,351
    Interest income - cash and cash
       equivalents                                                 261,513              364,803              508,144
                                                            --------------        -------------         ------------

             Total revenues                                     18,532,376           11,076,068           15,632,229
                                                            --------------        -------------         ------------

Expenses:
    Asset management fee to an affiliate (Note G)                  950,966            1,007,651            1,104,431
    Expense reimbursements to affiliates (Note G)                  243,109              256,564              220,657
    Amortization of prepaid fees and expenses (Note B)           1,352,788            1,029,734            1,672,143
    General and administrative (Note G)                            477,102              353,007              269,345
    (Reduction of) provision for impaired mortgage
     loans (Notes B and C)                                        (463,807)                   -               48,272
                                                            --------------        -------------         ------------

             Total expenses                                      2,560,158            2,646,956            3,314,848
                                                            --------------        -------------         ------------

Net income (Note I)                                             15,972,218            8,429,112           12,317,381

Other comprehensive income:
    Net change in unrealized gain
      on MBS                                                       133,752              213,560             (641,460)
                                                            --------------        -------------         ------------

Total comprehensive income                                  $   16,105,970        $   8,642,672         $ 11,675,921
                                                            ==============        =============         ============

Basic earnings per Share                                    $         1.06        $         .56         $        .82
                                                            ==============        =============         ============

Weighted average Shares outstanding                             15,053,135           15,053,135           15,053,135
                                                            ==============        =============         ============
</Table>

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

                                      F- 5
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

              For the Years Ended December 31, 2001, 2000 and 1999

                                   ----------

<Table>
<Caption>
                                                                                         Accumulated             Total
                                                   Common              Retained         Comprehensive         Shareholders'
                                                   Stock               Earnings            Income                Equity
                                               --------------        -------------      -------------        --------------
<S>                                            <C>                   <C>                <C>                  <C>
Balance at December 31, 1998                   $  164,742,014        $           -      $    872,776         $  165,614,790

Dividends                                         (26,820,787)         (12,317,381)                -            (39,138,168)

Net income                                                  -           12,317,381                 -             12,317,381

Change in unrealized gain
     on MBS                                                 -                    -          (641,460)              (641,460)
                                               --------------        -------------      ------------         --------------

Balance at December 31, 1999                      137,921,227                    -           231,316            138,152,543

Dividends                                          (1,807,021)          (8,429,112)                -            (10,236,133)

Net income                                                  -            8,429,112                 -              8,429,112

Change in unrealized gain
     on MBS                                                 -                    -           213,560                213,560
                                               --------------        -------------      ------------         --------------

Balance at December 31, 2000                      136,114,206                    -           444,876            136,559,082

Dividends                                          (8,263,332)         (15,972,218)                -            (24,235,550)

Net income                                                  -           15,972,218                 -             15,972,218

Change in unrealized gain
     on MBS                                                 -                    -           133,752                133,752
                                               --------------        -------------      ------------         --------------

Balance at December 31, 2001                   $  127,850,874        $           -      $    578,628         $  128,429,502
                                               ==============        =============      ============         ==============
</Table>

Shares issued and outstanding for each of the three years ended December 31, are
15,053,135

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

                                      F- 6
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                            STATEMENTS OF CASH FLOWS

              For the Years Ended December 31, 2001, 2000 and 1999

                                   ----------

<Table>
<Caption>
                                                                               2001                2000                   1999
                                                                          --------------       -------------         -------------
<S>                                                                       <C>                  <C>                   <C>
Operating activities:
   Net income                                                             $   15,972,218       $   8,429,112         $  12,317,381
   Adjustments to reconcile net income
    to net cash provided by operating activities:
      Amortization of (discounts) and premiums                                      (110)             (2,202)                3,044
      (Reduction of) provision for impaired mortgage loans                      (463,807)                  -                48,272
      Amortization of prepaid fees and expenses                                1,352,788           1,029,734             1,672,143
      Changes in assets and liabilities:
         Decrease (increase) in interest receivable and other assets             325,580            (108,921)               83,874
         Decrease in deferred income on Additional Loans                      (1,214,331)           (367,536)           (1,855,648)
         Decrease in other liabilities                                              (495)             (4,045)               (8,205)
                                                                          --------------       -------------         -------------

Net cash provided by operating activities                                     15,971,843           8,976,142            12,260,861
                                                                          --------------       -------------         -------------
Investing activities:
    Principal collections on PIMs and Insured Mortgages                        9,416,268             816,846            15,662,878
    Principal collections on MBS                                               1,699,012           1,174,687             3,992,931
    Additional Loan prepayments                                                4,943,617                   -             2,844,600
                                                                          --------------       -------------         -------------

Net cash provided by investing activities                                     16,058,897           1,991,533            22,500,409
                                                                          --------------       -------------         -------------

Financing activity:
    Dividends                                                                (24,235,550)        (10,236,133)          (39,138,168)
                                                                          --------------       -------------         -------------

Net increase (decrease) in cash and cash equivalents                           7,795,190             731,542            (4,376,898)

Cash and cash equivalents, beginning of year                                   5,359,041           4,627,499             9,004,397
                                                                          --------------       -------------         -------------

Cash and cash equivalents, end of year                                    $   13,154,231       $   5,359,041         $   4,627,499
                                                                          ==============       =============         =============
Non cash activities:
    Increase (decrease) in Fair Value of MBS                              $      133,752       $     213,560         $    (641,460)
                                                                          ==============       =============         =============
</Table>

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

                                      F- 7
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                          NOTES TO FINANCIAL STATEMENTS

                                   ----------

A.   ORGANIZATION

     Krupp Government Income Trust (the "Trust") was formed on November 1, 1989
     by filing a Declaration of Trust in The Commonwealth of Massachusetts. The
     Trust is authorized to sell and issue not more than 17,510,000 shares of
     beneficial interest (the "Shares"). The Trust was organized for the purpose
     of investing in commercial and multi-family loans and mortgage backed
     securities. Berkshire Mortgage Advisors Limited Partnership ("BMALP")(the
     "Advisor"), acquired 10,000 of such Shares for $200,000 and 14,999,999
     Shares were sold for $299,480,263 net of purchase volume discounts of
     $519,717 under a public offering which commenced on April 19, 1990 and
     ended on July 15, 1991. Under the Dividend Reinvestment Plan ("DRP"),
     43,136 Shares were sold for $819,356 during its public offering. The Trust
     shall terminate on December 31, 2029, unless earlier terminated by the
     affirmative vote of holders of a majority of the outstanding Shares
     entitled to vote thereon.

B.   SIGNIFICANT ACCOUNTING POLICIES

     The Trust uses the following accounting policies for financial reporting
     purposes:

     BASIS OF PRESENTATION

     The accompanying financial statements have been prepared on the accrual
     basis of accounting in accordance with accounting principles generally
     accepted in the United States of America ("GAAP").

     MBS

     The Trust, in accordance with the Financial Accounting Standards Board's
     Statement 115, "Accounting for Certain Investments in Debt and Equity
     Securities" ("FAS 115"), classifies its MBS portfolio as
     available-for-sale. The Trust classifies its MBS portfolio as
     available-for-sale as the Trust expects that a portion of the MBS portfolio
     will remain after all of the PIMs and PIMIs payoff and that it will be
     necessary to then sell the remaining MBS portfolio at that time in order to
     close out the Trust. In addition, other situations such as liquidity needs
     could arise which would necessitate the sale of a portion of the MBS
     portfolio . As such, the Trust carries its MBS at fair market value and
     reflects any unrealized gains (losses) as a separate component of
     Shareholders' Equity. The Trust amortizes purchase premiums or discounts
     over the life of the underlying mortgages using the effective interest
     method.

     The Federal Housing Administration ("FHA") insured mortgage is carried at
     amortized cost. The Trust holds this loan at amortized cost since it is
     fully insured by FHA.

     PIMs AND PIMIs

     The Trust accounts for its MBS portion of a PIM or PIMI investment in
     accordance with FAS 115 under the classification of held to maturity as
     these investments have a participation feature. As a result, the Trust
     would not sell or otherwise dispose of the MBS. Accordingly, the Trust
     has both the intention and ability to hold these investments to
     expected maturity. The Trust carries these MBS at amortized cost.

     The insured mortgage portion of the FHA PIM or FHA PIMI is carried at
     amortized cost. The Trust holds these mortgages at amortized cost since
     they are fully insured by FHA.

     The Additional Loans are carried at amortized cost unless the Advisor of
     the Trust believes there is an impairment in value, in which case a
     valuation allowance is established in accordance with FAS 114 and FAS 118.

     Basic interest is recognized based on the stated rate of the Department of
     Housing and Urban Development ("HUD") Insured Mortgage loan (less the
     servicer's fee) or the coupon rate of the Government National Mortgage
     Association ("GNMA") or Fannie Mae MBS. The Trust recognizes interest
     related to the participation features when the amount becomes fixed and the
     transaction that gives rise to such amount is finalized, cash is
     received and all contingencies are resolved. This could be the sale or
     refinancing of the underlying real estate which results in a cash
     payment to the Trust or a cash payment made to the Trust from surplus
     cash relative to the participation feature. The Trust defers the
     recognition of Additional Loan interest payments as income to the extent
     these interest payments were

                                    Continued

                                      F- 8
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

B.   SIGNIFICANT ACCOUNTING POLICIES, continued

     PIMs AND PIMIs, continued

     from escrows established with the proceeds of the Additional Loan. When the
     properties underlying the PIMI's generate sufficient cash flow to make the
     required Additional Loan interest payments and the Additional Loan value is
     deemed collectible, the Trust recognizes income as earned and commences
     amortization of the deferred interest amounts into income over the
     remaining estimated term of the Additional Loan. During periods where
     mortgage loans are impaired the Trust suspends amortizing deferred
     interest.

     The Trust also fully reserves the portion of any Additional Loan interest
     payment satisfied through the issuance of an operating loan and any
     associated interest due on such operating loan. The Trust will recognize
     the income related to the operating loan when the borrower repays amounts
     due under the operating loan.

     IMPAIRED MORTGAGE LOANS

     Impaired loans are those Additional Loans which the Advisor believes that
     the collection of all amounts due in accordance with the contractual terms
     of the loan agreement are not likely. Impaired loans are measured based on
     the fair value of the underlying collateral net of estimated selling costs.
     The Trust measures impairment on these loans quarterly. Interest received
     on the impaired loans is applied against the loan principal.

     CASH EQUIVALENTS

     The Trust includes all short-term investments with maturities of three
     months or less from the date of acquisition in cash and cash equivalents.
     The Trust invests its cash primarily in agency paper and money market funds
     with a commercial bank and has not experienced any loss to date on its
     invested cash.

     PREPAID FEES AND EXPENSES

     Prepaid fees and expenses represent prepaid acquisition fees and expenses
     and prepaid participation servicing fees paid for the acquisition and
     servicing of PIMs and PIMIs. The Trust amortizes prepaid acquisition fees
     and expenses using a method that approximates the effective interest method
     over a period of ten to twelve years, which represents the estimated life
     of the underlying mortgage.

     The Trust amortizes prepaid participation servicing fees using a method
     that approximates the effective interest method over a ten year period
     beginning at final endorsement of the loan if a HUD-insured mortgage loan
     or a GNMA MBS and at closing if a Fannie Mae MBS.

     Upon the repayment of a PIM or PIMI any unamortized acquisition fees and
     expenses and unamortized participation servicing fees related to such loan
     are expensed.

     INCOME TAXES

     The Trust has elected to be taxed as a REIT under the Internal Revenue Code
     of 1986, as amended, and believes it will continue to meet all such
     qualifications. Accordingly, the Trust will not be subject to federal
     income taxes on amounts distributed to shareholders provided it distributes
     annually at least 90% of its REIT taxable income and meets certain other
     requirements for qualifying as a REIT. Therefore, no provision for federal
     income taxes has been recorded in the financial statements.

                                    Continued

                                      F- 9
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

B.   SIGNIFICANT ACCOUNTING POLICIES, continued

     ESTIMATES AND ASSUMPTIONS

     The preparation of financial statements in accordance with the GAAP
     requires management to make estimates and assumptions that affect the
     reported amount of assets and liabilities, contingent assets and
     liabilities and revenues and expenses during the period. Significant
     estimates include the net carrying value of Additional Loans and the
     unrealized gains on MBS investments. Actual results could differ from those
     estimates.

C.   PIMIs

     The Trust had investments in four PIMIs on December 31, 2001 and five PIMIs
     on December 31, 2000 that provide the permanent financing of multi-family
     housing. One component of a PIMI is either a securitized HUD-insured first
     mortgage loan issued and guaranteed by GNMA or a sole participation
     interest in a first mortgage loan originated under the FHA lending program
     and insured by HUD (collectively the "Insured Mortgages"). The FHA first
     mortgage or the first mortgage underlying the GNMA security provided the
     borrower (generally a limited partnership) with a below market interest
     rate loan in exchange for providing the Trust with participation in a
     percentage of the cash generated from property operations and in a
     percentage of any appreciation of the underlying property to a preferred
     return, then a percentage of any appreciation thereafter. The borrower
     conveys these rights to the Trust through a subordinated promissory note
     and mortgage. In addition, the Trust made an Additional Loan to the owners
     of the borrower to provide additional funds for the construction and
     permanent financing of the property. The owners generally collateralize the
     Additional Loan through a pledge and security agreement that pledges their
     ownership interests in the borrower, and their share of any distributions
     made from surplus cash generated by the property and the proceeds realized
     upon the refinancing of the property, sale of the property or sale of the
     partnership interests. Amounts payable under the Additional Loan are
     neither guaranteed nor insured.

     The Trust receives level monthly principal and interest ("Basic Interest")
     payments amortizing over thirty to forty years, on the Insured Mortgage and
     is entitled to receive participation income under the subordinated
     promissory note and mortgage, and semi-annual interest payments
     ("Additional Loan Interest") and preferred interest under the Additional
     Loan ("Preferred Interest"). The Trust receives principal and interest
     payments on the Insured Mortgages currently, because these payments are
     insured or guaranteed; however, there are limitations to the amount and
     obligation to pay participation income, Additional Loan Interest and
     Preferred Interest.

     The subordinated promissory note and mortgage entitles the Trust to receive
     (i) Participating Income Interest generally equal to 50% of (a) all
     distributable Surplus Cash (as defined in the regulatory agreement of the
     HUD-insured first mortgage) generated by the property (b) any unrestricted
     cash generated from property operations and (c) to the extent available
     unexpended reserves and escrows, and (ii) Participating Appreciation
     Interest generally equal to 50% of the net proceeds or value of the
     property upon the sale, refinancing, maturity or accelerated maturity, or
     permitted prepayment of all amounts due under the Insured Mortgage and
     Additional Loan less the Outstanding Indebtedness, as defined. Amounts
     received by the Trust pursuant to the subordinated promissory note as
     Participating Income Interest reduce amounts payable as Preferred Interest
     and may reduce amounts payable as Base Interest under the Additional Loan.

     The Insured Mortgage and subordinated promissory note generally have
     maturities of 30 to 40 years, however, under the subordinated promissory
     note the Trust can generally accelerate these maturity dates at any time
     after the tenth anniversary of final endorsement for coinsurance or
     insurance, but in certain cases for construction loans after the eleventh
     or twelfth anniversary of initial endorsement (commencement of
     construction) for coinsurance or insurance, upon giving twelve months
     written notice for the payment of all accrued participation interest
     through the accelerated maturity date. The Trust can accelerate the
     maturity date for payment of amounts due under the subordinated promissory
     note and the insured mortgage providing the contract of insurance or
     coinsurance with the Secretary of HUD on the insured mortgage is canceled
     prior to the accelerated maturity date.

     Additional Loan Interest is payable from the following sources: (i) any
     Surplus Cash received pursuant to the subordinated promissory note as
     Participating Income Interest, (ii) amounts conveyed to the Trust by the
     owners of the borrowing entity representing distributions of Surplus Cash
     and (iii) amounts in reserve accounts established with the Additional Loan
     proceeds, if available, and any interest earned on these amounts. If these
     sources are not sufficient to make Additional Loan Interest payments the
     owners of

                                    Continued

                                      F- 10
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

C.   PIMIs, Continued

     the borrowing entity must notify the Trust of the amount of the shortfall
     and at its option the Trust could require a capital call from the owners of
     the borrowing entity. The capital call would be equal to 50% of the
     Additional Loan Interest shortfall and the Trust in certain situations
     could convert the remaining 50% into an operating loan.

     In addition to the Additional Loan Interest payments, the Additional Loan
     requires the payment of Preferred Interest representing a cumulative,
     non-compounded preferred return from the date of final endorsement to the
     date of calculation at interest rates ranging from 9.5% to 11% per annum on
     the outstanding balance of the Insured Mortgage plus the Additional Loan
     and any other funds advanced by the Trust to the borrowing entity or the
     owners of the borrowing entity less: (i) interest payments paid to the
     Trust under the Insured Mortgage, (ii) Participating Income Interest and
     (iii) Additional Loan Interest payments made under the Additional Loan.

     The Insured Mortgage and subordinated promissory note generally cannot be
     prepaid for a term of five years from the construction completion date or
     final endorsement and thereafter may be prepaid in whole without penalty
     provided all participation interest and amounts under the Insured Mortgage
     are paid. Any prepayment requires not less than ninety nor more than 180
     days prior written notice.

     The Additional Loan generally may not be prepaid before the fifth
     anniversary of the Agreement or the construction completion date and
     thereafter may be prepaid in full without penalty provided Preferred
     Interest and any amounts due under the Insured Mortgage and subordinated
     promissory note are paid in full.

     On December 31, 2001, the Trust received a prepayment of the Red Run
     Additional Loan and subordinated promissory note. The Trust received
     $2,900,000 of Additional Loan principal, $238,369 of Shared Appreciation
     Interest, $3,506,952 of preferred interest and $67,667 of Base Interest on
     the Additional Loan. In addition, the Trust recognized $702,259 of
     Additional Loan interest that had been previously received and recorded in
     deferred income on additional loans.

     On July 23, 2001, the Trust received a prepayment of the Seasons
     Subordinated Promissory Note and the Seasons Additional Loan. The Trust
     received $1,924,649 of Additional Loan principal, $180,916 of surplus cash,
     $847,450 of preferred interest, $1,052,455 of contingent interest, $69,129
     of Base Interest on the Additional Loan and $1,299,562 which represents the
     Trust's portion of the residual split. The Trust received $8,567,890
     representing the principal proceeds on the first mortgage note on July 26,
     2001. In addition, the Trust recognized $180,633 of Additional Loan
     interest that had been previously received and recorded in deferred income
     on additional loans. On August 17, 2001, the Advisor paid a special
     dividend of $0.93 per share from the proceeds of the Seasons PIMI
     prepayment.

     The payoff of the Seasons PIMI was a result of the 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. Both the Trustees and the Advisor believed that the market
     capitalization rate utilized in the appraisal was too high based on their
     knowledge of recent sales and experience in the market and agreed that the
     true fair value was the ultimate purchase price paid by the affiliate.

     During the third quarter of 1999, the Trust received a prepayment of the
     Audubon Villas PIMI including the Insured Mortgage with a remaining
     principal balance of $14,861,957, the Additional Loan of $2,691,000 and
     participation interest of $1,966,901. Also, $1,962,261 was recognized as
     Additional Loan interest income which was previously recorded as deferred
     income. On August 18, 1999, the Advisor declared a special dividend of
     $1.30 per share that was paid on September 17, 1999 from the payoff of the
     mortgage on the Audubon Villas PIMI.

     In June 1999, the Trust entered into a second modification agreement (the
     "Agreement") with the borrowers of the Mountain View Apartments PIMI
     reducing the interest rate on the Insured Mortgage by 1.25% per annum
     beginning January 1, 1999 and continuing through December 31, 2004 and
     changing the participation feature. The Agreement eliminated the Preferred
     Interest required under

                                    Continued

                                      F- 11
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

C.   PIMIs, Continued

     the Additional Loan and changed the Trust's participation in the Surplus
     Cash generated by the property. Under the Agreement, 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 the Additional Loan Interest. Unpaid
     Additional Loan Interest will accrue and be payable if there are sufficient
     proceeds from a sale or refinancing of the property except that $288,580 of
     existing accruals related to the Additional Loan had been forgiven. 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 and maintains a valuation allowance of $1,032,272.

     In May 1998, the borrower on the Lifestyles PIMI defaulted on its 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 was 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 have provided funds for repairs and improvements
     that have helped reposition Lifestyles. 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. During
     2001, the Trust received $118,968 of surplus cash generated by property
     operations. The Trust recognized this receipt as a reduction of principal
     balance of the Additional Loan and related impairment provision. In
     addition, the Trust further determined that the valuation allowance should
     be reduced by an additional $344,839 based upon the current estimated fair
     value of the underlying property.

     At December 31, 2001 and 2000 there are no Insured Mortgage loans within
     the Trust's portfolio that are delinquent as to principal or interest.

          The Trust's investments in PIMIs consist of the following at December
     31, 2001 and 2000:

<Table>
<Caption>
                                                                                             Balance Outstanding
                              Original       Approximate                                       At December 31,
                                Loan           Monthly      Interest       Maturity     -----------------------------
  Insured Mortgage             Amount         Payments        Rate           Date           2001            2000
--------------------        -------------   --------------  --------      ----------    ------------    -------------
<S>                         <C>             <C>               <C>         <C>           <C>             <C>
Lifestyles (GNMA)           $  10,292,394   $       63,000    7.000%(a)   05/01/2032    $  9,837,873    $   9,904,652

Windward (GNMA)                14,000,778          103,000    8.500%(b)   06/01/2032      13,434,399       13,518,840

Mountain View (FHA)             9,547,700           58,000    6.875%(c)   01/01/2034       9,208,461        9,264,428

Red Run (FHA)                  19,019,600          130,000    7.875%      05/01/2034      18,330,825       18,446,243

The Seasons (FHA)               9,075,351                -        -                -               -        8,617,922
                            -------------   --------------                              ------------    -------------

                            $  61,935,823   $      354,000                              $ 50,811,558(d) $  59,752,085
                            =============   ==============                              ============    =============
</Table>

                                    Continued

                                      F- 12
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

C.   PIMIs, Continued

<Table>
<Caption>
                                                                                             Base       Preferred
                                         Outstanding Balance               Maturity        Interest     Interest
     Additional Loan                  2001               2000                Date            Rate         Rate
     ---------------              ------------       -------------        ----------       --------     ---------
     <S>                          <C>                <C>                  <C>                 <C>         <C>
     Lifestyles(a):
       Due Contractually          $  1,817,665       $   1,817,665        05/14/2007            -          -
       Interest applied               (118,968)                  -
                                  ------------       -------------
       Carrying Value                1,698,697           1,817,665

     Windward(b)                     2,471,294           2,471,294        07/07/2002          7.5%        10%

     Mountain View(c)                1,400,000           1,400,000        09/16/2003          7.0%         -

     Red Run                                 -           2,900,000                 -            -          -

     The Seasons                             -           1,924,649                 -            -          -
                                  ------------       -------------

                                  $  5,569,991(e)    $  10,513,608
                                  ============       =============
</Table>

     (a)  The Trust entered into an Agreement which reduced the interest rate on
          the Insured Mortgage by 1.75% per annum effective January 1, 1998 for
          a period of twenty-four months and by 1.5% per annum for 2000 though
          2007. An affiliate of the Advisor refunds approximately .25% per annum
          to the Trust related to the interest reduction. The Trust will not
          receive any Additional Loan interest or Preferred Return due to the
          workout, but will receive a share of any cash generated from property
          operations and from proceeds of a sale or refinance.

     (b)  The Trust entered into an agreement which reduced the interest rate on
          the Insured Mortgage by 2.0% per annum for 1997 and by 1.0% for 1998
          through 2000. In addition, the Preferred Interest was reduced by 1%
          and Additional Loan Interest is payable from surplus cash.

     (c)  The Trust entered into a second modification agreement which reduced
          the interest rate on the Insured Mortgage by 1.25% per annum effective
          January 1, 1999 and continuing through December 31, 2004. The
          Agreement eliminated the Preferred Interest required under the
          Additional Loan and changed the Trust's participation in the surplus
          cash generated by the property. Furthermore, debt service relief
          provided by the first modification was forgiven.

     (d)  The aggregate cost for federal income tax purposes is $50,811,558.

     (e)  The aggregate cost for federal income tax purposes is $5,688,959.

IMPAIRED ADDITIONAL LOANS

The Advisor of the Trust has determined that the Lifestyles Additional Loan is
impaired. As a result, during 1998, a valuation allowance of $1,130,346 was
established to adjust the carrying amount of the loan to the estimated fair
market value of the collateral less anticipated costs of sale. During 2001, the
Trust received $118,968 of interest on the Additional Loan which was reflected
as a reduction of the carrying amount of the loan and the valuation allowance.
In addition in the fourth quarter of 2001, the Trust further reduced the
valuation allowance by $344,839 to $666,539 based upon the current estimated
fair value of the underlying property. The Trust will continue to reflect
interest receipts as reductions to the carrying amount of the loan and the
valuation allowance until the valuation allowance is zero. The Trust did not
receive any interest payments on the Lifestyles Additional Loan during 2000 or
1999 and did not recognize any interest income during 2001, 2000 or 1999.

The Advisor of the Trust has determined that the Mountain View Additional Loan
is impaired. As a result, during 1998, a valuation allowance of $984,000 was
established to adjust the carrying amount of the loan to the then estimated fair
market value of the collateral less

                                    Continued

                                      F- 13
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

C.   PIMIs, Continued

     anticipated costs of sale. During 1999, the Trust increased the valuation
     allowance of Mountain View by $48,272. The Trust will reflect interest
     receipts as reductions to the carrying amount of the loan and the valuation
     allowance until the valuation allowance is zero. The Trust did not receive
     any interest payments or recognize any income on the Mountain View
     Additional Loan during 2001, 2000 or 1999.

     The activity in the valuation allowance together with the related recorded
     and carrying value of the mortgage loans is as follows:

<Table>
<Caption>
                             Recorded                Valuation            Carrying
                               Value                 Allowance             Value
                            -----------             -----------         -----------
<S>                         <C>                     <C>                 <C>
Lifestyles                  $ 1,698,697             $   666,539         $ 1,032,158

Mountain View                 1,400,000               1,032,272             367,728
                            -----------             -----------         -----------

Balance at
 December 31, 2001          $ 3,098,697             $ 1,698,811         $ 1,399,886
                            ===========             ===========         ===========
</Table>

The Trust also has deferred income related to Lifestyles and Mountain View of
$687,319 and $367,383, respectively.

  A reconciliation of activity for each of the three years in the period ended
                           December 31, is as follows:

<Table>
<Caption>
                                                          2001                       2000                    1999
                                                     --------------             --------------          --------------
<S>                                                  <C>                        <C>                     <C>
INSURED MORTGAGES

Balance at beginning of period                       $   59,752,085             $   60,129,492          $   75,386,460

     Insured Mortgage prepayments                        (8,575,180)                         -             (14,861,957)

     Principal collections                                 (365,347)                  (377,407)               (395,011)
                                                     --------------             --------------          --------------

Balance at end of period                             $   50,811,558             $   59,752,085          $   60,129,492
                                                     ==============             ==============          ==============

ADDITIONAL LOANS

Balance at beginning of period                       $    8,350,990             $    8,350,990          $   11,243,862

     Interest received and recognized as
      Additional Loan prepayment                           (118,968)                         -                       -

     Additional Loan prepayments                         (4,824,649)                         -              (2,844,600)

     Adjustment to valuation allowance                      463,807                          -                 (48,272)
                                                     --------------             --------------          --------------

Balance at end of period                             $    3,871,180             $    8,350,990          $    8,350,990
                                                     ==============             ==============          ==============
</Table>

PROPERTY DESCRIPTIONS:

-    Lifestyles Apartments ("Lifestyles") is a 236-unit garden style apartment
     complex located in Palm Harbor, Florida.
-    Windward Lakes Apartments ("Windward") is a 276-unit garden style apartment
     complex located in Pompano Beach, Florida.
-    Mountain View Apartments ("Mountain View") is a 256-unit apartment complex
     located in Madison, Alabama.
-    Red Run Apartments ("Red Run") is a 304-unit apartment complex located in
     Owings Mills, Maryland.

                                    Continued

                                      F- 14
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

D.   PIMs

     The Trust had investments in five PIMs at December 31, 2001 and 2000. The
     Trust's PIMs consist of a GNMA or Fannie Mae MBS or a sole participation
     interest in a HUD-insured first mortgage loan originated under the FHA
     lending program (collectively the "Insured Mortgages"), and participation
     interests in the revenue stream and appreciation of the underlying property
     above specified base levels. The borrower conveys these participation
     features to the Trust generally through a subordinated promissory note and
     mortgage (the "Agreement").

     The Trust receives guaranteed level monthly payments of principal and
     interest, amortized over thirty to forty years. The GNMA and Fannie Mae MBS
     are guaranteed by GNMA and Fannie Mae and HUD insures the mortgage loan
     underlying the GNMA MBS and the FHA mortgage loan. The borrower usually
     cannot prepay the insured mortgage during the first five years but may
     prepay it thereafter subject to a 9% prepayment penalty in years six
     through nine, a 1% prepayment penalty in year ten and no prepayment penalty
     thereafter. The Trust may receive income related to its participation
     interests in the underlying property, however, these amounts are neither
     insured nor guaranteed.

     Generally, the participation features consist of the following: (i)
     "Minimum Additional Interest" at rates ranging from .5% to .75% per annum
     calculated on the unpaid principal balance of the Insured Mortgage on the
     underlying property, (ii) "Shared Income Interest" ranging from 25% to 30%
     of the monthly gross rental income generated by the underlying property in
     excess of a specified base, but only to the extent that it exceeds the
     amount of Minimum Additional Interest received during such month, and (iii)
     "Shared Appreciation Interest" ranging from 25% to 30% of any increase in
     value of the underlying property in excess of a specified threshold.

     Payment of participation interest from the operations of the property is
     limited to 50% of net revenue or Surplus Cash as defined by Fannie Mae or
     HUD, respectively. Payment of participation interest at the time of the
     prepayment of the PIM or upon its maturity generally cannot exceed 50% of
     any increase in value of the underlying property.

     Shared Appreciation Interest is payable when one of the following occurs:
     (1) the sale of the underlying property to an unrelated third party on a
     date which is later than five years from the date of the Agreement, (2) the
     maturity date or accelerated maturity date of the Agreement, or (3)
     prepayment of amounts due under the Agreement and the Insured Mortgage.

     Under the Agreement, the Trust, upon giving twelve months written notice,
     can accelerate the maturity date of the Agreement to a date not earlier
     than ten years from the date of the Agreement for (a) the payment of all
     participation interest due under the Agreement as of the accelerated
     maturity date, or (b) the payment of all participation interest due under
     the Agreement plus all amounts due on the first mortgage note on the
     property.

     At December 31, 2001 and 2000 there are no Insured Mortgage loans within
     the Trust's portfolio that are delinquent of principal or interest.

                                    Continued

                                      F- 15
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

D.   PIMs, continued

     The Trust's PIMs consisted of the following at December 31, 2001 and 2000:

<Table>
<Caption>
                              Original         Approximate                               Balance Outstanding At December 31,
                                Loan             Monthly       Interest      Maturity    ----------------------------------
PIM                            Amount           Payments         Rate          Date            2001               2000
---                         -------------    --------------    --------     ----------     ------------      ------------
<S>                         <C>              <C>                <C>         <C>            <C>               <C>
River View (GNMA)           $   9,284,877    $       64,500     8.000%      01/15/2033     $  8,905,107      $  8,964,717

Mill Pond (FHA)                 7,812,100            55,200     8.150%      01/01/2033        7,484,720         7,534,451

Waterford (FHA)                 6,935,900            48,800     8.125%      08/01/2032        6,625,742         6,671,434

Rivergreens (FHA)              10,003,000            69,500     8.005%      04/01/2033        9,588,286         9,652,263

Lincoln Green (FNMA)           15,565,000           100,000     6.750%      10/01/2002(a)    13,812,638        14,069,369
                            -------------    --------------                                ------------      ------------

   Total                    $  49,600,877    $      338,000                                $ 46,416,493(b)   $ 46,892,234
                            =============    ==============                                ============      ============
</Table>

(a)  Normal monthly benefit is based on a 30-year amortization. All unpaid
     principal of approximately $13,583,000 and accrued interest is due at the
     maturity date.
(b)  The aggregate cost for federal income tax purposes is $46,416,493.

     A reconciliation of activity for each of the three years in the period
ended December 31, is as follows:

<Table>
<Caption>
                                         2001                 2000                  1999
                                     -------------       -------------          -------------
<S>                                  <C>                 <C>                    <C>
Balance at beginning of period       $  46,892,234       $  47,331,673          $  47,737,583

   Principal collections                  (475,741)           (439,439)              (405,910)
                                     -------------       -------------          -------------

Balance at end of period             $  46,416,493       $  46,892,234          $  47,331,673
                                     =============       =============          =============
</Table>

PROPERTY DESCRIPTIONS:

 -   River View Apartments ("River View") is a 220-unit apartment complex
     located in Columbia, South Carolina.
 -   Mill Pond Apartments ("Mill Pond") is a 146-unit apartment complex in
     Bellbrook, Ohio.
 -   Waterford Townhomes Apartments ("Waterford") is a 122-unit apartment
     complex in Eagen, Minnesota.
 -   Rivergreens Apartments ("Rivergreens") is a 208-unit apartment complex in
     Gladstone, Oregon.
 -   Lincoln Green Apartments ("Lincoln Green") is a 616-unit apartment complex
     in Greensboro, North Carolina.

                                    Continued

                                      F- 16
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

E.   MBS

     At December 31, 2001, the Trust's MBS portfolio had an amortized cost of
     $9,546,823 and gross unrealized gains of $578,628, respectively. At
     December 31, 2001, the Trust had a FHA insured mortgage loan with an
     amortized cost of $4,845,897 and gross unrealized gains of $327,232. At
     December 31, 2000, the Trust's MBS portfolio had an amortized cost of
     $11,224,277 and gross unrealized gains and losses of $445,617 and $741,
     respectively. At December 31, 2000, the Trust's FHA insured mortgage loan
     had an amortized cost of $4,867,345 and a gross unrealized gain of
     $200,271. The Trust's MBS have maturities ranging from 2008 to 2035.

<Table>
<Caption>
                                                                                    Unrealized
              Maturity Date                       Fair Value                        Gain/(loss)
              -------------                     -------------                      -------------
               <S>                              <C>                                <C>
               2002 - 2006                      $           -                      $           -
               2007 - 2011                            102,831                              1,915
               2012 - 2035                         15,195,749                            903,945
                                                -------------                      -------------

                  Total                         $  15,298,580                      $     905,860
                                                =============                      =============
</Table>

F.   SHAREHOLDERS' EQUITY

     Under the Declaration of Trust and commencing with the initial closing of
     the public offering of shares, the Trust has declared and paid dividends on
     a quarterly basis. During the period in which the Trust qualifies as a
     REIT, the Trust has and will pay quarterly dividends aggregating at least
     95% of taxable income on an annual basis to be allocated to the
     shareholders in proportion to their respective number of shares.

     In order for the Trust to maintain its REIT status with respect to the
     requirements of Share ownership, the Declaration of Trust prohibits any
     investor from owning, directly or indirectly, more than 9.8% of the
     outstanding Shares and empowers the Trustees to refuse to permit any
     transfer of Shares which, in their opinion, would jeopardize the status of
     the Trust as a REIT.

G.   RELATED PARTY TRANSACTIONS

     Under the terms of the Advisory Service Agreement, the Advisor receives an
     Asset Management Fee equal to .75% per annum of the value of the Trust's
     actual and committed invested assets payable quarterly.

     The Trust also reimburses affiliates of the Advisor for certain costs
     incurred in connection with maintaining the books and records of the Trust,
     the preparation and mailing of financial reports, tax information and other
     communications to investors and legal fees and expenses. Included in the
     general and administrative expenses are legal fees and expenses paid by the
     Trust to an affiliate of $12,033, $3,305 and $1,285, for the years ended
     December 31, 2001, 2000 and 1999, respectively.

     During the three years ended December 31, 2001, 2000 and 1999, the Trust
     received interest collections on Additional Loans with affiliates of the
     Advisor of the Trust of $155,738, $173,544 and $225,156, respectively. In
     addition, the Trust received $3,431,133 in 2001, $174,505 in 2000 and
     $153,499 in 1999 related to Participating Interest Income.

     As discussed in Note C, the Trust received a prepayment of the Seasons PIMI
     as a result of a sale of the property to an affiliate.

H.   ORIGINAL SHARES

     Upon termination of the Trust, an affiliate of the Advisor is committed to
     pay to holders of Original Shares the amount (if any) by which (a) the
     Shareholders' Original Investments exceed (b) all Dividends (as defined in
     the prospectus) paid by the Trust with respect to such Original Shares.
     Original Shares are those Shares purchased during the Trust's initial
     public offering either through purchase or through the dividend
     reinvestment program and held until the last mortgage held by the Trust is
     repaid or disposed of.

                                    Continued

                                      F- 17
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

I.   FEDERAL INCOME TAXES

<Table>
     <S>                                                               <C>
     Net income per statement of income                                $ 15,972,218

     Less: Book to tax difference for Additional Loan
             interest income                                             (1,297,027)

     Less: Reduction of provision for impaired mortgage loans              (344,839)

     Less: Book to tax difference for amortization
             of prepaid fees and expenses                                  (648,593)
                                                                       ------------

     Net income for federal income tax purposes                        $ 13,681,759
                                                                       ============
</Table>

     The Trust paid dividends of $1.61 per share during 2001 which represents
     approximately $0.91 from ordinary income and $0.70 represents a non-taxable
     distribution for federal income tax purposes.

     The basis of the Trust's assets for financial reporting purposes is less
     than its tax basis by approximately $7,021,000 and $8,209,000 at December
     31, 2001 and 2000, respectively. The basis of the Trust's liabilities for
     financial reporting purposes exceeded its tax basis by approximately
     $2,314,000 and $3,550,000 at December 31, 2001 and 2000, respectively.

J.   FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS

     The Trust uses the following methods and assumptions to estimate the fair
     value of each class of financial instruments:

     CASH AND CASH EQUIVALENTS

     The carrying amount approximates fair value because of the short maturity
     of those instruments.

     MBS

     The Trust estimates the fair value of MBS based on quoted market prices
     while it estimates the fair value of insured mortgages based on quoted
     prices of MBS with similar interest rates. Based on the estimated fair
     value determined using these methods and assumptions the Trust's
     investments in MBS had gross unrealized gains of approximately $906,000 at
     December 31, 2001 and gross unrealized gains and losses of approximately
     $646,000 and $1,000 at December 31, 2000.

     PIMs AND PIMIs

     There is no active trading market for these investments. Accordingly,
     management estimates the fair value of the PIMs and the insured mortgage
     portion of the PIMIs using quoted market prices of MBS having the same
     stated coupon rate as the Insured Mortgages. Additional Loans are based on
     the estimated fair value of the underlying properties as an estimate of the
     fair value of the loan is not practicable. Management does not include any
     participation income in the Trust's estimated fair values, as Management
     does not believe it can predict the time of realization of the feature with
     any certainty. Based on the estimated fair value determined using these
     methods and assumptions, the Trust's investments in PIMs and PIMIs had
     gross unrealized gains of approximately $2,403,000 at December 31, 2001 and
     gross unrealized gains and losses of approximately $343,000 and $1,738,000,
     respectively at December 31, 2000.

                                    Continued

                                      F- 18
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

J.   FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS, continued

     At December 31, 2001 and 2000, the Trust estimated the fair value of its
     financial instruments as follows:

<Table>
<Caption>
                                                                       (amounts in thousands)
                                                                2001                         2000
                                                      ------------------------     ------------------------
                                                        Fair         Carrying        Fair         Carrying
                                                        Value          Value         Value          Value
                                                      ----------     ---------     ----------    ----------
         <S>                                          <C>            <C>           <C>           <C>
         Cash and cash equivalents                    $   13,154     $  13,154     $    5,359    $    5,359

         MBS                                              15,299        14,971         16,737        16,536

         PIMs and PIMIs:
           PIMs                                           47,803        46,416         46,594        46,892
           Insured mortgages                              51,828        50,812         58,655        59,752
           Additional Loans                                3,871         3,871          8,351         8,351
                                                      ----------     ---------     ----------    ----------

                                                      $  131,955     $ 129,224     $  135,696    $  136,890
                                                      ==========     =========     ==========    ==========
</Table>

K.   SUBSEQUENT EVENTS

     On January 3, 2002, the Trust received $18,330,825 representing the
     principal proceeds on the first mortgage note from the Red Run PIMI. The
     Advisor declared a special dividend of $1.68 per share from the proceeds of
     the Red Run PIMI prepayment which was paid on January 16, 2002.

     On January 2, 2002, the Trust received a prepayment of the Waterford
     Apartments Subordinate Promissory note. The Trust received $379,725 of
     Minimum Additional Interest and $425,643 of Shared Appreciation Interest.
     On January 17, 2002, the Trust received $6,625,742 representing the
     principal proceeds on the first mortgage. In addition, the Trust received a
     prepayment premium of $66,257 from the payoff. The Advisor has declared a
     special dividend of $0.51 per share from the proceeds of the Waterford
     Apartments PIM prepayment which will be paid in the first quarter of 2002.

                                      F- 19
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                   ----------

2001

<Table>
<Caption>
                                 Balance at       Charged to                           Balance at
                                 beginning         costs and                             end of
Description                      of Period         Expenses        Recoveries            Period
-----------                     -----------       -----------      -----------         -----------
<S>                             <C>               <C>              <C>                 <C>
Additional Loan
impairment provision            $ 2,162,618       $         -      $  (463,807)        $ 1,698,811
                                ===========       ===========      ===========         ===========
</Table>

2000

<Table>
<Caption>
                                 Balance at       Charged to                           Balance at
                                 beginning         costs and                             end of
Description                      of Period         Expenses        Recoveries            Period
-----------                     -----------       -----------      -----------         -----------
<S>                             <C>               <C>              <C>                 <C>
Additional Loan
impairment provision            $ 2,162,618       $         -      $         -         $ 2,162,618
                                ===========       ===========      ===========         ===========
</Table>

1999

<Table>
<Caption>
                                 Balance at       Charged to                           Balance at
                                 beginning         costs and                             end of
Description                      of Period         Expenses        Recoveries            Period
-----------                     -----------       -----------      -----------         -----------
<S>                             <C>               <C>              <C>                 <C>
Additional Loan
impairment provision            $ 2,114,346       $    48,272      $         -         $ 2,162,618
                                ===========       ===========      ===========         ===========
</Table>

                                      F- 20
<Page>

                          KRUPP GOVERNMENT INCOME TRUST

                               SUPPLEMENTARY DATA
                        SELECTED QUARTERLY FINANCIAL DATA

<Table>
<Caption>
                                             For the Quarter Ended
                          ----------------------------------------------------------
                           March 31,       June 30,     September 30,    December 31,
                             2001            2001           2001             2001
                          -----------    ------------   -------------    ------------
<S>                       <C>            <C>             <C>             <C>
Total revenues            $ 2,795,745    $  2,731,138    $ 6,059,462     $ 6,946,031
                          ===========    ============    ===========     ===========

Net income                $ 2,140,379    $  2,045,187    $ 5,360,536     $ 6,426,116
                          ===========    ============    ===========     ===========

Earnings per Share        $       .14    $        .14    $       .35     $       .43
                          ===========    ============    ===========     ===========

<Caption>
                                             For the Quarter Ended
                          ----------------------------------------------------------
                           March 31,       June 30,     September 30,    December 31,
                             2001            2001           2001             2001
                          -----------    ------------   -------------    ------------
<S>                       <C>            <C>             <C>             <C>

Total revenues            $ 2,657,314    $  2,660,457    $ 2,697,284     $ 3,061,013
                          ===========    ============    ===========     ===========

Net income                $ 2,027,459    $  1,964,868    $ 1,986,007     $ 2,450,778
                          ===========    ============    ===========     ===========

Earnings per Share        $       .13    $        .14    $       .13     $       .16
                          ===========    ============    ===========     ===========
</Table>

                                      F- 21