<PAGE> 1                         
                          UNITED STATES
                                
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                            FORM 10-K
                                
(Mark One)
  X      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 ---     SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

           For the fiscal year ended December 31, 1996
                                     -----------------
                            OR
                                
---      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

         For the transition period from ______ to ______.

                Commission file number:  0-25600
                                         -------     

            OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
            --------------------------------------------
        (Exact name of Registrant as specified in its charter)

  Maryland                                           52-1394232
--------------------------------------------------------------------
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                   Identification No.)

   7200 Wisconsin Avenue, 11th floor, Bethesda, Maryland 20814
   -----------------------------------------------------------
      (Address of principal executive offices)  (Zip Code)

 Registrant's telephone number, including area code: (301) 654-3100

 Securities registered pursuant to Section 12(b) of the Act:  NONE

    Securities registered pursuant to Section 12(g) of the Act:
      Beneficial Assignee Interests

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 (Section 229.405)  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. [X].
                                      
The Beneficial Assignee Interests of limited partnership interest
of  the Partnership (the "OTEF II BACs") are not currently  being
traded  in  any public market.  Therefore, the OTEF II  BACs  had
neither a market selling price nor an average bid or asked  price
within the 60 days prior to the date of this filing.

               DOCUMENTS INCORPORATED BY REFERENCE

Portions  of   the  following  documents  of the  Registrant  are
incorporated herein by reference as indicated:

Form 10-K Parts       Document
----------------------------------------------------------------
Parts I, II and III   Portions of the  1996  Annual  Report  are
                      incorporated by reference into Parts I, II
                       and III.

Exhibit Index is on page 9.

Total number of pages 51.










<PAGE> 2
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                             PART I

Item 1.  Business.

    Information  responsive to this Item is contained  under  the
headings  "Description  of Mortgaged Properties"  and  "Notes  to
Financial  Statements" at pages 13 through 17, and 32 through 47,
respectively,  of  the  1996  Annual  Report  of   the Registrant
attached hereto as Exhibit  13  which  is  incorporated herein by 
reference.

Item 2.  Properties.

    Information  responsive to this Item is contained  under  the
heading  "Description  of   Mortgaged  Properties"  at  pages  13
through 17 in the 1996 Annual Report of the  Registrant  which is
incorporated herein by reference.

Item 3.  Legal Proceedings.

    Information  responsive to this Item is contained  under  the
headings  "Report  of  Management"  at  pages 18 through 26,  and
"Notes to Financial Statements"  at  pages 32 through 47 of  the
1996 Annual Report which is incorporated herein by reference.

Item 4.  Submission of Matters to a Vote of Security Holders.

    None.

                             PART II

Item 5.  Market   the   Registrant's   Partnership  Interests and 
         Related Partnership Matters.

    (a)  Market Information.

         There is currently no established public market in  which
    the  OTEF  II  BACs are traded;  however, as  described  under
    the  heading  "Report of Management" at  pages  18  through 26
    of  the  1996  Annual  Report,  OTEF II  intends  to  list the 
    OTEF II BACs for  trading on a  national  securities  exchange
    in the near future.

    (b)  Number of Security Holders.

         The  number  of  BAC  Holders  at  December 31, 1996  was 
    15,678.

    (c)  Dividend History and Restrictions.
   
         The  information regarding the frequency  and  amount  of
      cash  distributions is included under the headings "Selected
      Financial  Data"  at  page 12 of  the  1996  Annual  Report,
      "Report  of  Management"  at  pages  18  through 26,  "Notes
      to  Financial  Statements"  at  pages 32  through  47,   and
      "Distribution  Information" at pages 48 and  49  of the 1996
      Annual  Report.   The  information  contained   under   such
      headings is incorporated herein by reference.
 
         The   Partnership  expects  to  continue   making   cash
      distributions to Partners pursuant to the provisions of its
      limited partnership agreement.
   
Item 6.  Selected Financial Data.

    Information  responsive to this Item is contained  under  the
heading  "Selected  Financial Data," included at page 12  of  the
1996 Annual Report which is incorporated herein by reference.

Item 7.  Management's   Discussion   and  Analysis  of  Financial 
         Condition and Results of Operations.

    Information  responsive to this Item is contained  under  the
heading  "Report  of  Management"  at pages 18 through 26 of  the
1996 Annual Report which is incorporated herein by reference.










<PAGE> 3
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                       PART II (continued)

Item 8.  Financial Statements and Supplementary Data.

    The financial statements of the Partnership, together with the
report    thereon   of  Coopers  &  Lybrand  L.L.P.,   independent
accountants,  appearing  at  pages  27  through  47  of  the  1996
Annual Report which are incorporated herein by reference.

Item 9.  Changes   in    and    Disagreements  with Accountants on
         Accounting and Financial Disclosure.

    None.
                                
                            PART III

Item 10.  Directors and Executive Officers of the Registrant.

    (a), (b), (c) and (e).

         The   Partnership   has  no   directors or officers.  The 
    Managing General  Partner  of  the Partnership  is  Oxford Tax
    Exempt   Fund   II   Corporation.  The   sole   directors  and  
    executive  officers  of  the  Managing  General Partner are as 
    follows:
   
Name                Age   Position and Business Experience
------------------------------------------------------------------
Leo E. Zickler       60   Chairman  of the Board of Directors  and
                          Chief  Executive Officer since inception
                          and  was  Chairman and  Chief  Executive
                          Officer  of the managing general partner
                          of   Oxford  Tax  Exempt  Fund   Limited
                          Partnership,   OTEF   II's   predecessor
                          ("OTEF").  Since March 1982 he has  been
                          Chairman  of the Board of Directors  and
                          Chief   Executive  Officer   of   Oxford
                          Development  Corporation ("Oxford"),  an
                          affiliate  of  the  Partnership  and   a
                          national real estate firm that owns  and
                          operates  apartment  and  senior  living
                          communities.   Mr.  Zickler  served   as
                          President  of Oxford until February  28,
                          1994.  Mr. Zickler continues to serve as
                          a  director  and officer of  Oxford  and
                          certain affiliated entities.

Francis P. Lavin      45  President  since inception and President
                          of OTEF's managing general partner since
                          March   1,  1994.   From  October   1989
                          through  January 1994, he was a Director
                          and   President  of  ML  Oxford  Finance
                          Corporation,  an  affiliate  of  Merrill
                          Lynch  &  Company, Inc.   From  1979  to
                          October  1989,  Mr. Lavin  held  various
                          positions  at  subsidiaries  of  Merrill
                          Lynch  &  Company including Director  of
                          Merrill  Lynch Capital Markets and  Vice
                          President of Merrill Lynch, Hubbard Inc.
                          Since  March  1,  1994,  Mr.  Lavin  has
                          served  as President of Oxford, as  well
                          as  a  director and officer  of  certain
                          affiliated entities.
Robert B. Downing     42  Executive Vice President and Director of
                          the   Managing  General  Partner   since
                          inception.  Mr. Downing joined Oxford in
                          1984  as Vice President of Acquisitions.
                          He  assumed the position of Senior  Vice
                          President of Acquisitions in 1986  where
                          he  was  responsible for  acquiring  and
                          financing  multi-family  properties   on
                          behalf    of    public,   private    and
                          institutional  investment  funds.   From
                          1987  to  1993,  he was responsible  for
                          numerous  debt  and equity restructuring
                          transactions,     including     Oxford's
                          corporate   recapitalization  (including
                          the sale of Oxford's property management
                          business)     in    1993.      Currently
                          Mr.   Downing  heads  Oxford's  merchant
                          banking  group which is responsible  for
                          Oxford's  real  estate  investment   and
                          capital market activities.









<PAGE> 4
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                      PART III (continued)

Name                 Age  Position and Business Experience
------------------------------------------------------------------
Richard R. Singleton  49  Senior  Vice  President since  inception
                          and  Chief Financial Officer since 1995.
                          He was Vice President of Oxford Mortgage
                          &  Investment Corporation since 1979 and
                          was promoted to Senior Vice President in
                          1983.    In   addition,  he  was   Chief
                          Operating  Officer  of  OTEF's  managing
                          general  partner  since  1990  and   was
                          promoted  to Chief Financial Officer  in
                          1995.   Formerly, he held  positions  as
                          Tax  Manager  with  Arthur  Andersen   &
                          Company.   Mr. Singleton also serves  as
                          an   officer   of  Oxford  and   certain
                          affiliated entities.

    (d)  Family Relationships.  None.

    (f)  Involvement in Certain Legal Proceedings.  None.

    (g)  Promoters and Controlling Persons.  Not applicable.

Item 11. Executive Compensation.

    (a), (b), (c), and (d)
   
         None   of  the  directors  or  executive officers of the 
     Managing  General  Partner,   Oxford   Tax  Exempt  Fund  II  
     Corporation,  receives   direct   compensation  for services  
     rendered to the Partnership.  However, certain directors and 
     officers  receive a  portion  of the cash distributions made 
     by OTEF II  to  its general partners.
   
         OTEF II intends to adopt an incentive option  plan  (the
     "Incentive Option Plan") in order for the  Managing  General
     Partner to attract  and retain key employees  and  advisers.
     The Incentive Option Plan will authorize the granting to the
     directors, officers and employees of  the  Managing  General
     Partner and  certain  affiliates  of  options  to   purchase
     approximately 26,000 OTEF II BACs (prior to any division  of
     the OTEF II BACs in connection with listing the OTEF II BACs
     on a national  securities exchange),  which  will  represent
     approximately 8.3% of the outstanding OTEF II BACs (assuming
     approximately 13,000 OTEF II BACs are converted  into Status
     Quo  BACs  ["SQBs"]), as described under the heading "Report 
     of Management-Status Quo BACs" at page 18 of the 1996 Annual
     Report.
   
         The Managing General Partner anticipates that options to
    purchase all or substantially all of the OTEF II BACs offered
    pursuant  to  the Incentive Option Plan will be granted prior
    to  the  effective  date of listing of the OTEF  II  BACs for
    trading, in which case the option price is expected to be the
    average of the closing prices of the OTEF II BACs as reported
    on  the exchange on which the OTEF II BACs are listed for the
    first 20  days  of trading.  The option price for  any  other
    options to  purchase OTEF II BACs issued under the  Incentive
    Option Plan is expected to be 100% of the OTEF II BACs'  fair
    market value at the date of grant.

    (e)  Termination of Employment and Change of Control
         Arrangements.  None.

Item 12. Security  Ownership  of  Certain  Beneficial  Owners and 
         Management.

    (a)  Security Ownership of Certain Beneficial Owners.
   
         No   person is    known by  the   Partnership   to   own 
    beneficially more than 5% of the outstanding OTEF II BACs.

    (b)  Security Ownership of Management.

         No  director or officer of the Managing  General Partner
    is known to beneficially own any OTEF II BACs.

    (c)  Changes in Control.  None.









<PAGE> 5
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                      PART III (continued)
                                

Item 13.  Certain Relationships and Related Transactions.

    (a) and (b) Transactions with Management and Others and
                Certain Business Relationships.
   
         Information responsive to this Item is  contained  under
    the heading "Notes to Financial Statements" at pages 34 to 36
    of  the  1996  Annual  Report  of  the  Registrant  which  is
    incorporated herein by reference.

    (c)  Indebtedness of Management.  None.

    (d)  Transactions with Promoters.  Not applicable.

                             PART IV
                                
Item 14. Exhibits,  Financia Statement Schedules, and Reports on
         Form 8-K.

    (a)  The following documents are filed as part of this Report.

         1. Financial Statements.

            The  following financial statements and notes thereto 
         are   contained  in   the   1996   Annual Report and are 
         incorporated by reference into Part II, Item 8.
        
                                               Sequentially
                                                 Numbered
                                                    Page(s)
                                                     
        Report of Independent Accountants.           27
        
        Balance Sheets as of December  31,           28
        1996 and 1995.
        
        Statements of Income for the  year           
        ended   December  31,   1996   for
        OTEF   II;  for  the  year   ended
        December  31,  1995  (Pro   Forma-
        Unaudited)  for OTEF II;  for  the
        seven  months  ended December  31,
        1995  for  OTEF II; for  the  five
        months  ended  May  31,  1995  for
        OTEF;   and  for  the  year  ended
        December 31, 1994 for OTEF.                 29
        
        Statement  of  Partners'   Capital           
        for  the years ended December  31,
        1996  and  1995 for OTEF  II;  and
        December 31, 1994 for OTEF.                 30
        
        Statements of Cash Flows  for  the           
        year  ended December 31, 1996  for
        OTEF  II;  for  the  seven  months
        ended   December  31,   1995   for
        OTEF   II;  for  the  five  months
        ended  May 31, 1995 for OTEF;  and
        for  the  year ended December  31,
        1994 for OTEF.                              31
        
        Notes   to  Financial  Statements,           
        which   include  the   information
        required   to   be   included   in
        Schedule  IV - Mortgage  Loans  on
        Real Estate.                              32-47










<PAGE> 6
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                       PART IV (continued)

         2.   Financial Statement Schedules.

              All   other   financial   statement  schedules  are  
        omitted   because  they  are inapplicable or because  the  
        required   information  is   included   in  the financial
        statements  or notes thereto.

        3.    Exhibits (listed according to  the  number assigned
              assigned in the table in Item 601 of Regulation S-K).

              Exhibit No. 3 - Articles of Incorporation and Bylaws.

              a.  Articles     of    Incorporation   for   OTEF  II  
                  Corporation  (incorporated   by   reference  from 
                  Exhibit  3(a)  to  the Registrant's  Registration 
                  Statement on Form  10  dated February 22, 1995).

                         b.    Bylaws  for  OTEF  II  Corporation
          (incorporated  by reference from Exhibit  3(b)  to  the
          Registrant's  Registration Statement on Form  10  dated
          February 22, 1995).

                       c.   Articles of Incorporation of OTEF  II
          Assignor  Corporation (incorporated by  reference  from
          Exhibit   3(c)   to   the   Registrant's   Registration
          Statement on Form 10 dated February 22, 1995).

                      d.   Bylaws of OTEF II Assignor Corporation
          (incorporated  by reference from Exhibit  3(d)  to  the
          Registrant's  Registration Statement on Form  10  dated
          February 22, 1995).

                       Exhibit  No. 4 - Instruments defining  the
            rights of security holders, including indentures.

                       a.   Certificate of Limited Partnership of
          Oxford   Tax   Exempt   Fund  II  Limited   Partnership
          (incorporated  by reference from Exhibit  No.  4(a)  to
          Registrant's  Registration Statement on Form  10  dated
          February 22, 1995).

                       b.    Agreement of Limited Partnership  of
          Oxford   Tax   Exempt   Fund  II  Limited   Partnership
          (incorporated  by reference from Exhibit  4(b)  to  the
          Registrant's  Registration Statement on Form  10  dated
          February 22, 1995).

                      c.   Amendment to the Certificate of Limited
          Partnership  of  Oxford  Tax  Exempt  Fund  II  Limited
          Partnership  (incorporated by  reference  from  Exhibit
          4(c)  to  the  Registrant's Registration  Statement  on
          Form 10 dated February 22, 1995).

                       d.    First Amendment to the Agreement  of
          Limited  Partnership  of  Oxford  Tax  Exempt  Fund  II
          Limited  Partnership (incorporated  by  reference  from
          Exhibit   4(d)   to   the   Registrant's   Registration
          Statement on Form 10 dated February 22, 1995).

                        e.     Form   of  Amended  and   Restated
          Certificate  and  Agreement of Limited  Partnership  of
          Oxford   Tax   Exempt   Fund  II  Limited   Partnership
          (incorporated  by reference from Exhibit  4(e)  to  the
          Registrant's  Registration Statement on Form  10  dated
          February 22, 1995).

                       f.   Second Amended and Restated Agreement
          of  Limited Partnership of Oxford Tax Exempt Fund II
          Limited Partnership (incorporated by reference from
          Exhibit  4(f) to the Registrant's Quarterly  Report  on
          Form 10-Q for the quarter ended June 30, 1995.)



<PAGE> 7                                
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                       PART IV (continued)

                      Exhibit No. 10 - Material contracts.

                      a.   Amended and Restated Yield Maintenance
          Reserve   Agreement  dated  as  of   August   1,   1988.

                       b.    Form  of BAC Holder Rights Agreement.

                      c.   Trust Indenture and Loan Agreement for
          Southridge-Oxford Limited Partnership.

                     d.    Stipulation of Settlement  filed  with
          the  U.S.  District Court for the District of  Maryland
          on November 18, 1996.

                     Exhibit  No. 13 - Annual report to  security
          holders, etc.

                      a.    Annual  Report  for  the  year  ended
          December   31,  1996,  ("filed"  only  to  the   extent
          material  therefrom  is  specifically  incorporated  by
          reference).

          (b)  Reports on Form 8-K.

     Form  8-K was filed with the Commission on December 6,  1996
     to  report  the  refunding of seven of the 15 existing  tax-
     exempt  mortgage  revenue bonds ("Existing  MRBs")  and  the
     preliminary   approval,  on  November  21,  1996,   of   the
     settlement between OTEF II and certain of its affiliates  as
     defendants  and  the class of BAC Holders as  plaintiffs  in
     putative  class and derivative lawsuits consolidated  as  In
     re Oxford Tax Exempt Fund Securities Litigation, No. WMN 95-
     3643 (D.Md.).
     
     Information responsive to this Item is contained  under  the
     headings "Report of Management" at pages 18 through 26,
     and  "Notes  to Financial Statements" at pages 32  through
     47  of the 1996 Annual Report which is incorporated herein
     by reference.

                No  financial statements were filed  as  part  of
          this Form 8-K.

          (c)   The  list  of Exhibits required by  Item  601  of
          regulation S-K is included in Item 14(a)(3) above.

          (d)  Financial Statement Schedules.

     See Item 14(a)(2) above.

<PAGE> 8                                
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                      CROSS REFERENCE SHEET

    The  item  numbers and captions in Parts I, II, III,  and  IV
hereof  and  the  page  and/or pages in the referenced  materials
where the corresponding information appears are as follows:

                                                       Sequenti
                                                         ally
            Item                  Reference Materials  Numbered
                                                        Page(s)
                                                           
1.  Business                       1996 Annual Report      pps 13-17 and
                                                               32-47
  
2.  Properties                     1996 Annual Report      pps 13-17

3. Legal Proceedings               1996 Annual Report    pps 18-26 and
                                                            32-47  

5.  Market   for  Registrant's     1996 Annual Report    pps 12, 18-26 and
   Partnership  Interest  and                               32-49
   Related Matters                                      

6.  Selected Financial Data        1996 Annual Report      pp 12
  
7.  Management's    Discussion     1996 Annual Report      pps 18-26
  and  Analysis of Financial
   Condition  and Results  of
   Operations
   
8.  Financial  Statements  and     1996 Annual Report      pps 27-47
  Supplementary Data
   
11. Executive Compensation         1996 Annual Report      pp 36

14.  Exhibits,        Financial     1996 Annual Report      pps 27-47
  Schedules  and Reports  on
  Form 8-K




<PAGE> 9                                
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                          EXHIBIT INDEX

(Listed according to the number assigned in the Exhibit Table in
Item 601 of Regulation S-K).

(13) 1996 Annual Report to Security Holders.

   Oxford Tax Exempt Fund II Limited Partnership's Report dated
December 31, 1996, follows on sequentially numbered pages 10
through 51 of this report.

(27) Financial Data Schedule.


                                
<PAGE> 10
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-K
                                
                           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.

                    Oxford Tax Exempt Fund II Limited Partnership

                  By:  Oxford Tax Exempt Fund II Corporation
                       Managing General Partner of the Registrant


Date: 04/15/97    By:  /s/  Richard R. Singleton
      --------         ------------------------------------------
                       Richard R. Singleton
                       Senior Vice President and
                         Chief Financial Officer


   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  and  on  the
dates indicated.



Date: 04/15/97    By:  /s/  Leo E. Zickler
      --------         -----------------------------------------
                       Leo E. Zickler
                       Chairman of the Board of Directors and 
                         Chief Executive Officer



Date: 04/15/97    By:  /s/  Francis P. Lavin
      --------         ----------------------------------------
                       Francis P. Lavin
                       Director and President



Date: 04/15/97    By:  /s/  Robert B. Downing
      --------         ----------------------------------------
                       Robert B. Downing
                       Director and Executive Vice President


    No proxy material has been sent to the Registrant's security
holders.  The Partnership's 1996 Annual Report is expected to be
mailed to OTEF II BAC Holders before May 15, 1997.


                                







<PAGE> 11
          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                       1996 Annual Report





















          CONTENTS

          Selected Financial Data
          Description of Mortgaged Properties
          Report of Management
          Report of Independent Accountants
          Balance Sheets
          Statements of Income
          Statement of Partners' Capital
          Statements of Cash Flows
          Notes to Financial Statements
          Distribution Information
          General Partnership Information
          Instructions for Investors who wish to reregister or
            transfer OTEF II BACs
 









<PAGE> 12

<TABLE>
--------------------------------------------------------------------------------------------------------------------------
Selected Financial Data (in thousands)                                                                                     
--------------------------------------------------------------------------||----------------------------------------------
<CAPTION>                                                                 ||                                                 
                                                                          ||                                              
                                                (Unaudited)               ||                                              
                                              PRO FORMA<F13> OTEF II<F12> ||                          OTEF<F2>            
                                     For the      For the   Seven months  ||----------------------------------------------
                                    year ended   year ended     ended     || Five months  For the Years Ended December 31,
                                   December 31, December 31, December 31, ||    ended    |--------------------------------
FINANCIAL HIGHLIGHTS<F1>               1996        1995         1995      ||May 31, 1995 |   1994      1993      1992     
--------------------------------------------------------------------------||-------------|--------------------------------
<S>                                  <C>         <C>          <C>         || <C>         | <C>       <C>       <C>        
Total Assets                         $228,733    $174,034     $174,034    || $163,856    | $168,568  $178,372  $189,537   
Investment in Existing MRBS          $ 48,705    $164,000     $164,000    || $153,032    | $158,599  $173,321  $184,734   
Investment in Series A Bonds         $ 96,919    $      0     $      0    || $      0    | $      0  $      0  $      0   
Investment in Series B Bonds         $ 69,905    $      0     $      0    || $      0    | $      0  $      0  $      0   
Total Revenue                        $ 19,762    $ 16,626     $  9,610    || $  2,452    | $  4,137  $  2,651  $  2,097   
Net Income                           $ 14,912    $ 15,210     $  8,369    || $  2,277    | $  3,727  $  2,246  $  1,664   
Net Income Allocated to BAC Holders  $ 14,614    $ 14,906     $  8,202    || $  2,232    | $  3,652  $  2,201  $  1,631   
Net Income per BAC                   $  48.71    $  49.69     $  27.34    || $   7.44    | $  12.17  $   7.34  $   5.44   
Municipal Income (Tax Basis)         $ 14,644    $ 16,210     $  8,369    || $  7,841    | $ 16,911  $ 13,211  $ 12,786   
Municipal Income Allocated to BAC                                         ||             |                                
  Holders (Tax Basis)                $ 14,351    $ 15,886     $  8,202    || $  7,687    | $ 16,573  $ 12,946  $ 12,530    
Municipal Income per BAC (Tax Basis) $  47.84    $  52.96     $  27.34    ||    25.62    |    55.24     43.16     41.77
Cash Distributions per BAC              47.60<F9>   47.60<F8>    35.70<F7>||    11.90<F6>|    45.00<F5> 44.07<F4> 42.52<F3>
OTEF II BACs Outstanding              299,995     299,995      299,995    ||  299,995    |  299,995   299,995   299,995   
Number of BAC Holders                  15,678      15,061       15,061    ||   15,249    |   15,359    15,585    15,746      
--------------------------------------------------------------------------||-------------|--------------------------------
<FN>                                                                                                                         
<F1> A  reconciliation  of  the  major  differences  between  financial statement income and municipal income, net for tax
     purposes, is as follows:                                             ||                                               
                                                                          ||                                              
                                               (Unaudited)                ||                                                
                                              PRO FORMA<F13> OTEF II<F12> ||                          OTEF<F2>            
                                     For the      For the    Seven months || --------------------------------------------- 
                                    year ended  year ended      ended     || Five months  For the Years Ended December 31,
RECONCILIATION TO                  December 31, December 31, December 31, ||   Ended     |--------------------------------
MUNICIPAL INCOME                        1996       1995         1995      ||May 31, 1995 |     1994      1993     1992    
--------------------------------------------------------------------------||-------------|--------------------------------
Net Income per financial                                                  ||             |                                          
  statements (GAAP)                  $14,912     $16,210      $8,369      || $2,227      | $ 3,726   $ 2,246   $ 1,664    
Add:                                                                      ||             |                                       
  Equity method adjustments:                                              ||             |                                     
  --Equity Income<F10>                     0           0           0      || (2,305)     |  (3,949)   (2,597)   (2,038)   
  --Interest received<F11>                 0           0           0      ||  7,869      |  18,591    13,562    13,482    
  Accrued base interest/-                                                 ||             |                                
   (reduction)/other                    (268)<F14>     0           0      ||      0      |  (1,457)        0      (322)   
--------------------------------------------------------------------------||-------------|--------------------------------
Municipal income,                                                         ||             |                                  
  net for tax reporting purposes     $14,644     $16,210      $8,369      || $7,841      | $16,911   $13,211    $12,786   
--------------------------------------------------------------------------||-------------|--------------------------------
<F2> Prior  to  June  1, 1995, OTEF accounted for its  investment  in  the                                           
     Operating Partnerships under the equity method, which treated interest paid
     by  the  Operating Partnerships as a reduction in its investment, and  also
     recorded  as an increase or reduction in its investment its equity interest
     in the aggregate income or losses of the Operating Partnerships.
<F3> Includes quarterly distributions of $10.32 per BAC distributed in May
     of 1992, $10.63 in August and November of 1992, and $10.94 in February  of
     1993.
<F4> Includes quarterly distributions of $10.94 per BAC distributed in May,
     August and November of 1993, and $11.25 in February of 1994.
<F5> Includes quarterly distributions of $11.25 per BAC distributed in May,
     August and November of 1994, and $11.25 in February of 1995.
<F6> Includes quarterly distributions of $11.90 per BAC distributed in May
     of 1995.
<F7> Includes  quarterly distributions of $11.90 per  BAC  distributed  in
     August and November of 1995, and $11.90 in February of 1996.
<F8> Includes quarterly distributions of $11.90 per BAC distributed in May,
     August and November of 1995, and $11.90 in February of 1996.
<F9> Includes quarterly distributions of $11.90 per BAC distributed in May,
     August and November of 1996, and $11.90 in February of 1997.
<F10>Represents  OTEF's  share  of  the  Operating  Partnerships'  annual
     financial statement income recognized while under the equity method.
<F11>Under the equity method, all interest income received on the Existing
     MRBs is treated as a reduction of the bond investment amount.
<F12>Effective on June 1, 1995, with the transfers of all units of OTEF to
     OTEF  II, OTEF II began accounting for its investments in Existing MRBs  in
     accordance  with  Statement  of  Financial Accounting  Standards  No.  115-
     Accounting for Certain Investments in Debt and Equity Securities ("SFAS No.
     115"),  as more fully described in the Notes to Financial Statements.   For
     federal income tax purposes, OTEF II is considered a continued entity.
<F13>The pro forma financial information reflects the adoption of SFAS No.
     115 as of January 1, 1995.  Although Pro Forma Total Revenue and Net Income
     is  shown  without $1 million in nonrecurring Oxford advances made  to  the
     Operating Partnerships which used these funds to pay OTEF in January  1995,
     for  purposes  of Reconciliation to Municipal Income, the  Net  Income  per
     financial  statements (GAAP) does reflect the $1 million paid  to  OTEF  in
     January 1995.
<F14>For  1996 represents (i) for GAAP purposes, payment of legal  fees  in
     connection  with  the  settlement of the class action suit  totaling  $2.5
     million  expensed  in 1996, which will not be reflected  for  tax  purposes
     until  1997;  (ii)  a  portion  of  the Partnership's  expenses,  for  GAAP
     purposes, totaling approximately $1,012,000 that was not expensed  in  1996
     for  tax purposes; and (iii) write-off of prior years' tax accrual totaling
     $3,780,000.
</FN>
</TABLE>

<PAGE> 13
-----------------------------------------------------------------
DESCRIPTION OF MORTGAGED PROPERTIES
-----------------------------------------------------------------

    The  following  pages contain brief descriptions  of  the  14
Mortgaged  Properties.   Unless otherwise indicated,  information
provided herein is as of December 31, 1996.

Chesapeake Landing, Aurora, Illinois (Fox Valley Oxford Limited 
Partnership).

   Chesapeake Landing is a 416-unit garden apartment community on
20  acres located 35 miles west of downtown Chicago and within 30
minutes of O'Hare International Airport.  The Fox Valley Regional
Mall   is   located  directly  across  from  Chesapeake  Landing.
Construction  was completed in June 1987.  Aurora is  the  second
largest  city  in the Chicago metropolitan area.   The  apartment
community consists of 17 buildings, including 15 two- and  three-
story  buildings, a clubhouse, and a maintenance building.   Each
unit  has  a  private  balcony or patio, a full-size  washer  and
dryer,  and cable television hook-up.  Amenities include a heated
swimming pool, clubhouse, indoor exercise facilities, tennis  and
racquetball   courts,   a  volleyball  court,   sauna,   Jacuzzi,
fireplaces   in  selected  units,  and  carports   and   garages.
Occupancy  was  88%  and 89% as of December 31,  1996  and  1995,
respectively.

    There  are approximately eight multifamily rental communities
containing  an  aggregate of approximately  3,000  units  located
within  five  miles  of  the site.  Average  occupancy  at  these
communities was approximately 89% as of December 31,  1996.   One
of  these communities is contiguous to Chesapeake Landing and  is
owned  by  an Oxford-affiliated partnership.  Chesapeake  Landing
and the contiguous community share all of the facilities owned by
both  communities.  Construction is underway at four  multifamily
sites, all within five miles of Chesapeake Landing.  There  is  a
planned   development   for  at  least  six   other   multifamily
communities in the Aurora/Naperville area, all within 8-10  miles
of Chesapeake Landing.

Island Club, Columbia, Maryland (Allview Oxford Limited 
Partnership).

   Island  Club  is  a  176-unit garden  apartment  community  in
Columbia,  Maryland,  which is part of  the  Baltimore-Washington
corridor.  Construction was completed in March 1987.  Island Club
is  situated  on 10 acres and consists of seven two-  and  three-
story  apartment buildings and a clubhouse.  Buildings are garden
style  with lapped 100% cedar siding exterior.  Each unit  has  a
private balcony or patio, individually controlled heating and air
conditioning,  and a washer and dryer.  Some units contain  wood-
burning  fireplaces or bay windows.  Amenities include a swimming
pool, clubhouse, exercise room, Jacuzzi, tot lots, carports,  and
a  sauna.  Occupancy was 92% and 96% as of December 31, 1996  and
1995, respectively.

    There  are approximately 8,400 multifamily units in Columbia.
Average occupancy at these communities was approximately  90%  as
of  December  31,  1996.  There are no known  rental  communities
under construction in the Island Club market area.

Northwoods, Middletown, Connecticut (Middletown Oxford Limited 
Partnership).

   Northwoods  is  a 336-unit garden apartment community  located
adjacent  to  Interstate 91, approximately five  miles  from  the
central business district of the City of Middletown and 13  miles
from downtown Hartford.  Construction was completed in July 1987.
Northwoods   consists  of  13  three-story  apartment   buildings
situated  on approximately 17 acres.  Each apartment unit  has  a
private  balcony  or  patio,  a  washer  and  dryer,  and   cable
television  hook-up.   Additional  amenities  include  a   heated
swimming  pool, clubhouse, exercise room, sauna, whirlpool  bath,
and   carports.   Rent  premiums  are  charged  for  wood-burning
fireplaces, carports, bay windows, and pets.  Occupancy  was  97%
and 91% as of December 31, 1996 and 1995, respectively.

    There  are  four  comparable multifamily  rental  communities
containing an aggregate of approximately 998 units located within
one  mile  of  Northwoods.  Occupancy at  these  communities  was
approximately  92% as of December 31, 1996. There  are  no  known
rental  communities under construction in the  Northwoods  market
area.




<PAGE> 14
Reflections,     Virginia     Beach,     Virginia      (Tidewater
Oxford Limited Partnership).

   Reflections  is a 480-unit garden apartment community  located
within  one mile of the Virginia Beach Expressway and  two  miles
from  the  1.2  million square foot Lynnhaven Mall.  Construction
was  completed  in  September  1987.   Reflections,  situated  on
approximately  50  acres,  consists of 17  two-  and  three-story
buildings and a clubhouse, all of wood frame construction.   Each
unit  has  a  private balcony or patio, washer and dryer  hook-up
connections, and cable television hook-up.  Amenities  include  a
swimming pool, a clubhouse with an exercise room, two racquetball
courts,  whirlpool bath, a jogging path, three tennis  courts,  a
volleyball  court, a gazebo, a barbecue pit, and a  picnic  area.
Rent   premiums  are  charged  for  bay  windows,  scenic  views,
carports,  garages, and wood-burning fireplaces.   Occupancy  was
89% and 93% as of December 31, 1996 and 1995, respectively.

    There  are  nine  comparable multifamily  rental  communities
containing  an  aggregate of approximately 2,900 apartment  units
located in Virginia Beach within a five-mile radius of the  site,
including Runaway Bay, which is owned by an affiliate of  Oxford.
Average occupancy at these communities was approximately  93%  as
of December 31, 1996. There are no known rental communities under
construction in the Reflections market area.

San     Bruno,     San    Bruno,    California     (San     Bruno
Oxford Limited Partnership).

   San Bruno is a 308-unit garden apartment community on 13 acres
in San Mateo County, 14 miles south of downtown San Francisco and
three  miles northwest of the San Francisco Airport.   San  Bruno
has  excellent  access  to  freeways and  retail  and  commercial
infrastructure.  The property's location provides good  views  of
the bay and ocean.  Construction was completed in July 1987.  San
Bruno consists of 16 buildings, including 14 two- and three-story
apartment  buildings,  a clubhouse, and a  maintenance  building.
Each unit has a private balcony or patio, intrusion alarms, frost-
free  refrigerators, dishwashers, self-cleaning ovens, and washer
and  dryer hook-ups.  Top-floor units have fireplaces.  Amenities
include  a  swimming  pool,  spa, tanning  bed,  sauna,  exercise
facility, community laundry rooms, private storage, and  enclosed
parking.  Small pets are accepted.  Occupancy was 99% and 97%  as
of December 31, 1996 and 1995, respectively.

    There are eight multifamily rental communities, containing an
aggregate of approximately 3,260 units, located within six  miles
of  San  Bruno.   Average  occupancy  at  these  communities  was
approximately  98% as of December 31, 1996.  The average  age  of
the  apartments in the area is 22-27 years. There  are  no  known
rental  communities under construction in the  San  Bruno  market
area.

Hunt Club, Austin, Texas (Travis One Oxford Limited Partnership).

   Hunt Club is a 384-unit garden apartment community on 17 acres
located  12  miles north of the City of Austin and  within  eight
miles  of  a major shopping mall.  Construction was completed  in
March 1987.  Three employment centers are located less than  four
miles from the site.  The community consists of 23 two- and three-
story  buildings  and  a  clubhouse  and  cabana,  all  of   wood
frame/brick  veneer construction.  Each unit  has  a  balcony  or
patio,  washer and dryer, and cable television hook-up.   Various
units  contain  wood-burning fireplaces, coffered  ceilings  with
fan,  bay  windows, and microwave ovens.  Amenities  include  two
swimming  pools,  indoor Jacuzzi and outdoor spa,  fully-equipped
fitness  room, two saunas, two tennis courts, carports,  garages,
and  two  racquetball courts.  Occupancy was 86% and  95%  as  of
December 31, 1996 and 1995, respectively.

    There  are  eight  comparable multifamily rental  communities
containing  an  aggregate of approximately  2,387  units  located
within  three miles of Hunt Club.  As of December 31,  1996,  the
average  occupancy  at these communities was  approximately  90%.
Additionally,  a 512-unit rental community and a 260-unit  rental
community  are under construction less than four miles from  Hunt
Club.



<PAGE> 15
Savannah      Trace,     Schaumburg,     Illinois     (Schaumburg
Oxford Limited Partnership).

  Savannah Trace is a 368-unit garden apartment community located
on  28 acres in southwest Schaumburg.  Construction was completed
in  July  1987.   Woodfield  Mall, one  of  the  world's  largest
enclosed  shopping  centers  (2.2 million  square  feet),  is  15
minutes  to  the north.  The community consists of  34  two-story
apartment  buildings and a clubhouse.  Each unit  has  a  private
balcony or patio, washer and dryer, and cable television hook-up.
Amenities  include  a heated swimming pool, clubhouse,  billiards
room,  and  two tennis courts.  Occupancy was 89% and 92%  as  of
December 31, 1996 and 1995, respectively.

    There are seven multifamily rental communities containing  an
aggregate of approximately 3,000 units located within eight miles
of  Savannah  Trace.  Average occupancy at these communities  was
approximately  90%  at December 31, 1996.   There  are  no  known
rental  communities  under construction  in  the  Savannah  Trace
market area.

The        Harbour,       Melbourne,       Florida        (Apollo
Oxford Associates Limited Partnership).

   The  Harbour is a 162-unit garden apartment community  located
approximately  one  and one-half miles from  downtown  Melbourne.
Construction  was  completed in April  1987.   This  property  is
situated  on 29 acres of wooded property and features 2,500  feet
of  frontage on the Eau Gallie River Intercoastal Waterway.   The
Harbour   consists  of  eight  two-  and  three-story   apartment
buildings.  Each unit has a private screened-in balcony or patio,
a  washer  and  dryer, individually controlled  heating  and  air
conditioning, and cable television hook-up.  Amenities include  a
clubhouse, a swimming pool, tennis courts, a cabana, a volleyball
court,  boat  ramp, exercise facility, and a Jacuzzi.   Occupancy
was 93% and 98% as of December 31, 1996 and 1995, respectively.

     There  are  13  comparable  multifamily  rental  communities
containing  an  aggregate of approximately  3,000  units  located
within  11  miles of the site.  As of December 31, 1996,  average
occupancy  at these communities was approximately  90%.   One  of
these communities is contiguous to The Harbour and is owned by an
Oxford-affiliated  partnership.  The Harbour and  the  contiguous
community each have a right to share some of the facilities owned
by   the   other  community.   Additionally,  a  216-unit  rental
community is under construction 13 miles from The Harbour.   This
project  is scheduled to break ground in early 1997 in the  North
Melbourne area.

Windsor Park, Westridge, Virginia (Westridge Oxford Limited 
Partnership).

   Windsor  Park  is  a  220-unit garden apartment  community  on
approximately   16  acres  in  eastern  Prince  William   County,
Virginia.  Construction was completed in May 1987.  The property,
located  off  Route 123 in the planned residential  community  of
Westridge, is three miles west of Woodbridge and approximately 15
miles south of Washington, D.C.  Windsor Park consists of 12 two-
and  three-story  buildings and a clubhouse, all  of  wood  frame
construction.  Each unit has a private balcony or patio, a washer
and dryer, vertical or mini-blinds, and cable television hook-up.
Various  units contain wood-burning fireplaces and  bay  windows.
Amenities  include a swimming pool, indoor Jacuzzi,  a  clubhouse
with  an  exercise  room,  a  lounge,  a  racquetball  court,   a
volleyball court, a picnic area with designated barbecue areas, a
tot lot for children, and a car wash area with vacuum.  Occupancy
was 95% as of December 31, 1996 and 1995.

    There  are  seven  comparable multifamily rental  communities
containing  an  aggregate of approximately  2,100  units  located
within  10  miles of Windsor Park.  One of these  communities  is
contiguous  to  Windsor Park and is owned by an Oxford-affiliated
partnership.  Windsor Park and the contiguous community each have
a  right  to  share  some of the facilities owned  by  the  other
community.  As of December 31, 1996, the average occupancy in the
market area was approximately 96%.  Two communities are currently
under  construction.  Summerland Heights is a 206-unit tax credit
property that is scheduled to open in April 1997.  This community
will  offer one-, two- and three-bedroom apartments at affordable
prices.  River Run, a new senior living community that is also  a
tax  credit  property, will offer one and two bedroom apartments.
This property is scheduled to open in May 1997.


<PAGE> 16

Windrift  at  Seaview  Ridge, Oceanside,  California  (Southridge
Oxford Limited Partnership).

   Windrift  at  Seaview  Ridge is a  404-unit  garden  apartment
community on 27 acres located approximately 35 miles north of the
San  Diego  International Airport and 12 miles east  of  downtown
Oceanside.    Construction  was  completed  in   November   1987.
Windrift  at  Seaview  Ridge consists of 40  two-story  apartment
buildings,  one clubhouse, and three cabanas.  Each  unit  has  a
private  balcony or patio, washer and dryer hook-ups, dishwasher,
outside  storage, one assigned covered parking space,  and  cable
television  hook-up.   Amenities  include  two  swimming   pools,
exercise room with dry sauna, two racquetball courts, one  tennis
court, and three Jacuzzis.  Occupancy was 98% as of December  31,
1996 and 1995.

     There  are  19  comparable  multifamily  rental  communities
containing  an  aggregate of approximately  4,700  units  located
within six miles of Windrift at Seaview Ridge.  Average occupancy
of  these  communities was approximately 97% as of  December  31,
1996. There are no known rental communities under construction in
the Windrift at Seaview Ridge market area.

Chambrel at Club Hill Senior Living Community, Garland, Texas 
(Colonel I  Oxford Limited Partnership).

    Chambrel  at Club Hill Senior Living Community is  a 260-unit
retirement community on 16 acres located approximately  10  miles
northeast  of  downtown Dallas.  Construction  was  completed  in
early  1988.  Each independent unit has a fully equipped kitchen,
a balcony or patio, and a 24-hour emergency response system.  The
community   offers   food   services,  scheduled   transportation
services,  utilities,  flat laundry services,  housekeeping,  and
various  social  activities.  The community  building,  which  is
connected  to  the  residential buildings  by  covered  walkways,
provides a focal point for dining, exercise classes, and wellness
and  fitness programs.  Amenities include a swimming pool, heated
indoor  whirlpool bath, covered walking paths, an arts and crafts
activity center, a music room, a library, a physical therapy  and
fitness  room, and a barber/beauty shop.  Occupancy was  89%  and
91% as of December 31, 1996 and 1995, respectively.

    There  are 10 retirement communities, containing an aggregate
of approximately 1,600 units, located within 10 miles of Chambrel
at  Club  Hill.   Average occupancy at these communities  was  in
excess  of 90% as of December 31, 1996. There are no known rental
communities  under  construction in the  Chambrel  at  Club  Hill
market area.

Chambrel at PineCastle Senior Living Community, Ocala, Florida 
(Ocala  Oxford Limited Partnership).

    Chambrel  at PineCastle Senior Living Community is a 161-unit
retirement  community constructed on 14 acres  located  80  miles
northwest  of  Orlando, Florida, and three  miles  from  downtown
Ocala.   Construction was completed in March 1987.   Three  full-
care   nursing  home  facilities,  two  hospitals,  and  numerous
doctors'  offices are located within two miles of the  community.
Each  independent unit has a fully equipped kitchen, individually
controlled  heating  and  air  conditioning,  and  an   emergency
response  system.   The  community  offers  food  services  in  a
community  dining  room, scheduled transportation  services,  and
various social activities.  First-floor units have sliding  glass
patio  doors  and patio entries.  Assisted Living  units  have  a
range   with   an  oven,  refrigerator,  garbage  disposal,   50%
independent   temperature  control  and  50%  shared  temperature
control.   Amenities include a swimming pool,  spa  and  exercise
room with a whirlpool bath, a shuffleboard court, walking trails,
laundry  facilities, game rooms, arts and crafts rooms,  library,
and  a  beauty salon.  Occupancy was 94% as of December 31,  1996
and 1995.

     There   are   12  nursing  and  assisted  living  retirement
communities containing an aggregate of approximately 1,200  units
located  within  12  miles of Chambrel  at  PineCastle.   Average
occupancy  at  these  communities was in  excess  of  89%  as  of
December  31,  1996.   Sterling House is under  construction  and
located  one-half mile east of Chambrel at Pine Castle.  It  will
have  42 assisted living facility units and is scheduled to  open
in May 1997.


<PAGE> 17

Chambrel at Williamsburg Senior Living Community, Williamsburg, 
Virginia (Williamsburg - Oxford Limited Partnership).

   Chambrel at Williamsburg Senior Living Community is a 256-unit
retirement  community  constructed on  58  acres  in  James  City
County.   Construction  was  completed  in  November  1987.   The
property  is  located  one and one-half miles  west  of  Colonial
Williamsburg,  across  the  street  from  a  community  hospital,
nursing  home,  clinic, and doctors' offices.  Each  unit  has  a
fully   equipped  kitchen,  a  balcony  or  patio,   individually
controlled  heating  and  air  conditioning,  and  an   emergency
response  system.  Amenities and programs include food  services,
scheduled transportation services and social programs, a library,
parlors,  health suites, craft and exercise rooms, a  Jacuzzi,  a
barber/beauty  shop,  a  swimming pool, gardens,  and  a  walking
trail.   Chambrel at Williamsburg offers three styles of  living:
independent, enriched and assisted.  Occupancy was 97% and 92% as
of December 31, 1996 and 1995, respectively.

    The other existing retirement community in the immediate area
is  at  an  occupancy of 100%.  Five other competitive retirement
communities are located in Newport News, Hampton, Virginia  Beach
and  Richmond.  The average occupancy at these communities as  of
December  31,  1996 was approximately 94%.  There  are  no  known
rental   communities  under  construction  in  the  Chambrel   at
Williamsburg's market area.

Chambrel at Montrose Senior Living Community, Copley Township, 
Ohio (Akron One Retirement  Oxford Limited Partnership).

    Chambrel  at  Montrose Senior Living Community is  a 168-unit
retirement  community located in northwest Akron, Ohio,  adjacent
to  Fairlawn, an upper income suburb of Akron.  Construction  was
completed in April 1987.  The community is centrally located  and
offers  easy  access to public transportation,  several  shopping
centers, churches, restaurants, and medical offices.  Chambrel at
Montrose  consists of one building situated on a nine-acre  site.
Each unit has a fully equipped kitchen and individual heating and
air  conditioning  controls.   The  large  two-bedroom,  two-bath
deluxe  units have an in-apartment utility room with  washer  and
dryer   hook-up.    Balconies  are  featured   in   some   units.
Independent Living rental payments include one meal each  day  in
the  community dining room, all utilities except telephone,  flat
laundry  and  housekeeping services, and  an  emergency  response
system.   Additional meals and laundry services are available  at
additional cost.  The community has a library, an arts and crafts
room,   a  community  room,  a  barber/beauty  shop,  greenhouse,
exercise   and   sauna   facilities,  scheduled   transportation,
concierge services, and cable television hook-up.  Occupancy  was
99% and 83% as of December 31, 1996 and 1995, respectively.

    There  are three comparable retirement communities containing
an  aggregate  of  approximately 500 units in  the  market  area.
Average occupancy of these communities was approximately  98%  as
of  December  31,  1996.  Copeland Oaks, located  13  miles  from
Chambrel  at  Montrose, is a Lifecare community  presently  under
construction.  Construction completion is planned for mid-1997.

<PAGE> 18
-----------------------------------------------------------------
REPORT OF MANAGEMENT
-----------------------------------------------------------------

   The following report provides additional information about the
financial  condition  of  Oxford  Tax  Exempt  Fund  II   Limited
Partnership, a Maryland limited partnership ("Oxford  Tax  Exempt
Fund  II,"  "OTEF II," or the "Partnership"), as of December  31,
1996, and its results of operations and cash flows for the period
then  ended.   This report and analysis should be  read  together
with  the financial statements and related notes thereto and  the
selected  financial  data  appearing  elsewhere  in  this  Annual
Report.

Recent Developments
    On  December 2, 1996, an Information Memorandum was furnished
to the holders of beneficial assignee interests (the "OTEF II BAC
Holders"),  which  represent assignments of  limited  partnership
interests in OTEF II (the "OTEF II BACs"), in connection with and
as   part  of  the  settlement  of  certain  putative  class  and
derivative  action  litigation  ("OTEF  II  Litigation").    This
Information  Memorandum  described the  new  business  plan  (the
"Liquidity and Growth Plan") for OTEF II and provided OTEF II BAC
Holders  with  the  information necessary  to  make  an  informed
decision regarding whether they wished to exchange their OTEF  II
BACs  for  a new class of BACs (the "Status Quo BACs" or "SQBs").
These  are  discussed below.  For a summary  of
the  OTEF II Litigation and the terms of the settlement, see Note
8 to the Financial Statements.

Status Quo BACs
    Approximately 4.3% of the OTEF II BAC Holders have elected to
convert their OTEF II BACs to SQBs.  The SQBs represent interests
only in the existing mortgage revenue bonds ("Existing MRBs"), as
refunded,  and  not in the new assets that will  be  acquired  by
OTEF  II  pursuant to the terms of the Liquidity and Growth  Plan
(described  below).  The SQBs are designed to replicate,  to  the
extent  possible, the economic interest that the holders  of  the
SQBs  (the  "Status  Quo  BAC Holders") would  have  had  in  the
Existing  MRBs,  as  refunded, if the partnership  agreement  for
Oxford  Tax Exempt Fund Limited Partnership ("OTEF"),  OTEF  II's
predecessor, had continued to govern and the Liquidity and Growth
Plan was not implemented.

    The  Status Quo BAC Holders will not share in the growth  and
the  other  benefits expected to be achieved under the  Liquidity
and  Growth  Plan.  The SQBs will not be listed on any securities
exchange,  and it is not expected that there will  be  an  active
trading market for them.  In addition, the Status Quo BAC Holders
will  not be allocated any capital losses for federal income  tax
purposes  that  may result from the disposition of  the  Existing
MRBs  or  interests therein or new assets.  The  Status  Quo  BAC
Holders  will  have the right, however, to require that  OTEF  II
purchase  or  redeem the SQBs under the terms  described  in  the
Information Memorandum.

Liquidity and Growth Plan
    As  described   below,  under  the
Liquidity  and Growth Plan: (i) OTEF II will apply  to  list  the
OTEF  II BACs for trading on a national securities exchange,  and
(ii)  the  proceeds  from the sale of the  bonds  issued  in  the
refunding of the Existing MRBs or interests therein or  any  debt
issued  by  OTEF  II  and secured by such assets  (together,  the
"Financing")  and any additional funds that OTEF  II  may  obtain
will  be  invested in new assets.  The Managing  General  Partner
believes that the Liquidity and Growth Plan will allow OTEF II to
take advantage of attractive investment opportunities and thereby
increase cash distributions and value to the holders of the  OTEF
II BACs ("Liquidity BAC Holders").

Listing of OTEF II BACs  Liquidity and Trading Market
     The  Managing  General  Partner  is  currently  involved  in
discussions  with one or more national securities  exchanges  and
expects  OTEF II to formally apply for listing on one of them  in
the  near future.  In addition, prior to listing or shortly after
listing, OTEF II will divide or "split" the outstanding  OTEF  II
BACs  into  smaller  denominations to  enhance  trading  in,  and
liquidity of, the OTEF II BACs and encourage a broader  range  of
investors.  It is expected that the division will result  in  the
issuance  of  approximately 20 to 25 new OTEF II  BACs  for  each
outstanding OTEF II BAC.

Issuance of New BACs

    All  OTEF II BACs currently are held in uncertificated, book-
entry  form  on  OTEF  II's  books.  Nevertheless,  the  OTEF  II
positions  of  many  OTEF II BAC Holders are  reported  on  their
brokerage account statements, and distributions made by  OTEF  II
are credited directly to their brokerage accounts.

<PAGE> 19

   In connection with the listing of the OTEF II BACs for trading
and the issuance of the New BACs, OTEF II will issue certificates
representing  ownership  of the New  BACs.   Unless  OTEF  II  is
instructed  otherwise (as described below),  those  OTEF  II  BAC
Holders  whose  OTEF  II  BACs are currently  reported  on  their
brokerage  account statements will not receive  certificates  for
their  New BACs.  Instead, the New BACs for such holders will  be
issued  in a form that will: (i) enable the New BACs to  continue
to  be  reported  on their account statements;  (ii)  enable  all
distributions payable with respect to such New BACs  to  continue
to  be  credited directly to their brokerage accounts; and  (iii)
enable  such  OTEF II BAC Holders to hold or sell  the  New  BACs
through their brokerage firm accounts.  Such form of issuance  is
referred to as "street name" issuance, and is the same form  that
generally  applies  to  traded securities  held  in  a  brokerage
account.

   The Status Quo BACs will be issued in the same uncertificated,
book-entry form as the current OTEF II BACs.

Business Plan for Growth
    Under the Liquidity and Growth Plan, OTEF II will invest  the
proceeds of the Financing and any additional funds that  OTEF  II
may  obtain  in  new  assets  described  below  to  increase  the
distributions payable with respect to the New BACs and the  value
to the Liquidity BAC Holders.

   Refunding and Financing.  As of December 31, 1996, OTEF II had
refunded  10  of the Existing MRBs, which comprise  approximately
two-thirds  of OTEF II's portfolio.  An additional  two  Existing
MRBs  were  refunded during the first quarter  of  1997.   It  is
expected  that  the refunding of the two remaining Existing  MRBs
will   close  during  1997.   Refunding  an  Existing  MRB  means
exchanging that bond for newly issued refunding bonds ("Refunding
Bonds") with approximately the same principal amount, an extended
maturity and restructured interest rates that increase each  year
during the terms of the Refunding Bonds and that are designed  to
require   the  limited  partnerships  which  own  the  properties
securing  the  bonds  (the  "Operating  Partnerships")   to   pay
substantially all of their projected cash flow as interest on the
Refunding Bonds.

    The Refunding Bonds are structured so as to consist of senior
bonds  ("Series  A  Bonds")  and subordinated  bonds  ("Series  B
Bonds").  This senior/subordinated structure will permit OTEF  II
to undertake the Financing, pursuant to which it will sell all or
a  portion of the Series A Bonds (or interests therein) that  are
designated as Liquidity Assets, or issue debt that may be secured
by  such  assets,  new assets or both.  OTEF II will  retain  the
related  Series  B  Bonds for the benefit of  the  Liquidity  BAC
Holders, and will retain both the senior Series A Bonds  and  the
subordinated  Series  B  Bonds, or interests  therein,  that  are
designated as Status Quo Assets for the benefit of the Status Quo
BAC Holders.  See "Report of Management - Refunding Bonds."

    In  addition to the proceeds from the Financing, OTEF II  may
acquire  new  assets: (i) from the proceeds  of  sales  or  other
dispositions  of  the  Refunding  Bonds  and  the  proceeds  from
principal  payments with respect to the Refunding  Bonds  (except
for  the  portion of such proceeds allocable to the  SQBs);  (ii)
from  the  proceeds of sales or other dispositions of new  assets
and  the  proceeds from principal payments with  respect  to  new
assets; (iii) from the proceeds of issuances of additional equity
securities, including additional limited partnership interests in
OTEF  II  and additional OTEF II BACs; (iv) by issuing additional
equity securities in exchange for new assets; or (v) by borrowing
funds  from  lenders  or  by issuing evidences  of  indebtedness.
Although  the  Managing  General  Partner  is  authorized   under
OTEF  II's  partnership agreement to reinvest cash  flow  in  new
assets,  it  has  no  current plans to do so in  the  foreseeable
future.

   Investment in New Assets. The Managing General Partner intends
to  invest  primarily in additional mortgage  revenue  bonds  and
securities  of  other  entities which primarily  hold  tax-exempt
mortgage  revenue bonds.  OTEF II also may invest in  multifamily
real  estate, senior living facilities or residential health care
facilities, or other direct or indirect debt or equity  interests
in  such  real  estate, some of which may give  rise  to  taxable
income,  but  the  Managing General Partner  does  not  currently
expect that these types of investments will be a significant part
of its business in the foreseeable future.  (All of the foregoing
are referred to collectively as "New Assets".)

<PAGE> 20

    OTEF  II  generally will acquire additional mortgage  revenue
bonds  and  taxable  bonds  that are not  rated  by  any  of  the
nationally  recognized rating agencies (such as Moody's  Investor
Services, Inc. or Standard & Poor's Ratings Group) and  that  are
not credit-enhanced at the time of acquisition, although OTEF  II
may  seek  to have all or a portion of such bonds credit-enhanced
or  rated at a future date.  It also is expected that OTEF II may
invest in bonds, including bonds that may be secured by bonds  or
mortgages that are subordinated to senior bonds or mortgages held
by third parties, on terms that will permit it, in many cases, to
participate (either through stepped interest rates or  otherwise)
in  the  future  growth and increase in value of  the  properties
financed  by such bonds.  In addition, in the case of bonds  that
require restructuring, it is anticipated that OTEF II may be able
to  acquire such bonds on a discounted basis, that is, where  the
nominal  principal amount of the bond exceeds the purchase  price
and/or  the estimated current liquidation value of the underlying
property.

Liquidity and Capital Resources
    Current Position.  OTEF II uses the payments it receives from
the  Operating  Partnerships primarily for distributions  to  its
General  Partners and OTEF II BAC Holders, to pay  administrative
expenses, to pay for the costs associated with the implementation
of  the 1995 OTEF Restructuring Plan, including litigation  costs
associated   with  the  settlement  of  the  OTEF  II  Litigation
described  in  Note  8  to  Financial  Statements,  and  to  fund
reserves.  Except as may be required in connection with the  1995
OTEF  Restructuring Plan, OTEF II has no commitments for  capital
expenditures.  A distribution for the quarter ended December  31,
1996, in the amount of $3,642,796, or $11.90 per BAC, (4.76%  per
annum  on  the  original $1,000 invested per  BAC)  was  made  on
February  14,  1997.   This distribution is consistent  with  the
distributions made for the previous seven quarters.

Set forth below is a year-by-year comparison of OTEF's and
OTEF II's liquidity:
    1996  versus  1995.  As of December 31, 1996,  OTEF  II  held
$12,072,000  in  cash  and  cash  equivalents,  an  increase   of
$2,374,000, or approximately 24.5%, from $9,698,000 in  cash  and
cash  equivalents held as of December 31, 1995.  The increase  in
OTEF  II's  cash  and  cash equivalents is due  primarily  to  an
increase  in  payments  received  from  its  investments  in  the
Existing  MRBs  and  the Refunding Bonds,  and  the  increase  in
Accounts  Payable  and  Accrued  Expenses  of  $2,829,000  (which
represents unpaid litigation and settlement costs).  The increase
in   OTEF   II's  cash  and  cash  equivalents  was   offset   by
administrative,  governance and litigation costs associated  with
the implementation of the 1995 OTEF Restructuring Plan which were
paid during 1996.

   Cash and cash equivalents represent interest payments received
from  the  Operating  Partnerships held in anticipation  of:  (i)
distributions  to its General Partners and OTEF II  BAC  Holders;
(ii) payment of OTEF II's governance and administrative expenses;
and (iii) payment of litigation and settlement costs.

    Governance and administrative expenses totaled $1,692,000 for
the  year ended December 31, 1996, as compared to $1,416,000  for
the  year  ended  December 31, 1995 for OTEF II  and  OTEF.   The
increase of $276,000 is primarily attributable to an increase  in
general  legal fees relating to the normal operations of OTEF  II
and an increase in expense reimbursements to the General Partners
and their affiliates.
   
    Litigation  and settlement costs, which are costs  associated
with  defending  OTEF II against the litigation  described  in
Note  8  to  Financial Statements, totaled $3,158,000 during  the
year  ended December 31, 1996.  This amount includes $2.5 million
payable  by OTEF II with respect to certain attorney's  fees  and
reimbursement of expenses incurred.

    1995  versus  1994.  As of December 31, 1995,  OTEF  II  held
$9,698,000  in cash and cash equivalents, including  the  balance
transferred  from  the working capital reserve,  an  increase  of
$843,000, or approximately 9.5%, from the total of $7,338,000  in
cash  and  cash  equivalents and $1,518,000  in  working  capital
reserve held as of December 31, 1994.  The increase in OTEF  II's
cash  and  cash equivalents was due primarily to: (i) an increase
in  payments received from its investments in Existing MRBs,  and
(ii)  an  Oxford  advance  of an additional  $1  million  of  its
remaining  Operating  Deficit  Guarantees  to  certain  Operating
Partnerships  which,  in  turn, used  these  funds  to  pay  OTEF
additional  Base  Interest  in January  1995.   The  increase  in
OTEF II's cash and cash equivalents was offset by administrative,
governance,  issuance, and bond refunding costs  associated  with
the implementation of the 1995 OTEF Restructuring Plan.

<PAGE> 21

    The  Managing  General Partner of OTEF II determined  that  a
separate  working  capital reserve was no longer  warranted  and,
accordingly, the amount of the reserve was combined with cash and
cash equivalents for financial statement presentation.  Cash  and
cash  equivalents represent interest payments received  from  the
Operating Partnerships held in anticipation of: (i) distributions
to  its General Partners and OTEF II BAC Holders; (ii) payment of
OTEF   II's   administrative  expenses;  and  (iii)  payment   of
governance, issuance and bond refunding costs.

    Governance and administrative expenses totaled $1,241,000 for
the  seven  months ended December 31, 1995 that OTEF  II  was  in
operation,  and $175,000 for the five months ended May  31,  1995
for  OTEF.   OTEF  II's and OTEF's governance and  administrative
expenses totaled $1,416,000 for the year ended December 31, 1995,
as  compared  to $410,000 for the year ended December  31,  1994.
The increase was primarily attributable to the development of the
1995 OTEF Restructuring Plan.

    1995  Pro  Forma.   On  June 1, 1995, with  the  transfer  of
substantially all of the assets of OTEF to OTEF II and the change
in  managing  general  partner from  Oxford  Tax  Exempt  Fund  I
Corporation  to  Oxford Tax Exempt Fund II Corporation,  OTEF  II
began  accounting  for  its  investments  in  Existing  MRBs   in
accordance  with Statement of Financial Accounting Standards  No.
115-Accounting  for  Certain  Investments  in  Debt  and   Equity
Securities  ("SFAS No. 115").  Accordingly, OTEF II records  cash
receipts  from  the  Operating Partnerships  as  interest  income
rather  than  as a reduction of its investment in Existing  MRBs.
Consequently, the first five months of 1995 were presented  under
the  equity method and the last seven months under SFAS No.  115.
For purposes of clarity, the Managing General Partner included  a
"Pro  Forma" column in the "Statements of Income" which  reflects
1995  Operations as if SFAS No. 115 had applied during the entire
year.   Oxford  advances  of $1 million  made  to  the  Operating
Partnerships  and  paid  to OTEF in January  1995  as  additional
interest are included in the Statements of Income, but have  been
excluded for purposes of the pro forma columnar presentation,  as
these payments are nonrecurring in nature.

    1994  versus  1993.   As  of December  31,  1994,  OTEF  held
$7,338,000  in  cash and cash equivalents, exclusive  of  working
capital  reserve,  an  increase of  104%  ($3,741,000)  from  the
$3,597,000 held as of December 31, 1993.  This amount represented
interest  payments received from the Operating Partnerships  held
in  anticipation  of: (i) the distribution to  Partners  made  on
February 14, 1995; (ii) payment of OTEF's administrative expenses
for  the  quarter  ended  December 31,  1994;  and  (iii)  costs,
expenses and reserves associated with the 1995 OTEF Restructuring
Plan.   The  increase in cash and cash equivalents  is  discussed
below.   Administrative and BAC issuance costs paid  during  1994
totaled $720,000, as compared to administrative expenses paid  in
1993  totaling $421,000 representing an increase of approximately
71%  ($299,000).  During 1994, OTEF also incurred  an  additional
$555,000  in  costs  associated with the 1995 OTEF  Restructuring
Plan.

    The  increase in OTEF's cash and cash equivalents was due  to
several  factors.   For  the year ended December  31,  1994,  the
distributions received by OTEF from the Existing MRBs  and  other
loans  increased to $18,672,000, compared to $14,010,000 for  the
same  period  in 1993, as a result of the following two  factors:
(i) increases in cash flows from improved property operations  of
approximately $1.4 million for the year ended December 31,  1994,
compared  to  the same period in 1993, and (ii) $3.3  million  of
additional interest paid by certain Operating Partnerships during
1994  as  a  result  of advances made by Oxford.   The  Operating
Partnerships did not receive any advances from Oxford during  the
year  ended  December 31, 1993.  In addition to the  increase  in
distributions from the Existing MRBs, approximately $1.4  million
was transferred from the bond depository account to replenish the
existing   working  capital  reserve  account  to  $1.5  million.
Finally, the Chambrel at Club Hill Senior Living Community repaid
to OTEF approximately $800,000 of principal on project loans that
were previously advanced, compared to approximately $1 million of
principal  on  project  loans repaid from certain  Senior  Living
Communities for the same period in 1993.

   Existing MRBs.  As of December 31, 1996, OTEF II held Existing
MRBs  for four of the Operating Partnerships.  An additional  two
refunding transactions were completed during the first quarter of
1997.   It  is  expected that the refunding of the two  remaining
Existing MRBs will close during 1997.

    The term of each Existing MRB, and accordingly, each Mortgage
Loan is 24 years.  The principal will not be amortized during the
term of the Existing MRB, and will be required to be repaid in  a
lump-sum balloon payment at the expiration of the bond term or at
such earlier time as OTEF II may require.  Beginning on the first

<PAGE> 22
day  of the thirteenth year and continuing through the end of the
fourteenth year, OTEF II may require payment of all principal and
deferred  interest  due, upon 12 months' prior  notice.   In  the
fifteenth  year (if an Existing MRB has not been repaid earlier),
OTEF  II will demand payment of principal and deferred contingent
interest due.  Each Mortgage Loan is nonassumable and due on sale
of the Mortgaged Property.

    Existing  MRB Interest.  The primary source of cash  receipts
for  OTEF  II is tax-exempt interest received from the  Operating
Partnerships pursuant to their debt service obligations under the
bond  documents  and interest earned on OTEF II's cash  reserves.
The  Existing MRBs and the underlying Mortgage Loans continue  to
provide  for the payment of interest at an aggregate annual  rate
of  up  to  16%,  consisting  of  Base  Interest  and  additional
Contingent Interest.  Base Interest is owed at the rate of  8.25%
per  annum, but is payable only to the extent funds are available
from  cash  flow  and  sale or refinance proceeds.   Unpaid  Base
Interest  is deferred, with additional interest charged  on  such
deferred  amounts  at  the rate of 8.25%  per  annum,  compounded
monthly and payable from future cash flow and sale or refinancing
proceeds.   

   As previously reported, under the 1988 OTEF Restructuring Plan
and the Debt Modification Agreements, dated as of April 12, 1995,
as amended, OTEF, OTEF II, the Operating Partnerships, and Oxford
entered  into certain forbearance arrangements which modify  many
of the terms of the Existing MRBs described above.  At such time 
as the Existing MRBs are refunded, the obligations of the Operating
Partnerships will be modified substantially as discussed below.

Refunding Bonds
    Series  A  Bonds.   The  term of  each  Refunding  Bond  and,
accordingly, each Mortgage Loan is 30 years following the date of
refunding.   The  Series A Bonds require interest  only  payments
during  the  first  three years and, thereafter,  are  subject  to
annual  sinking  fund  redemptions  that  will  result  in   full
amortization  of the Series A Bonds during the 27-year  remaining
term.

    Series  A  Bond Interest and Principal.  The Series  A  Bonds
require pre-determined annual sinking fund redemptions based on a
27-year  amortization  schedule beginning  in  the  fourth  year,
calculated  with an assumed rate of interest of  5.6%  per  year.
Series  A Bond interest will be set initially at closing  of  the
refundings  and  reset annually at a market  rate  based  upon  a
percentage  of  the then prevailing one-year U.S.  Treasury  Bill
rate,  with  a  maximum  rate of 5.6%  per  annum.   The  initial
interest rate on the Series A Bonds that have been issued to date
is 4.9%.  Upon a remarketing, the Series A Bonds may be converted
to  a  different interest rate mode (fixed or floating)  and  the
interest  rates  may  be modified at that  time  to  reflect  the
prevailing  market  interest rates for  whatever  rate  mode  and
remaining term is then applicable.

    Series  B  Bonds.   The  term of  each  Series  B  Bond  and,
accordingly, each Mortgage Loan is 30 years following the date of
refunding.

    Series  B  Bond Interest and Principal.  The Series  B  Bonds
accrue  interest  equal  to  the product  of  the  Combined  Rate
(as defined below) multiplied by the total combined principal 
balance of the  Series
A  Bonds  and  the Series B Bonds for each Operating Partnership,
less  the  interest payable on the related Series  A  Bonds;  the
resulting amount of interest divided by the principal balance  of
the Series B Bonds equals the interest accrual rate on the Series
B  Bonds.  Interest-only is payable on the Series B Bonds to  the
extent of available cash flow of the Operating Partnerships, with
the entire principal balance due at maturity.

    Combined Rate.  The Combined Rate represents that portion  of
each Property's projected Cash Flow Before Debt Service ("CFBDS")
for  each  year (projected at the time of the refunding  of  each
Existing  MRB)  that may be applied to interest on  the  combined
Series  A  Bonds  and Series B Bonds.  See Note  7  to  Financial
Statements for a schedule of the Combined Rates of the  Refunding
Bonds over the next 10 years.

    Other  Sources.   In  connection with  the  closing  of  each
Refunding  Bond, the applicable Operating Partnership will  enter
into certain agreements which provide as follows: (i) for so long
as   the  Series  A  Bonds  remain  outstanding,  each  Operating
Partnership will apply its net operating income before payment of
interest and principal on its Series B Bonds to make loans to the

<PAGE> 23
Operating Partnerships for the payment of interest and principal,
and  related  fees and expenses, reserves and deposits  owed  by
such  Operating Partnerships on their respective Series A  Bonds  to
the  extent the other Operating Partnerships are unable  to  make
such payments on their respective Series A Bonds, and (ii) for  so
long  as OTEF II owns the majority of the Series B Bonds relating
to  an  Operating Partnership's property and the Managing General
Partner  of  OTEF  II  is an affiliate of  the  current  Managing
General Partner, the Operating Partnerships will deposit into  an
account  available cash flow after the obligations  described  in
subparagraph  (i)  above have been met and the payments  required
under that Operating Partnership's Series B Bonds have been made,
which  funds shall be applied at OTEF II's discretion to,  among
other  things,   make loans to other Operating Partnerships  to
enable them to make all debt service payments due on their Series
B Bonds.

    The Operating Partnerships have also made additional interest
payments  on  their  Existing  MRBs  and  funded  certain   costs
associated with the bond refundings from two additional  sources:
advances   made  by  Oxford  Development  Corporation  ("Oxford")
pursuant to its operating deficit guarantees, and obligations  of
Oxford and the Operating Partnerships under the Yield Maintenance
Reserve  ("YMR") Agreement.  At December 31, 1996, only  $187,813
of YMR obligations were outstanding; these were satisfied in full
by  March  4, 1997.   As  discussed  in  prior reports, Oxford is 
continuing  to  hold  proceeds from the $2 million Treasury strip
bond that it received on August 15, 1996.  At  December 31, 1996,
Oxford was holding $1,524,432 of such proceeds  in  an interest-
bearing  account pending a determination  as  to which Operating
Partnerships these funds should be allocated.    This allocation
will be based on the  individual  refunding  costs  and  reserve 
requirements of the Operating Partnerships.

Results of Operations

   The Partnership's Operations
    1996  versus  1995.   Distributions to Partners  amounted  to
$14,571,000 for 1996.  This equates to an annual distribution per
BAC  of $47.60.  For financial statement purposes, Net Income and
Net Income per BAC were $14,912,000 and $48.71, respectively, for
the  year  ended  December  31, 1996.   For  financial  statement
purposes,  Net Income and Net Income per BAC were $8,369,000  and
$27.34,   respectively,   for  the   seven-month   period   ended
December  31, 1995 for OTEF II under SFAS No. 115, and $2,277,000
and  $7.44, respectively, for the five-month period ended May 31,
1995, under the equity method of accounting for OTEF.

    1995  versus  1994.   Distributions to Partners  amounted  to
$14,571,000 for 1995.  This equates to an annual distribution per
BAC  of $47.60.  For financial statement purposes, Net Income and
Net  Income per BAC were $8,369,000 and $27.34, respectively, for
the  seven-month period ended December 31, 1995 for OTEF II under
SFAS  No.  115, and $2,277,000 and $7.44, respectively,  for  the
five-month period ended May 31, 1995, under the equity method  of
accounting for OTEF.  For the year ended December 31,  1994,  Net
Income and Net Income per BAC for OTEF were $3,726,000 and $12.17
under the equity method of accounting.

    The  Partnership's  Pro Forma Operations.   For  purposes  of
clarity,  the Managing General Partner has included an additional
"Pro  Forma" column in the Statements of Income.  This pro  forma
information has been prepared as if: (i) OTEF II was in existence
during the period presented; (ii) OTEF II acquired the assets  of
OTEF  in exchange for OTEF II BACs on January 1, 1995; and  (iii)
OTEF II began accounting for its investments in the Bonds on that
date  under  the new accounting method.  For pro forma  financial
statement  purposes,  Net  Income and Net  Income  per  BAC  were
$15,210,000  and  $49.69,  respectively,  for  the   year   ended
December  31, 1995.  Oxford advances of $1 million  made  to  the
Operating  Partnerships  and paid to  OTEF  in  January  1995  as
additional interest are included in the Statements of Income, but
have  been excluded from the pro forma columnar presentation,  as
these payments are nonrecurring in nature.

    1994  versus  1993.   Distributions to Partners  amounted  to
$13,775,000 for 1994.  This equates to an annual distribution per
BAC  of $45.00.  For financial statement purposes, Net Income and
Net  Income  per  BAC were $3,726,000 and $12.17  in  1994.   The
$1,480,000 change in Net Income reported by OTEF between 1994 and
1993   reflected  improvements  in  property  performance.    The
Operating  Partnerships'  aggregate  1994  net  operating  income
increased  over  the  aggregate  1993  net  operating  income  by
approximately  $1,417,000,  or  approximately  9%,  allowing  the
Operating Partnerships to increase their payment of Base Interest
to  OTEF.   OTEF's administrative expenses increased slightly  by
$5,000  or  approximately 1%.  OTEF also incurred  an  additional
$555,000  in  costs  associated with the 1995 OTEF  Restructuring
Plan.

<PAGE> 24

   The Operating Partnerships' Operations
     The   operating  performance  of  each  of   the   Operating
Partnerships depends primarily on occupancy and rental rates, the
amount  of rent actually collected and expenditures for  property
improvements   and   operating  expenses  for  their   respective
Properties.  The occupancy and rental rates, in turn, depend on a
number  of factors, including the location of a Property  in  its
particular  community, local economic conditions and  changes  in
neighborhood  characteristics, demand for  similar  housing,  and
competition  from  existing and future housing complexes  in  the
vicinity of each Property.

    As  of December 31, 1996 and 1995, the Operating Partnerships
had  cumulative unpaid Base Interest and interest on interest  at
8.25% per annum, compounded monthly, of approximately $27,621,000
and  $94,630,000, respectively.  Under the applicable  method  of
accounting,  this unpaid Base Interest was not reflected  in  the
financial  statements  of  OTEF II  or  OTEF.   In
connection with the completion of the refundings for  10  of  the
Existing  MRBs,  approximately $78 million of  cumulative  unpaid
Base Interest and interest on interest was written-off during 1996.

    1996  versus  1995.  The Operating Partnerships  reported  an
aggregate  net  operating income before property improvements  of
approximately $21,475,000 for the year ended December  31,  1996,
representing an increase of approximately $811,000, or 3.9%, over
the  aggregate net operating income before property  improvements
reported  for the same period in 1995.  In addition,  during  the
year  ended  December  31,  1996,  overall  property  improvement
expenditures   were  approximately  $2,227,000,  representing   a
decrease  of  approximately $685,000, or 23.5%, compared  to  the
same period in 1995.

    The  Operating Partnerships that own the four  Senior  Living
Communities  reported  an aggregate net operating  income  before
property  improvements of approximately $5,723,000 for  the  year
ended   December   31,   1996,  representing   an   increase   of
approximately   $746,000,  or  14.9%,  over  the  aggregate   net
operating  income before property improvements reported  for  the
same  period  in 1995.  The weighted average occupancy  rate  for
these  four properties at December 31, 1996 was 94%, compared  to
90%  at  December  31, 1995.  The weighted average  monthly  rent
collected   for   December  1996  for  the  four  Senior   Living
Communities increased by approximately 3% to $1,776, compared  to
$1,720 for the same period in 1995.  In addition, during the year
ended   December   31,   1996,   overall   property   improvement
expenditures   for  the  four  Senior  Living  Communities   were
approximately $623,000, representing an increase of approximately
$26,000, or 4.4%, compared to the same period in 1995.

    The  Operating Partnerships that own the 10 garden apartments
reported  an  aggregate  net  operating  income  before  property
improvements  of  approximately $15,752,000 for  the  year  ended
December  31,  1996,  representing an increase  of  approximately
$65,000, or less than 1%, over the aggregate net operating income
before  property  improvements reported for the  same  period  in
1995.   The  weighted average occupancy rate for  the  10  garden
apartment communities was approximately 92% at December 31, 1996,
compared  to  94%  at  December 31, 1995.  The  weighted  average
monthly  rent  collected  for December 1996  for  the  10  garden
apartments  increased by approximately 5% to  $758,  compared  to
$722  for the same period in 1995.  In addition, during the  year
ended   December   31,   1996,   overall   property   improvement
expenditures   were  approximately  $1,604,000   representing   a
decrease  of  approximately $711,000, or 30.7%, compared  to  the
same period in 1995.

    1995  versus  1994.  The Operating Partnerships  reported  an
aggregate  net  operating income before property improvements  of
approximately $20,664,000 for the year ended December  31,  1995,
representing  an increase of approximately $1,662,000,  or  8.8%,
over   the   aggregate  net  operating  income  before   property
improvements reported for the same period in 1994.  In  addition,
during  the  year  ended  December  31,  1995,  overall  property
improvement    expenditures   were   approximately    $2,912,000,
representing  an  increase  of approximately  $505,000,  or  21%,
compared to the same period in 1994.

    The  Operating Partnerships that own the four  Senior  Living
Communities  reported  an aggregate net operating  income  before
property  improvements of approximately $4,977,000 for  the  year
ended   December   31,   1995,  representing   an   increase   of
approximately   $621,000,  or  14.3%,  over  the  aggregate   net
operating  income before property improvements reported  for  the
same  period  in 1994.  The weighted average occupancy  rate  for
these  four properties at December 31, 1995 was 90%, compared  to
91%  at  December 31, 1994.  As previously reported, the increase
in  aggregate  net  operating income and  decrease  in  occupancy

<PAGE> 25
rates,  compared  to  December 31,  1994,  is  primarily  due  to
substantial  increases  in  rents being  required  on  all  lease
renewals for the four communities.  The weighted average  monthly
rent  collected  for  December 1995 for the  four  Senior  Living
Communities increased by approximately 10% to $1,720, compared to
$1,565 for the same period in 1994.  In addition, during the year
ended   December   31,   1995,   overall   property   improvement
expenditures   for  the  four  Senior  Living  Communities   were
approximately  $597,000, representing a decrease of approximately
$213,000, or 26.3%, compared to the same period in 1994.

    The  Operating Partnerships that own the 10 garden apartments
reported  an  aggregate  net  operating  income  before  property
improvements  of  approximately $15,687,000 for  the  year  ended
December  31,  1995,  representing an increase  of  approximately
$1,041,000,  or  7.1%,  over the aggregate net  operating  income
before  property  improvements reported for the  same  period  in
1994.   The  weighted average occupancy rate for  the  10  garden
apartment communities was approximately 94% at December 31, 1995,
which   is  consistent  with  the  occupancy  rate  reported   at
December  31, 1994.  The weighted average monthly rent  collected
for  December  1995  for  the 10 garden apartments  increased  by
approximately 3% to $722, compared to $699 for the same period in
1994.   In  addition,  during the year ended December  31,  1995,
overall  property  improvement  expenditures  were  approximately
$2,315,000 representing an increase of approximately $718,000, or
44.9%, compared to the same period in 1994.

    1994  versus  1993.  The Operating Partnerships  reported  an
aggregate  net  operating income before property improvements  of
approximately $19,002,000 for the year ended December  31,  1994,
representing an increase of approximately 8%, or $1,437,000, over
the  aggregate net operating income before property  improvements
reported  for the same period in 1993.  However, during the  year
ended   December   31,   1994,   overall   property   improvement
expenditures  were  approximately  $2,407,000,  representing   an
increase  of approximately $20,000, or less than 1%, compared  to
the same period in 1993.

    The  Operating Partnerships that own the four  Senior  Living
Communities  reported  an aggregate net operating  income  before
property  improvements of approximately $4,356,000 for  the  year
ended  December  31,  1994, representing an approximate  11%  (or
$442,000) increase over the aggregate net operating income before
property improvements reported for the same period in 1993.   The
weighted  average  occupancy rate for these  four  properties  at
December 31, 1994 was 91%, compared to 92% at December 31,  1993.
The   weighted  average  monthly  rent  collected  increased   by
approximately  4%.   As  previously  reported,  the  Chambrel  at
Montrose Senior Living Community was in the process of converting
13  independent  living units to 19 assisted  living  beds.   The
conversion  was completed during the quarter ended September  30,
1994.   Occupancy  at  the  Chambrel at  Montrose  Senior  Living
Community increased five percentage points, from 81% as of  March
31,  1994,  to 86% as of December 31, 1994.  As a result  of  the
conversion,  the  Chambrel at Montrose  Senior  Living  Community
anticipates  a  significant improvement in property  performance.
The  Chambrel  at Montrose Senior Living Community  continues  to
strengthen its commitment to marketing.  During the period  ended
December  31,  1994, overall property improvements  increased  by
approximately  $206,000, or 34%, for the  Operating  Partnerships
that own the four Senior Living Communities, compared to the same
period in 1993.

    The  Operating Partnerships that own the 10 garden apartments
reported  an  aggregate  net  operating  income  before  property
improvements  of  approximately $14,646,000 for  the  year  ended
December 31, 1994, representing an increase of approximately  7%,
or  $995,000,  over  the  aggregate net operating  income  before
property improvements reported for the same period in 1993.   The
weighted  average  occupancy rate for  the  10  garden  apartment
communities  was  approximately 94%  at  December  31,  1994  and
December  31, 1993.  The weighted average monthly rent  collected
for December 31, 1994 increased by approximately 4%, compared  to
December  31, 1993.  During the period ended December  31,  1994,
overall   property   improvements  decreased   by   approximately
$186,000, or 10%, for the Operating Partnerships that own the  10
garden  apartment  communities,  compared  to  the  period  ended
December 31, 1993.

<PAGE> 26

Summary

    With  the restructuring program nearly completed, OTEF II  is
poised  to take advantage of attractive investment opportunities.
The refunding of the Existing MRBs held by OTEF II is expected to
give  OTEF  II access to the capital markets.  The Liquidity  BAC
Holders should benefit from the increase in value of the OTEF  II
BACs  that  is expected to occur as OTEF II acquires new  assets.
In  addition, the Liquidity BAC Holders should benefit from  more
efficient market pricing of the OTEF II BACs that is expected  to
occur  as  a  result of listing the OTEF II BACs  on  a  national
securities exchange.

    As  more fully described in the Annual Report, the Status Quo
BAC  Holders  will continue to hold an interest in  all of the  
bonds collaterialized by the Existing Mortgaged Properties. 
The Status Quo BACs will not benefit from any new  assets
acquired by OTEF II, and they will not be listed for trading on a
national securities exchange.

<PAGE> 27

-----------------------------------------------------------------
Report of Independent Accountants                                
-----------------------------------------------------------------
                                                                 
To  the  Partners and BAC Holders of Oxford Tax  Exempt  Fund  II
Limited Partnership:                                             
                                                                 
    We have audited the accompanying balance sheets of Oxford Tax
Exempt  Fund II Limited Partnership, as successor to the business
interest of Oxford Tax Exempt Fund Limited Partnership,  as  more
fully described in Note 2, as of December 31, 1996 and 1995,  and
the  related  statements of income, partners'  capital  and  cash
flows   for  each  of  the  three  years  in  the  period   ended
December   31,   1996.   These  financial  statements   are   the
responsibility  of  the Partnership's Managing  General  Partner.
Our  responsibility is to express an opinion on  these  financial
statements based on our audits.                                  
                                                                  
    We conducted our audits in accordance with generally accepted
auditing  standards.  Those standards 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.   An
audit also includes assessing the accounting principles used  and
significant  estimates made by management, as well as  evaluating
the  overall  financial statement presentation.  We believe  that
our audits provide a reasonable basis for our opinion.           
                                                                 
    In  our  opinion, the financial statements referred to  above
present  fairly, in all material respects, the financial position
of   Oxford  Tax  Exempt  Fund  II  Limited  Partnership  as   of
December 31, 1996 and 1995, and the results of its operations and
its  cash  flows for each of the three years in the period  ended
December   31,  1996,  in  conformity  with  generally   accepted  
accounting principles.                                           



                                     /s/ Coopers & Lybrand L.L.P.
                                     ----------------------------
                                     Coopers & Lybrand L.L.P.




Washington, D.C.
February 11, 1997,
  except as to certain of the information
  presented in Note 7 for which the date
  is March 6, 1997







<PAGE> 28

Oxford Tax Exempt Fund II Limited Partnership

<TABLE>
------------------------------------------------------------------------
Balance Sheets (in thousands)                                           
------------------------------------------------------------------------
<CAPTION>                                                               
December 31,                                        1996        1995   
------------------------------------------------------------------------
<S>                                               <C>         <C>
Assets                                                                   
  Investments in Bonds                            $215,529    $164,000 
  Cash and cash equivalents                         12,072       9,698 
  Bond interest receivable                           1,099           0    
  Other, primarily interest receivable                  33          26 
  Due from affiliates                                    0         310 
------------------------------------------------------------------------ 
       Total Assets                               $228,733    $174,034 
======================================================================== 
Liabilities and Partners' Capital                                        
  Liabilities                                                           
    Accounts payable and accrued expenses         $  3,321    $    492  
    Distributions payable                            3,643       3,643 
------------------------------------------------------------------------
       Total Liabilities                             6,964       4,135 
------------------------------------------------------------------------
Contingencies and commitments (Notes 8 and 9)                           
                                                                         
   Partners' Capital                                                    
      General Partners                              (2,393)     (2,400) 
      Limited Partners' Interests (Beneficial      161,665     161,331 
       Assignee Interests 299,995 interests                             
       issued and outstanding)                                         
      Unrealized Gain on Investments                62,497      10,968 
------------------------------------------------------------------------ 
       Total Partners' Capital                     221,769     169,899 
------------------------------------------------------------------------ 
       Total Liabilities and Partners' Capital    $228,733    $174,034 
========================================================================
     The accompanying notes are an integral part of these financial 
                              statements.
</TABLE>















<PAGE> 29

Oxford Tax Exempt Fund II Limited Partnership

<TABLE>                                                                                                                  
------------------------------------------------------------------------------------------------------------------------ 
Statements of Income (in thousands, except per BAC amounts)                                                              
------------------------------------------------------------------------------------------||---------------------------- 
<CAPTION>                                                                                 ||                               
                                                              (Unaudited)                 ||                             
                                                              OTEF II<F3>                 ||                             
                                                 OTEF II       PRO FORMA      OTEF II     ||     OTEF          OTEF      
                                                 Twelve         Twelve         Seven      ||     Five         Twelve     
                                              months ended   months ended   months ended  || months ended  months ended  
                                              December 31,   December 31,   December 31,  ||    May 31,    December 31,  
                                                  1996           1995           1995      ||      1995         1994      
------------------------------------------------------------------------------------------||---------------------------- 
<S>                                              <C>            <C>            <C>        ||     <C>          <C>        
Revenues                                                                                  ||                             
  Interest on Bonds<F1>                          $19,411        $16,283        $9,414     ||     $    0       $    0     
  Equity income on investments in Bonds<F2>            0              0             0     ||      2,305        3,949      
  Other, primarily interest on short-term                                                 ||                             
   investments                                       351            343           196     ||        147          187      
------------------------------------------------------------------------------------------||---------------------------- 
                                                  19,762         16,626         9,610     ||      2,452        4,136     
Expenses                                                                                  ||                             
  Governance and administrative expenses           1,692          1,416         1,241     ||        175          410     
  Litigation and settlement costs                  3,158<F4>          0             0     ||                             
------------------------------------------------------------------------------------------||---------------------------- 
Net income                                       $14,912        $15,210        $8,369     ||     $2,277       $3,726     
==========================================================================================||============================ 
Net income allocated to General Partners         $   298        $   304        $  167     ||     $   45       $   74     
==========================================================================================||============================ 
Net income allocated to BAC holders              $14,614        $14,906        $8,202     ||     $2,232       $3,652     
==========================================================================================||============================ 
Net income per BAC                               $ 48.71        $ 49.69        $27.34     ||     $ 7.44       $12.17     
==========================================================================================||============================ 
Distribution per BAC                             $ 47.60        $ 47.60        $35.70     ||     $11.90       $45.00     
==========================================================================================||============================ 
<FN>                                                                                                                      
<F1> On  June  1,  1995,  OTEF  II  adopted the provisions  of  Statement  of Financial  Accounting Standards  No. 115-   
     Accounting for Certain  Investments  in Debt  and Equity Securities in connection with the transfer of all  assets   
     and liabilities from OTEF to  OTEF II.  Under  this  method,  payments on  the  Existing  MRBs  by  the  Operating           
     Partnerships were treated as interest income.                                                                        
<F2> From October 1, 1987 to May 31, 1995, OTEF's investments in the Existing MRBs were accounted for under the  equity    
     method, in accordance with Financial Release No. 28 and a notice issued to practitioners, dated February 10, 1986,   
     by  the  Accounting  Standards  Executive  Committee, which  provides  guidance  on  accounting   for  real estate     
     acquisition, development and construction lending arrangements.  Under this method, OTEF's investments in Existing 
     MRBs  were: (i) reduced for interest payments (Base Interest)  received; (ii)  increased  or  decreased  by OTEF's 
     equity, which was based on its participation  percentages (generally 50%, except  when  it had outstanding project  
     advances to an Operating Partnership) in the income or  losses  of  the  related Operating Partnerships; and (iii)  
     written down to the fair value of the Properties  with such  fair  value representing the  present  value  of  the 
     projected cash flows from the Properties.  Since  OTEF  had  outstanding  project  loans  to certain senior living  
     Operating Partnerships from 1989 to 1995, OTEF's  participation  percentages  were  increased  to  100%  for these 
     Operating Partnerships during these years.                                                                          
<F3> This pro forma column has been prepared as if: (i) OTEF II had been in existence during the period presented; (ii) 
     OTEF II had acquired the assets of OTEF in exchange for OTEF II BACs on January 1, 1995; and  (iii)  OTEF  II  had  
     began accounting for its investments in the Bonds on that date under the new  accounting  method.   Under the  pro 
     forma presentation, $1 million in Oxford  advances,  which were made to the  Operating  Partnerships  in  December 
     1994 from the U.S. Treasury strip bond that matured November 15,  1994,  and paid  to OTEF as additional  interest 
     in January 1995, have been excluded from the Statements of Income  and the Statements of Cash  Flows  since  these      
     payments are nonrecurring in nature.                                                                                
<F4> This  amount  includes  $2.5  million  payable by OTEF II in payment of certain attorney's fees and  reimbursement  
     of expenses incurred.                                                                                               
</FN>                                                                                                                           
                           The accompanying notes are an integral part of these financial statements.                   
</TABLE>



























<PAGE> 30

Oxford Tax Exempt Fund II Limited Partnership

<TABLE>
------------------------------------------------------------------------
Statement of Partners' Capital (in thousands)                           
------------------------------------------------------------------------
<CAPTION>                                                                
                                            Limited
                                            Partner                 
                                           Interests                     
                                           ----------                    
                                           Beneficial Unrealized        
For the Years Ended               General  Assignee    Gain on           
December 31, 1996, 1995 and 1994  Partners Interests Investments Total  
------------------------------------------------------------------------
<S>                               <C>       <C>       <C>      <C>
Balance, January 1, 1994                                                      
  (predecessor business)          $(2,121)  $176,916  $     0  $174,795 
------------------------------------------------------------------------
Net Income                             74      3,652        0     3,726 
Distributions to Partners,                                                   
  including $45.00 per BAC           (275)   (13,500)       0   (13,775)
------------------------------------------------------------------------
Balance, December 31, 1994                                                  
  (predecessor business)           (2,322)   167,068        0   164,746 
------------------------------------------------------------------------
Capital Contributions,                                                     
  February 9, 1995                      1          0        0         1 
                                                                        
Net income, five months ended                                              
  May 31, 1995                                                             
  (predecessor business)               45      2,232        0     2,277 
                                                                         
Net income, seven months ended                                              
  December 31, 1995                   167      8,202        0     8,369 
                                                                           
Distributions to Partners,                                                    
  including $47.60 per BAC           (291)   (14,280)       0   (14,571)
                                                                            
Unrealized Gain on Investments          0          0   10,968    10,968 
                                                                            
BAC Issuance Costs                      0     (1,891)       0    (1,891)
------------------------------------------------------------------------
Balance, December 31, 1995         (2,400)   161,331   10,968   169,899 
------------------------------------------------------------------------
Net Income                            298     14,614        0    14,912 
                                                                            
Distributions to Partners,                                                
  including $47.60  per BAC          (291)   (14,280)       0   (14,571)
                                                                            
Unrealized Gain on Investments          0          0   51,529    51,529 
------------------------------------------------------------------------
Balance, December 31, 1996        $(2,393)  $161,665  $62,497  $221,769 
========================================================================
    The accompanying notes are an integral part of these financial      
                            statements.
</TABLE>


<PAGE> 31
Oxford Tax Exempt Fund II Limited Partnership
<TABLE>                                                                 
----------------------------------------------------------||-------------------
Statements of Cash Flows (in thousands)                   ||              
----------------------------------------------------------||-------------------
<CAPTION>                                                 ||                   
                                     OTEF II    OTEF II   ||   OTEF       OTEF 
                                     For the     Seven    ||   Five     For the
                                      year       months   ||  months     year  
                                      ended      ended    ||  ended      ended 
                                     December   December  ||   May     December
                                     31, 1996   31, 1995  || 31, 1995  31, 1994
----------------------------------------------------------||-------------------
<S>                                  <C>         <C>      ||  <C>      <C>     
Operating Activities                                      ||                   
  Net income<F1>                     $14,912     $8,369   ||  $2,277   $ 3,726 
  Adjustments to reconcile                                ||                   
    net income to net cash provided                       ||                   
    by operating activities:                              ||                   
    Equity income from                                    ||                   
      investments in Bonds<F2>             0          0   ||  (2,305)   (3,949)
  Changes in assets and liabilities:                      ||                   
    Bond interest receivable          (1,099)         0   ||       0         0 
    Other, primarily interest                             ||                   
      receivable                          (7)         7   ||      (9)      (19)
    Due from affiliates                  310       (310)  ||       0         0 
    Deferred costs                         0        555   ||       0         0 
    Accounts payable and accrued                          ||                   
      expenses                         2,829         17   ||      97       245 
----------------------------------------------------------||-------------------
Net cash provided by operating                            ||                   
  activities                          16,945      8,638   ||      60         3 
----------------------------------------------------------||-------------------
Investing activities                                      ||                   
  Working capital reserve                  0      1,537   ||     (19)   (1,445)
  Payments received from                                  ||                   
    investments in Bonds<F1>               0          0   ||   7,872    18,672 
  Project loans                            0        123   ||     411       841
----------------------------------------------------------||-------------------
Net cash provided by investing                            ||                   
  activities                               0      1,660   ||   8,264    18,068 
----------------------------------------------------------||-------------------
Financing activities                                      ||                   
  Distributions paid to Partners                          ||                   
    and BAC Holders                  (14,571)    (7,285)  ||  (7,087)  (13,775)
  Deferred costs paid                      0          0   ||       0      (555)
  BAC issuance costs                       0     (1,220)  ||    (671)        0 
  Capital contributions                    0          1   ||       0         0 
----------------------------------------------------------||-------------------
Net cash used by financing                                ||                   
  activities                         (14,571)    (8,504)  ||  (7,758)  (14,330)
----------------------------------------------------------||-------------------
Net increase in cash and cash                             ||                   
  equivalents                          2,374      1,794   ||     566     3,741 
Cash and cash equivalents,                                ||                   
  beginning of period                  9,698      7,904   ||   7,338     3,597 
----------------------------------------------------------||-------------------
Cash and cash equivalents,                                ||                   
  end of period                      $12,072     $9,698   ||  $7,904   $ 7,338 
==========================================================||===================
<FN>                                                                           
<F1> On  June  1,  1995,  OTEF  II  adopted the provisions of Statement  of
     Financial   Accounting   Standards  No.  115Accounting   for   Certain
     Investments  in  Debt  and Equity Securities in  connection  with  the
     transfer  of all assets and liabilities from OTEF to OTEF  II.   Under
     this   method,  payments  on  the  Existing  MRBs  by  the   Operating
     Partnerships are treated as interest income.
<F2> From  October  1,  1987  to  May  31, 1995, OTEF's investments in  the
     Existing  MRBs  were  accounted  for  under  the  equity  method,   in
     accordance  with  Financial Release No. 28  and  a  notice  issued  to
     practitioners,  dated  February 10, 1986, by the Accounting  Standards
     Executive  Committee, which provides guidance on accounting  for  real
     estate acquisition, development and construction lending arrangements.
     Under  this  method,  OTEF's investments in Existing  MRBs  were:  (i)
     reduced for interest payments (Base Interest) received; (ii) increased
     or  decreased  by OTEF's equity, which was based on its  participation
     percentages  (generally  50%, except when it had  outstanding  project
     advances to an Operating Partnership) in the income or losses  of  the
     related  Operating Partnerships; and (iii) written down  to  the  fair
     value  of the Properties with such fair value representing the present
     value of the projected cash flows from the Properties.  Since OTEF had
     outstanding   project  loans  to  certain  senior   living   Operating
     Partnerships from 1989 to 1995, OTEF's participation percentages  were
     increased to 100% for these Operating Partnerships during these years.
</FN>
     The accompanying notes are an integral part of these financial
                               statements.
</TABLE>








<PAGE> 32
------------------------------------------------------------------------
Notes to Financial Statements
------------------------------------------------------------------------
Note 1.  Financial Statements

    The  financial  statements  reflect all adjustments  which,  in  the
opinion   of   the  Managing  General  Partner  of  Oxford  Tax   Exempt
Fund   II   Limited   Partnership  ("Oxford   Tax   Exempt   Fund   II,"
"OTEF  II,"  or  the  "Partnership"), are necessary  to  present  fairly
OTEF   II's   financial   position  as  of   December   31,   1996   and
December  31,  1995,  the  Statements of  Income  for  the  years  ended
December  31,  1996  and  December 31, 1995 (unaudited  Pro  forma)  for
OTEF  II,  for  the  seven-month period  ended  December  31,  1995  for
OTEF  II,  for  the  five-month period ended May 31, 1995  and  for  the
year  ended  December  31,  1994 for OTEF, the  Statement  of  Partners'
Capital  as  of  December  31, 1996, and the Statements  of  Cash  Flows
for   the   year  ended  December  31,  1996  and  for  the  seven-month
period  ended  December  31,  1995  for  OTEF  II,  for  the  five-month
period  ended  May  31,  1995  and the  year  ended  December  31,  1994
for   OTEF,   and  the  notes  thereto,  in  accordance  with  generally
accepted   accounting  principles.   For  purposes   of   clarity,   the
Managing  General  Partner  has included an  additional  column  in  the
Statements   of   Income.   This   pro  forma   information   has   been
prepared  as  if:  (i)  OTEF  II  was in  existence  during  the  period
presented;  (ii)  OTEF  II  acquired the  assets  of  OTEF  in  exchange
for  OTEF  II  BACs  on  January  1,  1995;  and  (iii)  OTEF  II  began
accounting  for  its  investments  in  the  existing  mortgage   revenue
bonds   ("Existing  MRBs")  on  that  date  under  the  new   accounting
method.   Under  the  pro  forma  presentation,  $1  million  in  Oxford
advances  made  to  the  Operating Partnerships  and  paid  to  OTEF  as
additional   interest  in  January  1995  have  been   excluded,   since
such payments are nonrecurring in nature.

Note 2.  Business

     The  Partnership  was  formed  under  the  laws  of  the  State  of
Maryland   on  February  9,  1995,  in  connection  with  a  plan   (the
"1995  OTEF  Restructuring  Plan")  to  restructure  Oxford  Tax  Exempt
Fund  Limited  Partnership,  a  Maryland  limited  partnership  ("OTEF,"
"Predecessor,"   or  "OTEF  II's  predecessor").   Oxford   Tax   Exempt
Fund   II   Corporation,  a  Maryland  corporation,  is   the   Managing
General   Partner   of   OTEF  II  (the  "Managing  General   Partner").
OTEF   II   Associates   Limited   Partnership,   a   Maryland   limited
partnership,   is   the   associate   general   partner   of   OTEF   II
(together   with   the   Managing   General   Partner,   the    "General
Partners").

    Refunding  and  Financing.  As of December 31,  1996,  OTEF  II  had
completed   the   refunding   of  10  of  the   Existing   MRBs,   which
comprise   approximately  two-thirds  of  OTEF   II's   portfolio.    An
additional  two  Existing  MRBs  were  refunded  in  the  first  quarter
of  1997.   It  is  expected that the refunding  of  the  two  remaining
Existing   MRBs  will  close  in  1997.   Refunding  an   Existing   MRB
means  exchanging  that  bond  for a newly  issued  Refunding  Bond  with
approximately  the  same  principal amount,  an  extended  maturity  and
restructured  interest  rates  that  increase  each  year   during   the
term  of  the  Refunding  Bond  and that  is  designed  to  require each
owner   of   the   property   securing    the    Refunding   Bond   (the
"Operating  Partnership")  to  pay  substantially all of  its  projected  
cash  flow as interest on the Refunded Bond.

    The  Refunding  Bonds  are structured so as  to  consist  of  senior
bonds   ("Series   A   Bonds")  and  subordinated   bonds   ("Series   B
Bonds").   This  senior/subordinated  structure  will  permit  OTEF   II
to  undertake  the  Financing, pursuant to which it  will  sell  all  or
a  portion  of  the  Series  A  Bonds (or interests  therein)  that  are
designated  as  Liquidity  Assets, or issue debt  that  may  be  secured
by   such  assets,  new  assets  or  both.   OTEF  II  will  retain  the
related   Series  B  Bonds  for  the  benefit  of  the   Liquidity   BAC
Holders,  and  will  retain  both the senior  Series  A  Bonds  and  the
subordinated   Series   B  Bonds,  or  interests   therein,   that   are
designated  as  Status  Quo Assets for the benefit  of  the  Status  Quo
BAC Holders.  See Note 7 to Financial Statements.

    In  addition  to  the  proceeds from  the  Financing,  OTEF  II  may
acquire   new  assets:  (i)  from  the  proceeds  of  sales   or   other
dispositions   of   the   Refunding  Bonds   and   the   proceeds   from
principal   payments  with  respect  to  the  Refunding  Bonds   (except
for   the  portion  of  such  proceeds  allocable  to  the  SQBs);  (ii)
from  the  proceeds  of  sales  or  other  dispositions  of  new  assets
and   the  proceeds  from  principal  payments  with  respect   to   new
assets;  (iii)  from  the  proceeds of issuances  of  additional  equity
securities,  including  additional  limited  partnership  interests   in
OTEF  II  and  additional  OTEF  II BACs;  (iv)  by  issuing  additional
equity  securities  in  exchange for new assets;  or  (v)  by  borrowing
funds   from   lenders   or  by  issuing  evidences   of   indebtedness.
Although   the   Managing   General   Partner   is   authorized    under
OTEF   II's  partnership  agreement  to  reinvest  cash  flow   in   new
assets,   it   has  no  current  plans  to  do  so  in  the  foreseeable
future.

<PAGE> 33
-----------------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------------

    Investment  in  New  Assets. The Managing  General  Partner  intends
to   invest   primarily  in  additional  mortgage  revenue   bonds   and
securities   of   other   entities  which  primarily   hold   tax-exempt
mortgage  revenue  bonds.   OTEF  II  also  may  invest  in  multifamily
real  estate,  senior  living  facilities  or  residential  health  care
facilities,  or  other  direct  or indirect  debt  or  equity  interests
in   such   real  estate,  some  of  which  may  give  rise  to  taxable
income,   but   the   Managing  General  Partner  does   not   currently
expect  that  these  investments will  be  a  significant  part  of  its
business  in  the  foreseeable  future.   (All  of  the  foregoing   are
referred to collectively as "New Assets".)

     OTEF   II  generally  will  acquire  additional  mortgage   revenue
bonds   and   taxable  bonds  that  are  not  rated  by   any   of   the
nationally   recognized  rating  agencies  (such  as  Moody's   Investor
Services,  Inc.  or  Standard  & Poor's  Ratings  Group)  and  that  are
not  credit-enhanced  at  the  time of  acquisition,  although  OTEF  II
may  seek  to  have  all  or  a  portion of such  bonds  credit-enhanced
or  rated  at  a  future date.  It also is expected  that  OTEF  II  may
invest  in  bonds,  including bonds that may  be  secured  by  bonds  or
mortgages  that  are  subordinated to senior  bonds  or  mortgages  held
by  third  parties,  on terms that will permit it,  in  many  cases,  to
participate  (either  through  stepped  interest  rates  or   otherwise)
in   the   future  growth  and  increase  in  value  of  the  properties
financed  by  such  bonds.   In addition, in  the  case  of  bonds  that
require  restructuring,  it is anticipated that  OTEF  II  may  be  able
to  acquire  such  bonds  on  a discounted basis,  that  is,  where  the
nominal  principal  amount  of  the  bond  exceeds  the  purchase  price
and/or  the  estimated  current  liquidation  value  of  the  underlying
property.

Note 3.  Significant Accounting Policies

     Method   of   Accounting.   OTEF  II's  financial  statements   are
prepared    in    accordance   with   generally   accepted    accounting
principles.

     The   preparation  of  financial  statements  in  conformity   with
generally   accepted  accounting  principles  requires   management   to
make   estimates  and  assumptions  that  affect  the  reported  amounts
of  assets  and  liabilities and disclosure  of  contingent  assets  and
liabilities   at  the  dates  of  the  financial  statements   and   the
reported   amounts  of  revenues  and  expenses  during  the   reporting
periods.  Actual results could differ from those estimates.

    Income  Taxes.   No  provision has been  made  for  federal,  state,
or   local  income  taxes  in  the  financial  statements  of  OTEF   II
since   the   Partners  and  OTEF  II,  formerly   OTEF,   BAC   Holders
(collectively,  "OTEF  II  BAC  Holders)  are  required  to  report   on
their   individual  tax  returns  their  allocable  share   of   taxable
income, gains, losses, deductions, and credits of OTEF II.

     Transfer   of   Bonds   and  Change  in  Accounting   Method.    As
previously   reported,  on  June  1,  1995,  the  Existing   MRBs   were
transferred   from   OTEF   to  OTEF  II  at   their   book   value   of
approximately  $153,032,000.   The  OTEF  II  Managing  General  Partner
estimated   at   December  31,  1996  that  the  fair   value   of   the
Existing   MRBs   was   approximately  $215,529,000  and,   accordingly,
OTEF  II  recorded  a  credit to Partners' Capital in  an  amount  equal
to   approximately  $62,497,000  of  unrealized  gain  on   investments.
The  current  fair  value of the Existing MRBs  was  determined  by  the
Managing   General   Partner  using  the  same  cash  flow   methodology
applied   by  a  major  investment  banking  firm  in  connection   with
structuring  advice  rendered  to  OTEF  II  and  its  predecessor  with
respect  to  the  1995  OTEF  Restructuring Plan.   The  Series A  Bonds
are  valued  at  par  based  on comparable   municipal  bond securities,
and  all  other   bonds   (the Existing  MRBs  and  the Series B  Bonds)
are  valued  based  on  a discounted   cash  flow  analysis.   For  this
purpose the applicable cash flows are   based   on  certain  assumptions
concerning the Properties and the markets in  which  they  are  located,
including the timing and realization of such cash flows.

     In   connection  with  the  transfer  of  the  Existing   MRBs   to
OTEF   II   and  the  change  in  the  Managing  General  Partner   from
Oxford  Tax  Exempt  Fund I Corporation to Oxford  Tax  Exempt  Fund  II
Corporation,  OTEF  II  adopted  a new  accounting  method  governed  by
the  provisions  of  Statement  of Financial  Accounting  Standards  No.
115    "Accounting   for  Certain  Investments  in   Debt   and   Equity
Securities"   ("SFAS   No.   115").   Under   this   method:   (i)   the
Existing  MRBs  are  reflected  at their current  estimated  fair  value
on   the   face  of  the  Balance  Sheet,  with  cumulative   unrealized
gains  or  losses  being  charged or credited  as  unrealized  gains  or
losses   on   investments  and  included  in  capital   as   applicable,
rather  than  reflected  in  the Statements of  Income,  and  (ii)  cash
payments   on   the  bonds  received  from  the  Operating  Partnerships
are   treated  as  interest  income  on  the  Existing  MRBs.    Accrued
interest  on  the  Series  A  and Series B  Bonds  as  of  December  31,
1996   was  $396,000  and  $703,000,  respectively,  or  $1,099,000   in
total.

<PAGE> 34
------------------------------------------------------------------------
Notes to Financial Statements
------------------------------------------------------------------------

    From  October  1,  1987  to  May 31,  1995,  OTEF's  investments  in
the  Existing  MRBs  were  accounted for under  the  equity  method,  in
accordance  with  Financial  Release No.  28  and  a  notice  issued  to
practitioners,   dated   February   10,   1986,   by   the    Accounting
Standards    Executive   Committee,   which   provides    guidance    on
accounting    for    real    estate   acquisition,    development    and
construction   lending   arrangements.   Under   this   method,   OTEF's
investments  in  the  Existing  MRBs  were:  (i)  reduced  for  interest
payments  (Base  Interest)  received; (ii)  increased  or  decreased  by
OTEF's   equity,  which  was  based  on  its  participation  percentages
(generally  50%,  except  when  it  had  outstanding  project   advances
to   an   Operating  Partnership)  in  the  income  or  losses  of   the
related   Operating  Partnerships;  and  (iii)  written  down   to   the
fair   value  of  the  underlying  properties,  with  such  fair   value
representing  the  present  value  of  the  projected  cash  flows  from
the   underlying   properties.   Since  OTEF  had  outstanding   project
loans  to  certain  senior  living Operating Partnerships  in  1995  and
1994,  OTEF's  participation  percentages were  increased  to  100%  for
these Operating Partnerships.

     The   change  in  accounting  treatment  for  financial   reporting
purposes  is  technical  in nature and does not  affect  the  amount  of
payments  received  by  OTEF  II  or  the  level  of  distributions   to
OTEF  II  BAC  Holders.   In  addition, this change  has  no  effect  on
the  tax-exempt  nature  of  OTEF II's  net  income  or  the  obligation
of   the  Operating  Partnerships  to  make  all  payments  due  on  the
Bonds.   To  permit  OTEF  II BAC Holders to  evaluate  the  results  of
operations   of   OTEF  II,  as  reported  under  the   new   accounting
method,   the  Managing  General  Partner  has  included  an  additional
column  in  the  Statements  of  Income which  reflects  the  operations
of  OTEF  II  as  if:  (i) OTEF II was in existence  during  the  period
presented;  (ii)  OTEF  II  acquired the  assets  of  OTEF  in  exchange
for  OTEF  II  BACs  on  January  1,  1995;  and  (iii)  OTEF  II  began
accounting  for  its  investments  in  the  Bonds  on  that  date  under
the  new  accounting  method.   Under the  pro  forma  presentation,  $1
million  in  Oxford  advances  made to the  Operating  Partnerships  and
paid   to  OTEF  in  January  1995  as  additional  interest  have  been
excluded since these payments are nonrecurring in nature.

    Net  Income  and  Distributions  per  Beneficial  Assignee  Interest
(BAC).   Net  income  and  distributions per  BAC  are  based  upon  the
weighted  average  number  of  BACs outstanding  during  the  applicable
year.

    Statements  of  cash  flows.   The  statements  of  cash  flows  are
intended  to  reflect  only  cash receipts and  cash  payment  activity.
The   statements  do  not  reflect  investing  and  financing   activity
that  affect  recognized assets or liabilities  and  do  not  result  in
cash  receipts  or  cash  payments.   This  non-cash  activity  consists
of  distributions  payable  to Partners  and  OTEF  II  BAC  Holders  of
$3,643,000   for  December  31,  1996  and  1995,  and   $3,444,000   at
December   31,   1994,  and  an  unrealized  gain  on   investments   of
$62,497,000   recognized   in  accordance   with   SFAS   No.   115   as
discussed above.

    Cash  and  cash  equivalents.   Cash and  cash  equivalents  consist
of  all  demand  deposits  and  tax-exempt  money  market  funds  stated
at    cost,    which   approximates   market   value,   with    original
maturities of three months or less.

      Governance   and   administrative   expenses.    Governance    and
administrative   expenses  totaled  $1,692,000  for   the   year   ended
December  31,  1996,  as  compared to  $1,416,000  for  the  year  ended
December  31,  1995  for  OTEF II and OTEF.  The  increase  of  $276,000
is   primarily  attributable  to  an  increase  in  general  legal  fees
relating  to  the  normal  operations of OTEF  II  and  an  increase  in
expense    reimbursements   to   the   General   Partners   and    their
affiliates.

     Litigation   and  settlement  costs.   Litigation  and   settlement
costs  are  costs  associated with defending  OTEF  II  against  certain
lawsuits  as  discussed  in  Note  8 below,  totaled  $3,158,000  during
the   year   ended  December  31,  1996.   This  amount  includes   $2.5
million   payable  by  OTEF  II  with  respect  to  certain   attorney's
fees and reimbursement of expenses incurred.

Note 4.  Related Party Transactions

     Interests   in  OTEF  II  and  the  Operating  Partnerships.    The
General  Partners  own  interests  in  OTEF  II  that  entitle  them  to
receive  a  share  of  OTEF  II's  cash  flow  and  possibly  of   sale,
refinancing   and   liquidation  proceeds.   The  percentage   interests
of  the  General  Partners in OTEF II are the  same  as  the  percentage
interests  of  the  General  Partners in  OTEF.   Distributions  to  the
General  Partners  totaled  $291,000 for December  31,  1996  and  1995,
and $275,000 for December 31, 1994.

<PAGE> 35
------------------------------------------------------------------------
Notes to Financial Statements
------------------------------------------------------------------------

     Affiliates  of  the  Managing  General  Partner  that  are  general
and   limited   partners   of  the  Operating   Partnerships   have   an
interest   in   the  Operating  Partnerships  that  entitles   them   to
receive   a   share   of  any  cash  flow  and  sale,  refinancing   and
liquidation    proceeds   of   the   Operating   Partnerships.     Since
inception,  the  Operating  Partnerships have  not  been  able  to  make
any  distributions  of  cash  flow to  their  respective  partners.   In
addition,  in  connection  with the 1995  OTEF  Restructuring  Plan  and
after  the  Existing  MRBs  are refunded,  all  cash  flow  attributable
to these interests will be pledged for the benefit of OTEF II.

     Compensation   and  Fees.   Oxford  Development   Corporation   and
certain   affiliates  (collectively,  "Oxford")  and   NHP,   Inc.   and
certain   affiliates  (collectively,  "NHP")  entered  into  a  Purchase
Agreement   (the   "Purchase  Agreement"),   pursuant   to   which   NHP
acquired,    among   other   things,   Oxford's   property    management
assets.    The  transactions  contemplated  by  the  Purchase  Agreement
were  consummated  effective  December 10,  1993.   In  connection  with
such   transactions,  the  Operating  Partnerships   executed   property
management   agreements   with   NHP   Management   Company   for    the
management  of  the  Properties  and asset  management  agreements  with
Oxford  Realty  Financial  Group,  Inc.  ("ORFG"),  the  parent  of  the
Managing  General  Partner  of  OTEF  II.   The  Operating  Partnerships
also  entered  into  a  Capital Improvement  Consulting,  Oversight  and
Administration   ("CICOA")   Agreement   with   a   NHP   affiliate   to
provide    services   relating   to   property   improvements.     These
agreements  provide  for  substantially  the  same  level  of  fees   as
were   paid   previously  by  the  Operating  Partnerships   to   Oxford
affiliates   that  provided  these  services  prior  to   December   10,
1993.

     For  the  years  ended  December  31,  1996,  1995  and  1994,  the
Operating   Partnerships  paid  total  property  and  asset   management
fees   of   $2,377,000,   $2,344,000   and   $2,229,000,   respectively.
During   the  years  ended  December  31,  1996,  1995  and  1994,   the
Operating  Partnerships  also  paid ORFG,  in  the  aggregate,  $697,000
of     fees     pursuant     to    the    OTEF    Restructuring     Plan
Administration/Asset   Management  Fee  Agreement,   which   amount   is
equal  to  0.25%  per  annum  of  the  principal  amount  of  the  bonds
collateralized    by   the   properties   owned   by    the    Operating
Partnerships ("Existing Mortgaged Properties").

     Fees   Payable   to  ORFG.   As  discussed  above,  ORFG   provides
various   management  services,  relating  to  the  Existing   Mortgaged
Properties   and  OTEF  II's  investment  therein.   It   will   provide
additional   services  in  connection  with  OTEF  II's  investment   in
New  Assets,  as  described below.  The fees payable  to  ORFG  for  the
services   it   is  providing  currently  (the  "Existing   Fees")   are
operating  expenses  of  the  Operating Partnerships  that  are  payable
prior  to  the  payment  of  interest on the  Existing  MRBs.   OTEF  II
did  not  pay  any  fees  in  connection with OTEF  II's  investment  in
New  Assets  to  ORFG  in  1996; however,  with  the  implementation  of
the  Liquidity  and  Growth  Plan  in 1997,  OTEF  II  anticipates  that
it  will  pay  ORFG  new  fees  (the  "New  Asset  Fees")  beginning  in
1997.  The paragraphs below describe the New Asset Fees.

    Acquisition  Fee.   ORFG  will be entitled  to  an  acquisition  fee
for  finding,  analyzing  and  acquiring New  Assets.   The  acquisition
fee,  which  is  payable  on  the closing of any  transaction  in  which
OTEF   II   acquires  a  New  Asset,  is  equal  to  1.0%  of  (i)   the
purchase  price  paid  by  OTEF  II for the  New  Asset,  or  (ii)  with
respect  to  a  New  Asset which is subordinated in  payment  to  senior
indebtedness,  the  sum  of  (A) the purchase  price  paid  by  OTEF  II
for  its  subordinated  interest and (B) the  principal  amount  of  the
senior   interest,  if  any;  provided,  however,  that  no  acquisition
fee  shall  be  paid  with  respect  to  the  principal  amount  of  any
such   senior  interest  if  OTEF  II  has  not  purchased  the   senior
interest  and  neither  the Managing General  Partner  nor  any  of  its
affiliates   had   any   material  involvement   in   the   negotiation,
structuring  or  closing  of  the  purchase  of  the  senior   interest.
In  the  case  of  a  New  Asset  which is subordinated  in  payment  to
senior  indebtedness  as  of the closing of  the  transaction  in  which
OTEF   II   acquires   its   interest,  the  maximum   acquisition   fee
payable  shall  be  equal  to  2.5%  of  the  purchase  price  paid   by
OTEF II for such interest as of the date of closing.

    Advisory  Fee.   OTEF  II also will pay ORFG  an  advisory  fee  for
managing   OTEF   II's   New  Assets  after  their   acquisition.    The
advisory  fee,  which  is payable annually, is  equal  to  0.5%  of  (i)
the  purchase  price  paid  by OTEF II for a New  Asset,  or  (ii)  with
respect  to  a  New  Asset which is subordinated in  payment  to  senior
indebtedness,  the  sum  of  (A) the purchase  price  paid  by  OTEF  II
for  its  subordinated  interest and (B) the  principal  amount  of  the
senior  interest;  provided,  however,  that  if  an  affiliate  of  the
Managing    General   Partner   is   receiving   fees    for    property
management   services  pursuant  to  a  property  management   agreement
entered  into  with  the  owner  of  an Additional  Mortgaged  Property,
the  advisory  fee  will  be equal to 0.5% of the  purchase  price  paid
by   OTEF  II  for  the  related  New  Asset.   In  addition,   if   the
Managing   General  Partner  receives  in  any  year   compensation   or

<PAGE> 36
------------------------------------------------------------------------
Notes to Financial Statement
------------------------------------------------------------------------

fees   from   an  unaffiliated  person  that  serves  as  the   property
manager  for  the  Additional  Mortgaged Property,  the  amount  of  the
advisory  fee  payable  with  respect to the  related  New  Asset  shall
be  reduced  by  50%  of  any  such compensation  or  fees  received  by
the Managing General Partner.

      Expense    Reimbursements.    OTEF   II    and    the    Operating
Partnerships  also  reimburse  ORFG  for  certain  expenses  it   incurs
in   providing   services  with  respect  to  the   Existing   Mortgaged
Properties   and  the  administration  of  OTEF  II's  affairs.    Total
reimbursements  to  the  General  Partners  and  their  affiliates   for
the  years  ended  December  31,  1996, 1995  and  1994  were  $366,000,
$90,000   and  $82,000,  respectively.   The  Managing  General  Partner
anticipates  that  the  amount  of  expense  reimbursements  payable  by
OTEF  II  will  increase  in accordance with  the  terms  of  OTEF  II's
partnership  agreement  due,  in  part, to  the  additional  acquisition
and   financing  activities  relating  to  the  Liquidity   and   Growth
Plan.   Such  reimbursable  amount is determined  based  on  the  actual
time   the  officers  and  employees  devote  to  OTEF  II  based   upon
their perspective rate.

      Incentive  Option  Plan.  OTEF  II  intends  to adopt an incentive 
option  plan  (the  "Incentive  Option  Plan") in order for the Managing 
General  Partner  to attract and retain key employees and advisors.  The 
Incentive  Option  Plan  will  authorize  the granting to the directors, 
officers  and  employees  of  the  Managing  General Partner and certain 
affiliates  of  options  to  purchase  approximately 26,000 OTEF II BACs 
(prior to any division of the OTEF II BACs in connection with listing 
the OTEF II BACs on a national securities exchange), which will represent 
approximately 8.3% of the outstanding OTEF II BACs (assuming 
approximately 13,000 OTEF II BACs are converted into Status Quo BACs 
["SQBs"]), as described below.

The Managing General Partner anticipates that options to purchase all
of substantially of the OTEF II BACs offered pursuant to the Incentive
Option Plan will be granted prior to the effective date of listing of
the OTEF II BACs for trading, in which case the option price is expected
to be the average of the closing prices of the OTEF II BACs as reported
on the exchange on which the OTEF II BACs are listed for the first 20
days of trading.  The option price for any other options to purchase 
OTEF II BACs issued under the Incentive Option Plan is expected to
be 100% of the OTEF II BACs' fair market value at the date of the grant.

Note 5.  Capital, Profits, Losses, and Cash Distributions

     The   following  discussion  summarizes  certain  rights   of   the
Liquidity   BAC  Holders  and  the  Status  Quo  BAC  Holders  following
the Status Quo BAC Issuance Date.

Rights to Allocations and Distributions

      Capital   Accounts.    For   distribution   and   tax   allocation
purposes,  a  Capital  Account  is  maintained  for  each  OTEF  II  BAC
Holder.   The  OTEF  II  BAC  Holders have  the  same  Capital  Accounts
as  they  had  with  OTEF and their Capital Accounts  are  increased  by
the  amount  of  all  capital contributions made by  them  to  OTEF  II,
and  all  taxable  as  well as tax-exempt income  of  OTEF  II  (defined
for  purposes  of  these provisions as "Profits")  and  are  reduced  by
the  amount  of  all  distributions made to them  by  OTEF  II  and  all
tax-deductible   as   well   as   non-tax-deductible   expenditures   of
OTEF  II  (defined  for  purposes  of  these  provisions  as  "Losses").
The  Capital  Accounts  of  the OTEF II BAC  Holders  will  be  revalued
upon   certain   events,   including   the   admission   of   additional
OTEF  II  BAC  Holders  to  OTEF II in exchange for  additional  capital
contributions.

Status Quo BAC Election

    The  holders  of  approximately 4.3%  of  the  total  OTEF  II  BACs
outstanding  have  elected  to  convert their  OTEF  II  BACs  to  SQBs.
Following  the  Status  Quo  BAC Issuance  Date,  the  BAC  Holders  who
retain  their  OTEF  II  BACs  initially  will  have  the  same  Capital
Accounts  as  they  had  prior  to the Status  Quo  BAC  Issuance  Date.
Their   Capital  Accounts  and  the  Capital  Accounts  of   the   other
Liquidity  BAC  Holders  (the  "Liquidity  Capital  Accounts")  will  be
increased  by  Profits  relating to the Liquidity  Assets  and  the  New
Assets  ("Liquidity  Profits"),  but not  by  any  Profits  relating  to
the  Status  Quo  Assets ("Status Quo Profits"),  and  will  be  reduced
by  the  amount  of  all distributions made to them by  OTEF  II  (which
distributions  will  be  made  only  from  cash  flow  attributable   to
the   Liquidity   Assets  and  the  New  Assets,  the  "Liquidity   Cash
Flow")  and  Losses  relating  only to  the  Liquidity  Assets  and  the

<PAGE> 37
New  Assets  ("Liquidity  Losses"),  but  not  by  any  Losses  relating
to the Status Quo Assets ("Status Quo Losses").

     Status   Quo  BAC  Holders  also  initially  will  have  the   same
Capital  Accounts  as  they  had  prior  to  the  conversion  of   their
OTEF  II  BACs  into  SQBs.   Their Capital Accounts  (the  "Status  Quo
Capital  Accounts")  will  be  increased  by  the  Status  Quo  Profits,
but   not  by  any  Liquidity  Profits,  and  will  be  reduced  by  the
amount   of   all  distributions  made  to  them  by  OTEF   II   (which
distributions  will  be  made  only  from  cash  flow  attributable   to
the  Status  Quo  Assets, the "Status Quo Cash  Flow")  and  all  Status
Quo   Losses,   but  not  by  any  Liquidity  Losses.   OTEF   II   will
maintain  two  Capital  Accounts  (a Liquidity  Capital  Account  and  a
Status  Quo  Capital  Account)  for BAC Holders  who  elect  to  convert
only a portion of their OTEF II BACs into SQBs.

     Distributions  of  Cash  Flow.   Liquidity  Cash  Flow  and  Status
Quo Cash Flow will be distributed as described below.

     Liquidity  Cash  Flow.   Liquidity  Cash  Flow  in  any  year  will
first  be  distributed  98%  to the Liquidity  BAC  Holders  and  2%  to
the  General  Partners  until  the Liquidity  BAC  Holders  as  a  class
(other  than  the  holder(s)  of  the  Affiliated  OTEF  II  BACs)  have
received,  during  such  year,  a  noncumulative  11%  preferred  return
on   the   Liquidity   BAC  Holders'  Preference  Amount   (as   defined
below)  and,  thereafter,  during such year, 90%  to  the  Liquidity  BAC
Holders   as   a   class   and  10%  to  the  General   Partners.    The
"Liquidity  BAC  Holders'  Preference  Amount"  means  an  amount  equal
to  the  total  capital  contributions  of  the  Liquidity  BAC  Holders
to   OTEF   or  OTEF  II,  reduced  by  any  distributions  of  residual
proceeds  previously  made  to  them by OTEF,  and  further  reduced  by
all   distributions  of  Liquidity  Residual  and  Liquidation  Proceeds
(defined below) made by OTEF II to the Liquidity BAC Holders.

    Status  Quo  BAC  Cash Flow.  All Status Quo BAC Cash  Flow  in  any
year  will  first  be  distributed 98% to the  Status  Quo  BAC  Holders
as  a  class  and  2%  to  the General Partners  until  the  Status  Quo
BAC   Holders   as   a   class  (other  than  the   holder(s)   of   the
Affiliated  SQBs,  if  any)  have received  a  noncumulative  return  in
such  year  equal  to  11%  of the Status Quo  BAC  Holders'  Preference
Amount  (defined  below)  and,  thereafter,  during  such  year,  90%  to
the  Status  Quo  BAC  Holders  as  a  class  and  10%  to  the  General
Partners.   The  "Status  Quo  BAC  Holders'  Preference  Amount"  means
an  amount  equal  to  the  total capital contributions  of  the  Status
Quo  BAC  Holders  to  OTEF,  reduced by any distributions  of  residual
proceeds  previously  made  to  them by OTEF,  and  further  reduced  by
all  distributions  of  Status  Quo Residual  and  Liquidation  Proceeds
(defined below) made by OTEF II to the Status Quo BAC Holders.

     Distributions  of  Residual  Proceeds  and  Liquidation   Proceeds.
All  Residual  Proceeds,  which  in general,  means  the  cash  OTEF  II
receives   from  the  sale  of  a  Mortgaged  Property  or   New   Asset
("Sale")  or  the  repayment  of  the  principal  and  interest  payable
upon    maturity   or   remarketing   of   a   Mortgage   Revenue   Bond
("Repayment")   other  than  a  Sale  or  Repayment   that   occurs   in
connection  with  the  liquidation of OTEF II,  will  be  designated  as
"Liquidity   Residual   Proceeds"   to   the   extent   such    Residual
Proceeds  relate  to  the  Liquidity  and  New  Assets  and  as  "Status
Quo   Residual  Proceeds"  to  the  extent  that  they  relate  to   the
Status  Quo  Assets.   The  Liquidity Residual  Proceeds,  but  not  the
Status  Quo  Residual  Proceeds, may be  reinvested  in  New  Assets  at
the   discretion  of  the  Managing  General  Partner.   The   Liquidity
Residual  Proceeds,  to  the extent they are  not  reinvested,  and  the
Status   Quo   Residual  Proceeds  will  be  applied   and   distributed
generally as described below.

     Liquidity   Residual  and  Liquidation  Proceeds.   The   Liquidity
Residual  Proceeds  shall  be applied to the  payment  of  the  expenses
allocable  to  the  OTEF II BACs or reinvested  in  New  Assets  at  the
discretion  of  the  Managing General Partner, and  to  the  extent  not
so  applied  or  reinvested,  shall be available  for  distribution,  in
which    case   such   amounts   generally   shall   be   applied    and
distributed in the following amounts and order of priority:

   (a)   100%   to   the  payment  of  all  debts  and  obligations   of
     OTEF   II   that   are   then  due  and  owing   related   to   the
     Liquidity  and  New  Assets  (other than  loans  from  the  General
     Partners  and  their  affiliates)  and  to  any  additions  to  the
     Liquidity  Working  Capital  Reserve  that  the  Managing   General
     Partner may determine to be necessary;
   
<PAGE> 38

   (b)  100%  to  the  Liquidity BAC Holders  as  a  class  (other  than
     the   holder(s)  of  the  Affiliated  OTEF  II  BACs)   until   the
     Liquidity   BAC   Holders  (other  than  the   holder(s)   of   the
     Affiliated   OTEF   II   BACs)  receive   aggregate   distributions
     from  Liquidity  Residual  Proceeds  equal  to  the  Liquidity  BAC
     Holders' Preference Amount;
   
   (c)  100%  to  the  holder(s)  of  the Affiliated  OTEF  II  BACs  in
     an   amount   equal  to  $1,000  times  the  number  of  Affiliated
     OTEF   II   BACs,   less  any  prior  distributions   of   Residual
     Proceeds with respect to such Affiliated OTEF II BACs;
   
   (d)   100%   to   the  General  Partners  and  their  affiliates   to
     repay   loans,  if  any,  from  them  to  OTEF  II,  with  interest
     thereon,   except  to  the  extent  the  proceeds   of   any   such
     loans  were  used  to  pay  amounts  relating  to  the  Status  Quo
     Assets or OTEF II's ownership thereof;
   
   (e)   100%  to  the  General  Partners  until  the  General  Partners
     receive    aggregate   distributions   from   Liquidity    Residual
     Proceeds   and   Status  Quo  Residual  Proceeds   equal   to   the
     General   Partners'   Preference  Amount  (generally,   an   amount
     equal   to   the  total  capital  contributions  of   the   General
     Partners   to   OTEF   II   reduced   by   all   distributions   of
     Liquidity   Residual  and  Liquidation  Proceeds  and  Status   Quo
     Residual and Liquidation Proceeds); and
   
   (f)  the  remainder,  if  any,  98%  to  the  Liquidity  BAC  Holders
     and  2%  to  the  General  Partners,  except  that  the  2%  return
     to   the   General  Partners  generally  is  deferred   until   the
     Liquidity  BAC  Holders  receive  an  amount  (when  combined  with
     all    prior   distributions   of   Liquidity   Cash    Flow    and
     Liquidity   Residual   Proceeds)  equal  to   an   average   annual
     noncompounded  return  of  10%  on  the  Liquidity   BAC   Holders'
     Preference Amount.
  
     Liquidity  Liquidation  Proceeds  (which,  in  general,  means  all
cash  receipts  of  OTEF  II arising from the  dissolution  of  OTEF  II
and  liquidation  of  the  Liquidity  and  New  Assets)  generally  will
be   distributed   in   the   same  order  of  priority   as   Liquidity
Residual   Proceeds,   except  the  first   application   of   Liquidity
Liquidation Proceeds will be to establish certain reserves.

     If   Liquidity   Residual   Proceeds   or   Liquidity   Liquidation
Proceeds  are  insufficient  to  make  any  payment  set  forth   in   a
particular   paragraph   (b)   though   (f)   above,   then    Liquidity
Residual  Proceeds  or  Liquidity  Liquidation  Proceeds  available   to
make   the  payment  will  be  distributed  proportionately  among   the
parties entitled to the payment under such paragraph.

     Status   Quo  Residual  and  Liquidation  Proceeds.    Status   Quo
Residual  Proceeds  shall  be applied to the  payment  of  the  expenses
allocable  to  the  SQBs, and to the extent not  so  applied,  shall  be
available  for  distribution,  in  which  case  such  amounts  generally
shall   be  applied  and  distributed  in  the  following  amounts   and
order of priority:
   
   (a)   100%   to   the  payment  of  all  debts  and  obligations   of
     OTEF  II  that  are  then  due  and owing  related  to  the  Status
     Quo  Assets  (other  than  loans  from  the  General  Partners  and
     their   affiliates)  and  to  any  additions  to  the  Status   Quo
     Working   Capital   Reserve  that  the  Managing  General   Partner
     may determine to be necessary;
   
   (b)  100%  to  the  Status Quo BAC Holders as  a  class  (other  than
     the   holder(s)  of  the  Affiliated  SQBs,  if  any)   until   the
     Status   Quo  BAC  Holders  (other  than  the  holder(s)   of   the
     Affiliated   SQBs,   if   any)  receive   aggregate   distributions
     from  Status  Quo  Residual  Proceeds  equal  to  the  Status   Quo
     BAC Holders' Preference Amount;
   
   (c)  100%  to  the  holder(s) of the Affiliated  SQBs  in  an  amount
     equal  to  $1,000  times  the  number  of  Affiliated  SQBs,   less
     any   prior   distributions  of  Residual   Proceeds   (and   prior
     distributions  of  residual  proceeds  by  OTEF)  with  respect  to
     such Affiliated SQBs;
   
<PAGE> 39

   (d)   100%   to   the  General  Partners  and  their  affiliates   to
     repay  loans,  if  any,  from them to  OTEF  II,  the  proceeds  of
     which  were  used  to  pay  amounts  relating  to  the  Status  Quo
     Assets or OTEF II's ownership thereof;
   
   (e)   100%  to  the  General  Partners  until  the  General  Partners
     receive    aggregate   distributions   from   Liquidity    Residual
     Proceeds   and   Status  Quo  Residual  Proceeds   equal   to   the
     General Partners' Preference Amount; and
   
   (f)  98%  to  the  Status  Quo BAC Holders  as  a  class  and  2%  to
     the  General  Partners  until  the Status  Quo  BAC  Holders  as  a
     class  have  received  an  amount (when  combined  with  all  prior
     distributions  of  cash  flow  and  residual  proceeds)  equal   to
     an  average  annual  noncompounded return  of  11%  on  the  Status
     Quo  BAC  Holders'  Preference  Amount,  except  that  the  amounts
     otherwise   payable  to  the  General  Partners   hereunder   shall
     be   deferred  until  the  Status  Quo  BAC  Holders  as  a   class
     have   received   an   amount  (when  combined   with   all   prior
     distributions  of  cash  flow  and  residual  proceeds)  equal   to
     an  average  annual  noncompounded return  of  10%  on  the  Status
     Quo BAC Holders' Preference Amount.
    Status  Quo  Liquidation  Proceeds (which,  in  general,  means  all
cash  receipts  of  OTEF  II arising from the  dissolution  of  OTEF  II
and   liquidation   of  the  Status  Quo  Assets)  generally   will   be
distributed  in  the  same  order of priority  as  Status  Quo  Residual
Proceeds,  except  the  first  application  of  Status  Quo  Liquidation
Proceeds will be to establish certain reserves.

     If   Status   Quo  Residual  Proceeds  or  Status  Quo  Liquidation
Proceeds  are  insufficient  to  make  any  payment  set  forth   in   a
particular   paragraph   (b)  though  (f)   above,   then   Status   Quo
Residual  Proceeds  or  Status  Quo Liquidation  Proceeds  available  to
make   the  payment  will  be  distributed  proportionately  among   the
parties entitled to the payment under such paragraph.

     Allocation   of  Profits  and  Losses.   Liquidity   Profits   from
operations  generally  will  be  allocated  between  the  Liquidity  BAC
Holders  and  the  General  Partners as follows:  first,  in  accordance
with   distributions  of  Liquidity  Cash  Flow,  until  the  cumulative
Liquidity   Profits   so   allocated  are  equal   to   the   cumulative
Liquidity   Cash   Flow  distributions,  and  thereafter   2%   to   the
General  Partners  and  98%  to the Liquidity  BAC  Holders.   Liquidity
Losses   from  operations  generally  will  be  allocated  2%   to   the
General  Partners  and  98%  to the Liquidity  BAC  Holders.   Liquidity
Profits   and  Liquidity  Losses  arising  from  a  Sale  or   Repayment
(including   Liquidity   Profits  which   represent   the   receipt   of
interest   income  on  a  Mortgage  Revenue  Bond)  or  liquidation   of
OTEF  II  generally  will  be allocated in  a  manner  so  as  to  cause
the   Liquidity  Capital  Account  balances  of  the  General   Partners
and   Liquidity  BAC  Holders  to  equal  the  amounts  that  would   be
distributable to them.

    Status  Quo  Profits  from operations generally  will  be  allocated
between  the  Status  Quo  BAC  Holders  and  the  General  Partners  as
follows:   first,  in  accordance  with  distributions  of  Status   Quo
Cash  Flow,  until  the  cumulative  Status  Quo  Profits  so  allocated
are  equal  to  the  cumulative  Status  Quo  Cash  Flow  distributions,
and  thereafter  2%  to  the General Partners  and  98%  to  the  Status
Quo  BAC  Holders.   Status  Quo Losses from  operations  generally  are
allocated  2%  to  the  General Partners  and  98%  to  the  Status  Quo
BAC  Holders.   Status  Quo  Profits and  Losses  arising  from  a  Sale
or  Repayment  of  a  Status  Quo Asset (including  Status  Quo  Profits
which   represent  the  receipt  of  interest  income  on   a   Mortgage
Revenue   Bond)   or   liquidation  of  OTEF  II   generally   will   be
allocated   in  a  manner  so  as  to  cause  the  Status  Quo   Capital
Account   balances  of  the  General  Partners  and   Status   Quo   BAC
Holders to equal the amounts that would be distributable to them.

    The  above  allocations  of Liquidity and  Status  Quo  Profits  and
Losses  will  be  subject  to  compliance with  the  principles  of  the
Internal   Revenue   Code   of  1986  (the   "Code")   sections   704(b)
(containing   rules  concerning  the  determination   of   a   partner's
distributive   share  and  capital  account  maintenance)   and   704(c)
(containing  rules  for  reflecting  disparities  in  the  adjusted  tax
basis   and   the   fair  market  value  of  property   contributed   or
revalued   by   a   partnership)   and   the   regulations   promulgated
thereunder.

<PAGE> 40

Voting Rights After Issuance of SQBs

    Both  the  Status  Quo  BAC Holders and the  Liquidity  BAC  Holders
generally   will  continue  to  have  voting  rights  with  respect   to
actions  that  could  materially affect their  rights  or  interests  in
OTEF   II,  but  neither  will  have  voting  rights  with  respect   to
actions  that  would  have  no  material  effect  on  their  rights   or
their  interests  in  OTEF  II.   The  following  discussion  summarizes
the  provisions  in  the  OTEF  II Partnership  Agreement  (as  it  will
be   supplemented  to  reflect  the  rights  and  preferences   of   the
SQBs)  relating  to  the  voting rights  of  the  BAC  Holders  and  the
procedure for calling meetings of the BAC Holders.

     Actions  Subject  to  Approval  by  All  BAC  Holders.   Both   the
Liquidity  BAC  Holders  and  the  Status  Quo  BAC  Holders  have   the
right, voting as a single class, to vote on:

   (a)   removal  of  a  General  Partner  of  OTEF  II  and,  if   such
     General   Partner  of  OTEF  II  was  the  sole  remaining  General
     Partner of OTEF II, election of a replacement therefor;
   
   (b) dissolution of OTEF II;
   
   (c)  amendments  to  the  OTEF  II Partnership  Agreement  ("All  BAC
     Holder   Amendments")  that  could  adversely  affect  the   rights
     of   both  the  Liquidity  BAC  Holders  (or  their  interests   in
     the  Liquidity  Assets  or  New Assets)  and  the  Status  Quo  BAC
     Holders (or their interests in the Status Quo Assets); and
   
   (d)   in  the  case  of  the  Status  Quo  BAC  Holders,  any  matter
     with  respect  to  which  the  vote of the  Liquidity  BAC  Holders
     is   solicited,   other  than  any  matters  relating   exclusively
     to  the  Liquidity  Assets  or  New Assets  or  the  Liquidity  and
     Growth  Plan,  and  in  the  case of  the  Liquidity  BAC  Holders,
     any  matter  with  respect to which the  vote  of  the  Status  Quo
     BAC   Holders  is  solicited,  other  than  any  matters   relating
     exclusively to the Status Quo Assets.
  
     Actions  Subject  to  Approval  by  Liquidity  BAC  Holders.    The
Liquidity   BAC   Holders  also  will  have  the  right,   without   the
concurrence   of   the   Status  Quo  BAC   Holders   or   the   General
Partners, to vote on:

<PAGE> 41

   (a)   the   sale  of  all  or  substantially  all  of  the  Liquidity
     Assets   and  New  Assets,  taken  as  a  whole  (except  for   any
     sale   of  any  property  or  asset  securing  a  Mortgage  Revenue
     Bond or any sale approved by the IREC);
   
   (b)   amendments  to  the  OTEF  II  Partnership  Agreement,   except
     for:   (i)  All  BAC  Holder  Amendments  (with  respect  to  which
     the   Liquidity   BAC   Holders  will  vote,  together   with   the
     Status   Quo   BAC   Holders,  as  described   above),   and   (ii)
     amendments   that  could  adversely  affect  the  rights   of   the
     Status  Quo  BAC  Holders  or their interests  in  the  Status  Quo
     Assets,  but  would  not  materially  affect  the  rights  of   the
     Liquidity BAC Holders;
   
   (c)  the  acquisition  of  control of any  Management  Entity  or  of
     the  assets  of  any  Management Entity that  is  an  affiliate  of
     the   Managing   General  Partner,  unless  such   acquisition   is
     incidental  to  the  acquisition by  OTEF  II  of  New  Assets,  or
     is   incidental   to   the   acquisition   of   any   entity,   the
     principal   assets   of  which  are  mortgage  revenue   bonds   or
     other  related  assets  (and  which  is  not  itself  a  Management
     Entity);
   
   (d)  the  provision  by  OTEF II of, or the  engagement  of  OTEF  II
     in,   management  services  with  respect  to  its  assets   (other
     than   those   services  provided  by  OTEF  II  in  the   ordinary
     course  of  its  business  on  and  after  June  25,  1995)  unless
     OTEF   II   obtains   an   opinion  of  the   IREC   with   respect
     thereto; and
   
   (e)   the   termination  of  any  contract  for  management  services
     provided  to  OTEF  II  by  the Managing  General  Partner  or  its
     affiliates.

    Actions  Subject  to  Approval  by  Status  Quo  BAC  Holders.   The
Status   Quo   BAC   Holders   will  have   the   right,   without   the
concurrence  of  the  Liquidity BAC Holders  or  the  General  Partners,
to vote on:
  
   (a)  the  sale  of  all  or  substantially  all  of  the  Status  Quo
     Assets   (except   for   any  sale  of  any   property   or   asset
     securing   a  Mortgage  Revenue  Bond  or  for  any  sale  approved
     by the IREC); and
   
   (b)   amendments  to  the  OTEF  II  Partnership  Agreement,   except
     for:   (i)  All  BAC  Holder  Amendments  (with  respect  to  which
     the   Status   Quo  BAC  Holders  will  vote  together   with   the
     Liquidity   BAC   Holders,   as   described   above),   and    (ii)
     amendments   that  could  adversely  affect  the  rights   of   the
     Liquidity   BAC  Holders  or  their  interests  in  the   Liquidity
     Assets,  but  would  not  materially  affect  the  rights  of   the
     Status Quo BAC Holders.

Note 6.  BAC Holder Rights Plan

    OTEF  II  and  the  Managing  General Partner  entered  into  a  BAC
Holder   Rights  Agreement  dated  May  30,  1995  with   Crestar   Bank
which  governs  the  terms of the BAC Holder  Rights  Plan.   Under  the
BAC  Holder  Rights  Plan,  one Right was issued  for  each  outstanding
OTEF   II   BAC   to   OTEF  II  BAC  Holders  of   record   immediately
following  the  distribution of the OTEF  II  BACs  to  the  holders  of
OTEF  BACs.   Each  Right  entitles  the  holder  thereof  to  buy   one
OTEF   II   BAC   at   an   exercise  price  of   $1,000,   subject   to
adjustment.

    In  the  event  that OTEF II issues additional  OTEF  II  BACs,  the
BAC  Holder  Rights  Plan provides that Rights will  be  issued  to  the
holders   of  such  OTEF  II  BACs  in accordance with the BAC Holder 
Rights Agreement.   Rights  will not be  issued  with  respect  to  the
SQBs  and  the  Rights  previously  issued  with  respect  to  OTEF   II
BACs that are converted into SQBs will be canceled.

     The  Rights  could  cause  substantial  dilution  to  a  person  or
group  that  attempts  to  acquire OTEF II  in  a  manner  or  on  terms
not   approved  by  the  Managing  General  Partner  and  therefore  may
make  it  more  costly  or  difficult to acquire  control  of  OTEF  II,
which  could  have  the  effect of discouraging  takeover  attempts  and
make   it   more   difficult  to  remove  the  existing  management   of
OTEF  II.   The  Rights,  however,  should  not  deter  any  prospective
offeror   willing  to  negotiate  in  good  faith  with   the   Managing
General Partner.

     As   part  of  the  settlement  of  the  OTEF  II  Litigation,  the
Managing   General   Partner  has  agreed   to   amend   the   OTEF   II
partnership   agreement  to  provide  that,  if  the  Managing   General
Partner  or  an  affiliate  of  the  Managing  General  Partner   (other
than   OTEF  II),  initiates  a  tender  offer  in  which  the  Managing
General  Partner  or  its  affiliate offers to purchase  more  than  10%
of  the  OTEF  II  BACs then outstanding, and at the  time  such  tender
offer   is   initiated  there  is  not  pending  any  public  offer   to
purchase  OTEF  II  BACs  by  any  person,  then  the  Managing  General
Partner  will  not  employ  the OTEF II BAC Holder  Rights  Plan  so  as
to   prevent   the  closing  of  any  subsequent  competing   offer   to
purchase   OTEF   II   BACs   that  may  be  published   and   that   is
outstanding  prior  to  the published termination  date  of  the  tender
offer  by  the  Managing  General Partner or  an  affiliate  (regardless
of  any  earlier  termination  of  the offer  by  the  Managing  General
Partner or an affiliate).

Note 7.  Investments in Bonds

    As  shown  in  the  table below, as of December 31,  1996,  OTEF  II
owned  four  Existing  MRBs and 10 new Refunding  Bonds,  all  of  which
are   collateralized  by  Mortgage  Loans  on  the   Existing   Mortgaged
Properties.   The  safekeeping  and  administration  of  the  bonds   is
performed   by   a  custodian  under  the  Custody  Agreement   and   by
various   trustees   under   the  terms   of   the   Trust   Indentures.
Substantially   all   of  the  proceeds  from  the   issuance   of   the
Existing  MRBs  were  used  to  make Mortgage  Loans  to  the  Operating
Partnerships.

     OTEF's  rights  under  the  Mortgage  Loans  are  defined  by,  and
dependent  on,  the  terms and conditions of the  bonds.   Each  of  the
Mortgage  Loans  is  collateralized by  a  first  mortgage  on  each  of
the  Existing  Mortgaged  Properties  which,  together  with  rents,  has
been  assigned  to  the  indenture trustee of the  bonds  as  collateral
for the benefit of OTEF as bondholder.

     Other   Sources.    In  connection  with  the   closing   of   each
Refunding   Bond,  the  applicable  Operating  Partnership  will   enter
into  certain  agreements  which provide as follows:  (i)  for  so  long
as   the   Series   A   Bonds   remain   outstanding,   each   Operating
Partnership  will  apply  its net operating  income  before  payment  of
interest  and  principal on its Series B Bonds  to  make  loans  to  the
Operating  Partnerships  for  the payment  of  interest  and  principal,

<PAGE> 42

and   related  fees  and  expenses,  reserves  and  deposits  owed   by
such  Operating  Partnerships  on  their respective  Series  A  Bonds   to
the   extent  the  other  Operating  Partnerships  are  unable  to  make
such  payments  on  their respective Series A  Bonds,  and  (ii)  for  so
long  as  OTEF  II  owns  the majority of the Series  B  Bonds  relating
to   an  Operating  Partnership's  property  and  the  Managing  General
Partner   of   OTEF   II  is  an  affiliate  of  the  current   Managing
General  Partner,  the  Operating  Partnerships  will  deposit  into  an
account   available  cash  flow  after  the  obligations  described   in
subparagraph  (i)  above  have  been  met  and  the  payments   required
under  that  Operating  Partnership's Series B  Bonds  have  been  made,
which  funds  shall  be  applied  at OTEF  II's  discretion  to,  among
other  things,   make  loans  to  other  Operating  Partnerships   to
enable  them  to  make  all debt service payments due  on  their  Series
B Bonds.

    The  Operating  Partnerships  have  also  made  additional  interest
payments   on   their   Existing   MRBs   and   funded   certain   costs
associated  with  the  bond  refundings  from  two  additional  sources:
advances    made   by   Oxford   Development   Corporation    ("Oxford")
pursuant  to  its  operating  deficit  guarantees,  and  obligations  of
Oxford  and  the  Operating  Partnerships under  the  Yield  Maintenance
Reserve   ("YMR")  Agreement.   At  December  31,  1996,  only  $187,813
of  YMR  obligations  were  outstanding; these  were  satisfied  in  full
  on
March  4,  1997.   As  previously discussed  in  prior  reports,  Oxford
is  continuing  to  hold  proceeds from the $2  million  Treasury  strip
bond  received  that  it  received on  August  15,  1996.   At  December
31,  1996,  Oxford  was  holding  $1,924,432  of  such  proceeds  in  an
interest-bearing   account   pending  a  determination   as   to   which
Operating   Partnerships  these funds should  be  allocated.    This
allocation  will  be  based  on  the  individual  refunding  costs   and
reserve requirements of the Operating Partnerships.

<TABLE>
------------------------------------------------------------------------
                         Schedule of Investments in Bonds @ December 31,
------------------------------------------------------------------------
<CAPTION>                                                               
                                              1996     1995      1994
------------------------------------------------------------------------
<S>                                        <C>       <C>       <C>
Existing MRBs (not refunded as of                                     
              December 31, 1996)           $ 40,288  $153,032  $176,599
A Bonds (refunded as of December 31, 1996)   65,781         0         0     
B Bonds (refunded as of December 31, 1996)   46,963         0         0 
------------------------------------------------------------------------
                                            153,032   153,032   176,599
Adjustment for unrealized gains (losses)     62,497    10,968   (18,000)
------------------------------------------------------------------------
       TOTAL                               $215,529  $164,000  $158,599
========================================================================
</TABLE>

   Existing MRBs.  As of December 31, 1996, OTEF II held Existing
MRBs  for four of the Operating Partnerships.  An additional  two
refunding transactions were completed during the first quarter of
1997.   It  is  expected that the refunding of the two  remaining
Existing MRBs will close during 1997.

    The term of each Existing MRB, and accordingly, each Mortgage
Loan is 24 years.  The principal will not be amortized during the
term  of the Existing MRB and will be required to be repaid in  a
lump-sum balloon payment at the expiration of the bond term or at
such earlier time as OTEF II may require.  Beginning on the first
day  of the thirteenth year and continuing through the end of the
fourteenth year, OTEF II may require payment of all principal and
deferred  interest  due, upon 12 months' prior  notice.   In  the
fifteenth  year (if an Existing MRB has not been repaid earlier),
OTEF  II will demand payment of principal and deferred contingent
interest due.  Each Mortgage Loan is nonassumable and due on sale
of the Existing Mortgaged Property.

    Existing  MRB Interest.  The primary source of cash  receipts
for  OTEF  II is tax-exempt interest received from the  Operating
Partnerships pursuant to their debt service obligations under the
bond  documents  and interest earned on OTEF II's cash  reserves.
The  Existing MRBs and the underlying Mortgage Loans continue  to
provide  for the payment of interest at an aggregate annual  rate
of  up  to  16%,  consisting  of  Base  Interest  and  additional
Contingent Interest.  Base Interest is owed at the rate of  8.25%
per  annum, but is payable only to the extent funds are available
from  cash  flow  and  sale or refinance proceeds.   Unpaid  Base
Interest  is deferred, with additional interest charged  on  such
deferred  amounts  at  the rate of 8.25%  per  annum,  compounded
monthly and payable from future cash flow and sale or refinancing
proceeds.

<PAGE> 43

   As previously reported, under the 1988 OTEF Restructuring Plan
and the Debt Modification Agreements, dated as of April 12, 1995,
as amended, OTEF, OTEF II, the Operating Partnerships, and Oxford
entered  into certain forbearance arrangements which modify  many
of the terms of the Existing MRBs described above.  At such time
as the Existing MRBs are refunded, the obligations of the Operating
Partnerships will be modified substantially as discussed below.

   The table below sets forth the cumulative Unpaid Base Interest
and  Interest on Unpaid Base Interest as of December 31, 1996 for
Existing MRBs:

<TABLE>
-----------------------------------------------------------------
<CAPTION>                                                        
(In thousands)                   Interest on                     
                                    Unpaid     Unpaid            
                                     Base       Base             
Property Name/Partnership Name     Interest   Interest    Total  
-----------------------------------------------------------------
<S>                                <C>        <C>       <C> 
Northwoods (Middletown)            $   40     $   729   $   769  
San Bruno (San Bruno)                  65         722       787  
The Harbour (Apollo)                  983       2,309     3,292  
Chambrel at Club Hill (Colonel I)   7,103      15,670    22,773  
----------------------------------------------------------------- 
                                   $8,191     $19,430   $27,621  
=================================================================
</TABLE>


     Under   the   equity  method,  no  interest   was   accrued.
Additionally, no interest has been accrued under SFAS No. 115, as
collection is highly unlikely.  For tax purposes, since the
collection of such interest is highly unlikely, recognition of
accrued  interest income was suspended.   However,  prior  to
this suspension, approximately $4  million  of interest was
accrued  for federal income tax purposes on certain Existing 
MRBs.  These Existing MRBs were refunded, and the Unpaid Base 
Interest for the applicable Operating Partnerships was forgiven.
This forgiveness will have no financial statement impact.

    Refunding Bonds (Series A Bonds).  The term of each Refunding
Bond  and,  accordingly, each Mortgage Loan is 30 years following
the  date of refunding.  The Series A Bonds require interest only
payments  during  the  first  three years  and,  thereafter,  are
subject  to annual sinking fund redemptions that will  result  in
full  amortization  of  the  Series A Bonds  during  the  27-year
remaining term.

    Series  A  Bond Interest and Principal.  The Series  A  Bonds
require pre-determined annual sinking fund redemptions based on a
27-year  amortization  schedule beginning  in  the  fourth  year,
calculated  with an assumed rate of interest of  5.6%  per  year.
Series  A Bond interest will be set initially at closing  of  the
refundings  and  reset annually at a market  rate  based  upon  a
percentage  of  the then prevailing one-year U.S.  Treasury  Bill
rate,  with  a  maximum  rate of 5.6%  per  annum.   The  initial
interest rate on the Series A Bonds that have been issued to date
is 4.9%.  Upon a remarketing, the Series A Bonds may be converted
to  a  different interest rate mode (fixed or floating)  and  the
interest  rates  may  be modified at that  time  to  reflect  the
prevailing  market  interest rates for  whatever  rate  mode  and
remaining term is then applicable.

    Refunding Bonds (Series B Bonds).  The term of each Series  B
Bond  and,  accordingly, each Mortgage Loan is 30 years following
the date of refunding.

    Series  B  Bond Interest and Principal.  The Series  B  Bonds
accrue  interest  equal  to  the product  of  the  Combined  Rate
(as defined below) multiplied by the total combined principal 
balance of the  Series
A  Bonds  and  the Series B Bonds for each Operating Partnership,
less  the  interest payable on the related Series  A  Bonds;  the
resulting amount of interest divided by the principal balance  of
the Series B Bonds equals the interest accrual rate on the Series
B  Bonds.  Interest-only is payable on the Series B Bonds to  the
extent of available cash flow of the Operating Partnerships,  with
the entire principal balance due at maturity.

<PAGE> 44

<TABLE>                                                                          
                                                                                 
The Combined Rates on the Refunding Bonds over the next 10 years are as follows:
                                                                                 
--------------------------------------------------------------------------------- 
<CAPTION>                                                                        
             1997  1998  1999  2000  2001  2002  2003  2004   2005   2006   2007 
---------------------------------------------------------------------------------
<S>          <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>    <C>    <C>   
Akron        8.50% 8.76% 9.04% 8.38% 8.73% 9.07% 9.43% 9.82% 10.22% 10.65% 11.11%
Allview      7.38% 7.48% 7.77% 7.24% 7.54% 7.82% 8.12% 8.44%  8.77%  9.12%  9.50%
Colonel      4.36% 4.45% 4.61% 4.23% 4.90% 5.08% 5.26% 5.46%  5.66%  5.87%  6.09%
Fox Valley   7.12% 7.22% 7.50% 6.95% 7.23% 7.51% 7.79% 8.10%  8.42%  8.75%  9.11%
Middletown   7.28% 7.39% 7.67% 7.13% 7.42% 7.70% 8.00% 8.31%  8.64%  8.99%  9.36%
Ocala        8.50% 8.60% 8.94% 8.35% 8.70% 9.04% 9.39% 9.77% 10.17% 10.60% 11.05%
Schaumburg   6.05% 6.14% 6.38% 5.84% 6.09% 6.32% 6.56% 6.81%  7.08%  7.36%  7.65%
Southridge   5.23% 5.33% 5.53% 5.11% 5.32% 5.52% 5.72% 5.93%  6.16%  6.39%  6.64%
Tidewater    7.19% 7.29% 7.57% 6.98% 7.27% 7.56% 7.85% 8.16%  8.49%  8.84%  9.21%
Travis       5.33% 5.43% 5.63% 5.14% 5.36% 5.56% 5.76% 5.98%  6.21%  6.45%  6.70%
Westridge    6.12% 6.22% 6.46% 5.97% 6.22% 6.45% 6.69% 6.95%  7.22%  7.50%  7.80%
Williamsburg 7.64% 7.74% 8.05% 7.47% 7.78% 8.09% 8.40% 8.74%  9.09%  9.47%  9.86%
---------------------------------------------------------------------------------
</TABLE>

    The  Combined  Rates  decrease in the fourth  year  following
commencement  of  the date of refunding due to the  sinking  fund
payments  under the Refunding Bonds and, thereafter, the  Combined
Rates  increase  every  year through the remaining  term  of  the
Refunding Bonds.

<PAGE> 45

<TABLE>

<CAPTION>
Note 7.   Investments in Bonds (continued)
                                                                                                                        
     Information on the Bonds as of December 31, 1996 and 1995 (in 000's) and the related properties is as follows:
                                                                                                                        
                                                                                    1996    1995            Monthly       
                                                    Carrying Value at 12/31/96       Unrealized  Carrying   Interest        
                                         Combined ------------------------------  --------------- Value ------------------
                              Maturity     Face   Existing                        Gain or Gain or   @   Existing A    B 
Bond Investment                 Date      Amount    Bond  A Bond  B Bond   Total   (Loss) (Loss) 12/31/95 Bond Bond Bond
--------------------------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>      <C>    <C>     <C>     <C>      <C>     <C>    <C>      <C> <C>  <C>  
REFUNDED BONDS:                                                                                                         
Chesapeake Landing,        November 2027 $ 25,450 $    0 $13,102 $ 9,651 $ 22,753 $ 8,639 $3,233 $ 17,347 $ 0 $ 54 $ 98 
Fox Valley-Oxford L.P.                                                                                                  
Island Club,               November 2027   11,300      0   5,744   4,550   10,294   5,669  2,878    7,503   0   23   46 
Allview-Oxford L.P.                                                                                                     
Reflections,               November 2027   25,644      0  13,998   9,643   23,641  10,551  4,055   17,146   0   57   96 
Tidewater-Oxford L.P.                                                                                                   
Hunt Club,                 December 2027   20,270      0   8,732   5,391   14,123   1,367     33   12,789   0   36   54 
Travis One-Oxford L.P.                                                                                                  
Savannah Trace,            November 2027   23,400      0  11,232   7,160   18,392   3,686 (1,576)  13,129   0   46   72 
Schaumburg-Oxford L.P.                                                                                                  
Windsor Park,              November 2027   14,000      0   6,333   4,507   10,840   5,192  3,012    8,660   0   26   46 
Westridge-Oxford L.P.                                                                                                   
Windrift at Seaview Ridge, December 2027   29,430      0  11,258   8,117   19,375     939 (4,527)  13,909   0   46   82 
Southridge-Oxford L.P.                                                                                                  
Chambrel at Pinecastle,    November 2027    9,500      0   5,458   4,494    9,952   4,495      5    5,462   0   22   45 
Ocala-Oxford L.P.                                                                                                      
Chambrel at Williamsburg,  November 2027   25,000      0  13,708  10,280   23,988   8,551   (264)  15,173   0   56  103
Williamsburg-Oxford L.P.                                                                                                
Chambrel at Montrose,      December 2027   12,800      0   7,354   6,112   13,466   4,991 (2,587)   5,888   0   30   61
Akron One Retirement-                    --------------------------------------------------------------------------------
  Oxford L.P.                                                                                                          
                 Subtotal Refunded Bonds $196,794 $    0 $96,919 $69,905 $166,824 $54,080 $4,262 $117,006 $ 0 $396 $703
                                         --------------------------------------------------------------------------------
                                        (continued)                                                                    
                                                                                                                       
<PAGE> 46

Note 7.   Investments in Bonds (continued)                                                                             
                                                                                                                       
     Information on the Bonds as of December 31, 1996 and 1995 (in 000's) and the related properties is as follows:    
                                                                                                                       
                                                                                    1996    1995                         
                                                   Carrying Value at 12/31/96       Unrealized  Carrying Monthly interest
                                       Combined -------------------------------- ---------------- Value -----------------
                            Maturity     Face   Existing                         Gain or  Gain or   @    Existing A    B 
Bond Investment               Date      Amount   Bond    A Bond  B Bond    Total  (Loss)   (Loss) 12/31/95 Bond Bond Bond
-------------------------------------------------------------------------------------------------------------------------
<S>                      <C>           <C>      <C>     <C>     <C>     <C>      <C>     <C>     <C>      <C>  <C>  <C>
UNREFUNDED BONDS (Existing Bonds):                                                                                       
                                                                                                                         
Northwoods,              October 2009  $ 21,700 $14,655 $     0 $     0 $ 14,655 $ 5,084 $ 5,303 $ 14,874 $149 $  0 $  0 
Middletown-Oxford L.P.<F1>                                                                                               
                                                                                                                         
San Bruno,               November 2009   25,000  17,458       0       0   17,458   7,066   6,318   16,710  172    0    0 
San Bruno-Oxford L.P.    December 2009    1,060     740       0       0      740     300     268      709    7    0    0 
                                                                                                                        
The Harbour,             November 2009    8,710   4,176       0       0    4,176    (788)   (456)   4,507   60    0    0 
Apollo-Oxford Associates L.P.                                                                                            
                                                                                                                        
Chambrel at Club Hill,   December 2009   25,430  11,676       0       0   11,676  (3,245) (4,727)  10,194  175    0    0 
Colonel I-Oxford L.P.<F1>              ---------------------------------------------------------------------------------
             Subtotal Unrefunded Bonds $ 81,900 $48,705 $     0 $     0 $ 48,705 $ 8,417 $ 6,706 $ 46,994 $563 $  0 $  0
                                       ---------------------------------------------------------------------------------
          Total Bonds                  $278,694 $48,705 $96,919 $69,905 $215,529 $62,497 $10,968 $164,000 $563 $396 $703
                                       =================================================================================
<FN>                                                                                                                    
<F1> Subsequent to December 31, 1996, Middletown (January 29, 1997) and Colonel I (March 6, 1997) were refunded         
     consistent with the other 10 mortgage revenue bonds listed above.  Additionally, approximately $78 million         
     in unpaid Base Interest and interest on Unpaid Base Interest was written-off.                                      
</FN>
</TABLE>

<PAGE> 47

Note 8.  Other Events

     As   previously  reported,  OTEF  II  and  certain  of  its  affiliates
(collectively "Defendants")  are Defendants in putative class and derivative
lawsuits consolidated  as   In  re Oxford Tax   Exempt    Fund    Securities
Litigation,   No.   WMN   95-3643   (D.Md.).   These   complaints    alleged
breach   of   OTEF's  partnership  agreement,  breach  of   fiduciary   duty
by    the   general   partners,   and   breach   of   Federal   and    state
securities    laws,   and   sought   unspecified   monetary   damages    and
various    forms   of   equitable   relief.    The   plaintiffs   and    the
Defendants   in   the  consolidated  action  entered  into   a   Stipulation
of   Settlement   (the  "Settlement"),  which  was  filed  with   the   U.S.
District   Court  for  the  District  of  Maryland  ("Court")  on   November
18,   1996.    At   a  hearing  held  on  November  21,  1996,   the   Court
entered   an   order  granting  preliminary  approval  of   the   Settlement
and   providing   certification   for  settlement   purposes   only   of   a
class   consisting   of  all  OTEF  II  BAC  Holders  as   of   the   record
date.   On   January   31,  1997,  the  Court  issued  an   order   granting
final   approval   of  the  terms  of  the  settlement  of   the   OTEF   II
litigation.    An  appeal  was  filed  with  the  U.S.  Court   of   Appeals
for  the  Fourth  Circuit  by  an  OTEF  II  BAC  Holder  who  is  appearing
pro   se.    The   Managing  General  Partner  believes   this   appeal   is
without   merit,   although  no  assurances  can  be   given   as   to   the
outcome of this appeal.

      In    connection   with   the   Settlement:   (1)   Defendants    will
complete   the   refunding   of   the   Existing   MRBs   in   the    manner
contemplated   by  the  1995  OTEF  Restructuring  Plan,   and   cause   the
Operating   Partnerships   to  grant  OTEF  II   additional   security   for
the  Refunding  Bonds,  (2)  OTEF  II will  issue  SQBs  to  those  OTEF  II
BAC   Holders  who  made  a  timely  election,  (3)  OTEF  II   will   offer
the  Status  Quo  BAC  Holders  an  option  to  have  OTEF  II  purchase  or
redeem  their  SQBs  in  the  future  at  a  price  of  $540  per  SQB,  (4)
ORFG   will   relinquish  certain  fees  that  otherwise  would  have   been
paid   by   the   Operating   Partnerships,  (5)   Defendants   will   grant
OTEF   II  a  participation  interest  in  certain  receivables  they   hold
from    the    Operating    Partnerships,   and    (6)    Defendants    have
consented   to  the  court  order,  reforming  or  otherwise  changing   the
OTEF   II   partnership  agreement  in  certain  respects,   and   otherwise
imposing  limitations  on  the  rights  and  powers  of  OTEF  II  and   its
Managing   General   Partner.    The  settlement   also   provides   for   a
release of all claims by and among the parties.

     While  the  Defendants  did  not  make  any  admission  of  wrongdoing,
they   desired,   by   settlement   of   all   controversies   between   and
among   them,   the  Class  and  OTEF  II,  to  avoid  the  risk,   expense,
inconvenience,   distraction,   and  delay   of   litigation.    The   Court
did    not   determine   the   merits   of   Plaintiffs'   claims   or   the
defenses   of   the  Defendants.   The  Settlement  did   not   imply   that
there  has  been  or  would  be  any finding of  any  violation  of  law  or
that  recovery  could  be  had  in  any  amount  if  the  action  were   not
settled.    In   addition,   Plaintiff's  class   counsel   prosecuted   the
OTEF   II   Litigation   on   behalf   of   the   class   on   an   entirely
contingent   basis   and   have   received   no   compensation   for   their
services   from   the  inception  of  this  litigation  in   November   1995
through   the   present.    In   light  of   the   benefits   conferred   on
OTEF   II,   the  Managing  General  Partner  has  agreed  to  the   payment
by   OTEF   II   of   attorney's   fees  and   reimbursement   of   expenses
incurred,   in   an   amount   not  to  exceed  $2.5   million,   which   is
included in accounts payable and accrued expense.

Note 9.  Subsequent Events

     In   connection  with  the  Settlement,
the     holders     of     approximately    13,000    BACs,     representing
approximately   4.3%   of   the   total   outstanding   BACs,   elected   to
exchange their OTEF II BACs for Status Quo BACs.

    On  January  29,  1997,  OTEF  II refunded  the  Existing  MRB  that  is
collateralized    by    the   Existing   Mortgaged   Property    owned    by
Middletown-Oxford   Limited   Partnership,  effective   January   1,   1997.
On   March   6,   1997,  OTEF  II  refunded  the  Existing   MRB   that   is
collateralized    by    the   Existing   Mortgaged   Property    owned    by
Colonel I-Oxford Limited Partnership, effective March 1, 1997.

      On    February   14,   1997,   OTEF   II   made   a   quarterly   cash
distribution  of  $3,642,796  or  $11.90  per  BAC  (4.76%  per   annum   on
the  original  $1,000  invested  per  BAC)  to  BAC  Holders  of  Record  as
of   December   31,  1996.   This  distribution  is  consistent   with   the
distribution made for the previous seven quarters.

<PAGE> 48
<TABLE>
----------------------------------------------------------------------------
Distribution Information                                                    
----------------------------------------------------------------------------

  The following table sets forth, on a quarterly basis, all distributions
                   declared by OTEF II and OTEF.
   
                                               Amount Distributed<F1>
----------------------------------------------------------------------------
<CAPTION>
                                                    BAC        General
         Quarter Ended<F1>            Per BAC   Holders<F2>    Partners
----------------------------------------------------------------------------
<S>      <C>                          <C>       <C>            <C> 
1996                                                    
         December 31, 1996            $  11.90  $  3,569,940   $   72,856
         September 30, 1996           $  11.90  $  3,569,940   $   72,856
         June 30, 1996                $  11.90  $  3,569,940   $   72,856
         March 31, 1996               $  11.90  $  3,569,940   $   72,856
---------------------------------------------------------------------------
1995                                                                        
         December 31, 1995            $  11.90  $  3,569,940   $   72,856
         September 30, 1995           $  11.90  $  3,569,940   $   72,856
         June 30, 1995                $  11.90  $  3,569,940   $   72,856
         March 31, 1995               $  11.90  $  3,569,940   $   72,856
---------------------------------------------------------------------------
1994
         December 31, 1994            $  11.25  $  3,374,944   $   68,876
         September 30, 1994           $  11.25  $  3,374,944   $   68,876
         June 30, 1994                $  11.25  $  3,374,944   $   68,876
         March 31, 1994               $  11.25  $  3,374,944   $   68,876
---------------------------------------------------------------------------
1993
         December 31, 1993            $  11.25  $  3,374,944   $   68,876
         September 30, 1993           $  10.94  $  3,281,945   $   66,979
         June 30, 1993                $  10.94  $  3,281,945   $   66,979
         March 31, 1993               $  10.94  $  3,281,945   $   66,979
---------------------------------------------------------------------------
1992
         December 31, 1992            $  10.94  $  3,281,945   $   66,979
         September 30, 1992           $  10.63  $  3,188,947   $   65,080
         June 30, 1992                $  10.63  $  3,188,947   $   65,080
         March 31, 1992               $  10.32  $  3,095,948   $   63,184
---------------------------------------------------------------------------
1991
         December 31, 1991            $  10.32  $  3,096,000   $   63,184
         September 30, 1991           $  10.32  $  3,096,000   $   63,184
         June 30, 1991                $  10.32  $  3,096,000   $   63,184
         March 31, 1991               $  10.32  $  3,096,000   $   63,184
---------------------------------------------------------------------------
1990                                                   
         December 31, 1990            $  10.32  $  3,096,000   $   63,184
         September 30, 1990           $  10.32  $  3,096,000   $   63,184
         June 30, 1990                $  10.32  $  3,096,000   $   63,184
         March 31, 1990               $  10.32  $  3,096,000   $   63,184
---------------------------------------------------------------------------
1989
         December 31, 1989            $  10.32  $  3,096,000   $   63,184
         September 30, 1989           $  10.32  $  3,096,000   $   63,184
         June 30, 1989                $  10.32  $  3,096,000   $   63,184
         March 31, 1989               $  10.32  $  3,096,000   $   63,184
--------------------------------------------------------------------------- 
1988
         December 31, 1988            $  10.32  $  3,096,000   $   63,184
         September 30, 1988           $  10.32  $  3,096,000   $   63,184
         June 30, 1988<F3>            $  20.63  $  6,189,000   $  126,306
         March 31, 1988               $  20.63  $  6,189,000   $  126,306
---------------------------------------------------------------------------
                                   (continued)                             
                                                                           
<PAGE> 49                                                                  
                                               Amount Distributed<F1> 
---------------------------------------------------------------------------
                                                    BAC        General 
         Quarter Ended<F1>            Per BAC   Holders<F2>    Partners
---------------------------------------------------------------------------
1987                                                                        
         December 31, 1987            $  20.63  $  6,189,000   $  126,306
         September 30, 1987           $  21.56  $  6,468,000   $  132,000 
         June 30, 1987                $  21.56  $  6,468,000   $  132,000 
         March 31, 1987               $  21.56  $  6,468,000   $  132,000
---------------------------------------------------------------------------
1986
         December 31, 1986            $  21.25  $  6,375,000   $  130,102
         September 30, 1986           $  21.25  $  6,375,000   $  130,102
         June 30, 1986                $  21.25  $  6,375,000   $  130,102
         March 31, 1986               $  21.25  $  6,375,000   $  130,102
---------------------------------------------------------------------------
1985                                                    
         December 31, 1985<F4>        $  14.88  $  3,894,287   $   79,475
--------------------------------------------------------------------------- 
Total                                 $ 597.72  $178,745,149   $3,647,865
===========================================================================
<FN>
<F1> Distributions   in  all  cases  were  paid  in   the   quarter
     immediately  following the quarter to which  the  distribution
     relates.
<F2> The   aggregate  amount  distributed  to  BAC  Holders   since
     inception  is $178,745,149, or approximately 60% based  on  an
     original investment of $1,000 per BAC.
<F3> Excludes  the $507,450 ($1.70 per BAC) distributed  on  August
     15, 1988 as a return of capital.
<F4> Assumes BAC Holders were admitted on October 10, 1985.
</FN>
</TABLE>









<PAGE> 50
------------------------------------------------------------------
General Partnership Information
------------------------------------------------------------------

Legal Counsel
Shaw, Pittman, Potts & Trowbridge
Washington, D.C.

Independent Accountants
Coopers & Lybrand L.L.P.
Washington, D.C.

Transfer Agent and Registrar
MMS Escrow & Transfer Agency, Inc.
P.O. Box 7090
Troy, Michigan 48007-7090

Managing General Partner
Oxford Tax Exempt Fund II Corporation
7200 Wisconsin Avenue, 11th floor
Bethesda, Maryland  20814

The Annual Report on Form 10-K for the
year ended December 31, 1996, filed with
the Securities and Exchange Commission,
is available to BAC Holders and may be
obtained by writing:

   Investor Services
   Oxford Tax Exempt Fund II Limited Partnership
   P.O. Box 7090
   Troy, Michigan  48007-7090
   (810) 614-4550


<PAGE> 51
------------------------------------------------------------------
Instructions for Investors who wish to reregister or transfer
OTEF II BACs
------------------------------------------------------------------

    Please   follow  the  instructions  below  to  expedite   the
reregistration or transfer of ownership of any OTEF II Beneficial
Assignee Interests ("OTEF II BACs") that you may own.  Note  that
no  transfers or sales can be effected without the consent of the
Managing  General  Partner  and  the  completion  of  the  proper
documents.


  To  cover  the costs associated with processing transfers,  MMS
  Escrow & Transfer Agency, Inc. ("MMS"), the transfer agent  for
  OTEF  II, charges $25 for each transfer of OTEF II BACs between
  related  parties  and  $50 per seller  for  each  transfer  for
  consideration  (sale).  The only exception is a transfer  to  a
  surviving  joint  holder of BACs when the  other  joint  holder
  dies,  in  which case no fee is charged.  MMS charges $150  for
  the conversion of a BAC into a limited partner interest.

  To  transfer ownership of OTEF II BACs held in a Merrill  Lynch
  account,  please  have your Merrill Lynch financial  consultant
  contact  Merrill Lynch Partnership Operations in New Jersey  at
  (201)  557-1619  to  request the necessary transfer  documents.
  Merrill  Lynch  Partnership Operations will only  accept  calls
  from  your  financial  consultant.  YOU MUST  HAVE  THE  PROPER
  TRANSFER  DOCUMENTS  FROM MERRILL LYNCH TO EFFECT  A  TRANSFER.
  You  must  have  your financial consultant contact  Partnership
  Operations,  as  OTEF  Investor  Services  does  not  send  out
  transfer papers for BACs held in a Merrill Lynch account.

  Investors  who  no longer hold OTEF II BACs in a Merrill  Lynch
  account  should contact Investor Services at (810) 614-4550  or
  P.O.  Box  7090, Troy, Michigan 48007-7090, to obtain  transfer
  documents.  YOU MUST OBTAIN THE PROPER TRANSFER DOCUMENTS  FROM
  INVESTOR  SERVICES TO EFFECT A TRANSFER OF BACs WHICH YOU  HOLD
  PERSONALLY.

  MMS  does  not issue paper certificates to investors  who  take
  their  OTEF II BACs out of their Merrill Lynch accounts.  Paper
  confirmations   are   issued  instead.    (Please   note   that
  previously-issued OTEF paper certificates are no longer  valid.
  Investors  who  hold OTEF certificates may  retain  or  discard
  them,  as  they  choose.  It is no longer necessary  to  return
  certificates to MMS when transferring ownership interests.)

  If  an  individual who holds his or her OTEF II  BACs  directly
  wishes  to redeposit the BACs into a Merrill Lynch account,  he
  or  she  should send written instructions to Investor  Services
  after  the  Merrill  Lynch account has been  opened.   OTEF  II
  Investor  Services will then instruct Merrill Lynch to  deposit
  the BACs into the account.

  Please  remember to notify Investor Services in writing at  the
  address  below  or by calling (810) 614-4550 in the  event  you
  change  your mailing address or your financial consultant.   We
  can  then continue to provide you and your representative  with
  timely information about your investment in OTEF II.

  The  Annual Report on Form 10-K for the year ended December 31,
  1996,  filed  with the Securities and Exchange  Commission,  is
  available to BAC Holders and may be obtained by writing:

                                
                        Investor Services
          Oxford Tax Exempt Fund II Limited Partnership
                          P.O. Box 7090
                    Troy, Michigan 48007-7090
                                
                         (810) 614-4550