<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, 1997
                                 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.  []

At  December  31,  1997,  the  following  classes  of  beneficial
assignee   interests  of  Oxford  Tax  Exempt  Fund  II   Limited
Partnership were outstanding; (i) 7,185,200 Liquidity  BACs  with
an  aggregate market value of $181,857,412, and (ii) 7,093 Status
Quo BACs ("SQBs").

               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 1997  Annual  Report   are
                      incorporated by reference into Parts I,  II
                      and III.

Exhibit Index is on page 11.

Total number of pages is 48.

<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 "Notes to Financial Statements" at pages 27 through  45,
respectively,  of  the  1997  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  "Investment in Tax-Exempt Securities" in Note 7  to  the
Financial  Statements at pages 37 through 43 in the  1997  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  15  through  21,  and
"Notes  to  Financial Statements" at pages 27 through 45  of  the
1997 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.

          Information responsive to this item is contained  under
        Note 8 "Quarterly Information" included at page 44 of the
        1997  Annual Report  which  is  incorporated  herein   by
        reference.

   (b)  Number of Security Holders.

          The number of BAC Holders  at  December  31,  1997  was
        16,009.  The  number  of  Status   Quo  BAC  holders   at
        December 31, 1997 was 236.

   (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 14 of the  1997  Annual
        Report,  "Report  of  Management" at pages 15 through 21,
        "Notes to Financial  Statements"  at  pages  27   through
        45, and "Distribution Information" at page 46 of the 1997
        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
         14  of  the  1997  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 15 through
         21  of  the  1997  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 22 through 45 of the 1997  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.
          Directors and Executive Officers
          (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         61 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       46 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      43 Executive  Vice  President and Director
                          of the Managing General Partner   since
                          inception. Mr. Downing joined Oxford in
                          1984.  Since  1993,  Mr.  Downing   has
                          served as Executive Vice President  and
                          Director of  various Oxford affiliates.
                          Mr. Downing is responsible for the day-
                          to-day   investment    and    financing
                          activities of OTEF II.
<PAGE> 4

          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                            FORM 10-K

                      PART III (continued)

Name                  Age Position and Business Experience
-----------------------------------------------------------------
Stephen P. Gavula, Jr. 47 Director.  From June 1988 to  September
                          1995, Mr. Gavula was Chairman and Chief
                          Executive Officer of the JHM  Group  of
                          companies, which  provided  specialized
                          investment  management   services    to
                          various  financial  institutional   and
                          individual investors.   The  JHM  Group
                          specialized     in      mortgage-backed
                          securities and was an affiliate of  The
                          John   Hancock  Mutual  Life  Insurance
                          Company.   In  September  1995,   after
                          accumulating over $2 billion in  assets
                          under a management, Mr. Gavula sold his
                          interest in JHM to John Hancock  Mutual
                          Life.  Presently, Mr.  Gavula  acts  as
                          Chairman and Chief Executive Officer of
                          JDS   Capital Corporation,  a   private
                          investment firm in McLean, Virginia.

Scot B. Barker         49 Director.  Mr. Barker is the President,
                          Director and    owner   of   Newman   &
                          Associates,   Inc.,   a    Denver-based
                          financial services firm  that  arranges
                          debt financing for both commercial  and
                          multifamily properties since 1985.  Mr.
                          Barker   has  extensive  experience  in
                          financing HUD-insured and  HUD-assisted
                          properties throughout the U.S.  He  has
                          been  instrumental   in    designing  a
                          variety of new financing  programs  for
                          the real estate sector.

Mark E. Schifrin       44 Executive    Vice   President   of  the
                          Managing General  Partner  since  1993.
                          Mr.  Schifrin  joined  Oxford  in 1984.
                          Since 1993,  Mr.  Schifrin  has  served
                          as   Executive   Vice   President   and
                          Director of various  Oxford affiliates.
                          Mr.  Schifrin  is  responsible  for the
                          day-to-day asset management  activities
                          relating     to    Oxford's    property
                          portfolio,     including    operations,
                          refinancings   and   recapitalizations,
                          oversight   of   property   management,
                          dispositions  and  investor  servicing.

Richard R. Singleton   50 Senior  Vice  President since inception
                          and Chief Financial Officer since 1995.
                          Mr. Singleton  joined Oxford  in  1979.
                          Mr. Singleton  serves  as  Senior  Vice
                          President of various Oxford  affiliates
                          and  Chief Financial Officer of  OTEF's
                          managing general partner.

Marc B. Abrams         43 Senior Vice  President,  Secretary  and
                          General Counsel  since  inception.  Mr.
                          Abrams joined  Oxford  in  1985.    Mr.
                          Abrams serves as Senior Vice President,
                          Secretary   and   General  Counsel   of
                          various Oxford affiliates.

<PAGE> 5

          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                            FORM 10-K

                      PART III (continued)


   (d)  Family Relationships.  None.

   (f)  Involvement in Certain Legal Proceedings.  None.

   (g)  Promoters and Controlling Persons.  Not applicable.

   Section 16(a) Beneficial Ownership Reporting Compliance

   Section  16(a)  of  the Securities Exchange Act  of  1934,  as
amended  (the  "Exchange  Act"),  requires  that  the  directors,
executive  officers,  and persons who own  more  than  10%  of  a
registered class of the equity securities of OTEF II or  OTEF  II
Corporation  ("reporting persons") file with the  Securities  and
Exchange Commission initial reports of ownership, and reports  of
changes  in  ownership, of OTEF II BACs, and options to  purchase
OTEF  II BACs.  Reporting persons are required by Securities  and
Exchange Commission rules to furnish OTEF II with copies  of  all
Section 16(a) reports they file.

   Based   solely   upon   a  review  of  Section  16(a)  reports
furnished to OTEF II for the fiscal year ended December 31,  1997
(the  "1997  fiscal  year"),  and  representations  by  reporting
persons  that no other reports were required for the 1997  fiscal
year,  OTEF  II believes that all reporting persons timely  filed
all  reports  required  by  Section 16(a),  except  that  Messrs.
Zickler,  Lavin,  Downing, Schifrin, Abrams and  Singleton  filed
late their Initial Reports of Beneficial Ownership on Form 3.

Item 11.  Executive Compensation.
          (a), (b), (c), and (d)

   None  of  the  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.   During
1997,  the two independent directors received a total of  $20,000
in directors' fees.

   On  May  21,  1997, OTEF II  adopted 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 authorizes the granting to the  directors,
officers  and  employees  of  the Managing  General  Partner  and
certain affiliates of options to purchase 652,125 options  (on  a
post-split  basis).  Such options are exercisable for  10  years.
The  Managing  General Partner has awarded  all  of  the  options
authorized under the terms of the Incentive Option Plan.  Of  the
652,125  options,  613,000 were fully vested  upon  issuance  and
39,125  vest  in  equal annual amounts over  3  years  commencing
January 1, 1998.

<PAGE> 6

          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                            FORM 10-K

                      PART III (continued)


Option Grants In Fiscal 1997

   Shown  below  is information concerning option grants  to  the
executive  officers  of  the Managing General  Partner  who  were
granted  options to purchase OTEF II BACs during OTEF  II's  1997
fiscal year.

<TABLE>
                                       Individual Grants
---------------------------------------------------------------------------------------
<CAPTION>
                                   % of
                                  Total                      Potential Realizable Value
                    Number of    Options                     at Assumed Annual Rates of
                      BACs     Granted to  Exercise             BAC Price Appreciation
                   Underlying   Employess  or Base                  For Option Term
                     Options    in Fiscal   Price  Expiration     Compounded Annually
Name               Granted<F1>    1997     ($/BAC)    Date         5%         10%
---------------------------------------------------------------------------------------
<S>                   <C>        <C>        <C>      <C>       <C>         <C>
Leo E. Zickler        163,031    25.000%    $23.88   5/21/07   $2,448,400  $6,204,727
Francis P. Lavin      163,031    25.000%    $23.88   5/21/07   $2,448,400  $6,204,727
Robert  B. Downing     82,150    12.597%    $23.88   5/21/07   $1,233,729  $3,126,512
Mark  E. Schifrin      75,620    11.596%    $23.88   5/21/07   $1,135,661  $2,877,989
Marc  B. Abrams        61,606     9.447%    $23.88   5/21/07     $925,199  $2,344,636
Richard  R. Singleton  47,997     7.360%    $23.88   5/21/07     $720,819  $1,826,697
---------------------------------------------------------------------------------------
<FN>
<F1>  All options held by executive officers were granted prior to the effective  date
      of listing of the OTEF II BACs for trading on the American Stock Exchange.   The
      exercise  price  of  each option  grant  was  set at the average of the American
      Stock Exchange closing bid prices of the OTEF II BACs for the first  20  days of
      trading following the listing of the OTEF II BACs.
</FN>
</TABLE>

         Aggregate Option Exercises in Last Fiscal Year and
                      Fiscal Year-End Values

   Shown below is information with respect to certain unexercised
options  to purchase OTEF II BACs held by the executive  officers
of  OTEF  II  Corporation as of the end of OTEF II's 1997  fiscal
year.  None  of  the  executive officers of OTEF  II  Corporation
exercised any options during OTEF II's 1997 fiscal year.

<TABLE>
-----------------------------------------------------------------------------
<CAPTION>
                         Number of BACs          Value of In-the-Money
                      Underlying Options at        Options at End of
                        End of Fiscal Year          Fiscal 1997<F1>
Name                 Exercisable Unexercisable  Exercisable  Unexercisable
-----------------------------------------------------------------------------
<S>                    <C>             <C>        <C>              <C>
Leo E. Zickler         163,031         0          233,134          0
Francis P. Lavin       163,031         0          233,134          0
Robert B. Downing       82,150         0          117,475          0
Mark E. Schifrin        75,620         0          108,137          0
Marc B. Abrams          61,606         0           88,097          0
Richard R. Singleton    47,997         0           68,636          0
-----------------------------------------------------------------------------
   TOTAL               593,435         0          848,613          0
-----------------------------------------------------------------------------
<FN>
<F1> Based on the market value of  the  OTEF II BACs on the last trading  day
     of  1997 (as measured by  the American  Stock Exchange closing bid price
     of $25.31), minus  the  exercise price.
</FN>

</TABLE>

   (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.

<PAGE> 7

          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                            FORM 10-K

                      PART III (continued)

   The  following table sets forth, as of February 5,  1998,  the
number  and percentage of outstanding BACs beneficially owned  by
(i)  each  director of OTEF II Corporation, (ii)  each  executive
officer  of OTEF II Corporation, and (iii) all executive officers
and  directors  of OTEF II Corporation as a group.   Each  person
named in the table has sole voting and sole investment power with
respect  to each of the OTEF II BACs beneficially owned  by  such
person.

<TABLE>
-----------------------------------------------------------------------------
<CAPTION>
Name and Address of               Beneficial Ownership     Percentage of
  Beneficial Owner                   No.  BACs <F1>     Outstanding BACs <F2>
-----------------------------------------------------------------------------
<S>                                      <C>                   <C>
Leo E. Zickler<F3><F4>
7200 Wisconsin Avenue, Suite 1100
Bethesda, MD  20814                      163,031               2.08%

Francis P. Lavin<F3><F4>
7200 Wisconsin Avenue, Suite 1100
Bethesda, MD  20814                      167,131               2.13%

Robert B. Downing<F3><F4>
7200 Wisconsin Avenue, Suite 1100
Bethesda, MD  20814                       91,150               1.16%

Stephen P. Gavula, Jr.<F3>
8300 Greensboro Drive, Suite 970
McLean, VA  22102                         20,127               0.26%

Scot B. Barker,<F3>
1801 California Street
Denver, Co  80202                          3,261               0.04%

Mark E. Schifrin<F4>
7200 Wisconsin Avenue, Suite 1100
Bethesda, MD  20814                       76,420               0.98%

Marc B. Abrams<F4>
7200 Wisconsin Avenue, Suite 1100
Bethesda, MD  20814                       61,606               0.79%

Richard R. Singleton<F4>
7200 Wisconsin Avenue, Suite 1100
Bethesda, MD  20814                       48,997               0.63%
-----------------------------------------------------------------------------
All executive officers and
directors as a group (8 persons)         631,723               8.06%
-----------------------------------------------------------------------------
<FN>
<F1> Amount of   beneficial  ownership  includes  options  to  purchase  OTEF
     II  BACs  granted  to  directors  and  executive  officers   of OTEF  II
     Corporation which have vested and are exercisable as of February 5,1998.
     Accordingly, Mr. Zickler has 163,031 options vested and exercisable; Mr.
     Lavin has 163,031 options vested and exercisable; Mr. Downing has 82,150
     options vested and exercisable; Mr. Gavula has 3,261 options vested  and
     exercisable;  Mr.  Barker has 3,261 options vested and  exercisable; Mr.
     Schifrin has 75,620 options vested and exercisable;Mr. Abrams has 61,606
     options vested and exercisable;  and  Mr.  Singleton  has 47,997 options
     vested and exercisable.

<F2> All percentages  of  OTEF II BACs were calculated to include options  to
     purchase OTEF  II  BACs  vested  and  exercisable  for  those individual
     directors and executive  officers  of  OTEF II  Corporation who had such
     options.

<F3> Indicates a director of OTEF II Corporation.

<F4> Indicates an executive officer of OTEF II Corporation.
</FN>
</TABLE>

<PAGE> 8

          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                            FORM 10-K

                      PART III (continued)


(c)  Changes in Control.  None.

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 32  to  33
     of  the  1997  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, Financial 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 1997 Annual Report and are incorporated
        by reference into Part II, Item 8.

                                                Sequentially
                                                  Numbered
                                                   Page(s)
                                                ------------
        Report of Independent Accountants.           22

        Balance Sheets as of  December 31,
        1997 and 1996.                               23

        Statements  of  Income   for   the
        years ended December 31, 1997  and
        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;
        and  for the five months ended May
        31, 1995 for OTEF.                           24

        Statement  of  Partners'   Capital
        for  the years ended December  31,
        1997, 1996 and 1995 for OTEF II.             25

        Statements of Cash Flows  for  the
        years ended December 31, 1997  and
        1996  for  OTEF II; for the  seven
        months  ended  December  31,  1995
        for  OTEF  II;  and for  the  five
        months  ended  May  31,  1995  for
        OTEF.                                        26

        Notes   to  Financial  Statements,
        which   include  the   information
        required   to   be   included   in
        Schedule  IV - Mortgage  Loans  on
        Real Estate.                                27-45

<PAGE> 9

          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                            FORM 10-K

                      PART III (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 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. Third  Amended  and  Restated  Agreement  of   Limited
           Partnership of  Oxford  Tax  Exempt  Fund  II  Limited
           Partnership (incorporated by reference  from  (Exhibit
           4(a) to the registrant's quarterly report on form  10-
           Q/A for the quarter ended March 31, 1997.

        Exhibit No.10  - Material contracts.

        a.   BAC Holder Rights Agreement.

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

        c.   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,
                1997  ("filed"  only  to   the  extent   material
                therefrom   is   specifically   incorporated   by
                reference).

          (b)  Reports on Form 8-K.

               No   reports  on  Form 8-K were filed  during  the
               fourth quarter of 1997.

          (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> 10

          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:

                                                    Sequentially
    Item                      Reference Materials  Numbered Page(s)
-------------------------------------------------------------------
1.  Business                   1997 Annual Report      pps 27-45

3.  Legal Proceedings          1997 Annual Report      pps 15-21
                                                       and 27-45
5.  Market  for  Registrant's
    Partnership  Interest and
    Related Matters            1997 Annual Report   pps 14,15-21,
                                                       and 27-47
6.  Selected Financial Data    1997 Annual Report       pp 14

7.  Management's   Discussion
    and Analysis of Financial
    Condition and Results  of
    Operations                 1997 Annual Report      pps 15-21

8.  Financial Statements  and
    Supplementary Data         1997 Annual Report      pps 22-45

11. Executive Compensation     1997 Annual Report       pp 33

14. Exhibits,       Financial
    Schedules   and   Reports
    on Form 8-K                1997 Annual Report      pps 22-45




<PAGE> 11

          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) 1997 Annual Report to Security Holders.

   Oxford Tax Exempt Fund II Limited Partnership's  Report  dated
December 31, 1997, follows  on  sequentially  numbered  pages  13
through 48 of this report.

(27) Financial Data Schedule.












<PAGE> 12

          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: 3/30/98   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: 3/30/98   By:  /S/ Leo E. Zickler
      -------       ---------------------------------------------
                    Leo E. Zickler
                    Chairman of the Board of Directors and
                    Chief Executive Officer

Date: 3/30/98   By:  /S/ Francis P. Lavin
      -------       ---------------------------------------------
                    Francis P. Lavin
                    Director and President

Date: 3/30/98   By:  /S/ Robert B. Downing
      -------       ---------------------------------------------
                    Robert B. Downing
                    Director and Executive Vice President

Date: 3/30/98   By:  /S/ Stephen P. Gavula, Jr.
      -------       ---------------------------------------------
                    Stephen P. Gavula, Jr.
                    Director

Date: 3/30/98   By:  /S/ Scot B. Barker
      -------       ---------------------------------------------
                    Scot B. Barker
                    Director

    No proxy material has been sent to the Registrant's security
holders.  The Partnership's 1997 Annual Report is expected to be
mailed to OTEF II BAC Holders before May 15, 1998.

<PAGE> 13











          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                       1997 Annual Report
















          CONTENTS

          Selected Financial Data
          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> 14

<TABLE>
-------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Selected Financial Data (in thousands, except per Liquidity BAC)
                        (Restated for the 25-for-1 stock split which occurred on July 1, 1997)
------------------------------------------------------------------------------------||-----------------------------------
                                                OTEF II<F3>                         ||            OTEF<F1>
                           ---------------------------------------------------------||-----------------------------------
                                                                      | Seven months||Five months|
                           For the years ended Decmeber 31,           |    ended    ||   ended   |     For the years
                           --------------------------------  Pro Forma| December 31,||   May 31, |   ended December 31,
FINANCIAL HIGHLIGHTS             1997             1996       1995<F4> |  1995<F3>   ||    1995   |    1994       1993
----------------------------------------------------------------------|-------------||-----------|-----------------------
<S>                            <C>              <C>          <C>      |   <C>       || <C>       | <C>        <C>
Total Assets                   $270,663         $228,733     $174,034 |   $174,034  || $163,856  | $168,568   $178,372
                                                                      |             ||           |
Investment in Tax-Exempt                                              |             ||           |
  Securities                   $217,159         $215,529     $164,000 |   $164,000  || $153,032  | $158,599   $173,321
                                                                      |             ||           |
Investment in Tax-Exempt                                              |             ||           |
  Securities Held in Trust     $ 38,820         $      0     $      0 |   $      0  || $      0  | $      0   $      0
                                                                      |             ||           |
Total Revenue                  $ 19,130         $ 19,762     $ 16,626 |   $  9,610  || $  2,452  | $  4,137   $  2,651
                                                                      |             ||           |
Net Income                     $ 16,642         $ 14,912     $ 15,210 |   $  8,369  || $  2,277  | $  3,727   $  2,246
                                                                      |             ||           |
Net Income Allocated to                                               |             ||           |
BAC Holders                    $ 15,893<F7>     $ 14,614     $ 14,906 |   $  8,202  || $  2,232  | $  3,652   $  2,201
                                                                      |             ||           |
Net Income per BAC             $   2.19<F7>     $  1.948     $  1.988 |   $  1.094  || $  0.298  | $  0.487   $  0.294
                                                                      |             ||           |
Net Income per BAC-assumming                                          |             ||           |
  dilution                     $   2.18<F8>     $      0     $      0 |   $      0  || $      0  | $      0   $      0
                                                                      |             ||           |
Municipal Income (Tax Basis)   $ 16,983         $ 14,644     $ 16,210 |   $  8,369  || $  7,841  | $ 16,911   $ 13,211
                                                                      |             ||           |
Municipal Income Allocated                                            |             ||           |
to BAC Holders (Tax Basis)     $ 16,041<F6>     $ 14,351     $ 15,886 |   $  8,202  || $  7,687  | $ 16,573   $ 12,946
                                                                      |             ||           |
Municipal Income per BAC                                              |             ||           |
(Tax Basis)                    $  2.233<F6><F7> $  1.914     $  2.118 |   $  1.094  || $  1.025  | $  2.209   $  1.726
                                                                      |             ||           |
Cash Distributions per BAC<F2> $  1.942<F7>     $  1.904     $  1.904 |   $  1.428  || $  0.476  | $  1.800   $  1.763
                                                                      |             ||           |
Weighted  Average OTEF II                                             |             ||           |
BACs Outstanding<F9>              7,264<F7>        7,500        7,500 |      7,500  ||    7,500  |    7,500      7,500
                                                                      |             ||           |
Number of BAC Holders            16,009           15,678       15,061 |     15,061  ||   15,249  |   15,359     15,585
----------------------------------------------------------------------|-------------||-----------|-----------------------
                                                        OTEF II<F3>                 ||            OTEF<F1>
                                ----------------------------------------------------||-----------------------------------
                                                                      | Seven months||Five months|
                                     For the years                    |    ended    ||   ended   |     For the years
RECONCILIATION TO                  ended December 31,        Pro Forma| December 31,||  May 31,  |   ended December 31,
MUNCIIPAL INCOME                  1997            1996       1995 <F4>|    1995     ||   1995    |    1994       1993
----------------------------------------------------------------------|-------------||-----------|-----------------------
Net Income per financial       $ 16,642         $ 14,912     $ 16,210 |   $  8,369  || $  2,277  | $  3,726   $  2,246
  statements (GAAP)                                                   |             ||           |
Add:                                                                  |             ||           |
  Equity method adjustments:                                          |             ||           |
  ---Equity Income<F3>                0                0            0 |          0  ||   (2,305) |   (3,949)    (2,597)
  ---Interest received<F3>            0                0            0 |          0  ||    7,869  |   18,591     13,562
  Accrued base interest/                                              |             ||           |
    (reduction)/other               341<F5>         (268)<F5>       0 |          0  ||        0  |   (1,457)         0
----------------------------------------------------------------------|-------------||-----------|-----------------------
Municipal income,                                                     |             ||           |
  net for tax reporting                                               |             ||           |
  purposes                     $ 16,983         $ 14,644     $ 16,210 |   $  8,369  || $  7,841  | $ 16,911    $13,211
======================================================================|=============||===========|=======================
<FN>
<F1> 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.
<F2> See page 46 for analysis of historical quarterly distributions.
<F3> Effective  on  June 1, 1995, with the transfer 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.
<F4> The unaudited 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.
<F5> 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 be capitalized for  tax  purposes  in 1997;  (ii)  a
     portion of the Partnership's expenses, for  GAAP  purposes, totaling  approximately $1 million that was not expensed
     in 1996 for tax purposes;  and  (iii)  write-off of prior years' tax accrual  totaling   $3.8  million.   For   1997
     this amount represents the tax capitalization of continuing class  action litigation costs in conjunction  with  the
     appeal. (See note 9)
<F6> Municipal  income  is  before the Liquidity & Growth  Plan  Financing Transaction  (See  page 16), which was treated
     as a sale  for  tax  purposes resulting in a $3,829,000 capital loss.
<F7> On April 1, 1997, 314,675 BACs were converted to 12,587 Status Quo BACs (SQBs).  Amounts presented for 1997 are  for
     Non-SQB Liquidity BACs only.
<F8> Options  granted but not exercised in 1997 are dilutive.  The  weighted average BACs outstanding  assuming  dilution
     is 7,283,795.
<F9> This amount is in thousands and has been restated to reflect the 25-for-1 stock split effective July 1, 1997.
</FN>

</TABLE>

<PAGE> 15

----------------------------------------------------------------------------
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,
1997,  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

     Refunding  and  Financing.   During  the  last  quarter  of  1996,  ten
of   the   fifteen   existing  mortgage  revenue  bonds  ("Existing   MRBs")
were   refunded.    During  the  first  quarter  of  1997,  two   additional
Existing   MRBs   were  refunded  for  a  total  of  twelve  MRBs   refunded
or   88%   of   the   existing  portfolio.   As  a  result   of   the   1997
refundings,  the  estimated  value  of  the  bonds  held  by  OTEF  II,   as
shown   on   the   Balance   Sheet,   increased   by   approximately   $16.1
million   as  of  December  31,  1997,  compared  to  December   31,   1996.
Management   is   continuing   its  efforts   to   refund   the    remaining
Existing MRBs.

     The   Refunding  Bonds  currently  held  by  OTEF  II  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  one  or  more   financing
transactions  pursuant  to  which  it  will  sell  all  or  a   portion   of
the   Series   A  Bonds,  or  interests  therein,  that  are  allocable   to
the  OTEF  II  BACs  ("Liquidity  Assets"),  or  issue  debt  that  may   be
secured    by   such   assets,   new   assets   or   both.   (See    "Recent
Developments-Financing    Transactions").     The    net    proceeds    from
these   financings   will   be  invested  in  new   assets,   as   discussed
below.    OTEF  II  generally  expects  that  it  will  retain  the  related
Series   B   Bonds   for   the  benefit  of  the   Liquidity   BAC   Holders
(although   such   Series   B   Bonds   may   be   used   to   finance   the
acquisition   of    new   assets),  and  will   retain   both   the   senior
Series   A   Bonds  and  the  subordinated  Series  B  Bonds,  or  interests
therein,   allocable   to   the  SQBs  ("Status   Quo   Assets")   for   the
benefit of the SQB Holders.

     The   Managing   General  Partner  intends  to  invest   primarily   in
additional   tax-exempt   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  (all  of  the
foregoing    are   referred   to   collectively   as   "New    Assets"    or
"Liquidity   &   Growth   Bonds").    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
may   permit   it,   in   some   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.

     Information   Memorandum.   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,  see  Note   9   to   the
Financial Statements.

      Status    Quo    BACs.    In   connection   with    the    Information
Memorandum  discussed  above,  approximately  4.2%  of  the  OTEF   II   BAC
Holders   made  a  timely  election  to  convert  their  OTEF  II  BACs   to
SQBs.     Effective   April   1,   1997,   OTEF   II   issued   the    SQBs,
representing   12,587   shares,   in   uncertificated,   book-entry    form.
Effective  July  31,  1997,  OTEF  II  redeemed  5,484  SQBs  at  $540   per
SQB   for   a  total  of  approximately  $3.0  million.   On  November   30,
1997,   OTEF  redeemed  an  additional  10  SQBs  at  the  price   of   $540
per   SQB.    As   of   December   31,   1997,   there   were   7,093   SQBs
outstanding.

<PAGE> 16

----------------------------------------------------------------------------
Report of Management
----------------------------------------------------------------------------

     The   Information  Memorandum  states  that,  subject  to  receipt   of
a    fairness    opinion   from   OTEF   II's   independent   real    estate
consultant,   non-tendered   SQBs  will  be   purchased   or   redeemed   by
OTEF   II   at   such   time  as  the  Managing  General  Partner   believes
that  it  would  be  in  the  best interests of  OTEF  II  and  the  holders
of  the  non-tendered  SQBs,  but  in  no  event  later  than  December  31,
2003,   which   date   may   be   extended  under   certain   circumstances.
The  purchase  or  redemption  price  will  be  the  fair  market  value  of
the  Status  Quo  Assets  at  the  time  of  purchase  or  redemption,  less
the   costs   of   sale.   The  Managing  General  Partner  has   undertaken
an   analysis  of  whether  such  a  purchase  or  redemption  by  OTEF   II
would  be  in  the  best  interests  of the  SQB  holders  and  OTEF  II  at
the   present   time  and,  in  connection  therewith,  is   reviewing   all
ownership   attributes  of  the  SQBs,  including,   among   other   things,
the   proper   allocation   of   OTEF  II's   general   and   administrative
expenses   to  SQB  holders.   The  Managing  General  Partner  expects   to
complete its analysis later this year.

     OTEF   II  BAC  Split.   In  anticipation  of  listing  the   OTEF   II
BACs   with   a   national   securities  exchange,  the   Managing   General
Partner  of  OTEF  II  declared  a  25-for-1  split  of  the  BACs   as   of
July  1,  1997  for   Liquidity  BAC  Holders  of  record  as  of  June  30,
1997.   This  split  of  the  outstanding  OTEF  II  BACs  was  intended  to
divide   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.     For    comparative
financial   statement  purposes,  prior  periods  have  been   restated   to
reflect   this   25-to-1   split.   No  split  was   effectuated   for   the
SQBs.

     Stock  Exchange  Listing.   On  July  22,  1997,  the  American   Stock
Exchange   began   trading   OTEF   II   BACs.    New   certificates    were
issued   by  OTEF  II's  registrar  and  transfer  agent  to  all  OTEF   II
Liquidity   BAC   Holders  whose  OTEF  II  BACs  were   not   held   by   a
brokerage   firm   in  street  name  for  the  benefit  of   such   holders.
The   SQBs   were  not  listed  for  trading,  and  will  continue   to   be
reflected   on  OTEF  II's  books  and  records  in  uncertificated,   book-
entry form.

     Financing   Transactions.   On  August  22,  1997,   OTEF   II   closed
the   first   of   a  series  of  transactions  that  will  enable   it   to
acquire   New   Assets   in  accordance  with  the  Liquidity   and   Growth
Plan.    OTEF  II  securitized  approximately  $39  million  of   Series   A
Bonds   collateralized  by  four  properties.   OTEF  II  retained  all   of
its   interest   in  the  corresponding  Series  B  Bonds.    In   addition,
OTEF   II  applied  approximately  $12  million  of  the  proceeds  to   the
purchase    of    a    subordinated   interest   in   this    securitization
transaction.   OTEF   II   also  retained  certain   rights   to   reacquire
the   securitized  assets.   On  February  19,  1998,  OTEF  II  closed   an
additional   securitization   transaction   involving   $12.8   million   of
Series   A   Bonds   collateralized   by   one   property,   and   OTEF   II
purchased   a   subordinated   interest.    The   portion   of    the    net
proceeds   from   these   transactions  that  is   not   invested   in   New
Assets   was   temporarily  invested  in  liquid  tax-exempt  money   market
securities.    These   short-term   securities   earned   interest   ranging
from 2.9% to 4.1% during the period.

     In   connection  with  these  transactions,  OTEF  II   converted   the
interest   rate   mode  on  the  five  Series  A  Bonds   from   an   annual
reset  to  weekly  floaters.   In  the  first  transaction,  OTEF  II   also
purchased   a  three-year  interest  rate  cap  on  a  notional  amount   of
approximately   $27   million   to  minimize   the   effects   of   interest
rate   volatility.    Under  this  arrangement,  if   the   average   short-
term,   tax-exempt  interest  rates  for  any  month  during  the  term   of
the   cap   increase  above  a  specified  level  (6%),  the   counter-party
to   the   interest  rate  cap  transaction  is  required  to  pay  directly
to   OTEF   II  the  amount  by  which  such  rates  exceed  the   specified
level.

      For    financial   statement   purposes,   these   transactions    are
accounted   for   as   financing   transactions.    The   amount   of    the
Series   A   Bonds  financed  during  1997  of  approximately  $39   million
is   reflected   as  Securities  Held  in  Trust,  the  net  cash   proceeds
are   classified   as   Cash  and  Cash  Equivalents  and   the   difference
between   the   principal  amount  of  the  Series  A  Bonds  financed   and
the   principal   amount   of   the  subordinated   interest   acquired   by
OTEF   II   is   classified   as  financing  debt.    The   financing   debt
bears    interest    at   the   Public   Securities   Association    ("PSA")
weekly   floating   bond   index  plus  approximately   80   to   85   basis
points,   which   averaged   4.63%  from  the  date   of   closing   through
December    31,    1997.     Costs   associated   with    these    financing
transactions   are   being   amortized   over   10   years   for   financial
statement   purposes,   and  costs  associated  with   the   interest   rate
cap   are   being   amortized   over  the  life   of   the   interest   rate
agreement,   which   is   3  years.   For  federal  income   tax   purposes,
these   transactions  were  treated  as  a  sale   by   OTEF   II   of   the
applicable   Series   A   Bonds   and  a  purchase   of   the   subordinated
interests.    With   respect  to  the  first  transaction,   the   sale   of
the   Series  A  Bonds  resulted  in  a  capital  loss  for  federal  income
tax   purposes  of  approximately  $3.8  million.   None  of  this   capital
loss was allocated to the SQBs.

<PAGE> 17

----------------------------------------------------------------------------
Report of Management
----------------------------------------------------------------------------

     New  Asset  Acquisition  (New  Bonds).   On  December  30,  1997,  OTEF
II   used   substantially   all  of  the  net  proceeds   from   the   first
securitization    transaction    to    acquire    two    tax-exempt    bonds
collateralized   by   two   garden   apartment   communities   located    in
Texas.    These   properties   are  owned  by  Carpenter-Oxford   Associates
Limited     Partnership     and     Dallas-Oxford     Associates     Limited
Partnership,   respectively,  both  of  which   are   affiliates   of   OTEF
II's   Managing  General  Partner.   The  combined  face  amounts   of   the
bonds   acquired,   after  cancellation  of  $6.5  million   by   the   bond
trustees,    was    approximately   $27.9   million.    The    bonds    were
purchased   from   a   third   party   for  approximately   $24.4   million.
The   existing  Dallas  and  Carpenter  bonds  mature  on  March  1,   2006,
except   that  they  are  subject  to  mandatory  redemption  on   July   1,
2000,  unless  alternative  security  is  provided  on  or  prior  to   that
date.       These   bonds  currently  bear  a  weighted   average   interest
of   7.54%   per   annum   based  on  the  outstanding  principal   balance.
Due    to   the   discounted   purchase   price,   the   approximate    8.6%
effective  yield  to  OTEF  II  is  higher  than  the  stated  coupon   rate
on   the   bonds.    For  financial  statement  purposes   the   bonds   are
reflected      at     their     purchase     price.      The      properties
collateralizing   these  bonds  have  an  aggregate   appraised   value   of
$28    million.    The   partnerships   and   OTEF   II   agreed   to    use
reasonable   commercial   efforts  to  cause  the  issuance   of   refunding
bonds,   or  modification  of  the  existing  bond  documents,  to   achieve
the   following   principal   terms:   (i)   principal   amount   of   bonds
equal   to  the  sum  of  OTEF  II's  purchase  price  for  the  bonds   and
acquisition   costs,  (ii)  fixed  interest  at  a   rate   of   7.25%   per
annum,      (iii)      30-year      maturity      with      a      mandatory
redemption/remarketing    on    the    seventh    anniversary     of     the
refunding   or   restructuring,  and  (iv)  optional   redemption   by   the
partnerships  on  and  after  the  fourth  anniversary   upon   payment   of
a   sliding  scale  premium  or  at  any  time  with  the  consent  of  OTEF
II.    In   addition,   each  of  the  partnerships   has   the   right   to
repurchase  its  respective  bonds  from  OTEF  II  on  certain  terms   and
conditions  if  they  determine  they  will  not  be  able  to  obtain   the
consent  of  the  issuers  to  refund  or  modify  the  bonds  as  described
above.   No  assurances  can  be  given  that  the  partnerships  and   OTEF
II  will  be  able  to  cause  the  bonds to  be  refunded  or  modified  in
the    manner    described    above.    The   Managing    General    Partner
anticipates   that   approximately   $3.5   million   of   bonds   will   be
cancelled upon refunding.

     As  a  condition  of  the  purchase,  OTEF  II  agreed  to  make  loans
in   the   aggregate   of   approximately   $1.6   million   to   Carpenter-
Oxford      Associates     Limited     Partnership     and     Dallas-Oxford
Associates   Limited   Partnership.   The  loans   bear   taxable   interest
at   an   annual   rate   of  9.30%  payable  monthly   in   arrears.    The
principal   of   the  loans  is  due  at  maturity  which   shall   be   the
earlier   of   July   1,  2000,  or  repurchase  of   the   bonds   by   the
borrower.    The   purpose   of  the  loan   is   to   provide   funds   for
property   improvements,   partnership  costs,  and   bond   refunding   and
restructuring   costs.    On   January  5,   1998,   OTEF   II   loaned   an
aggregate    $0.9    million   to   Carpenter-Oxford   Associates    Limited
Partnership   and   Dallas-Oxford   Associates   Limited   Partnership   for
this    purpose.     It   is   anticipated   that   the   additional    $0.7
million   will  be  loaned  at  the  time  of  refunding  or  restructuring.
The  maturity  will  be  revised  to  match  the  redemption  dates  on  the
refunding  bonds  when  these  bonds  are  refunded  or  modified   in   the
manner described above.

     Distribution   for   the  Quarter  ended  December   31,   1997.    The
Managing   General   Partner   declared,   on   December   17,    1997,    a
quarterly   distribution  of  $0.495  per  BAC   for   the   Liquidity   BAC
holders,   and   $12.38  per  SQB  holders  of  record  paid   on   February
14,  1998.   This  distribution  is  at the  same  level  as  was  made  for
the   third   quarter.    The  third  and  fourth  quarter's   distributions
represent   a   4%   increase   in   the  prior   distribution   level   and
represented the first increase in ten consecutive quarters.

Liquidity and Capital Resources

     Current  Position.   OTEF  II  uses  the  payments  it  receives   from
the   Refunding   Bonds,  Existing  MRBs,  New  Assets  and  cash   reserves
primarily   for   distributions  to  the  OTEF  II  BAC  Holders   and   SQB
Holders   and   its  General  Partners,  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  9  to  Financial  Statements,  and  to   acquire   New
Assets   and  to  pay  for  costs  and  time  relating  to  the  acquisition
of    New   Assets.   It  is  anticipated  that  the  $1.5  million  balance
due   plaintiff's  counsel  in  connection  with  the  OTEF  II   Litigation
will be paid during 1998.

Set forth below is a year-by-year comparison of OTEF II's
liquidity:

     1997   versus   1996.   As  of  December  31,  1997,   OTEF   II   held
approximately   $11.7   million   in   cash   and   cash   equivalents,    a
decrease   of    approximately   $0.4   million,   or   approximately    3%,
from   the  $12.1  million  in  cash  and  cash  equivalents  held   as   of
December   31,   1996.    This  decrease  in  OTEF  II's   cash   and   cash
equivalents    was    primarily   the   result   of    approximately    $3.0
million   paid  by  OTEF  II  on  July  31,  1997  to  redeem   5,484   SQBs
pursuant   to  its  obligation  under  the  Optional  Sale  Plan   discussed
above   and  a  $1.0  million  advance  to  plaintiff's  counsel   made   in
connection   with   the  settlement  of  the  OTEF  II  Litigation.    These
decreases   in   cash   were   partially  offset   by   approximately   $3.0
million   in  cash  proceeds  from  the  financing  transaction   that   was
completed  on  August  22,  1997,  in  excess  of  the  purchase  price   of
the New Asset acquisitions also described above.

<PAGE> 18

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     Total   liabilities   of   OTEF  II  shown   on   the   balance   sheet
increased   to   approximately  $34  million  as  of   December   31,   1997
from    approximately   $7   million   at   December   31,    1996.     This
increase    is   attributed   to   the   financing   transaction   described
above,   and   the   4%   increase  in  quarterly  distributions   made   by
OTEF II.

     1996   versus   1995.   As  of  December  31,  1996,   OTEF   II   held
approximately   $12.1   million   in   cash   and   cash   equivalents,   an
increase   of   approximately   $2.4  million,   or   approximately   24.5%,
from   approximately  $9.7  million  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   approximately   $2.8  million  (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.

      Governance   and   administrative   expenses   totaled   approximately
$1.7  million  for  the  year  ended  December  31,  1996,  as  compared  to
approximately   $1.4  million  for  the  year  ended   December   31,   1995
for   OTEF  II  and  OTEF.   The  increase  of  approximately  $0.3  million
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    against    the    OTEF    II    Litigation     totaled
approximately   $3.2   million   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
approximately    $9.7    million    in   cash    and    cash    equivalents,
including    the    balance   transferred   from   the    working    capital
reserve,    an    increase    of    approximately    $0.8    million,     or
approximately   9.5%,   from  the  total  of  approximately   $7.4   million
in   cash   and  cash  equivalents  and  $1.5  million  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.

     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.

      Governance   and   administrative   expenses   totaled   approximately
$1.2   million   for  the  seven  months  ended  December  31,   1995   that
OTEF   II  was  in  operation,  and  approximately  $0.2  million  for   the
five   months  ended  May  31,  1995  for  OTEF.   OTEF  II's   and   OTEF's
governance   and   administrative  expenses   totaled   approximately   $1.4
million   for   the   year  ended  December  31,  1995,   as   compared   to
approximately   $0.4  million  for  the  year  ended  December   31,   1994.
The   increase  was  primarily  attributable  to  the  development  of   the
1995 OTEF Restructuring Plan.

<PAGE> 19

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     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.

Existing MRBs

    As  of  December  31,  1997,  OTEF II held  Existing  MRBs  for  two  of
the    Operating   Partnerships.    The   Managing   General   Partner    is
continuing   its   efforts   to  refund  these   Existing   MRBs.    As   of
December    31,   1997,   the   Operating   Partnerships   had    cumulative
unpaid   Base  Interest  and  interest  on  interest  at  8.25%  per  annum,
compounded   monthly,  of  approximately  $4.9  million  with   respect   to
these   Existing   MRBs.   Under  the  applicable  method   of   accounting,
this   unpaid   Base   Interest   was  not  reflected   in   the   financial
statements  of  OTEF  II.   In  connection  with  the  completion   of   the
refundings  for  2  of  the  Existing  MRBs  during  the  first  quarter  of
1997,    approximately   $24.1   million   of   cumulative    unpaid    Base
Interest and interest on interest was written off during 1997.

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
was   4.9%.   On  or  about  December  1997,  the  interest  rate   on   the
Series   A   Bonds   retained  by  OTEF  II  were  reset   to   4.8%.    The
interest   rate   on   the  Series  A  Bonds  involved  in   the   financing
transactions    described    above   under   "Recent    Developments"    was
converted  from  annual  reset  to  a  weekly  floating  rate  based  on   a
spread   over   the   PSA  index.   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
Partnership,   with   the   entire  principal   balance   and   any   unpaid
interest 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.

<PAGE> 20

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Report of Management
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    Other  Sources.   In  connection  with  the  closing  of  the  Refunding
Bonds,    the    applicable    Operating    Partnerships     entered    into
certain    pooling    agreements   which   may   provide    under    certain
circumstances   additional  sources  of  funds  to  enable   them   to   pay
their   respective   debt   service  on  the  Series   A   Bonds   and   the
Series  B  Bonds  and  related  fees  and  expenses.  As  of  December   31,
1997,   the  aggregate  amount  of  net  excess  cash  flow  held   in   the
Operating    Partnership   escrows   was   approximately    $1.1    million,
including   deposits   from   December's  cash   flow   compared   to   $0.1
million at the end of 1996.

     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  March  4,  1997  all  such   obligations
were fully satisfied.

    Oxford   Advances.    In   1997,  Oxford   funded   approximately   $0.1
million   to   Colonel   I  from  the  proceeds  of   the   Treasury   Strip
Bond,   which   has   been   discussed  in   previous   reports,   that   it
continues   to   hold  from  August  15,  1996.   At  December   31,   1997,
Oxford   was   holding  approximately  $1.1  million   of   such   proceeds,
plus    approximately   $0.2   million   in   accrued   interest,   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.   Since   August
15,    1996,   approximately   $0.9   million   of   these   proceeds   were
advanced    to    certain   Operating   Partnerships'   based    on    their
individual bond refunding costs and property improvement needs.

Results of Operations

  OTEF II's  Operations

      1997   versus   1996.    Distributions   to   Partners   amounted   to
approximately   $14.7   million,   or   $1.942   per   Liquidity   BAC   and
$36.50   per  SQB.   For  financial  statement  purposes,  Net  Income   and
Net   Income  per  Liquidity  BAC  were  approximately  $16.6  million   and
$2.19,   respectively,   for  the  year  ended   December   31,   1997,   as
compared   to   approximately  $14.9  million   and   $1.95,   respectively,
for   the   year  ended  December  31,  1996.   Net  income  per   Liquidity
BAC   for   the  year  ended  December  31,  1997,  assuming  dilution   for
stock options granted in 1997, was $2.18.

       OTEF    II's    revenues   for   1997   reflect   a    decrease    of
approximately   $632,000,  or  3%,  from  1996.   Due   to   the   refunding
of   ten   Existing   MRBs   in  1996,  OTEF  II  changed   its   accounting
method  for  these  assets  from  cash  to  accrual.   As  a  result,   OTEF
II's   revenues  for  1996  reflect  interest  income  for  13  months  with
respect   to   the  Refunding  Bonds,  and  for  1997  OTEF  II's   revenues
reflect   only   12  months  of  interest  income  with   respect   to   the
Refunding Bonds.

     For   1997,   OTEF  II's  expenses  decreased  by  approximately   $2.4
million,   or   49%,   compared  to  1996.   This   decrease   in   expenses
reflects  nearly  a  $2.9  million  decrease  in  litigation  costs  and   a
$771,000     decrease    in    administrative    expenses,     offset     by
approximately    $840,000    of    additional    Liquidity    and     Growth
expenses.    In   addition,  commencing  in  1997,  OTEF  II   is   required
to    report    interest    expense   attributable    to    the    financing
transaction that was completed on August 22, 1997.

      1996   versus   1995.    Distributions   to   Partners   amounted   to
approximately  $14.6  million  for  1996.   This  equates   to   an   annual
distribution    per    BAC    of    $1.904.    For    financial    statement
purposes,   Net   Income   and  Net  Income  per  BAC   were   approximately
$14.9    million   and   $1.95,   respectively,   for   the    year    ended
December   31,   1996.   For  financial  statement  purposes,   Net   Income
and   Net  Income  per  BAC  were  approximately  $8.4  million  and  $1.09,
respectively,   for   the  seven-month  period  ended  December   31,   1995
for   OTEF   II   under  SFAS  No.  115,  and  approximately  $2.3   million
and   $0.298,  respectively,  for  the  five-month  period  ended  May   31,
1995, under the equity method of accounting for OTEF.

<PAGE> 21

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Report of Management
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      1995   versus   1994.    Distributions   to   Partners   amounted   to
approximately  $14.6  million  for  1995.   This  equates   to   an   annual
distribution    per    BAC    of    $1.904.    For    financial    statement
purposes,   Net   Income   and  Net  Income  per  BAC   were   approximately
$8.4   million   and   $1.09,  respectively,  for  the  seven-month   period
ended   December   31,  1995  for  OTEF  II  under   SFAS   No.   115,   and
approximately  $2.3  million  and  $0.298,  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  approximately   $3.7
million and $0.487 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
approximately  $15.2  million  and  $1.99,  respectively,   for   the   year
ended   December   31,   1995.    Oxford  advances   of   approximately   $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.

Summary

      OTEF    II    is    taking   advantage   of   attractive    investment
opportunities.    The   refunding   of   the   Existing   MRBs    held    by
OTEF   II   has   given  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   resulting  in  more  net  income  and  a  higher   level   of
distributions   to   the   Liquidity  BAC   Holders.    In   addition,   the
Liquidity   BAC   Holders   should  benefit  from  more   efficient   market
pricing  of  the  OTEF  II  BACs due to listing  of  the  OTEF  II  BACs  on
the American Stock Exchange.

<PAGE> 22

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Report of Independent Accountants
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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,  1997  and  1996,  and
the   related   statements   of   income,   partners'   capital   and   cash
flows    for    each   of   the   three   years   in   the   period    ended
December    31,    1997.     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,  1997  and  1996,  and  the  results  of  its  operations  and
its   cash  flows  for  each  of  the  three  years  in  the  period   ended
December    31,    1997,    in    conformity   with    generally    accepted
accounting principles.




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




Washington, D.C.
February 5, 1998
  except for Note 10, as to which the
  date is February 24, 1998.




<PAGE> 23

<TABLE>
Oxford Tax Exempt Fund II Limited Partnership
-----------------------------------------------------------------------------
Balance Sheets (in thousands)
-----------------------------------------------------------------------------
<CAPTION>
December 31,                                      1997             1996
-----------------------------------------------------------------------------
<S>                                             <C>              <C>
Assets
  Investments in tax-exempt securities          $217,159         $215,529
  Investments in tax-exempt securities
    held in trust                                 38,820                0
  Cash and cash equivalents                       11,694           12,072
  Bond and other interest receivables              1,439            1,132
  Other assets                                     1,551                0
-----------------------------------------------------------------------------
      Total Assets                              $270,663         $228,733
=============================================================================
Liabilities and Partners' Capital
  Liabilities
    Financing debt                              $ 27,174         $      0
    Distributions payable                          3,719            3,643
    Accounts payable and accrued expenses          2,988            3,321
-----------------------------------------------------------------------------
      Total Liabilities                           33,881            6,964
-----------------------------------------------------------------------------
Contingencies and commitments (Notes 9 and 10)

Partners' Capital
  General Partners                                (2,356)          (2,393)
  Limited Partnership Interests:
    Liquidity BAC interests <F1>
      (7,499,875 interests issued and
      7,185,200 interests outstanding
      as of December 31, 1997)                   156,672          161,665
    Status Quo BAC interests (12,587
      interests issued as of April 1,
      1997, 7,093 interests outstanding
      as of December 31, 1997)                     3,885                0
  Unrealized gain on investments                  78,581           62,497
-----------------------------------------------------------------------------
      Total Partners' Capital                    236,782          221,769
-----------------------------------------------------------------------------
      Total Liabilities and Partners' Capital   $270,663         $228,733
=============================================================================
<FN>
<F1> For comparative purposes, Liquidity BAC Interests have been restated to
     reflect the 25-for-1 split which occurred on July 1, 1997.
</FN>

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

</TABLE>


<PAGE> 24

<TABLE>
Oxford Tax Exempt Fund II Limited Partnership
---------------------------------------------------------------------------------------------
Statements of Income (in thousands, except per Liquidity BAC amounts which have been restated
                      to reflect the 25-for-1 stock split effective July 1, 1997)
-------------------------------------------------------------------------------||------------
<CAPTION>
                                                      OTEF II                  ||   OTEF
                                  ---------------------------------------------||------------
                                  For the years ended December 31,|Seven months||Five months
                                  --------------------------------|   ended    ||   ended
                                                         Pro Forma|December 31,||  May 31,
                                     1997        1996     1995<F2>|    1995    ||   1995
------------------------------------------------------------------|------------||------------
<S>                               <C>         <C>         <C>     |   <C>      ||  <C>
Revenues                                                          |            ||
  Interest on bonds<F1>           $17,734<F5> $19,411<F4> $16,283 |   $9,414   ||  $    0
  Interest on securities held                                     |            ||
  in trust                            667           0           0 |        0   ||       0
  Equity income on investments                                    |            ||
    in Bonds<F1>                        0           0           0 |        0   ||   2,305
  Other, primarily interest on                                    |            ||
    short-term investments            729         351         343 |      196   ||     147
------------------------------------------------------------------|------------||------------
      Total Revenues               19,130      19,762      16,626 |    9,610   ||   2,452
------------------------------------------------------------------|------------||------------
Expenses                                                          |            ||
  Governance and administrative                                   |            ||
    expenses                          921       1,692       1,416 |    1,241   ||     175
  Litigation and settlement costs     265       3,158<F3>       0 |        0   ||       0
  Liquidity & growth costs            840           0           0 |        0   ||       0
  Finance interest expense            462           0           0 |        0   ||       0
------------------------------------------------------------------|------------||------------
      Total Expenses                2,488       4,850       1,416 |    1,241   ||     175
------------------------------------------------------------------|------------||------------
Net income                        $16,642     $14,912     $15,210 |   $8,369   ||  $2,277
==================================================================|============||============
Net income allocated to Liquidity                                 |            ||
BAC holders                       $15,893     $14,614     $14,906 |   $8,202   ||  $2,232
==================================================================|============||============
Net income per  Liquidity BAC     $  2.19     $  1.95     $  1.99 |   $ 1.09   ||  $0.298
==================================================================|============||============
Weighted average Liquidity BACs                                   |            ||
outstanding<F7>                     7,264       7,500       7,500 |    7,500   ||   7,500
==================================================================|============||============
Net Income per Liquidity BAC-                                     |            ||
assuming dilution<F6>             $  2.18        N/A         N/A  |     N/A    ||    N/A
==================================================================|============||============
Weighted average Liquidity BAC-                                   |            ||
assuming dilution<F6><F7>           7,284        N/A         N/A  |     N/A    ||    N/A
==================================================================|============||============
Distribution per  Liquidity BAC   $ 1.942     $ 1.904     $ 1.904 |   $1.428   ||  $0.476
==================================================================|============||============
<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. 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.  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
     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.

<F2> 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.

<F3> This  amount  includes $2.5 million payable by OTEF II in payment of plaintiff's
     counsel fees and reimbursement of expenses incurred.

<F4> This  amount  includes  approximately  $1,068,000  representing  an extra months
     accrual  of  bond interest on the 10 bonds which were  refunded  in  the  fourth
     quarter of 1996 due to their conversion to "accrual" basis accounting.

<F5> This amount includes approximately $243,000 representing an extra months accrual
     of bond interest on the two bonds which were refunded in  the  first quarter  of
     1997 due to their conversion to "accrual"  basis accounting.

<F6> In 1997, stock options were granted but not exercised.  (See notes 1 and 4).

<F7> This amount is in thousands and has been restated to reflect the 25-for-1  stock
     split effective July 1, 1997.
</FN>

 The accompanying notes are an integral part of these financial statements

</TABLE>


<PAGE> 25

<TABLE>
Oxford Tax Exempt Fund II Limited Partnership
--------------------------------------------------------------------------------------------------------
Statement of Partners' Capital (in thousands)
--------------------------------------------------------------------------------------------------------
<CAPTION>
                                                         Limited Partner
                                                            Interests
                                                      -----------------------
                                                                               Unrealized
For the Years Ended                           General   Liquidity    Status      Gain on
December 31, 1997, 1996, and 1995            Partners      BACs     Quo BACs   Investments     Total
--------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>        <C>           <C>
Balance, January 1, 1995
  (predecessor business)                     $(2,322)    $167,068    $    0     $     0       $164,746
========================================================================================================
Capital Contributions, February 9, 1995            1            0         0           0              1

Net income, five months ended
  May 31, 1995 (predecessor business)             45        2,232         0           0          2,277

Net income, seven months ended
  December 31, 1995                              167        8,202         0           0          8,369

Distributions to Partners,
  including $1.904 per BAC<F1>                  (291)     (14,280)        0           0        (14,571)

Unrealized gain on investments                     0            0         0      10,968         10,968

BAC Issuance Costs                                 0       (1,891)        0           0         (1,891)
--------------------------------------------------------------------------------------------------------
Balance, December 31, 1995                    (2,400)     161,331         0      10,968        169,899
========================================================================================================
Net income                                       298       14,614         0           0         14,912

Distributions to Partners,
    including $1.904 per BAC<F1>                (291)     (14,280)        0           0        (14,571)

Unrealized gain on investments                     0            0         0      51,529         51,529
--------------------------------------------------------------------------------------------------------
Balance, December 31, 1996                    (2,393)     161,665         0      62,497        221,769
========================================================================================================
Allocation of SQB Capital                          0       (6,809)    6,809           0              0

SQB Redemptions                                    0           26    (2,992)          0         (2,966)

Net income                                       333       15,893       416           0         16,642

Distributions to Partners,
  including $1.942 per Liquidity BAC<F1>
  and $36.50 per SQB                            (296)     (14,103)     (348)          0        (14,747)

Unrealized gain on investments                     0            0         0      16,084         16,084
--------------------------------------------------------------------------------------------------------
Balance, December 31, 1997                   $(2,356)    $156,672    $3,885     $78,581       $236,782
========================================================================================================
<FN>
<F1> For comparative purposes Liquidity BAC per share amounts have been restated to reflect the 25-for-1
     stock split which occurred on July 1, 1997.
</FN>

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

</TABLE>

<PAGE> 26

<TABLE>
Oxford Tax Exempt Fund II Limited Partnership
-----------------------------------------------------------------------------
Statements of Cash Flows (in thousands)
-----------------------------------------------------------------------------
<CAPTION>                                                      ||
                                                     OTEF II   ||    OTEF
                                     OTEF II          Seven    ||    Five
                               For the years ended months ended||months ended
                                   December 31,    December 31,||  May 31,
                                 ---------------   ------------||------------
                                 1997       1996       1995    ||   1995
---------------------------------------------------------------||------------
<S>                            <C>        <C>         <C>      || <C>
Operating Activities                                           ||
 Net income<F1>                $16,642    $14,912     $8,369   || $ 2,277
 Adjustments to reconcile net                                  ||
   income to net cash provided                                 ||
   by operating activities:                                    ||
   Equity income from                                          ||
     investments in Bonds<F2>        0          0          0   ||  (2,305)
 Changes in assets and                                         ||
   liabilities:                                                ||
   Bond and other interest                                     ||
     receivable                   (307)    (1,106)         7   ||      (9)
   Due from affiliates               0        310       (310)  ||       0
   Deferred costs                    0          0        555   ||       0
   Accounts payable and                                        ||
     accrued expenses             (333)     2,829         17   ||      97
---------------------------------------------------------------||------------
Net cash provided by                                           ||
  operating activities          16,002     16,945      8,638   ||      60
---------------------------------------------------------------||------------
Investing activities                                           ||
  Investment in new bonds      (24,366)         0          0   ||       0
  Partial redemption of SQBs    (2,966)         0          0   ||       0
  Other assets<F3>              (1,551)         0        123   ||     411
  Working capital reserve            0          0      1,537   ||     (19)
  Payments received from                                       ||
    investments in Bonds<F1>         0          0          0   ||   7,872
---------------------------------------------------------------||------------
Net cash (used in) provided                                    ||
  by investing activities      (28,883)         0      1,660   ||   8,264
---------------------------------------------------------------||------------
Financing activities                                           ||
  Distributions paid to                                        ||
    Partners and BAC Holders   (14,671)   (14,571)    (7,285)  ||  (7,087)
  Proceeds from financing                                      ||
    transactions                27,174          0          0   ||       0
  BAC issuance costs                 0          0     (1,220)  ||    (671)
  Capital contributions              0          0          1   ||       0
---------------------------------------------------------------||------------
Net cash (used) in                                             ||
  financing activities          12,503    (14,571)    (8,504)  ||  (7,758)
---------------------------------------------------------------||------------
Net (decrease) increase in                                     ||
  cash and cash equivalents       (378)     2,374      1,794   ||     566
Cash and cash equivalents,                                     ||
  beginning of period           12,072      9,698      7,904   ||   7,338
---------------------------------------------------------------||------------
Cash and cash equivalents,                                     ||
  end of period                $11,694    $12,072     $9,698   || $ 7,904
===============================================================||============
<FN>
<F1> On  June  1,  1995, OTEF II  adopted  the  provisions of  Statement   of
     Financial Accounting  Standards No. 115 ("SFAS 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 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.

<F3> Other  assets  represent deferred costs incurred in association with the
     Liquidity & Growth Plan financing transaction, prepaid items, and short-
     term promissory  notes associated with the OTEF II Litigation settlement,
     which are not recurring operating activities.
</FN>

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

</TABLE>

<PAGE> 27

----------------------------------------------------------------------------
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,   1997    and
December   31,  1996,  the  Statements  of  Income  for  the   years   ended
December   31,   1997,   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,   and   for   the   five-month
period   ended   May  31,  1995  for  OTEF,  the  Statement   of   Partners'
Capital   as   of   December   31,   1997,   1996   and   1995,   and    the
Statements   of   Cash  Flows  for  the  years  ended  December   31,   1997
and   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  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.  The   pro   forma   information
presented  for  1995  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.

     In   February   1997,   the   Financial  Accounting   Standards   Board
issued   a   Statement   of   Financial  Accounting   Standards   No.   128,
"Earnings   Per  Share"  ("SFAS  No.  128").   Basic  earnings  per   share,
a   measure   required  by  the  new  standard,  does  not   include   stock
options   as   common  stock  equivalents.   Diluted  earnings   per   share
reflects   the   potential  dilution  that  could  occur  if  such   options
or   other  contracts  to  issue  shares  were  exercised  or  resulted   in
the   issuance  of  an  incremental  amount  of  new  shares  based  on  the
Treasury   Method.    The  Treasury  Method  assumes   that   the   proceeds
from   exercise  of  the  options  are  used  to  purchase  shares  at   the
average   market   price   during   the   reporting   period,   which    was
$25.20.     The    incremental   shares   (the   difference   between    the
number   of  shares  assumed  issued  and  the  number  of  shares   assumed
purchased)   is  included  in  the  denominator  of  the  diluted   earnings
per   share  computation.   For  the  impact  of  OTEF  II's  option   plan,
see   Note   3.  "Net  Income  and  Distributions  per  Beneficial  Assignee
Interest (BAC) and SQB".

Note 2.  Business

     The  Partnership,  which  was  formed  under  the  laws  of  the  State
of    Maryland,    commenced   operations   on    March    1,    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,  1997,  OTEF  II  had
completed   the   refunding   of   12   of   the   Existing   MRBs,    which
comprise   approximately   88%  of  OTEF  II's  portfolio.    The   Managing
General   Partner  is  continuing  its  efforts  to  cause   the   refunding
of   the   remaining  Existing  MRBs.   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   one   or   more    financing  transactions,   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  generally  expects  that  it  will  retain  the   related
Series   B   Bonds   for   the  benefit  of  the   Liquidity   BAC   Holders
(although   the   Series   B   Bonds  may  be  utilized   to   finance   the
acquisition   of   new   assets),   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  these   Financial
Statements.

<PAGE> 28

----------------------------------------------------------------------------
Notes to Financial Statements
----------------------------------------------------------------------------

      In   addition   to   the   proceeds   from   financing   transactions,
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.

     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"   or   "Liquidity  &  Growth  Bonds").   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.

     Financing  Transaction.  On  August  22,  1997,  OTEF  II  closed   the
first   of  a  series  of  transactions  that  will  enable  it  to  acquire
New   Assets   in   accordance   with  the  Liquidity   and   Growth   Plan.
OTEF   II   securitized  approximately  $39  million  of  Series   A   Bonds
collateralized   by  four  properties.   OTEF  II  retained   all   of   its
interest   in   the  corresponding  Series  B  Bonds.   In  addition,   OTEF
II   applied   approximately   $12  million   of   the   proceeds   to   the
purchase    of    a    subordinated   interest   in   this    securitization
transaction.    Substantially   all  of   the   net   proceeds   from   this
transaction   were  invested  by  OTEF  II  in  the  New  Assets   described
below.   The  portion  of  the  net  proceeds  of  this  financing  that  is
not  invested  in  New  Assets  was  temporarily  invested  in  liquid  tax-
exempt    money    market    securities.    These   short-term    securities
earned  interest  ranging  from  2.9%  to  4.1%  during  the  period.   OTEF
II   also   retained   certain   rights   to   reacquire   the   securitized
assets.

     In   connection   with  this  transaction,  OTEF   II   converted   the
interest   rate  mode  on  these  four  Series  A  Bonds  from   an   annual
reset   to   weekly   floaters.  OTEF  II  also   purchased   a   three-year
interest   rate   cap   on   a   notional  amount   of   approximately   $27
million   to   minimize   the   effects   of   interest   rate   volatility.
Under    this   arrangement,   if   the   average   short-term,   tax-exempt
interest   rates  for  any  month  during  the  term  of  the  cap  increase
above   a   specified  level  (6%),  the  counter-party  to   the   interest
rate   cap  transaction  is  required  to  pay  directly  to  OTEF  II   the
amount by which such rates exceed the specified level.

     New   Assets.   On  December  30,  1997,  OTEF  II  used  substantially
all    of   the   proceeds   acquired   from   the   financing   transaction
discussed   above   to  acquire  two  tax-exempt  bonds  collateralized   by
two    garden    apartment   communities   located    in    Texas.     These
properties    are    owned    by   Carpenter-Oxford    Associates    Limited
Partnership    and    Dallas-Oxford    Associates    Limited    Partnership,
respectfully,   both  of  which  are  affiliates  of  OTEF   II's   Managing
General   Partner.   The  combined  face  amount  of  the  bonds   acquired,
after   cancellation   of   $6.5  million  by   the   bond   trustees,   was
approximately   $27.9   million.   The   bonds   were   purchased   from   a
third   party   for  approximately  $24.4  million.   The  existing   Dallas
and  Carpenter  bonds  mature  on  March  1,  2006,  except  that  they  are
subject    to    mandatory   redemption   on   July    1,    2000,    unless
alternative   security  is  provided  on  or  prior  to  that  date.   These
bonds   currently   bear  a  weighted  average  interest   rate   of   7.54%
per   annum  based  on  the  outstanding  principal  balance.   Due  to  the
discounted   purchase  price,  the  8.6%  yield  to  OTEF   II   is   higher
than    the    stated   coupon   rate   on   the   bonds.    For   financial
statement   purposes   these   bonds  are  reflected   at   their   purchase
price.     The    properties   collateralizing   these   bonds    have    an
aggregate   appraised   value  of   $28  million.   The   partnerships   and
OTEF   II  agreed  to  use  reasonable  commercial  efforts  to  cause   the

<PAGE> 29

----------------------------------------------------------------------------
Notes to Financial Statements
----------------------------------------------------------------------------

issuance   of  refunding  bonds,  or  modification  of  the  existing   bond
documents    to    achieve    the   following    principal    terms:     (i)
principal  amount  of  bonds  equal  to  the  sum  of  OTEF  II's   purchase
price  for  the  bonds  and  acquisition  costs,  (ii)  fixed  interest   at
a   rate   of   7.25%   per   annum,   (iii)   30-year   maturity   with   a
mandatory    redemption/remarketing   on   the   seventh   anniversary    of
the   refunding   or   restructuring,  and  (iv)  optional   redemption   by
the   partnerships  on  and  after  the  fourth  anniversary  upon   payment
of   a   sliding  scale  premium  or  at  any  time  with  the  consent   of
OTEF    II.    The   Managing   General   Partner   anticipates   that    an
additional   $3.5  million  of  bonds  will  be  cancelled  upon   refunding
or   restructuring.   In  addition,  each  of  the  partnerships   has   the
right   to  repurchase  its  respective  bonds  from  OTEF  II  on   certain
terms   and  conditions  if  they  determine  they  will  not  be  able   to
obtain   the  consent  of  the  issuers  to  refund  or  modify  the   bonds
as    described   above.    No   assurances   can   be   given   that    the
partnerships  and  OTEF  II  will  be  able  to  cause  the  bonds   to   be
refunded or modified in the manner described above.

    As  a  condition  of  the  purchase,  OTEF  II  has  agreed  to  advance
in   the   aggregate   of   $1.6  million  to  Carpenter-Oxford   Associates
Limited     Partnership     and     Dallas-Oxford     Associates     Limited
Partnership.    The  loans  will  bear  interest  at  an  annual   rate   of
9.30%  payable  monthly  in  arrears.    The  principal  of  the  loans   is
due   at  maturity  which  shall  be  the  earlier  of  July  1,  2000,   or
repurchase   of   the   bonds  by  the  borrower.   The   purpose   of   the
loans   is   to   provide  funds  for  property  improvements,   partnership
costs,   bond   refunding   and  restructuring   costs.    On   January   5,
1998,   OTEF   II   advanced,  in  aggregate  $0.9  million  to   Carpenter-
Oxford      Associates     Limited     Partnership     and     Dallas-Oxford
Associates    Limited    Partnership    for    this    purpose.     It    is
anticipated   that  the  additional  $0.7  million  will  be   advanced   at
the   time   of  refunding  or  restructuring.   The  interest   income   on
these   loans  will  be  taxable  in  1998.   The  maturity  date  will   be
revised   when  these  bonds  are  refunded  or  modified  in   the   manner
described above.

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  million.   The  OTEF  II  Managing   General   Partner
estimated   at   December   31,   1997  that   the   fair   value   of   the
Existing   MRBs   was   approximately   $232   million   and,   accordingly,
OTEF  II  recorded  a  credit  to  Partners'  Capital  in  an  amount  equal
to    approximately   $79   million   of   unrealized    gain    on    these
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.   The  Dallas  and   Carpenter   bonds
are   recorded  at  cost,  which  is  equal  to  their  fair  market  values
at December 31, 1997.

     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,
1997   was   $0.5   million   and  $0.9  million   respectfully,   or   $1.4
million   in   total   and  as  of  December  31,  1996  was   approximately
$0.4   million   and  $0.7  million,  respectively,  or  $1.1   million   in
total.

<PAGE> 30

----------------------------------------------------------------------------
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,
approximately   $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)   and   SQB.    Net  income  and  distributions  per   BAC   and   net
income   and   distributions  per  Status  Quo   BAC   ("SQB")   are   based
upon   the   weighted   average  number  of  BACs   and   SQBs   outstanding
during   the  applicable  year.  For  the  first  quarter  of  1997,   there
were   7,499,875  BACs  outstanding.   On  April  1,  1997,   314,675   BACs
were   converted   to   12,587  SQBs,  leaving  7,185,200   Liquidity   BACs
outstanding  at  December  31,  1997.   Of  the  BACs  converted  to   SQBs,
5,484   were   redeemed  on  August  1,  1997.   An   additional   10   SQBs
were    redeemed    on    November   30,   1997,    leaving    7,093    SQBs
outstanding   at   December   31,  1997.    Subsequent   to   December   31,
1997,   an   additional   25   SQBs   were   redeemed.    All   SQBs    were
redeemed   at   a  price  of  $540  per  SQB.   On  a  diluted  basis,   the
weighted    average   outstanding   shares   for   the   period    including
stock options were 7,283,795.

     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,  SQB  holders  and  OTEF  II  BAC
Holders   of   $3.7  million  for  December  31,  1997  and   $3.6   million
for   December   31,   1996   and   1995,  and   an   unrealized   gain   on
investments  of  $79  million  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.

     Litigation   and   settlement   costs.    Litigation   and   settlement
costs   associated   with   defending  against  the   OTEF   II   Litigation
totaled   $3.2   million   during  the  year  ended   December   31,   1996.
This   amount  includes  $2.5  million  payable  by  OTEF  II  with  respect
to    plaintiff's   counsels'   fees   and   reimbursement    of    expenses
incurred.     OTEF  II  paid  $1  million  in  1997  and  anticipates   that
it   will   pay   the   $1.5   million  balance  due   plaintiffs'   counsel
later   during   1998.   Approximately  an  additional   $0.3   million   of
such costs were incurred in 1997.

<PAGE> 31

----------------------------------------------------------------------------
Notes to Financial Statements
----------------------------------------------------------------------------

     Financing   Transaction.    For  financial  statement   purposes,   the
Financing  Transaction  described  in  Note  2  is  accounted   for   as   a
financing   transaction.   Accordingly,  the  amount   of   the   Series   A
Bonds   financed   of   approximately   $39   million   is   reflected    as
Securities  Held  in  Trust,  the  net  cash  proceeds  are  classified   as
Cash    and    Cash   Equivalents   and   the   difference    between    the
principal   amount  of  the  Series  A  Bonds  financed  and  the  principal
amount    of    the   subordinated   interest   acquired    by    OTEF    is
classified   as   Financing  Debt.   The  Financing  Debt   bears   interest
at   the   Public   Securities  Association  weekly  floating   rate   index
("PSA")   plus   approximately  80  to  85  basis  points,  which   averaged
4.46%   from  the  date  of  closing  through  December  31,  1997.    Costs
associated   with   this  financing  transaction  which  are   included   in
"Other   assets"   are   being  amortized  over  10  years   for   financial
statement   purposes,   and  costs  associated  with   the   interest   rate
cap   are   being   amortized   over  the  life   of   the   interest   rate
agreement,   which   is   3  years.   For  federal  income   tax   purposes,
this  transaction  is  treated  as  a sale  by  OTEF  II  of  the  Series  A
Bonds    and    a   purchase   of   the   subordinated   interests,    which
resulted in a $3.8 million capital loss.

     Accounting   for  SQBs.   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.

     Approximately  4.2%  of  the  OTEF  II  BAC  holders  made   a   timely
election   to  convert  their  OTEF  II  BACs  to  SQBs.   Effective   April
1,   1997,  OTEF  II  issued  the  SQBs,  representing  12,587  shares,   in
uncertificated,   book-entry  form.   Effective   August   1,   1997,   OTEF
II    redeemed   5,484   SQBs   for   approximately   $3.0   million.    The
redeemed   SQB   Holders   received  a  final   prorated   amount   of   the
distribution     that    was    declared    for    the     quarter     ended
September   30,  1997,  paid  on  November  14,  1997.   On   November   30,
1997   an  additional  10  SQBs  were  redeemed  at  the  $540  price,  with
no   distribution.   All  SQBs  were  redeemed  at  a  price  of  $540   per
SQB.

     For   financial  statement  purposes,  the  SQBs  are  treated   as   a
separate   class   of  security  and,  accordingly,  net  income   allocated
to   SQB  holders,  net  income  per  SQB,  and  distribution  per  SQB  are
reflected   separately   from   the   OTEF   II   BAC   Holders    on    the
Statement  of  Partners'  Capital.   The  SQBs  were  not  split   as   were
the   OTEF   II   BACs   on   July  1,  1997.    The   redeemed   SQBs   are
reflected   as   a   reduction  of  Partners'  Capital   and   were   offset
against the SQB Holders' interests when redeemed.

     The  SQB  Holders  do  not  share  in  the  growth  or  other  benefits
expected   to  be  achieved  under  the  Liquidity  and  Growth  Plan.    In
addition,   the  SQBs  will  not  be  allocated  any  capital   losses   for
federal   income   tax  purposes  that  may  result  from  the   disposition
of   the   Refunding   Bonds  or  interests  therein  or   new   assets   in
connection   with   a  financing  undertaken  pursuant  to   the   Liquidity
and   Growth   Plan.   A  schedule  of  SQB  income  as  of   December   31,
1997 is as follows:

<TABLE>
------------------------------------------------------------------------------
STATEMENT OF STATUS QUO BAC INCOME (in thousands, except per interest amounts)
(Unaudited)
<CAPTION>
------------------------------------------------------------------------------
                                                               Pro Forma
                                     Nine months ended    Twelve months ended
                                   December 31, 1997<F1> December 31, 1997<F2>
                                   -------------------------------------------
<S>                                      <C>                   <C>
Revenues
  Interest on bonds                      $   431               $   620
  Other interest                               9                    13
------------------------------------------------------------------------------
                                             440                   633
Expenses
  Governance and administration               18                    31
  Litigation expenses                          6                    10
------------------------------------------------------------------------------
Net income allocated to SQB holders      $   416               $   592
==============================================================================
Net income per SQB                       $ 43.62               $ 57.50
==============================================================================
Distributions to SQB holders             $   348               $   498
==============================================================================
Distribution per SQB                     $ 36.50               $ 48.34
==============================================================================
Weighted Average SQBs outstanding          9,538                10,300
==============================================================================
<FN>
<F1>  SQBs  were issued on April 1, 1997.
<F2>  This  Pro  Forma  presentation includes  the  SQB  holders' earnings for
      the  first  quarter  of  the  year,  before  their  Beneficial  Assignee
      Certificates (BACs) were converted to SQBs, in addition  to  their  nine
      months of SQB earnings.
</FN>
</TABLE>

<PAGE> 32

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

   This Information Memorandum states that, subject to receipt of
a  fairness  opinion  from  OTEF  II's  independent  real  estate
consultant,  non-tendered SQBs will be purchased or  redeemed  by
OTEF  II  at  such time as the Managing General Partner  believes
that it would be in the best interests of OTEF II and the holders
of the non-tendered SQBs, but in no event later than December 31,
2006,  which  date  may be extended under certain  circumstances.
The purchase or redemption price will be the fair market value of
the  Status Quo Assets at the time of liquidation, less the costs
of sale.

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   approximately   $0.3  million   for
December 31, 1997, 1996 and 1995.

    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.
At  the  end of 1997, OTEF II acquired the tax-exempt bonds  that
are  collaterlized  by  the  properties  owned  by  Dallas-Oxford
Associates  Limited  Partnership and Carpenter-Oxford  Associates
Limited  Partnerships,  both  of  which  are  affiliates  of  the
Managing  General Partner of OTEF II.  Affiliates of the Managing
General Partner receive fees from these partnerships and serve as
their  general partners, which entitles them to a  share  of  any
cash  flow  and refinancing and liquidation proceeds  from  these
partnerships.

   Compensation and Fees.  For the years ended December 31, 1997,
1996  and 1995, the Operating Partnerships paid ORFG total  asset
management fees of approximately $0.6 million, respectively.  The
Operating  Partnerships also paid ORFG, in  the  aggregate,  $0.7
million   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").

    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  to
ORFG  in  1997  in  connection with OTEF II's investment  in  New
Assets.

    ORFG is 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.  ORFG's 1% acquisition fee attributable
to  the New Asset transaction described above is contingent upon,
among  other things, receipt of approval by the investor  limited
partners  of  the  Dallas  and  Carpenter  partnerships.   It  is
anticipated that ORFG's acquisition fees will be earned and  paid
by   the  Dallas  and  Carpenter   partnerships   in  1998.    No
acquisition fees were paid to ORFG in 1997.

<PAGE> 33

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

    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
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.  The advisory fees associated with
the  acquisition of the Dallas and Carpenter bonds will  commence
in 1998.  No advisory fees were paid to ORFG in 1997.

     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,  1997,  1996  and  1995   were
approximately  $0.6  million, $0.4  million,  and  $0.1  million,
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.   The
portion  of  the  expense reimbursement relating to  salaries  is
determined  based on the actual time the officers  and  employees
devote to OTEF II based upon their respective wage rate.

    Incentive Option Plan.  On May 21, 1997, OTEF II  adopted  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 authorizes the granting
to  the directors, officers and employees of the Managing General
Partner  and  certain affiliates of options to  purchase  652,125
OTEF II BACs (on a post-split basis),  representing approximately
8.3%  of  the outstanding OTEF II BACs on a fully diluted  basis.
Such  options are exercisable for 10 years. The Managing  General
Partner has awarded all of the OTEF II BACs authorized under  the
terms  of  the  Incentive Option Plan.  Of the  652,125  options,
613,000  were  fully vested upon issuance and 39,125  are  vested
equally  over  3 years commencing January 1, 1998.  The  exercise
price  for  all  options is $23.88 per BAC.  As of  December  31,
1997,  assuming  the  fully  vested  options  were  exercised  on
December  31,  1997  at  $25.31 per OTEF II  Liquidity  BAC,  the
compensation expense is approximately $0.9 million.  This  amount
is  being  amortized over the life of the options  in  accordance
with the Statement of Financial Accounts Standards No. 123.

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

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

Rights to Allocations and Distributions

   Capital Accounts.  Following the Status Quo BAC Issuance Date,
the  BAC  Holders who retained their OTEF II BACs initially   had
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")   are 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   are reduced by the amount of all distributions made to them
by  OTEF  II (which distributions  are 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 New Assets ("Liquidity Losses"), but not  by  any
Losses relating to the Status Quo Assets ("Status Quo Losses").

<PAGE> 34

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

    Status  Quo  BAC Holders also initially had 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")  are increased by the Status Quo Profits, but  not  by
any  Liquidity  Profits, and are 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 maintains two Capital
Accounts  (a  Liquidity Capital Account and a Status Quo  Capital
Account) for BAC Holders who elected to convert only a portion of
their OTEF II BACs into SQBs.

    Distributions of Cash Flow.  Liquidity Cash Flow  and  Status
Quo Cash Flow are 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;

 (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;

<PAGE> 35

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

 (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;

   (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;

<PAGE> 36

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

   (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.

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, until May 30, 2005, or an earlier redemption by  OTEF
II .

<PAGE> 37

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Notes to Financial Statements
-----------------------------------------------------------------

    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 Tax-Exempt Securities

    As shown in the table below, as of December 31, 1997, OTEF II
owned  three  Existing MRBs and 12 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.   Additionally,  on  December  30,  1997,  OTEF  II
acquired  two  additional tax-exempt revenue bonds collateralized
by garden apartments.  These bonds are identified as "New Bonds".

    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 Partnerships  entered
into  certain pooling agreements which may provide under  certain
circumstances additional sources of funds to enable them  to  pay
their  respective  debt service on the Series  A  Bonds  and  the
Series B Bonds and related fees and expenses.  As of December 31,
1997,  the aggregate amount of net excess cash flow held  in  the
Operating  Partnership  escrows was approximately  $1.1  million,
including deposits from December's cash flow.

    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
approximately  $0.2 million 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  approximately $2 million Treasury strip bond  that  it
received  on August 15, 1996.  At December 31, 1997,  Oxford  was
holding  approximately  $1.3  million  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.

<PAGE> 38

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

<TABLE>
-----------------------------------------------------------------
Schedule of Investments in Tax-Exempt Securities
-----------------------------------------------------------------
<CAPTION>
                                             December 31,
                                       ------------------------
  (In thousands)                        1997      1996     1995
-----------------------------------------------------------------
<S>                                  <C>       <C>       <C>
Existing MRBs (not refunded
  as of 12/31)                       $ 15,796  $ 40,288  $153,032
A Bonds (refunded as of 12/31)         56,076    65,781         0
B Bonds (refunded as of 12/31)         59,968    46,963         0
New bonds (not refunded as
  of 12/31)                            24,366         0         0
-----------------------------------------------------------------
                                      156,206   153,032   153,032
Adjustment for unrealized gains        60,953    62,497    10,968
-----------------------------------------------------------------
  Subtotal investment in
    tax-exempt securities            $217,159  $215,529  $164,000
-----------------------------------------------------------------
Investments in securities
  held in trust                        21,192         0         0
Adjustment for unrealized gains        17,628         0         0
-----------------------------------------------------------------
  Subtotal investment in tax-exempt
    securities held in trust           38,820         0         0
-----------------------------------------------------------------
  TOTAL                              $255,979  $215,529  $164,000
=================================================================
</TABLE>

   Existing MRBs.  As of December 31, 1997, OTEF II held Existing
MRBs for two of the Operating Partnerships.  The Managing General
Partner is continuing its efforts to cause the refunding of these
Existing MRBs.

   The table below sets forth the cumulative Unpaid Base Interest
and  Interest on Unpaid Base Interest as of December 31, 1997 for
Existing MRBs:

<TABLE>
---------------------------------------------------------------------------
<CAPTION>
                                                (In thousands)
                                 ------------------------------------------
                                 Interest on Unpaid     Unpaid
Property Name/Partnership Name     Base Interest     Base Interest   Total
---------------------------------------------------------------------------
<C>                                    <C>              <C>         <C>
San Bruno (San Bruno)
  (2 Existing MRB's)                   $  126           $  889      $1,015
The Harbour (Apollo)                    1,277            2,638       3,915
---------------------------------------------------------------------------
                                       $1,403           $3,527      $4,930
===========================================================================
</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 was highly unlikely, recognition  of
accrued  interest income was suspended.  However, prior  to  this
suspension, approximately $4 million of interest had been accrued
for federal income tax purposes on certain Existing MRBs.  As  of
December  31, 1996 all of this accrued interest had been  written
off for tax purposes.  These Existing MRBs were refunded, and the
Unpaid  Base  Interest for the applicable Operating  Partnerships
was  forgiven.   This  forgiveness  had  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  was 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%.   On or about December 1997, the interest rates on  the
Series  A  Bonds  retained by OTEF II were reset  to  4.8%.   The
interest  rate  on the Series A Bonds involved in  the  financing
transactions  completed  by OTEF II were  converted  from  annual
reset  mode  to a floating rate based on a spread  over  the  PSA
index. 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.

<PAGE> 39

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

    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.

    The  Combined Rates on the Refunding Bonds over the  next  10
years are as follows:

<TABLE>
-------------------------------------------------------------------------------------
<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<F1>      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<F1>    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<F1>    6.12% 6.22% 6.46% 5.97% 6.22% 6.45% 6.69% 6.95%  7.22%  7.50%  7.80%
Williamsburg<F1> 7.64% 7.74% 8.05% 7.47% 7.78% 8.09% 8.40% 8.74%  9.09%  9.47%  9.86%
-------------------------------------------------------------------------------------
<FN>
<F1> Note that even though the Series A  Bonds  bears  interest  at  a
     spread  over the weekly PSA floating  rate  index, as  previously
     described under "Financing Transaction", the rate associated with
     the  related  Series  B Bonds  must  fluctuate  to  maintain  the
     "Combined  Rate"  stated  above.  Consequently,   the   financing
     transaction has no effect on the combined rate  of  these  select
     bonds.
</FN>
</TABLE>

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

    New Bonds.  The Managing General Partner anticipates that the
Dallas  and  Carpenter  bonds will be  refunded  in  1998.  Their
current  maturity  date is March 1, 2006, except  that  they  are
subject   to  mandatory  redemption  on  July  1,  2000,   unless
alternative security is provided on or prior to the  date.    The
Carpenter  and  Dallas partnerships and OTEF  II  agreed  to  use
reasonable commercial efforts to cause the issuance of  refunding
bonds,  or modification of the existing bond documents to achieve
the  following principal terms:  (i)  principal amount  of  bonds
equal  to  the sum of OTEF II's purchase price for the bonds  and
acquisition  costs, (ii) fixed interest at a rate  of  7.25%  per
annum,     (iii)    30-year    maturity    with    a    mandatory
redemption/remarketing  on  the  seventh   anniversary   of   the
refunding or restructuring, and (iv) optional redemption  by  the
partnerships on and after the fourth anniversary upon payment  of
a  sliding scale premium or at any time with the consent of  OTEF
II.   In  addition, each of the Carpenter and Dallas partnerships
has the right to repurchase its respective bonds from OTEF II  on
certain terms and conditions if they determine they will  not  be
able to obtain the consent of the issuers to refund or modify the
bonds  as  described above.  No assurances can be given that  the
partnerships and OTEF II will be able to cause the  bonds  to  be
refunded or modified in the manner described above.  The existing
and anticipated rates on these bonds are as follows:

<PAGE> 40

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

<TABLE>
-----------------------------------------------------------------
<CAPTION>
Investments                  Existing      Anticipated Rate
in New Bonds                   Rate          At Refunding
-----------------------------------------------------------------
<S>                            <C>               <C>
Carpenter                      8.02%             7.25%
Dallas                         6.87%             7.25%
-----------------------------------------------------------------
Combined                       7.54%<F1>         7.25%<F2>
=================================================================
<FN>
<F1> In  connection  with these transactions, OTEF II  will  also
     hold  taxable loans bearing interest at 9.30% per annum. The
     weighted average combined effective interest rate, including
     the  rate earned on the taxable loans, is 8.64%  during  the
     interim period prior to refunding and is  anticipated to  be
     7.375% per annum after the refunding.

<F2> No  assurances  can  be given that the terms described above
     can be achieved.
</FN>
</TABLE>

<PAGE> 41-42

<TABLE>
----------------------------------------------------------------------------------------------------------------------------------
Notes to Financial Statements
----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Note 7. Investments in Bonds (continued)

    Information on the Bonds as of December 31, 1997 and 1996 (in 000's) and the related properties is as follows:

                                                                                       1997    1996
                                                      Carrying Value at 12/31/97       Unrealized     Total    Monthly Interest
                                         Combined ---------------------------------- --------------- Carrying --------------------
                              Maturity     Face   Existing                           Gain or Gain or Value @  Existing   A     B
Bond Investment                 Date      Amount    Bond    A Bond   B Bond   Total   (Loss)  (Loss) 12/31/96   Bond   Bond  Bond
----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>       <C>     <C>      <C>     <C>      <C>     <C>     <C>        <C>    <C>   <C>
REFUNDED BONDS:

Chesapeake Landing,        November 2026 $ 25,450  $     0 $ 13,102 $10,418 $ 23,520 $ 9,407 $ 8,639 $ 22,753   $  0   $ 52  $101
Fox Valley-Oxford L.P.

Hunt Club,                 December 2026   20,270        0    8,732   5,825   14,557   1,801   1,367   14,123      0     36    56
Travis One-Oxford L.P.

Savannah Trace,            November 2026   23,400        0   11,232   7,738   18,970   4,264   3,686   18,392      0     45    75
Schaumburg-Oxford L.P.

Windrift at Seaview Ridge, December 2026   29,430        0   11,258   8,760   20,018   1,582     939   19,375      0     46    84
Southridge-Oxford L.P.

Chambrel at Pinecastle,    November 2026    9,500        0    5,458   4,858   10,316   4,859   4,495    9,952      0     22    46
Ocala-Oxford L.P.

Chambrel at Montrose,      December 2026   12,800        0    7,354   6,613   13,967   5,492   4,991   13,466      0     30    63
Akron One Retirement-
  Oxford L.P.

Chambrel at Club Hill,     March    2027   25,430        0    8,673   6,771   15,444     523  (3,245)  11,676      0     35    57
Colonel I-
  Oxford L.P.<F1>

Northwoods,                January  2027   21,700        0   11,126   9,220   20,346  10,775   5,084   14,655      0     45    86
Middletown-
  Oxford L.P.<F1>

Reflections,               November 2026   25,644        0   13,998  10,428   24,426  11,335  10,551   23,641      0     56    98
Tidewater-
  Oxford L.P.<F2>

Island Club,               November 2026   11,300        0    5,744   4,911   10,655   6,030   5,669   10,294      0     23    47
Allview-Oxford L.P.<F2>

Windsor Park,              November 2026   14,000        0    6,333   4,867   11,200   5,552   5,192   10,840      0     25    47
Westridge-
  Oxford L.P.<F2>

Chambrel at Williamsburg,  November 2026   25,000        0   13,708  11,106   24,814   9,377   8,551   23,988      0     55   107
Williamsburg-
  Oxford L.P.<F2>
----------------------------------------------------------------------------------------------------------------------------------
    Subtotal Refunded Bonds              $243,924  $     0 $116,718 $91,515 $208,233 $70,997 $55,919 $193,155   $  0   $470  $867
----------------------------------------------------------------------------------------------------------------------------------
UNREFUNDED BONDS (Existing Bonds):

San Bruno,                 November 2009 $ 25,000  $18,362 $      0 $     0 $ 18,362 $ 7,971 $ 7,066 $ 17,458   $172   $  0  $  0
San Bruno-Oxford L.P.      December 2009    1,060      779        0       0      779     338     300      740      7      0     0

The Harbour,               November 2009    8,710    4,239        0       0    4,239    (725)   (788)   4,176     60      0     0
Apollo-Oxford
  Associates L.P.
----------------------------------------------------------------------------------------------------------------------------------
    Subtotal Unrefunded Bonds            $ 34,770  $23,380 $      0 $     0 $ 23,380 $ 7,584 $ 6,578 $ 22,374   $239   $  0  $  0
----------------------------------------------------------------------------------------------------------------------------------
    Subtotal Refunded & Existing Bonds   $278,694  $23,380 $116,718 $91,515 $231,613 $78,581 $62,497 $215,529   $239   $470  $867
----------------------------------------------------------------------------------------------------------------------------------
<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  $24.1  million  in  unpaid   Base
     Interest and interest on Unpaid Base  Interest  was written-off.  San Bruno and Apollo are expected to be refunded in  1998.

<F2> Financing Transaction. On August 22, 1997 OTEF II closed the  first  of  a  series  of   transactions that will enable it to
     acquire additional assets  in accordance  with  the   Liquidity   and  Growth  Plan.    OTEF  II  securitized  approximately
     $39  million  of  Series  A  Bonds  collateralized   by   four properties.  OTEF II retained all  of  its  interest  in  the
     corresponding  Series B Bonds. In  addition, OTEF II applied approximately  $12  million  of  the  proceeds  to the purchase
     of a subordinated interest in  the  securitization transaction.  OTEF  II  also  retained  certain  rights  to reacquire the
     securitized  assets.  In connection with  this  transaction, OTEF  II  converted  the  interest  rate  mode  on  these  four
     Series A Bonds from an annual  reset  to weekly floaters.

     For financial  statement purposes, this transaction is accounted  for  as  a  financing  transaction and,  accordingly,  the
     amount of the  Series  A  Bonds financed  of  $39 million is reflected as Securities Held in Trust,  the  net  cash proceeds
     are classified as Cash and Cash Equivalents and the difference between the principal amount of the Series A  Bonds  financed
     and the principal amount  of  the  subordinated interest acquired  by   OTEF   is   classified   as  financing   debt.   The
     financing debt bears interest at the Public  Securities Association  weekly floating bond  rate  ("PSA")  plus approximately
     80  to  85 basis  points which averaged 4.63% from the date of closing through  December  31, 1997.  For federal income  tax
     purposes, this transaction is treated as  a sale  by  OTEF  II  of the Series A Bonds and a  purchase  of  the  subordinated
     interests, which is expected to result in a small capital loss.
</FN>
</TABLE>

<PAGE> 43

<TABLE>
----------------------------------------------------------------------------------------------------------------------------------
Notes to Financial Statements
----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Note 7. Investments in Bonds (continued)

    Information on the Bonds as of December 31, 1997 and 1996 (in 000's) and the related properties is as follows:

                                                                                       1997    1996
                                                       Carrying Value at 12/31/97       Unrealized     Total    Monthly Interest
                                         Combined ---------------------------------- --------------- Carrying --------------------
                              Maturity     Face   Existing                           Gain or Gain or Value @  Existing   A     B
Bond Investment                 Date      Amount    Bond    A Bond   B Bond   Total   (Loss)  (Loss) 12/31/96   Bond   Bond  Bond
----------------------------------------------------------------------------------------------------------------------------------
NEW BONDS:
<S>                        <C>           <C>       <C>     <C>      <C>     <C>      <C>     <C>     <C>        <C>    <C>   <C>
Springhouse,               July 2000<F3> $ 11,700  $10,296 $      0 $     0 $ 10,296 $     0 $  N/A  $  N/A     $ 67   $  0  $  0
Dallas-Oxford L.P.

Steeplechase,              July 2000<F3>   16,175   14,070        0       0   14,070       0    N/A     N/A      108      0     0
Carpenter-Oxford L.P.
----------------------------------------------------------------------------------------------------------------------------------
     Subtotal New Bonds:                 $ 27,875  $24,366 $      0 $     0 $ 24,366 $     0 $     0 $      0   $175   $  0  $  0
----------------------------------------------------------------------------------------------------------------------------------
    Total Bonds:                        $306,569  $47,746 $116,718 $91,515 $255,979 $78,581 $62,497 $215,529   $414   $470  $867
==================================================================================================================================
<FN>
<F3> The  existing Dallas and Carpenter  bonds  mature  on  March 1,  2006,  except
     that  they  are  subject  to mandatory redemption  on  July  1,  2000,  unless
     alternative security is provided on or prior to that date.  These  bonds  were
     acquired  on  December 30, 1997.  Management anticipates that if  a  refunding
     occurs approximately $3.5 million in the combined face amount of  these  bonds
     will  be  cancelled  by the bond trustee.  If  the fair market  value  of  the
     bonds  is  less  than  book  value at the time of refunding  there  may  be  a
     realized  loss  in the amount of the difference.  At December  31,  1997,  the
     purchase price of the new bonds was equal to their fair market value.
</FN>
</TABLE>

<PAGE> 44

<TABLE>
-------------------------------------------------------------------------------------
Notes to Financial Statements
-------------------------------------------------------------------------------------
<CAPTION>
Note 8.  Quarterly Results and Market Information (in thousands, except per Liquidity
                                                   BACs and Market Prices)

                                         For the Three Months Ended in 1997<F2>
                                     ----------------------------------------------
                                      March 31, June 30, September 30, December 31,
                                     ----------------------------------------------
<S>                                   <C>      <C>          <C>         <C>
Revenues
 Interest on tax-exempt securities    $4,605   $4,629       $4,387      $4,113
 Interest on tax-exempt securities
   held in trust                           0        0          202         465
 Other, primarily interest on
   short term investments                 91      113          187         338
-------------------------------------------------------------------------------------
     Total Revenues                    4,696    4,742        4,776       4,916
-------------------------------------------------------------------------------------
Expenses
 Governance &
   administrative expenses               312      185          151        274
 Litigation & settlement costs            98      106           37         24
 Liquidity & growth costs                 20      127          435        258
 Finance interest expense                  0        0          139        322
-------------------------------------------------------------------------------------
     Total Expenses                      430      418          762        878
-------------------------------------------------------------------------------------
Net income                            $4,266   $4,324       $4,014     $4,038
=====================================================================================
Net income to Liquidity BAC holders   $4,181   $4,054       $3,801     $3,856
=====================================================================================
Net  income  per  Liquidity BAC       $0.557   $0.565       $0.529     $0.537
=====================================================================================
Weighted average Liquidity
  BACs outstanding                     7,500    7,185        7,185      7,185
=====================================================================================
Net income per Liquidity
  BAC-assuming dilution<F3>           $0.557   $0.564       $0.526     $0.534
=====================================================================================
Weighted average BACs outstanding
  outstanding-assuming dilution<F3>    7,500    7,197        7,219      7,219
=====================================================================================
Distribution per  Liquidity BAC       $0.476   $0.476       $0.495     $0.495
=====================================================================================
Market Information:
  Opening Price<F1>                     N/A      N/A        $20.00     $26.31
  High                                  N/A      N/A        $27.63     $26.44
  Low                                   N/A      N/A        $21.38     $25.19
  Closing Price                         N/A      N/A        $26.31     $25.31
=====================================================================================
<FN>
<F1> OTEF II began trading on the American Stock Exchange on July 22, 1997.
<F2> On April 1, 1997, 314,675 BACs were converted to 12,587 SQB shares in accordance
     with the class action litigation settlement  discussed  in Note 9. Consequently,
     the number of BACs decreased from 7,500,000 in the first quarter to 7,185,000 in
     the second quarter.
<F3> As required by FASB 128, net income per BAC assuming dilution has been presented
     as if the stock options awarded on May 21, 1997 had been exercised.  The  effect
     would be to increase the number of shares outstanding and  effectively  decrease
     earnings.  See Notes 1 and 4 for further discussion.
</FN>
</TABLE>

<PAGE> 45

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------

Note 9.  Other Events

    As previously reported, OTEF II and certain of its affiliates
(collectively,  "Defendants") were 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  United States Court of Appeals for the Fourth Circuit by  an
OTEF II BAC Holder who was appearing pro se.

Note 10.  Subsequent Events

    On  January 5, 1998, in connection with its December 30, 1997
acquisition of two new tax-exempt bonds collateralized by  rental
property  owned by two operating partnerships, OTEF  II  advanced
approximately  $0.9 million, in the aggregate, to these operating
partnerships  for  property improvements, partnership  costs  and
future  bond refunding costs.  These loans bear taxable  interest
at  9.30%.   OTEF II has agreed to lend up to an additional  $0.7
million   to  these  operating  partnerships.   These   operating
partnerships  are controlled by affiliates of OTEF II's  managing
general  partner.   (See Note 2, New Assets,  for  discussion  of
this transaction).

     On  February  14,  1998,  OTEF  II  made  a  quarterly  cash
distribution  of  approximately $3.7 million or  $0.495  per  BAC
(4.95% per annum on the original $1,000 invested per BAC) to  BAC
Holders  of  record and $12.38 to SQB holders  of  record  as  of
December 31, 1997.

    On  February  19, 1998, OTEF II closed another securitization
transaction  involving approximately $12.8 million  of  Series  A
Bonds.  In addition, OTEF II purchased a subordinated interest in
the   securitization  transaction.   In  connection   with   this
transaction, OTEF II converted the interest rate on the Series  A
Bonds to weekly floaters.

   As of February 5, 1998, an additional 25 SQBs were redeemed at
the redemption price of $540 per SQB.

    On  February 24, 1998, the United States Court of Appeals for
the  Fourth  Circuit  affirmed the lower court  decision  by  per
curiam opinion.


<PAGE> 46

<TABLE>
------------------------------------------------------------------------------
Distribution Information
------------------------------------------------------------------------------
<CAPTION>
The following table sets forth, on a quarterly basis, all distributions
declared by OTEF II and OTEF.

                                             Amount Distributed<F1>
-------------------------------------------------------------------------------
                                              BAC      Per     SQB
                       Quarter  Per BAC     Holders    SQB    Holders  General
  Quarter Ended<F1>    Payment   <F5>        <F2>      <F6>    <F6>    Partners
-------------------------------------------------------------------------------
<C>                        <C> <C>      <C>          <C>    <C>      <C>
1997
December 31, 1997          49  $ 0.4950 $  3,556,674 $12.38 $ 87,811 $   74,378
September 30, 1997         48  $ 0.4950 $  3,556,674 $12.38 $110,566 $   74,842
June 30, 1997              47  $ 0.4760 $  3,420,155 $11.90 $149,785 $   72,856
March 31, 1997             46  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
                               -------- ------------ ------ -------- ----------
                               $ 1.9420 $ 14,103,443 $36.66 $348,162 $  294,932
-------------------------------------------------------------------------------
1996
December 31, 1996          45  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
September 30, 1996         44  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
June 30, 1996              43  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
March 31, 1996             42  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
                               -------- ------------ ------ -------- ----------
                               $ 1.9040 $ 14,279,760 $ N/A  $  N/A   $  291,424
-------------------------------------------------------------------------------
1995
December 31, 1995          41  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
September 30, 1995         40  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
June 30, 1995              39  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
March 31, 1995             38  $ 0.4760 $  3,569,940 $ N/A  $  N/A   $   72,856
                               -------- ------------ ------ -------- ----------
                               $ 1.9040 $ 14,279,760 $ N/A  $  N/A   $  291,424
-------------------------------------------------------------------------------
1994
For the 4 quarters ended 34-37 $ 1.8000 $ 13,499,776 $ N/A  $  N/A   $  275,504
-------------------------------------------------------------------------------
1993
For the 4 quarters ended 30-33 $ 1.7628 $ 13,220,779 $ N/A  $  N/A   $  269,813
-------------------------------------------------------------------------------
1992
For the 4 quarters ended 26-29 $ 1.7008 $ 12,755,787 $ N/A  $  N/A   $  260,323
-------------------------------------------------------------------------------
1991
For the 4 quarters ended 22-25 $ 1.6512 $ 12,384,000 $ N/A  $  N/A   $  252,736
-------------------------------------------------------------------------------
1990
For the 4 quarters ended 18-21 $ 1.6512 $ 12,384,000 $ N/A  $  N/A   $  252,736
-------------------------------------------------------------------------------
1989
For the 4 quarters ended 14-17 $ 1.6512 $ 12,384,000 $ N/A  $  N/A   $  252,736
-------------------------------------------------------------------------------
1988
For the 4 quarters ended 10-13 $ 2.4760 $ 18,570,000 $ N/A  $  N/A   $  378,980
-------------------------------------------------------------------------------
1987
For the 4 quarters ended  6-9  $ 3.4124 $ 25,593,000 $ N/A  $  N/A   $  522,306
-------------------------------------------------------------------------------
1986
For the 4 quarters ended  2-5  $ 3.4000 $ 25,500,000 $ N/A  $  N/A   $  520,408
-------------------------------------------------------------------------------
1985
December 31, 1985<F4>      1   $ 0.5952 $  3,894,287 $ N/A  $  N/A   $   79,475
-------------------------------------------------------------------------------
Total                          $25.8508 $192,848,592 $36.66 $348,162 $3,942,797
===============================================================================
<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
     $192,848,592, or approximately 64% based on an original  investment  of
     $1,000 per BAC.

<F3> Excludes the $507,450 ($0.068 per BAC) distributed on August  15,  1988
     as a return of capital.

<F4> Assumes BAC Holders were admitted on October 10, 1985.

<F5> All  periods  have  been  restated  to reflect the 25-for-1 stock split
     effectuated on July 22, 1997.

<F6> On  April 1, 1997, in accordance with the class action litigation, OTEF
     granted  the option to BAC  holders  to  elect  Status  Quo  BAC  (SQB)
     status.  Of  the  12,587  units held as SQBs as of April 1, 1997, 5,484
     elected to  be redeemed as of August 1, 1997. SQBs were not affected in
     the 25-for-1  stock split on July 1, 1997.  An additional 10 SQBs  were
     redeemed  on November 30, 1997,  reducing  the  total number of SQBs to
     7,093.
</FN>
</TABLE>

<PAGE> 47

-----------------------------------------------------------------
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
Registrar & Transfer Company
ATTN:  William Tatler, Vice President
Stock Transfer Department
10 Commerce Drive
Cranford, NJ 07016
1-800-368-5948

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, 1997, 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
7200 Wisconsin Avenue, 11th floor
Bethesda, MD 20814
1-888-321-OTEF























<PAGE> 48

-----------------------------------------------------------------
Instructions  for  Investors  who wish  to reregister or transfer
OTEF II BACs or SQBs
-----------------------------------------------------------------

On   July  22,  1997,  the American Stock Exchange began  trading
OTEF  II  BACs under the ticker symbol, OTF.  Please  follow  the
instructions  below  to  expedite  the reregistration or transfer
of  ownership of any OTEF II BACs or Status Quo BACs ("SQB") that
you may own.

* IF YOU DO NOT HOLD CERTIFICATES

  Your  shares are being held by your brokerage firm  in  "street
  name".  To register a change of ownership of OTEF II BACs  held
  in  such  accounts, please have your account representative  or
  financial  consultant request the necessary transfer documents.
  YOU   MUST  HAVE  THE  PROPER  TRANSFER  DOCUMENTS  FROM   YOUR
  BROKERAGE  FIRM.   Additionally, please  contact  your  account
  representative or financial consultant for address changes.


* IF YOU HOLD CERTIFICATES

  Effective  July  1,  1997,  OTEF  II  appointed  Registrar  and
  Transfer  Company  ("R&T") as the sole registrar  and  transfer
  agent with respect to the OTEF II BACs and SQBs.

  All  notices, claims, certificates, requests, demands and other
  communications relating to transfers of OTEF II BACs  and  SQBs
  should be sent to:

                    Registrar and Transfer Company
                    Attn:  William Tatler, Vice President
                    Stock Transfer Department
                    10 Commerce Drive
                    Cranford, NJ  07016

  All  phone calls relating to such transfers should be  directed
  to:

                    Registrar and Transfer Company
                    Stock Transfer Department
                    1-800-368-5948

* GENERAL INFORMATION

  All  general  inquiries relating to OTEF II should be  directed
  to OTEF II Investor Services at 1-888-321-OTEF.

  The  Annual Report on Form 10-K for the year ended December 31,
  1997,  filed  with the Securities and Exchange  Commission,  is
  available  to SQB and OTEF II BAC Holders and may  be  obtained
  by writing:



                        Investor Services
          Oxford Tax Exempt Fund II Limited Partnership
                7200 Wisconsin Avenue, 11th Floor
                    Bethesda, Maryland  20814


             ALSO VISIT OUR WEB PAGE AT WWW.OTEF.COM