<PAGE>  1
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                          UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C.  20549
                                
                            FORM 10-Q
(Mark One)
/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     For the quarterly period ended September 30, 1998

                               OR

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

For the transition period from_______________to______________

              Commission file number:  0-25600

          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:
Beneficial Assignee Interests
-----------------------------
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 /  /

At  September  30,  1998,  the following  classes  of  beneficial
assignee   interests  of  Oxford  Tax  Exempt  Fund  II   Limited
Partnership were outstanding:  (i) 7,185,200 beneficial  assignee
interests  ("BACs") with an aggregate market  value  ($25.75  per
share) of $185,018,900, and (ii) 6,946 Status Quo BACs ("SQBs").

Index to Exhibits is found on page 3.
=================================================================
<PAGE>  2

          OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-Q
                                
                  PART I-FINANCIAL INFORMATION
                               
Item 1.  Financial Statements.

   The financial statements of OTEF II are incorporated herein by
reference  to sequentially numbered pages 15 through 25  of  OTEF
II's Quarterly Report (Unaudited).

Item 2.  Management's Discussion and Analysis of Financial Condit
ion and Results of Operations.

    A  discussion of OTEF II's financial condition and results of
operations  for the three and nine-month periods ended  September
30,  1998  is  incorporated herein by reference  to  sequentially
numbered  pages  6  through 14 entitled  "Report  of  Management"
included in OTEF II's Quarterly Report (Unaudited).

                    PART II OTHER INFORMATION

Item 1.  Legal Proceedings.
   None.

Item 2.  Changes in Securities.

     Information responsive to this Item regarding changes in
securities is contained in Item 2 of the Form 10-Q/A for the
quarter ended March 31, 1997, filed by OTEF II.

Item 3. Defaults Upon Senior Securities.
   None.

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

Item 5. Other Information.
   
   In connection with the incentive option BACs, a Registration
   Statement on Form S-8 was filed with the SEC on June 10,
   1998, and a Post Effective Amendment was filed with the SEC
   on June 12, 1998.

Item 6. Exhibits and Reports on Form 8-K.
   (a)  Exhibits.
        For  a  list  of  Exhibits  as  required  by  Item  601   of
        Regulation S-K, see Exhibit Index on page 3 of this report.

   (b)  Reports on Form 8-K.
        None.

   No other items were applicable.



<PAGE>  3

            OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-Q
                                
                          EXHIBIT INDEX

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

(20) Report furnished to Security Holders.

     Oxford Tax Exempt Fund II Limited Partnership's Quarterly
     Report (Unaudited) dated September 30, 1998, follows on
     sequentially numbered pages 5 through 26 of this report.

(27) Financial Data Schedule.


                                






































<PAGE>  4

              OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
                                
                            FORM 10-Q
                                
                           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: 11/13/98    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: 11/13/98    By: /S/ Francis P. Lavin
      --------        --------------------------------------------  
                      Francis P. Lavin
                      Director and President



Date: 11/13/98    By: /S/ Robert B. Downing
      --------        ---------------------------------------------   
                      Robert B. Downing
                      Director and Executive Vice President






                                









<PAGE>  5










            OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP

                        Quarterly Report
                           (Unaudited)

                       September 30, 1998





















     CONTENTS

     Report of Management
     Balance Sheets
     Statements of Income
     Statement of Partners' Capital
     Statements of Cash Flows
     Notes to Financial Statements
     Instructions for Investors who wish to reregister or
       transfer OTEF II BACs











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Report of Management
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    The following report provides information about the financial
condition  of  Oxford Tax Exempt Fund II Limited  Partnership,  a
Maryland limited partnership ("OTEF II" or the "Partnership"), as
of  September  30, 1998, 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 Quarterly Report.

Recent Developments

    Distribution for the Quarter ended September 30,  1998.   The
Managing  General  Partner declared, on September  17,  1998,   a
distribution  for the quarter ended September  30,  1998  in  the
amount of $0.51 per BAC for the Liquidity BAC holders, and $12.38
per   Status   Quo  BAC  (SQB)  holders.  This  distribution  was 
paid  on   November 13, 1998.  For  the  Liquidity  BAC  holders,
this distribution is in the same amount as was disclosed for  the
second quarter of 1998 and represents a 3% increase in the amount
of the distribution paid for the first quarter of 1998.

    Repurchase Program.  On October 30, 1998, OTEF  II  announced
that  the  Board  of  Directors of its Managing  General  Partner
authorized the repurchase, from time to time, of  up  to  250,000 
shares of Liquidity BACs. OTEF II may purchase Liquidity BACs  in
the open market or through privately negotiated transactions. The
timing  and amount of Liquidity BACs purchased will be  dependent
on the availability of Liquidity BACs and other  market  factors.
OTEF II will purchase Liquidity BACs only to the extent that they
may be purchased at favorable prices.  There can be  no assurance 
that any Liquidity BACs will be repurchased by  or  on  behalf of  
OTEF II.  OTEF II has not repurchased any Liquidity  BACs  as  of  
the date of this report.

    Investments  in  New Assets.  On October 27,  1998,  OTEF  II
acquired  $14,200,000 Collin County Housing  Finance  Corporation
Multifamily  Housing  Mortgage  Revenue  Bonds  (Carpenter-Oxford
Development) Series 1998 (the "Carpenter Refunding  Bonds").   As
previously reported, on December 30, 1997, OTEF II purchased,  at
a  discount, $16,175,000 of tax-exempt bonds issued by the  Texas
Department  of  Housing  and Community Affairs.   The  bonds  are
collateralized by Steeple Chase Apartments, a 368-unit  apartment
community  located in Plano, Texas, that is owned by a privately-
held  Maryland  limited partnership whose  general  partners  are
affiliates of OTEF II ("Carpenter Borrower").

    In connection with the recent refunding transaction, OTEF  II
exchanged the bonds that it acquired on December 30, 1997 for the
Carpenter  Refunding Bonds.  The Carpenter Refunding  Bonds  bear
tax-exempt  interest  at an annual fixed rate  of  7.25%  for  an
initial term through October 1, 2005, at which time the Carpenter
Refunding Bonds  must  be  remarketed.  The  Carpenter  Refunding
Bonds  mature on September 1, 2018, subject to earlier redemption
(optional and mandatory) upon the occurrence of certain events.
<PAGE>  7

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    In addition, OTEF II funded the balance of a taxable loan  in
the  amount of $315,000.  The Carpenter Borrower will  apply  the
net  proceeds  of this loan to fund certain capital improvements,
and  pay  transactional, bond refunding and certain other  costs.
The  taxable  loan in the aggregate principal amount of  $915,000
will be repaid on an interest-only basis with taxable interest at
an   annual  fixed  rate  of  9.30%  on  the  principal   balance
outstanding from time to time with the principal due at maturity.
The  taxable  loan  matures on the same  date  as  the  Carpenter
Refunding  Bonds  and  is  prepayable  on  the  same  terms   and
conditions as the Carpenter Refunding Bonds.

     On  July  20,  1998,  OTEF  II  acquired  $10,300,000  Texas
Department of Housing and Community Affairs Multifamily  Mortgage
Revenue  Refunding Bonds (Dallas-Oxford Development) Series  1998
(the  "Dallas  Refunding  Bonds").  As  previously  reported,  on
December  30, 1997, OTEF II purchased, at a discount, $11,700,000
of tax-exempt bonds issued by the Texas Department of Housing and
Community  Affairs.  The bonds are collateralized by  Springhouse
Apartments,  a  372-unit apartment community located  in  Dallas,
Texas,  that  is  owned  by  a  privately-held  Maryland  limited
partnership  whose  general partners are affiliates  of  OTEF  II
("Dallas Borrower").

    In connection with the recent refunding transaction, OTEF  II
exchanged the bonds that it acquired on December 30, 1997 for the
Dallas  Refunding Bonds.  The Dallas Refunding  Bonds  bear  tax-
exempt  interest at an annual fixed rate of 7.25% for an  initial
term  through  July 1,  2005, at  which time the Dallas Refunding  
Bonds must be remarketed.  The  Dallas Refunding Bonds mature  on
April  1,  2018,  subject  to earlier  redemption  (optional  and
mandatory) upon the occurrence of certain events.

    In addition, OTEF II funded the balance of a taxable loan  in
the  amount of $355,000.  The Dallas Borrower will apply the  net
proceeds  of this loan to fund certain capital improvements,  and
pay  transactional, bond refunding and certain other costs.   The
taxable  loan in the aggregate principal amount of $680,000  will
be  repaid on an interest-only basis with taxable interest at  an
annual  fixed rate of 9.30% on the principal balance  outstanding
from  time  to  time  with the principal due  at  maturity.   The
taxable  loan  matures on the same date as the  Dallas  Refunding
Bonds  and is prepayable on the same terms and conditions as  the
Dallas Refunding Bonds.

    As previously reported, OTEF II has  begun  working  on  bond
refunding  and  refinancing  transactions  with  respect  to  the 
Jacaranda and Summerwalk properties.  The senior tax-exempt bonds
secured by these properties ($11.8 million for Jacaranda and  $10
million for Summerwalk) are currently held by third parties.  The
letters of credit that secure these bonds expire  on  August  15,
1999 for Jacaranda and  December 15,  2000  for  Summerwalk.   If
substitute credit enhancement is not provided by such dates,  the
<PAGE>  8

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Report of Management
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senior  bonds   must  be  refunded  or  repaid.  Based   on   its
preliminary discussions, the Managing General Partner anticipates 
consummating refunding and refinancing  transactions   for  these 
properties where the requirement  to  maintain  letters of credit 
is  eliminated  and  the  bonds  are  refinanced  or, in the case
of  Summerwalk,  possibly  acquired  by  OTEF II  as  part  of  a
refinancing.  However, in light of the financial turmoil that has 
affected   the  global   capital  markets  in  recent  months, no 
assurances   can   be   given   that   these  transactions can be 
consummated in a timely manner.   

    Status  Quo  BACs.  Effective April 1, 1997, OTEF  II  issued
SQBs,  representing 12,587 shares, in uncertificated,  book-entry
form.   During  1997, a total of 5,494 SQBs were redeemed  for  a
cost of $3.0 million.  During the first two quarters of 1998,  an
additional 147 SQBs were redeemed at prices ranging from $540  to
$550  per share, leaving 6,946 SQBs outstanding at June 30, 1998.
No redemptions occurred during the third quarter.

    The Information Memorandum states that, subject to receipt of
a  fairness  opinion  from  OTEF  II's  independent  real  estate
consultant, all outstanding 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 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.  The Managing General  Partner
expects  to complete its analysis later this year. 

Year 2000 Compliance

     In accordance with the SEC's interpretive release "Statement
of  the  Commission Regarding Disclosure of Year 2000 Issues  and
Consequences by Public Companies'," the Managing General  Partner
of OTEF II has upgraded and tested the principal systems on which
OTEF II relies and believes that they are Year 2000 compliant  as
of   this  date.   The  Managing  General  Partner  is  currently
contacting  third  parties with whom OTEF  II  does  business  to
evaluate  their exposure to year 2000 issues.  In  addition,  the
Managing  General  Partner is in the  process of  contacting it's 
vendors  to  determine   their   compliance   and  is  developing  
contingency plans.  The Managing General   Partner  believes that  
such  analysis  will  be completed in 1999. The Managing  General  
Partner  is  committed  to  making   OTEF II's   transition  into 
the next millennium a smooth one.


<PAGE>  9
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Report of Management
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Liquidity and Capital Resources

    Current  Position.   OTEF  II uses  the  interest  income  it
receives from Refunding Bonds, Existing MRBs, New Assets (each as
defined   below),  and  cash  reserves  to  make  periodic   cash
distributions  to its General Partners, OTEF II BAC  Holders  and
SQB  Holders,  pay administrative expenses and fund reserves,  as
well as the costs and expenses associated with the implementation
of  the  1995 OTEF Restructuring Plan and the acquisition of  New
Assets.

    As  of  September 30, 1998, OTEF II held approximately  $16.8
million  in  cash  and  cash equivalents,  an  increase  of  $5.1
million,  or  approximately  44%, from  the  approximately  $11.7
million  in  cash  and cash equivalents held as of  December  31,
1997.   This  increase  in OTEF II's cash  and  cash  equivalents
primarily  reflects  the  net proceeds generated  from  Financing
Transactions in excess of the amounts invested by OTEF II.  Total
assets were $297.7 million compared to $270.7 million at December
31,  1997. In addition, total liabilities of OTEF II shown on the
balance  sheet  increased  by $18 million  to  approximately  $52
million  as of September 30, 1998 from approximately $34  million
at December 31, 1997 due to the Financing Transactions.

    Investment  in  New  Assets.  OTEF II generally  will  invest
in additional tax-exempt mortgage revenue bonds  and, to a lesser 
extent, taxable  loans or other real estate-related  assets  that
are  secured  by,  or associated  with,  apartment   and   senior
living/health care  communities  located  throughout  the  nation 
("New Assets").  It is expected that OTEF II will invest on terms 
that will  permit it, in many cases, to participate substantially 
in the future  growth  and  increase in value of  the  properties 
financed  by  such  bonds.  See "Recent Developments"  and  prior  
reports  for  additional information regarding New Assets.

    Refunding  Bonds.  As of September 30, 1998,  twelve  of  the
fifteen  mortgage  revenue  bonds  owed  by  OTEF  II  prior   to
implementation  of the 1995 Restructuring Plan ("Existing  MRBs")
had  been refunded, representing 88% of the combined face amounts
of the Existing MRBs and Refunding Bonds portfolio.

    The  refunding bonds that were issued to refund Existing MRBs
("Refunding  Bonds") are structured so as to  consist  of  senior
bonds  ("Series  A  Bonds")  and subordinated  bonds  ("Series  B
Bonds").    This  senior/subordinated  structure  has   permitted
OTEF  II to  undertake several  financing  transactions involving 
the  Series  A  Bonds that  are  allocable to  the OTEF  II  BACs 
("Liquidity Assets"). A portion of the  net  proceeds  from these 
financings has been  invested  in New Assets, as discussed above. 
OTEF II has retained the  related Series B Bonds for the  benefit  
of the Liquidity BAC Holders, and  has  retained  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.
<PAGE> 10

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Report of Management
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    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.  In
the annual reset mode, Series A Bond interest was  set  initially 
at closing of the refundings and is reset annually thereafter  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%.  The interest rate  on  one  of the 
Series  A Bonds retained by OTEF II was reset recently  to 3.75%;
the interest rate on the five remaining Series A  Bonds  retained
by OTEF II will reset at various times  during  the  period  from
December 1998 through March 1999. The interest rate on the Series
A Bonds involved in the  financing transactions  described  above 
was converted from annual  reset  to a weekly floating rate based 
on a spread over the BMA index. This rate averaged 4.51% from the 
date of closing through December 31, 1997 and  4.37% for the nine 
months of 1998. 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.  All interest has been currently  paid
on the Series B Bonds.

    Combined Rate.  The Combined Rate represents that portion  of
each  Property's projected cash flow before debt service 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
<PAGE> 11

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Report of Management
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Bonds  and  Series  B  Bonds.  The 1998 weighted average Combined
Rate for the 12 Refunding Bonds is 6.62%.  See Note 7 to the 1997
Annual  Report for a schedule of Combined Rates of the  Refunding
Bonds over the next ten years.

  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 September 30,  1998,
the  aggregate  amount  of  net excess  cash  flow  held  in  the
Operating  Partnership  escrows was approximately  $2.2  million,
compared to $1.1 million at the end of 1997.  As of the  date  of
this report, none of these reserves has been drawn in relation to
the  pooling  agreements.  In addition,  as  discussed  in  prior
reports,  in  connection  with  the  closing  of  the  Oxford/NHP
transaction  in 1993, Oxford committed certain proceeds  of  such
closing  to satisfy certain obligations it had to these Operating
Partnerships.   In  August 1998, Oxford funded  $0.1  million  to
Allview,  leaving the total commitment of Oxford as of  September
30,   1998  at  $1.2  million.   The  Managing  General   Partner
anticipates  that  the  remaining balance  will  be  advanced  to
certain  Operating  Partnerships to  help  defray  the  costs  of
refunding   the   remaining  Existing  MRBs,  increase   property
improvement  reserves and create operating  reserves,  as  deemed
necessary by the Managing General Partner.

    Financing  Transactions. OTEF II seeks to enhance its overall
return on investment and to generate  proceeds  which  facilitate 
the   acquisition   of  additional  investments.   OTEF  II   has
securitized a total of approximately $62.6 million of its  Series  
A Bonds by assigning these Series A  Bonds  to  a  Merrill  Lynch 
affiliate which, in turn, deposits them into trusts.  The trusts,
in turn, sell to institutional investors  senior,  floating  rate
securities credit enhanced by a Merrill  Lynch  affiliate.  These
senior securities have first priority on the debt service payments
related to  the  Series  A  Bonds.  OTEF  II  acquired   all  the
subordinated interests in these trusts in the aggregate amount of 
approximately  $15 million,  and  received  the proceeds from the 
sale of the senior securities,  less  certain  transaction costs. 
OTEF II has  certain rights to  repurchase  and/or refinance  the 
Series A Bonds and to repurchase  the  senior   securities   and, 
therefore, retains a level of control over the  Series  A  Bonds.   
These securitization transactions provide low-cost  financing for
OTEF II's growth. The portion  of  the  net  proceeds  from these 
transactions that is not invested in New Assets  is   temporarily  
invested in liquid tax-exempt money market securities.

    In  connection with these transactions, OTEF II converted the
interest rate mode on the Series A Bonds from an annual reset  to
weekly  floaters.   In  the first securitization  transaction  on
August  22,  1997,  OTEF II also purchased a three-year  interest
<PAGE> 12

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Report of Management
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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.  On September  21,
1998, OTEF II purchased an additional 3 year interest rate cap on
a  notional amount of $30 million pursuant to which OTEF II  will
receive  payments if the average, short-term tax-exempt  interest
rates  for any month during the term of the cap increase above  a
specified level (4.5%).

    For  financial  statement purposes,  these  transactions  are
accounted  for  as  financing transactions.  The  amount  of  the
Series  A  Bonds  financed  of  approximately  $62.6  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 interests  acquired  by
OTEF  II  is  classified as financing debt on OTEF  II's  balance
sheet.   The aggregate financing debt at September 30,  1998  was
$47.6  million  as compared to $27.2 million as of  December  31,
1997.  OTEF II's financing  debt represents approximately 16%  of  
OTEF II's total assets (if the entities in which OTEF II has made 
a  subordinated  debt  investment were consolidated with OTEF II, 
then OTEF II's adjusted debt  would represent  approximately  22% 
of OTEF II's total assets ).   Due  to  the   credit  enhancement  
provided  by  a  Merrill  Lynch affiliate in  connection with the
securitization   transactions,   and    favorable    underwriting 
characteristics (low  loan-to-value and high debt coverage), this
financing debt bears interest at the  BMA  weekly  floating  bond  
index plus approximately 80 to 85  basis points (including credit
enhancement, trustee and related fees).  This rate averaged 4.46% 
from the date of closing through  December 31, 1997 and 4.32% for
the nine months of 1998.  The credit  enhancement associated with 
approximately  $27.174  million  of  this  financing debt must be 
renewed or  refinanced  by  August 21, 1999.  OTEF II has certain 
rights to repurchase the Series A  Bonds and the senior interests
involved in these securitization  transactions.  While OTEF II is 
not an obligor and,  therefore,  is  not liable  for repayment of 
this financing debt, the Series  A  Bonds (in which  OTEF II owns 
approximately $15 million of  subordinated  interests through the 
trusts) are in effect collateral for this  financing debt.  Based 
on  its  preliminary   discussions  with  financing sources,  the 
Managing General Partner believes that OTEF II  will  be able  to  
extend the credit enhancement or refinance  this  financing debt, 
however, in light of the financial turmoil that has affected  the  
global capital markets in recent months, no assurances can be given.
      
    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  each  interest  rate   cap
<PAGE> 13

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

agreement,  which is 3 years.  For federal income  tax  purposes,
these  transactions  are  treated as sales  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 1997 capital loss for  federal
income  tax  purposes of approximately $3.8 million.  Information
regarding  the  federal  income  tax  consequences  of  financing
transactions  completed during 1998 will be provided  later  this
year. 

    Existing  MRBs.   As  of September 30,  1998,  OTEF  II  held
Existing  MRBs  for  two of the Operating  Partnerships.   It  is
expected  that  the refunding of at least one  of  the  Operating
Partnership's Existing MRBs will close in 1998.

Results of Operations

    OTEF II's  Operations

    OTEF II Distributions.  Distributions to Partners will amount
to  approximately  $3.8 million, or $0.51 per Liquidity  BAC  and
$12.38 per SQB holders of record as of September 30, 1998.

    OTEF  II's  Three-Month Operations.  For financial  statement
purposes,  Net Income and Net Income per Liquidity BAC  was  $4.8
million  and  $0.637,  respectively, for the  three-month  period
ended  September 30, 1998, compared to $4.0 million  and  $0.529,
respectively,  for the same period in 1997. The increase  in  Net
Income  for  the comparative six-month periods is the  result  of
additional  interest received on New Assets exceeding  the  costs
associated with the implementation of the Liquidity & Growth Plan
that  were  not  incurred in the prior comparative  period.   Net
Income  per Liquidity BAC assuming dilution due to the  incentive
option  plan for the three-month period ended September 30,  1998
was $0.631.

    OTEF  II's  Nine-Month  Operations. For  financial  statement
purposes,  Net Income and Net Income per Liquidity BAC was  $13.8
million and $1.840, respectively, for the nine-month period ended
September  30,  1998,  as compared to $12.6 million  and  $1.651,
respectively, for the nine-month period ended September 30, 1997.
The  increase in Net Income is the result of additional  interest
received  on New Assets exceeding the costs associated  with  the
implementation  of  the Liquidity & Growth  Plan  that  were  not
incurred  in  the  prior  comparative  period.   Net  Income  per
Liquidity BAC assuming dilution due to the incentive option  plan
for the nine-month period ended September 30, 1998 was $1.821.

    Due to OTEF II's conversion of a portion of the BACs to SQBs,
effective April 1, 1997, there were 7,499,875 BACs outstanding in
the  first  quarter of 1997 compared to 7,185,200  in  the  first
quarter  of 1998.  Consequently, the weighted average  number  of
Liquidity  BACs outstanding for the computation of  earnings  per
<PAGE> 14

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

share   was  7,185,200  as  of  September  30,  1998  and   1997,
respectively.   Beginning in 1998, the relative portion  of  OTEF
II's administrative costs allocated to SQB Holders increased  due
to  the  adoption by the Managing General Partner of a  new  cost
allocation  methodology  designed  to  reflect  the  actual  time
incurred to administratively service the SQB Holders.  During the
period   from   April  1,  1997  to  December  31,  1997,   these
administrative costs were allocated based upon the ratio  of  SQB
Holders  to  BAC  Holders.   After consultation  with  OTEF  II's
professional advisors, the Managing General Partner believes that
this new methodology is more equitable to all parties.

THIS REPORT  CONTAINS  STATEMENTS  THAT  ARE  FORWARD-LOOKING  IN  
NATURE AND REFLECT MANAGEMENT'S CURRENT  VIEWS  WITH  RESPECT  TO
FUTURE  EVENTS  AND  FINANCIAL PERFORMANCE.  THESE STATEMENTS ARE 
SUBJECT TO MANY  UNCERTAINTIES  AND  RISKS,  AND  SHOULD  NOT  BE  
CONSIDERED GUARANTEES OF FINANCIAL PERFORMANCE.




































<PAGE> 15

Oxford Tax Exempt Fund II Limited Partnership
<TABLE>
------------------------------------------------------------------------------
Balance Sheets (in thousands)
------------------------------------------------------------------------------
<CAPTION>
                                                   September 30,   
                                                      1998        December 31,
                                                   (Unaudited)       1997
------------------------------------------------------------------------------ 
<S>                                                   <C>          <C>        
Assets                                                                          
  Investments in tax-exempt securities                $204,164     $217,159   
  Investments in tax-exempt securities held in trust    62,565       38,820   
  Investment in taxable securities and loans            11,179            0   
  Cash and cash equivalents                             16,840       11,694   
  Bond and other interest receivable                     1,583        1,439   
  Other assets                                           1,333        1,551   
------------------------------------------------------------------------------
      Total Assets                                    $297,664     $270,663   
==============================================================================
                                                                                
Liabilities and Partners' Capital                                             
  Liabilities                                                                 
    Financing debt                                    $ 47,614     $ 27,174   
    Accounts payable and accrued expenses                  568        2,988   
    Distributions payable                                3,827        3,719   
------------------------------------------------------------------------------
      Total Liabilities                                 52,009       33,881   
------------------------------------------------------------------------------
                                                                              
Partners' Capital                                                             
  General Partners' Interests                           (2,309)      (2,356)  
  Limited Partners' Interests:                                                
    Beneficial Assignee Interests                                             
      (7,499,875 interests issued and 7,185,200                               
      interests outstanding)                           159,009      156,672     
    Status Quo BAC Interests (12,587 interests                                
      issued and 7,093 and 6,946 interests                                    
      outstanding as of December 31, 1997 and                                 
      September 30, 1998,respectively)                   3,824        3,885   
  Accumulated other comprehensive income                85,131       78,581   
------------------------------------------------------------------------------
      Total Partners' Capital                          245,655      236,782   
------------------------------------------------------------------------------
      Total Liabilities and Partners' Capital         $297,644     $270,663   
==============================================================================
                                                                              
       The accompanying notes are an integral part of these financial
                                statements.
</TABLE>
                                


<PAGE> 16

Oxford Tax Exempt Fund II Limited Partnership
<TABLE>
------------------------------------------------------------------------------
Statements of Income and Comprehensive Income (in thousands, except per       
                                               Liquidity BAC amounts)         
(Unaudited)                                                                   
------------------------------------------------------------------------------
<CAPTION>                                                                     
                                     Three months ended    Nine months ended   
                                        September 30,         September 30,   
                                     -------------------   -------------------
                                         1998     1997      1998       1997   
------------------------------------------------------------------------------
<S>                                     <C>      <C>       <C>       <C>      
Revenues                                                                      
  Interest on tax-exempt securities     $4,593   $4,387    $13,655   $13,621  
  Interest on tax-exempt securities                                           
    held in trust                          665      202      1,808       202  
  Interest on taxable securities                                              
    and loans                              318        0        491         0  
  Other, primarily interest                157      187        440       391  
------------------------------------------------------------------------------
    Total Revenues                       5,733    4,776     16,394    14,214  
------------------------------------------------------------------------------
Expenses                                                                      
  Governance and administrative expenses  (214)    (188)      (655)     (889) 
  Litigation and settlement costs           (1)       0         (8)        0   
  Liquidity and growth expenses           (251)    (435)      (636)     (582)  
  Finance interest expense                (500)    (139)    (1,320)     (139)
------------------------------------------------------------------------------
    Total Expenses                        (966)    (762)    (2,619)   (1,610)
------------------------------------------------------------------------------
Net Income                              $4,767   $4,014    $13,775   $12,604
==============================================================================
Other comprehensive income:                                                  
  Unrealized gains on investments       $4,913   $3,328    $ 6,550   $ 8,711
==============================================================================
Comprehensive income                    $9,680   $7,342    $20,325   $21,315 
==============================================================================
Net income allocated to Liquidity BACs  $4,576   $3,801    $13,222   $12,036
==============================================================================
Weighted Average Liquidity                                                  
  BACs outstanding                       7,185    7,185      7,185     7,290
==============================================================================
Net income per Liquidity BAC<F1>        $0.637   $0.529    $ 1.840   $ 1.651
==============================================================================
Weighted Average Liquidity BACs                                              
  outstanding - assuming dilution<F2>    7,252    7,226      7,262     7,309
==============================================================================
Net income per Liquidity BAC - assuming                                     
  dilution<F2>                          $0.631   $0.526    $ 1.821   $ 1.647 
==============================================================================
Distribution per Liquidity BAC<F1>      $0.510   $0.495    $ 1.515   $ 1.447
==============================================================================



<PAGE> 16 (continued)

<FN>
<F1>  Prior  periods  Liquidity  BAC  interest  amounts  have  been restated
      to reflect the 25-for-1 stock split which  occurred  on   July 1, 1997 
      and  amounts presented are after allocation  of  net income to General
      Partners and Status   Quo  BAC  holders.  (See Note  3  for  the   SQB 
      Statement of Income).

<F2>  Reflects the dilutive effect of unexercised stock  options granted  in
      the second quarter of 1997.

</FN>
                                
The accompanying notes are an integral part of  these  financial statements.

</TABLE>










































<PAGE> 17

Oxford Tax Exempt Fund II Limited Partnership
<TABLE>
------------------------------------------------------------------------------
Statement of Partners' Capital (in thousands) (Unaudited)                     
------------------------------------------------------------------------------
<CAPTION>                                Partners'
                                     Limited Interests
                                   ---------------------- Accumulated
                                      Beneficial  Status    Other
                             General   Assignee   Quo BAC Comprehensive
                             Partners  Interests Interests   Income    Total
------------------------------------------------------------------------------
<S>                          <C>       <C>        <C>       <C>     <C>
Balance, December 31, 1997   $(2,356)  $156,672   $3,885    $78,581 $236,782
==============================================================================
SQB Redemption                     0          0      (55)         0      (55)
                                                                             
Net Income, including                                                         
  $0.61 per Liquidity BAC                                                     
  <F1> and $12.63 per SQB         91      4,377       89          0    4,557
                                                                            
Unrealized gains on                                                          
  investments                      0          0        0        135      135
                             -------------------------------------------------
  Comprehensive income            91      4,377       34        135    4,637
                                                                             
Distributions payable to                                                      
  Partners including $0.495                                                  
  per Liquidity BAC<F1> and                                                  
  $12.38 per SQB                 (74)    (3,557)     (87)         0   (3,718)  
------------------------------------------------------------------------------
Balance, March 31, 1998      $(2,339)  $157,492   $3,832    $78,716 $237,701
==============================================================================
SQB Redemption                     0          0      (25)         0      (25)
                                                                             
Net Income, including                                                        
  $0.59 per Liquidity BAC                                                     
  <F1> and $13.31 per SQB         89      4,269       93          0    4,451
                                                                             
Unrealized gains on                                                          
  investments                      0          0        0      1,502    1,502
                             -------------------------------------------------
  Comprehensive income            89      4,269       68      1,502    5,928
                                                                             
Distributions payable to                                                     
  Partners including $0.51                                                   
  per Liquidity BAC<F1> and                                                   
  $12.38 per SQB                 (77)    (3,664)     (86)         0   (3,827)
------------------------------------------------------------------------------
Balance, June 30, 1998       $(2,327)  $158,097   $3,814    $80,218 $239,802
==============================================================================






Net Income, including                                                        
  $0.64 per Liquidity BAC                                                    
  <F1> and $13.77 per SQB         95      4,576       96          0    4,767
                                                                             
Unrealized gains on                                                          
  investments                      0          0        0      4,913    4,913  
                             -------------------------------------------------
  Comprehensive income            95      4,576       96      4,913    9,680
                                                                     
Distributions payable to                                                     
  Partners including $0.51                                                   
  per Liquidity BAC<F1> and                                                   
  $12.38 per SQB                 (77)    (3,664)     (86)         0   (3,827) 
------------------------------------------------------------------------------
Balance, September 30, 1998  $(2,309)  $159,009   $3,824    $85,131 $245,655
==============================================================================
<FN>
<F1>  Liquidity BAC share amounts 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> 18

Oxford Tax Exempt Fund II Limited Partnership
<TABLE>
------------------------------------------------------------------------------
Statements of Cash Flows  (in thousands)
(Unaudited)
------------------------------------------------------------------------------
<CAPTION>
                                              Nine months ended September 30,
                                              --------------------------------
                                                       1998          1997
------------------------------------------------------------------------------
<S>                                                  <C>           <C>
Operating Activities                                                         
  Net income                                         $13,775       $12,604   
  Adjustments to reconcile net income                                        
    to net cash Provided by operating activities:                            
  Changes in assets and liabilities:                                          
  Interest receivable and other                         (144)       (1,663)
  Litigation settlement payment                       (1,538)            0
  Accounts payable and accrued expenses                 (882)         (297)
------------------------------------------------------------------------------
Net cash provided by operating activities             11,211        10,644
------------------------------------------------------------------------------
Investing Activities                                                        
  Acquisitions<F1>                                   (14,944)            0
  Decrease in other assets                              (218)            0
  Redemption of SQBs                                     (80)       (2,961)
------------------------------------------------------------------------------
Net cash used in investing activities                (15,242)       (2,961)  
------------------------------------------------------------------------------
Financing activities                                                         
  Net proceeds from debt refinancing                  20,440        27,174
  Distributions paid                                 (11,263)      (10,929)
------------------------------------------------------------------------------
Net cash provided by financing activities              9,177        16,245
------------------------------------------------------------------------------
Net increase in cash and cash equivalents              5,146        23,928
Cash and cash equivalents, beginning of period        11,694        12,072 
------------------------------------------------------------------------------
Cash and cash equivalents, end of period             $16,840       $36,000
==============================================================================
<FN>
<F1>   Acquisitions include new tax-exempt bonds, other tax-exempt securities
       and interests in taxable loans.

</FN>

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

</TABLE>







<PAGE> 19

-----------------------------------------------------------------
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 ("OTEF II" or the "Partnership"), are
necessary  to present fairly OTEF II's financial position  as  of
September  30,  1998  and December 31, 1997,  the  Statements  of
Income  and  Comprehensive Income for the  three  and  nine-month
periods  ended  September 30, 1998 and  1997,  the  Statement  of
Partners' Capital as of September 30, 1998, and the Statements of
Cash Flows for the nine-month period ended September 30, 1998 and
1997,  and  the  notes  thereto,  in  accordance  with  generally
accepted accounting principles.  These statements should be  read
in  conjunction with the audited financial statements  and  notes
included  in the Partnership's Annual Report for the  year  ended
December 31, 1997.

    In  February  1997, the Financial Accounting Standards  Board
issued  a  Statement of Financial Accounting Standards  No.  128,
"Earnings Per Share", which changed the reporting of earnings per
share  beginning in the fourth quarter of 1997.   Basic  earnings
per  share,  a  measure required by the new  standard,  does  not
include  stock  options  as  common stock  equivalents.   However
diluted earnings per share includes the effect of stock options.

Note 2.  Business

    The  Partnership was formed under the laws of  the  State  of
Maryland in February, 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").

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.


<PAGE> 20

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

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

   Valuation of Bonds.  The Managing General Partner estimated at
September  30, 1998 that the fair value of the 12  Series  A  and
Series  B  Bonds, the two Existing MRBs and the  New  Assets  was
approximately $266.7 million and, accordingly, OTEF II recorded a
credit  to  Partners' Capital in an amount equal to approximately
$85.1 million of unrealized gain on investments.  This represents
an  increase  of  approximately $6.6 million since  December  31,
1997.  The Managing General Partner determined these values 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, 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 New Assets are also valued  at  their
original purchase price at date of acquisition.

    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  period. On  April  1,  1997  there  were
7,499,875  BACs outstanding, and 314,675 BACs were  converted  to
12,587 SQBs, leaving 7,185,200 Liquidity BACs outstanding. During
1997,  5,494 SQBs were redeemed for a total cost of $3.0 million.
In the first nine-month period of 1998, 147 SQBs were redeemed at
a  cost  of  $0.08 million, including 45 SQBs during  the  second
quarter,  leaving 6,946 SQBs outstanding at June  30,  1998.   No
SQBs  were redeemed during the three-month period ended September
30, 1998.

    Comprehensive Income.  In June 1997, the Financial Accounting
Standards   Board   issued  Statement  of  Financial   Accounting
Standards No. 130 "Reporting Comprehensive Income" which requires
the  reporting of comprehensive income as part of a full  set  of
financial  statements.  Comprehensive income includes  both  "Net
Income" and "Other Comprehensive Income".  OTEF's only source  of
"other  comprehensive income" is related to the valuation of  its
tax-exempt  investments  to market which  results  in  unrealized
gains  or  losses previously charged to an equity  account  under
SFAS  115 "Accounting for Certain Investments in Debt and  Equity
Securities".    SFAS  130  does  not  require   presentation   of
comprehensive  earnings per share.  For the  three  month  period
ended  September  30,  1998, OTEF recorded  "Other  Comprehensive
<PAGE> 21

-----------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------
Income"  from  unrealized gains on it's investment in  tax-exempt
securities of  $4.9 million and $3.3 million for the same  period
in  1997.   For the nine-month period ended September  30,  1998,
OTEF  recorded "Other Comprehensive Income" from unrealized gains
on it's investments in tax exempt securities of  $6.6 million and
$8.7 million for the same period in 1997.

    Statements of cash flows.  The statements of cash  flows  are
intended  to reflect only cash receipts and cash payment activity
during  the  reporting  period.  The statements  do  not  reflect
investing and financing activity that affect recognized assets or
liabilities that do not result in cash receipts or cash  payments
during  such period, including distributions payable to Partners,
SQB  Holders,  and  OTEF  II BAC Holders  of  approximately  $3.8
million  at September 30, 1998 and $3.7 million at September  30,
1997.

    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.

   Accounting for Status Quo Interests.  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.

    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 distributions 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.  Set forth below is a schedule of SQB income for
the three and nine-months ended September 30, 1998:                 







<PAGE> 22
------------------------------------------------------------------
Notes to Financial Statements
------------------------------------------------------------------
                       
<TABLE>
------------------------------------------------------------------
                STATEMENT OF STATUS QUO BAC INCOME                
          (in thousands, except per SQB interest amounts)         
                            (Unaudited)                           
------------------------------------------------------------------
<CAPTION>                                       
                                Three Months      Nine Months
                                   Ended       Ended September 30,  
                               September 30,      Pro Forma
                              ---------------  -------------------
                                1998<F2> 1997    1998<F2> 1997<F1>
                              ------------------------------------
<S>                             <C>     <C>      <C>      <C>
Revenues                                                         
  Interest on Bonds             $  108  $  134   $  320   $  514
  Other Interest                     3       3        9        7
------------------------------------------------------------------
                                   111     137      329      521
Expenses                                                       
  Governance and Administration    (16)     (5)     (50)     (12)
  Litigation expenses                0       0       (2)      (5)
------------------------------------------------------------------      
Net income to SQB holders       $   95  $  132   $  277   $  504
==================================================================
Other comprehensive income:                                       
  Unrealized gains on investment                                 
     in tax-exempt securities      114      99      152      325
==================================================================
Comprehensive income            $  209  $  231   $  429   $  829
==================================================================
Weighted average SQB                                             
  shares outstanding             6,946   8,931    6,977   11,368    
==================================================================
Net income per SQB interest     $13.77  $14.78   $39.72   $44.37  
==================================================================
Distribution per SQB interest   $12.38  $12.38   $37.14   $36.18  
==================================================================
<FN>
<F1>  Since the SQBs were issued on April 1, 1997,  there  are no
      actual comparative results of SQB operations for the  three 
      months ended March 31, 1997.  This  Pro  Forma presentation 
      includes the SQB holders' earnings for the first quarter of
      1997, before  their Beneficial Assignee Certificates (BACs) 
      were converted to SQBs.

<F2>  The Information Memorandum states that,  subject to receipt 
      of a fairness opinion from OTEF II's independent real estate
      consultant, all  outstanding   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 

<PAGE> 23

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

<F2>  (continued)
      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.  The  Managing  General  Partner  expects  to 
      complete its analysis later this year.                  

</FN>
</TABLE>
        
                                                                    
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.  Distributions  to   the
General Partners totaled approximately $0.23 million for the nine
months  ended September 30, 1998 and approximately $0.22  million
for the same period in 1997.

    Affiliates  of the Managing General Partner that are  general
and  limited  partners of the various real estate-owning  limited
partnerships  (collectively, the "Operating Partnerships")  whose
property collateralizes or secures the tax-exempt bonds  held  by
OTEF  II  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.   In  addition, in connection with  the  1995  OTEF
Restructuring Plan and after the Existing MRBs are refunded, cash
flow  attributable  to these interests with  respect  to  the  14
original  Operating Partnerships is pledged for  the  benefit  of
OTEF  II  to  secure  the repayment of the  Refunding  Bonds  and
interest thereon.

    Compensation  and  Fees.   For the nine-month  periods  ended
September   30,   1998  and  1997,  certain  of   the   Operating
Partnerships   paid   ORFG  total  asset   management   fees   of
approximately  $0.55  million  and $0.47  million,  respectively.
During the nine-month periods ended September 30, 1998 and  1997,
the  Operating  Partnerships also paid ORFG,  in  the  aggregate,
approximately  $0.52  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  Existing MRBs and Refunding Bonds collateralized by  the
properties owned by the related Operating Partnerships.


<PAGE> 24

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

  In connection with OTEF II's investment in  New Assets, ORFG is
entitled  to  an acquisition fee of 1-2.5% of the purchase  price
(depending on the type of transaction) for finding, analyzing and
acquiring  New  Assets, which is payable on the  closing  of  any
transaction in which OTEF II acquires a New Asset. OTEF  II  also
will  pay  ORFG  an  annual advisory fee equal  to  0.5%  of  the
purchase  price  for  managing OTEF II's New Assets  after  their
acquisition. For  the nine-month period ended September 30, 1998, 
OTEF II paid approximately  $0.35 million in acquisition fees and 
$0.16  million  in   advisory   fees  to  ORFG.  Acquisition fees
are  treated  as deferred  costs  associated with the acquisition 
and are amortized over  10 years.  Advisory  fees are deducted as 
period costs.

    Expense Reimbursements.  The Operating Partnerships and  OTEF
II  also  reimburse  ORFG  for  certain  expenses  it  incurs  in
providing  services  with respect to (i) the  Existing  Mortgaged
Properties, (ii) the investment in New Assets, (iii) the sale  or
disposition  of  the Refunding Bonds, and (iv) the administration
of  OTEF  II's  affairs.   Total reimbursements  to  the  General
Partners  and  their affiliates for the nine-month  period  ended
September  30,  1998 and 1997, were approximately $0.460  million
(of which $0.240 million amount is included in Liquidity & Growth
expenses)  and  $0.376 million, respectively.  Such  reimbursable
amount  is  determined based on the actual time the officers  and
employees devote to OTEF II based upon their respective salaries.

    Incentive  Option Plan.  On May 21, 1997, OTEF II adopted  an
incentive option plan (the "1997 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.  As of
August  18, 1997 the Managing General Partner had granted all  of
the  OTEF  II  BAC  options authorized under  the  terms  of  the
Incentive  Option  Plan.  Of the 652,125  options,  613,000  were
vested immediately, 13,000 were vested as of January 1, 1998  and
26,083  are  vested  equally over 2 years commencing  January  1,
1999.   The  exercise price for all options is  $23.88  per  BAC,
which  was  equal  to  the 20-day average  market  price  of  the
Liquidity BACs at the date the options were granted.

Note 5.  Subsequent Events.

    On October 27, 1998, OTEF II completed the refunding  of  the
Carpenter  tax-exempt  bonds,  and  funded  the  balance  of  the 
taxable loan made to the Carpenter  borrower  in  the  amount  of
$315,000.


<PAGE> 25

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

    On October 30, 1998, OTEF II announced the commencement of  a 
repurchase plan involving up to 250,000 Liquidity BACs.           
 
    On  November  13, 1998, the  Managing  General Partner paid a 
distribution of $0.51 per Liquidity  BAC and  $12.38 per  SQB  to
holders of record as of September 30, 1998.















































<PAGE> 26
-----------------------------------------------------------------
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  Quarterly  Report  on  Form 10-Q  for  the  quarter  ended
  September  30,  1998,  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
                         1-888-321-OTEF
                                
             ALSO VISIT OUR WEB SITE AT WWW.OTEF.COM