<PAGE>


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


                                 FORM 10-K
(Mark One)

             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934 [FEE REQUIRED]

             For the fiscal year ended           December 31, 1999

                                                          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                0-20164

                            Krupp Government Income Trust II
                (Exact name of registrant as specified in its charter)

         Massachusetts                                  04-3073045
(State or other jurisdiction                 (IRS Employer Identification No.)
 of incorporation or organization)

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title                                     Name of Exchange on which Registered
Shares of Beneficial Interest                         None


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

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

Yes   X    No

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

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

Documents incorporated by reference: see Part IV, Item 14

The exhibit index is located on pages 12-18.


<PAGE>


                                    PART I

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

ITEM 1.  BUSINESS

Krupp Government Income Trust II (the "Trust") is a Massachusetts business trust
which was formed on February 8, 1991 and is  authorized to sell up to 25,000,000
shares of beneficial interest (the "Shares").  Berkshire Realty Advisors Limited
Partnership acquired 10,000 of such Shares and 18,315,158 Shares were sold under
the Trust's public offering for $365,686,058 net of purchase volume discounts of
$617,102.  On December 29, 1994, Berkshire Mortgage Advisors Limited Partnership
acquired  Berkshire  Realty  Advisors  Limited  Partnership's  10,000 shares and
assumed the role of the Advisor to the Trust.  Under the  Dividend  Reinvestment
Plan  ("DRP"),  46,319 Shares were sold for $880,061  (the  remaining  6,572,204
Shares  are  available  for  general  Trust  purposes).  See  Note A of Notes to
Financial  Statements  included  in  Appendix A of this  report  for  additional
information. The Trust has utilized the net proceeds from the public offering to
acquire participating insured mortgages ("PIMs"), participating insured mortgage
investments   ("PIMIs")  and  mortgage-backed   securities  ("MBS").  The  Trust
considers  itself to be  engaged in only one  industry  segment,  investment  in
mortgages.

The Trust has elected to be treated as a real estate  investment trust ("REIT"),
under the Internal  Revenue Code of 1986, as amended.  The Trust shall terminate
on December 31, 2030,  unless  earlier  terminated  by the  affirmative  vote of
holders of a majority of the outstanding  shares  entitled to vote thereon.  See
Note A of Notes to  Financial  Statements  included in Appendix A of this report
for additional information.

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

The PIMIs consist of an insured mortgage,  as discussed above, and an additional
loan ("Additional  Loan") to the borrower or owners of the borrower in excess of
mortgage  amounts insured or guaranteed  under GNMA,  Fannie Mae or FHA programs
that  increases  the Trust's total  financing  with respect to that property and
participation  in cash generated by property  operations and any appreciation in
the value of the property.  The participation  features related to all PIMIs are
neither  insured  nor  guaranteed.  Additional  Loans  associated  with  insured
mortgages  issued or originated  under or in connection  with HUD cannot,  under
government  regulations,  be  collateralized  by a  mortgage  on the  underlying
property.  These Additional Loans are typically  collateralized  with collateral
satisfactory to the Advisor, but are neither insured nor guaranteed.  Additional
Loans  associated  with  FNMA  insured   mortgages  are   collateralized   by  a
subordinated  mortgage on the underlying  property.  The borrower  conveys these
rights to the Trust through a subordinated loan agreement.  Under the Additional
Loans, the Trust receives  semi-annual  interest payments and a Preferred Return
representing a non-compounded cumulative return on the outstanding indebtedness,
usually the aggregate amount of the insured mortgage and Additional Loan.

The Trust also  acquired MBS  collateralized  by  single-family  mortgage  loans
issued or originated by Fannie Mae or the Federal Home Loan Mortgage Corporation
("FHLMC").  Fannie Mae and FHLMC  guarantee  the  principal  and interest of the
Fannie Mae and FHLMC MBS, respectively.

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

Although the Trust will  terminate no later than December 31, 2030, the value of
the PIMIs and PIMs may be realized  by the Trust  through  repayment  or sale as
early as ten years from the dates of the closings of the  permanent  loans,  and
the Trust may realize the value of all of its other investments within that time
frame thereby  resulting in a dissolution  of the Trust  significantly  prior to
December 31, 2030.

<PAGE>

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

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

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

As of December 31, 1999, there were no personnel directly employed by the Trust.

ITEM 2.  PROPERTIES

None.

ITEM 3.  LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Trust is a party or
to which any of its investments are subject to.

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

None.

                                   PART II

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

Currently there is no established public trading market for the Shares.

The number of investors holding Shares as of December 31, 1999 was approximately
14,248.

The  Trust has and  intends  to  continue  to  declare  and pay  dividends  on a
quarterly basis. The Trustees  established a dividend rate per Share per quarter
of $.3125  for 1999 and 1998 and has  established  a  dividend  rate of $.24 per
Share per quarter for 2000.

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

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

                                   (Amounts in thousands, except for per Share amounts)

                                                     1999             1998             1997            1996           1995

<S>                                             <C>               <C>              <C>             <C>            <C>
Total revenues                                  $    19,613       $   21,630       $   21,291      $   19,877     $   20,033

Net income                                      $    14,974       $   13,183       $   16,263      $   14,999     $   13,747

Net income per Share                            $       .82       $      .72       $      .89      $      .82     $      .75

Weighted average Shares
 outstanding                                         18,371           18,371           18,371          18,371         18,371

Total assets at December 31                     $   231,209       $  267,410       $  293,158      $  298,297     $  306,965

Average dividends per Share                     $      2.73       $     2.12       $     1.25      $     1.25     $     1.25
</TABLE>


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

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  contains  forward-looking   statements  including  those  concerning
Management's  expectations regarding the future financial performance and future
events.   These   forward-looking   statements  involve   significant  risk  and
uncertainties,  including  those  described  herein.  Actual  results may differ
materially from those anticipated by such forward-looking statements.

Impact of the Year 2000 Issue

Starting  in 1997 the  Advisor  conducted  an  assessment  of the  Trust's  core
internal and external computer  information systems to understand the nature and
extent of work  required  to make its  systems  Year 2000  ready.  The Year 2000
readiness  issue was concerned  with the inability of  computerized  information
systems to  accurately  calculate,  store or use a date after 1999.  The Advisor
believed that a system  failure or  miscalculation  could cause  disruptions  of
operations.

As a result  of this  concern,  the  Advisor,  along  with  certain  affiliates,
upgraded their computer  systems  including  their hardware and software so they
would be Year 2000 ready. In addition, the Advisor surveyed the Trust's material
third-party  service providers and significant  vendors and received  assurances
that they were Year 2000 ready. The Advisor also developed contingency plans for
all of its "mission-critical  functions" to insure  business  continuity.  As a
result of these efforts and the efforts of third parties,  the Year 2000 did not
result in any disruption of activities to the Trust.

Liquidity and Capital Resources

At  December  31,  1999 the  Trust  had  liquidity  consisting  of cash and cash
equivalents,  of approximately $8.7 million as well as the cash inflows provided
by PIMs,  PIMIs,  MBS,  cash and cash  equivalents.  The Trust may also  receive
additional cash flow from the participation  features of its PIMs and PIMIs. The
Trust  anticipates that these sources will be adequate to provide the Trust with
sufficient  liquidity to meet its obligations,  including providing dividends to
its investors.

The most  significant  demand on the Trust's  liquidity is quarterly  dividends,
including  liquidating  dividends,  paid  to  investors  of  approximately  $4.4
million,  and special  distributions.  Funds for  dividends  come from  interest
income  received  on PIMs,  PIMIs,  MBS and cash  and  cash  equivalents  net of
operating expenses,  and the principal  collections  received on PIMs, PIMIs and
MBS.  The portion of dividends  funded from  principal  collections  reduces the
capital  resources of the Trust. As the capital resources of the Trust decrease,
the  total  cash  flows to the  Trust  will also  decrease  which may  result in
periodic adjustments to the dividends paid to the investors.

<PAGE>


The Advisor  periodically  reviews the  dividend  rate to  determine  whether an
adjustment is necessary based on projected  future cash flows.  Based on current
projections,  the Advisor  presented  the Board of  Trustees  with a proposal to
reduce the dividend  rate to $.24 per Share per quarter  commencing  in February
2000 and to pay a special  distribution  of $.80 per Share in December 1999. The
Board of Trustees approved the new rate and payment of the special  distribution
at their quarterly meeting in November.  In general,  the Advisor tries to set a
dividend rate that  provides for level  quarterly  distributions.  To the extent
quarterly dividends do not fully utilize the cash available for distribution and
cash balances  increase,  the Advisor may adjust the dividend rate or distribute
such funds through a special distribution.

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

During 1999, the Trust received the full Additional  Loan interest  payment from
eight of its ten PIMI investments, six of which made the payments from operating
cash flow.  Oasis and Windmill  Lakes did not pay any  Additional  Loan interest
during 1999. During 1999, the Trust received  participation  income from four of
its investments,  totaling $799,024.  Mill Pond paid $18,928;  Crossings Village
paid $112,500;  Sunset Summit paid $274,780;  and The Seasons paid $392,816. The
Advisor expects that these same properties will pay participation  income during
2000 as well as Martins Landing, The Lakes and Mequon.

Most properties had stable  operating  results during 1999. High occupancy rates
were  maintained and moderate  rental income  increases were achieved at many of
the  properties  due to  stable  or  improving  markets.  Generally,  all of the
properties  the Trust expects to receive  participation  income from during 2000
have been occupied in the mid 90% range most of the year. Two other  properties,
Norumbega and Fountains, also have been occupied in the high 90% range, but have
not generated  sufficient  Surplus Cash under HUD's definition to be able to pay
the Trust any participation income. Rivergreens II occupancy has improved during
1999,  finishing  the  year  with  occupancy  in  the  high  90%  range  despite
challenging market conditions.

One  property,  Windsor  Lake,  was sold  during  1999 and the Trust  received a
prepayment  of  the  Insured  Mortgage  and  the  Additional  Loan  as  well  as
participation  income based on the increased value of the asset as determined by
the sales price.

Occupancy and operating  results of the three  remaining  properties are closely
monitored by the Advisor and warrant  mention.  The borrower on the PIMI for the
Falls at Hunters Point is in monetary  default for non-payment of  participation
income that is payable to the Trust based on 1997 operating results. The Advisor
is currently pursuing remedies to collect the delinquent participation income.

The borrowers on the PIMIs for Oasis at Springtree  and Windmill Lakes have both
sought debt service relief on the Additional Loan due to the highly  competitive
market in Broward  County,  Florida,  where both  properties  are  located.  The
strength  of the South  Florida  economy,  bolstered  by an  expanding  business
environment  and  in-migration  coupled  with low interest  rates and  available
building  sites,  has encouraged  aggressive  development of both  single-family
homes  and new  apartments.  Oasis  is  located  in the  Sunrise  submarket,  an
established market that has seen some major rehab activity as well as new infill
construction in the multifamily  sector.  Occupancy at Oasis has remained stable
over the past three  years in the low 90% range,  however  occupancy  has become
increasingly more expensive to achieve. Because Oasis must compete with newer or
rehabilitated  properties,   maintenance  costs  have  risen  as  the  standards
apartment  communities  are judged by  continue  to rise.  However,  as an older
property,  Oasis has not been  able to  command  the  commensurate  rental  rate
increases  it needs to be able to pay for  improvements  that will  enhance  its
appeal  in the  market.  Consequently,  the  Advisor  has  agreed  to defer  the
Additional  Loan  interest  payments  for 1999 to free up funds  for some  major
capital projects.  As a result of the factors described above, in December 1998,
management determined that the additional loan collateralized by the Oasis asset
was impaired.  As a result the Trust recorded a valuation  allowance of $994,000
in the fourth quarter of 1998 and has maintained such allowance throughout 1999.
The  modification  agreement  for the debt  service  relief is  currently  being
negotiated between the Advisor and the borrower on the Oasis PIMI.

<PAGE>

Windmill  Lakes is located in the Pembroke  Pines  submarket,  a market that had
vast tracts of vacant land three years ago and has seen  explosive  construction
activity  since  then in the  single-family,  multifamily  and  retail  sectors.
Windmill  Lakes is a ten-year old, basic  apartment  community that has not been
able to compete against the influx of new apartment  communities that are loaded
with  amenities.  Builders  use  deep  marketing  concessions  to  fill  the new
properties,  lowering  the cost of  renting a new  apartment  and making it more
difficult  for  older  properties  like  Windmill  Lakes to  attract  residents.
Occupancy at year-end is in the low 80% range.  The  property's  curb appeal,  a
critical element in a competitive market, has suffered as well because there has
not been enough cash flow for adequate maintenance. Consequently, due to lack of
cash flow, the borrower is delinquent in his  obligation to pay Additional  Loan
interest.  Although he is trying to sell the  property,  the  borrower  has been
unable to secure a purchase  price that will  cover the  property's  outstanding
liabilities.  The Advisor has agreed to defer the delinquent and 1999 Additional
Loan interest  payments  pending a sale of the property.  If it becomes apparent
that a sale  mutually  acceptable to both the Trust and the borrower will not be
possible,  the Advisor will reassess the feasibility of extending long-term debt
service relief rather than risk the  consequences of a default on the guaranteed
first mortgage.  As a result of the factors  described  above, in December 1998,
management  determined that the additional loan  collateralized  by the Windmill
Lakes asset was impaired.  As a result the Trust recorded a valuation  allowance
of $2,000,000  in the fourth  quarter of 1998,  and  maintained  such  allowance
through 1999.

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

On  December  16,  1999,  the  Trust  received  $2,832,907  from  Windsor  Lake;
consisting of $2,000,000 from the payoff of the additional loan, $40,000 of base
interest on the  Additional  Loan,  and $792,907 of  participating  appreciation
interest income.  The payoff of the balance on the insured mortgage,  $9,172,642
paid off on January 26, 2000. The Trust will pay a special  dividend of $.66 per
Share from the prepayment proceeds.

On October 18, 1999, the Trust received a payoff of $12,399,164 from the Estates
MBS consisting of a first mortgage of  $11,375,380  and a prepayment  premium of
$1,023,784.  During October 1999, the Trust paid a special  dividend of $.68 per
Share from the proceeds received from the Estates MBS payoff.

During  1998,  the  Trust  received  the  prepayment  of the  St.  Germain  PIMI
investment when the property was refinanced. The prepayment occurred four months
prior to the  expiration  of the five year  prohibition.  However,  the  Advisor
agreed to allow the  transaction to be completed  while market  conditions  were
favorable.  The Trust  received the  prepayment of the principal  balance of the
guaranteed first mortgage,  $11,006,015, the principal balance of the Additional
Loan,  $2,860,000,  and Additional Loan interest $83,417. In addition, the Trust
received  participation income comprised of the outstanding  preferred return on
the Trust's investment of $89,975, participation income interest of $94,258, and
the Trust's  share in the  increase in the value of the  underlying  property of
$1,874,032.  The Trust paid a special dividend on September 28, 1998 of $.87 per
Share from the prepayment proceeds.

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

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

Assessment of Credit Risk

The Trust's  investments  in  mortgages,  with the  exception of the  Additional
Loans,  are  guaranteed or insured by Fannie Mae, the Federal Home Loan Mortgage
Corporation  (FHLMC) or the Department of Housing and Urban  Development  (HUD),
and therefore,  the risk of a material loss of amounts  invested is remote.  The
certainty  of principal on the Trust's  investments  primarily  depends upon the
creditworthiness of these entities.

Fannie  Mae  is  a  federally  chartered  private  corporation  that  guarantees
obligations originated under its programs. However,  obligations of FNMA are not
backed by the U.S. Government.  Fannie Mae is one of the largest corporations in
the United  States and the  Secretary of the  Treasury of the United  States has
discretionary  authority to lend up to $2.25  billion to Fannie Mae at any time.
FHLMC  is  a  federally  chartered   corporation  that  guarantees   obligations
originated  under its programs and is  wholly-owned  by the twelve  Federal Home
Loan Banks.  These obligations are not guaranteed by the U.S.  Government or the
Federal Home Loan Bank Board. HUD, an agency of the U.S. Government, insures the
obligations originated under its programs which are backed by the full faith and
credit of the U.S. Government.

<PAGE>

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

The Trust includes in cash and cash equivalents approximately $7.6 million of
Agency paper.

Interest Rate Risk

The Trust's primary market risk exposure is to interest rate risk,  which can be
defined as the  exposure  of the Trust's  net  income,  comprehensive  income or
financial  condition  to adverse  movements in interest  rates.  At December 31,
1999,  the Trust's  PIMs,  PIMIs and MBS  comprise  the  majority of the Trust's
assets.  As such,  decreases in interest  rates may accelerate the prepayment of
the Trust's  investments.  The Trust does not utilize any  derivatives  or other
instruments  to  manage  this  risk  as  the  Trust  plans  to  hold  all of its
investments to expected maturity.

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

The table below provides  information about the Company's financial  instruments
that are sensitive to changes in interest rates. For mortgage  investments,  the
table presents  principal cash flows and related weighted average interest rates
by expected maturity dates. The expected  maturity date is contractual  maturity
adjusted for expectations of prepayments.
<TABLE>
<CAPTION>
                                    Expected maturity dates ($ in thousands)


                                 2000      2001      2002      2003      2004    Thereafter    Total    Fair Value
                                                                                                Face
                                                                                               Value

Interest-sensitive assets:

<S>                           <C>       <C>       <C>       <C>       <C>         <C>        <C>         <C>
MBS                           $ 3,745   $ 2,954   $ 2,333   $ 1,848   $ 1,468     $  8,980   $ 21,328    $ 21,127
Weighted
Average interest rate            8.09%     8.09%     8.09%     8.09%     8.09%        8.09%      8.09%

PIMS                              363       392       422       455       491       35,922     38,045      36,763
Weighted
Average interest rate            7.04%     7.04%     7.05%     7.05%     7.05%        7.05%      7.05%

PIMIS                          10,542     1,481     1,602     1,732     1,873      114,521    131,751     127,108
Insured Mortgages
Weighted
Average interest rate            7.02%     7.02%     7.03%     7.03%     7.03%        7.03%      7.03%

Additional Loans                    -         -         -         -         -       24,292     24,292      21,298
Weighted
Average interest rate            7.45%     7.45%     7.45%     7.45%     7.45%        7.45%      7.45%


Total Interest-
Sensitive Assets              $14,650   $ 4,827   $ 4,357   $ 4,035   $ 3,832     $183,715   $215,416    $206,296
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

Operations


                                                     (amounts in thousands, except per Share amounts)
                                                                 Year Ended December 31,
                                                    1999                     1998                        1997
                                                          Per                       Per                         Per
                                             Amount      Share        Amount       Share          Amount       Share
  Interest on PIMs:
<S>                                        <C>           <C>        <C>            <C>          <C>            <C>
     Basic interest                        $ 11,998      $ .66      $ 12,450       $ .68        $ 13,828       $ .75
     Additional loan interest                 1,712        .09         1,581         .09           2,147         .12
     Participation income                     1,592        .08         3,252         .18           1,770         .10
      Interest income on MBS                  3,251        .18         3,265         .18           2,847         .16
      Interest income - other                 1,060        .06         1,082         .06             698         .04
      Trust expenses                         (2,274)      (.12)       (2,553)       (.15)         (2,840)       (.16)
      Provision for impaired mortgage
       loans                                    -           -         (2,994)       (.16)            -            -
      Amortization of prepaid fees and
       expenses                              (2,365)      (.13)       (2,900)       (.16)         (2,187)       (.12)

      Net Income                           $ 14,974      $ .82      $ 13,183       $ .72        $ 16,263       $ .89

Weight Average Shares Outstanding               18,371,477                18,371,477                   18,371,477
</TABLE>

The Trust's total interest income decreased by approximately $2 million for 1999
when  compared to 1998 due  primarily to decreases in  participation  income and
basic interest income on PIM and PIMI's.  The decrease in  participation  income
from 1999 as compared to 1998 was a result of the participation  income received
when the payoff of the St.  Germain PIMI  occurred in 1998  exceeding  the total
participation income received when the Windsor Lake PIMI prepaid. Basic interest
on the PIMs and PIMIs also decreased due to the St. Germain payoff.

Trust expenses for 1999 decreased by approximately $3.8 million when compared to
1998,  due to  decreases in the  provision  for impaired  mortgage  loan,  asset
management  fees, and amortization  expense.  The Trust recorded a provision for
impaired  mortgage loans of $2,994,000  related to Windmill and Oasis Additional
Loans in 1998. The decrease in asset  management  fees resulted from the Trust's
asset base declining.  Amortization  expense in 1998 decreased because the Trust
fully  amortized  the  remaining  prepaid  acquisition  costs and  participating
servicing fees relating to the St. Germain PIMI when it paid off.

The Trust's  total  interest  income for 1998 as compared to 1997  increased  by
approximately  $340,000 due to higher participation  income,  interest income on
MBS and interest income other,  which was partially offset by decreases in basic
interest  on PIMs and  PIMIs and  Additional  Loan  interest.  The  increase  in
participation income in 1998 as compared to 1997 is due primarily to the Trust's
receipt of approximately $2,323,000 from the operations and repayment of the St.
Germain PIMI and  approximately  $929,000 from its other PIMS and PIMIs in 1998,
versus  $789,000 of  participation  income  received  when the  repayment of the
Willows Additional Loan occurred,  and $981,000 of participation interest on the
other PIMs and PIMIs in 1997.  The increase in interest  income on MBS is due to
reclassifying  the MBS portion of The Willows PIMI and The Estates PIM as MBS as
a result of property sale transactions in 1997 from which the Trust received all
participation  owed but will  continue to receive  principal and interest on the
first mortgage loan from the buyer. This transaction, along with the St. Germain
prepayment,  caused a  corresponding  decrease in the basic interest on PIMs and
PIMIs in 1998 as compared to 1997. The increase in other interest  income is due
to Trust having higher  short-term  investment  balances for 1998 as compared to
1997.  Additional Loan interest decreased due to the repayment of St. Germain in
1998 and Willows in the third quarter of 1997.  Interest income on MBS and basic
interest  on PIMs and PIMIs  will  generally  decline as  principal  collections
reduce the outstanding balance of the MBS, PIM and PIMI portfolios.

Trust expenses  increased by  approximately  $3.4 million in 1998 as compared to
1997  primarily  due to the Trust  recording a provision  for impaired  mortgage
loans of  $2,994,000  related to Windmill  Lakes and Oasis as  discussed  above.
Expense  reimbursements  decreased  when comparing 1998 to 1997 due to the Trust
having received a rebate for expense reimbursements related to 1997 during 1998.
The decrease in asset  management fees when comparing 1998 to 1997 resulted from
the Trust's asset base declining.

<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Appendix A to this report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
None.

                                     PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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


                                    Position with Krupp
   Name and Age                     Government Income Trust II

   Douglas Krupp (53)               Chairman of Board of Trustees and Trustee
*  Charles N. Goldberg (58)         Trustee
*  E. Robert Roskind (55)           Trustee
*  J. Paul Finnegan (75)            Trustee
   Robert A. Barrows (42)           Treasurer
   Scott D. Spelfogel (39)          Clerk
   Kristin L. Hicks (33)            Assistant Clerk

* Independent Trustee


     Douglas Krupp  co-founded  and serves as  Co-Chairman  and Chief  Executive
     Officer  of The  Berkshire  Group,  an  integrated  real  estate  financial
     services  firm engaged in real estate  acquisitions,  property  management,
     investment  sponsorship,   venture  capital  investing,  mortgage  banking,
     financial  management,  and ownership of three operating  companies through
     private equity investments.  Mr. Krupp has held the position of Co-Chairman
     since The Berkshire  Group was  established as The Krupp  Companies in 1969
     and he has served as the Chief  Executive  Officer  since 1992.  Mr.  Krupp
     serves as a member of the Board of Trustees at Brigham & Women's  Hospital.
     He is a graduate of Bryant College where he received an honorary  Doctor of
     Science in Business Administration in 1989 and was elected trustee in 1990.

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

     E.  Robert  Roskind  is the  Chairman  and  Co-Chief  Executive  Officer of
     Lexington Corporate  Properties,  a  self-administered  REIT, the shares of
     which are listed on the NYSE. Mr. Roskind has served in this capacity since
     October of 1993. Mr. Roskind is also the Managing Partner of The LCP Group,
     a real estate  investment  firm based in New York, the predecessor of which
     he  co-founded  in 1974.  He holds a B.A.  degree  from the  University  of
     Pennsylvania  and a J.D.  degree from  Columbia  Law School.  He has been a
     member of the New York Bar since 1970. He currently  serves as a Trustee of
     Krupp  Government  Income Trust II and Chairman of the Board of Trustees of
     Lexington Corporate Properties.

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

<PAGE>

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

     Scott D. Spelfogel is the Clerk of the Trust and is Senior Vice  President
     and General  Counsel to The  Berkshire  Group.  Prior to 1997, he served as
     Vice President and Assistant  General  Counsel.  Before joining the firm in
     November  1988,  he was a  litigator  in private  practice  in  Boston.  He
     received  a Bachelor  of Science  degree in  Business  Administration  from
     Boston University, a Juris Doctor Degree from Syracuse University's College
     of Law, and a Master of Laws degree in Taxation from Boston  University Law
     School.  He is admitted to practice law in Massachusetts and New York, is a
     member  of the  American,  Boston,  Massachusetts  and New York  State  bar
     associations and is a licensed real estate broker in Massachusetts.

     Kristin  L.  Hicks is the  Assistant  Clerk of the Trust  and is  Assistant
     General Counsel to The Berkshire Group.  Prior to 1999, she served as Staff
     Attorney for The Berkshire  Group beginning in September 1997, and prior to
     that  position,  she was the manager of the transfer  department  for Krupp
     Funds Group from May of 1992 through September of 1997. She received a B.A.
     degree  from  Northeastern  University  in 1989 and a J.D.  degree from the
     Suffolk  University  Law School in 1995. She is admitted to practice law in
     Massachusetts and is a member of the American, Massachusetts and Boston bar
     associations.

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

     George Krupp (age 55) is the  Co-Founder  and  Co-Chairman of The Berkshire
     Group,  an integrated real estate  financial  services firm engaged in real
     estate acquisitions,  property management,  investment sponsorship, venture
     capital investing, mortgage banking, financial management, and ownership of
     three operating companies through private equity investments. Mr. Krupp has
     held the position of Co-Chairman  since The Berkshire Group was established
     as The Krupp Companies in 1969. Mr. Krupp has been an instructor of history
     at the New Jewish High School in Waltham,  Massachusetts since September of
     1997.  Mr.  Krupp  attended  the  University  of  Pennsylvania  and Harvard
     University and holds a Master's Degree in History from Brown University.

     Peter F. Donovan (age 46) is Chief Executive Officer of Berkshire  Mortgage
     Finance  which  position  he has  held  since  January  of 1998 and in this
     capacity,  he oversees the strategic  growth plans of this mortgage banking
     firm.  Berkshire  Mortgage Finance is the 16th largest in the United States
     based on servicing and asset  management of a $7.2 billion loan  portfolio.
     Previously  he served as  President  of  Berkshire  Mortgage  Finance  from
     January of 1993 to January of 1998 and in that  capacity  he  directed  the
     production,  underwriting, servicing and asset management activities of the
     firm.  Prior to that,  he was Senior Vice  President of Berkshire  Mortgage
     Finance and was responsible for all  participating  mortgage  originations.
     Before joining the firm in 1984, he was Second Vice President,  Real Estate
     Finance for Continental  Illinois National Bank & Trust, where he managed a
     $300 million  construction  loan  portfolio of commercial  properties.  Mr.
     Donovan  received a B.A.  from  Trinity  College and an M.B.A.  degree from
     Northwestern University.

     Ronald  Halpern  (age 58) is  President  and  Chief  Operating  Officer  of
     Berkshire Mortgage Finance.  He has served in these positions since January
     of 1998 and in this capacity,  he is responsible for the overall operations
     of the Company.  Prior to January of 1998, he was Executive Vice President,
     managing the  underwriting,  closing,  portfolio  management  and servicing
     departments  for Berkshire  Mortgage  Finance.  Before  joining the firm in
     1987, he held senior  management  positions  with the Department of Housing
     and Urban  Development in Washington D.C. and several HUD regional offices.
     Mr. Halpern has over 30 years of experience in real estate  finance.  He is
     currently a member of the  Advisory  Council for Fannie Mae and Freddie Mac
     and was prior Chairman of the MBA Multifamily Housing Committee. He holds a
     B.A.  degree from the  University  of the City of New York and J.D.  degree
     from Brooklyn Law School.

     Carol J.C. Mills (age 50) is Senior Vice  President for Loan  Management of
     Berkshire Mortgage Finance and in this capacity, she is responsible for the
     Loan Servicing and Asset Management  functions of the Boston,  Bethesda and
     Seattle offices of Berkshire  Mortgage  Finance.  She manages the estimated
     $7.2  billion  portfolio of loans.  Ms. Mills joined  Berkshire in December
     1997 as Vice President and was promoted to Senior Vice President in January
     1999. From January 1989 through November 1997, Ms. Mills was Vice President
     of  First  Winthrop  Corporation  and  Winthrop  Financial  Associates,  in
     Cambridge,  MA. Ms. Mills earned a B.A.  degree from Mount Holyoke  College
     and a Master of Architecture degree from Harvard University. Ms. Mills is a
     member of the Real Estate  Finance  Association,  New England Women in Real
     Estate and the Mortgage Bankers Association.

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

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

Compensation of Trustees

     The Trust paid each of the Independent Trustees a fee of $25,000 in 1999.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>

     As of  February  5,  2000,  no  person  owned of record or was known by the
     Advisor  to  own  beneficially  more  than  5% of  the  Trust's  18,371,477
     outstanding  Shares.  The only  Shares  held by the  Advisor  or any of its
     affiliates consist of the original 10,000 Shares held by the Advisor.
<S>                    <C>                              <C>                                  <C>
Class of               Name of Beneficial               Amount and Nature of                 Percent
 Stock                        Owner                     Beneficial Interest                  of Class

Shares of              Douglas Krupp
Beneficial             One Beacon Street
Interest               Boston, Ma. 02108                10,000 Shares**                       ***

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

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

     *** The  amount  owned  does  not  exceed  one  percent  of the  shares  of
     beneficial interest of the Trust outstanding as of February 5, 2000.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  See Note G to Financial Statements included in Appendix A of this report.

<PAGE>
                                                       PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

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

(b)  Exhibits:

     Number and Description Under Regulation S-K

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

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

     (4.1)Fourth  Amended  and  Restated  Declaration  of Trust  filed  with The
          Massachusetts  Secretary of State on September  25, 1991  [Included as
          Exhibit  4.8  to  Post-effective   Amendment  No.  1  to  Registrant's
          Registration Statement on Form S-11 dated September 26, 1991 (File No.
          33-39033)].*

     (4.2)Subscription  Agreement  Specimen [Included as Exhibit C to Prospectus
          included   in   Post-effective   Amendment   No.  1  to   Registrant's
          Registration Statement on Form S-11 dated September 26, 1991 (File No.
          33-39033)].*

     (10) Material Contracts

     (10.1) Advisory  Services  Agreement dated September 11, 1991 between Krupp
          Government  Income  Trust II and  Berkshire  Realty  Advisors  Limited
          Partnership   (formerly  known  as  Krupp  Realty   Advisors   Limited
          Partnership)[Exhibit  10.1 to Registrant's report on Form 10-K for the
          year ended December 31, 1994 (File No. 0-20164)].*

     (10.2)  Assignment  and  Assumption   Agreement  between  Berkshire  Realty
          Advisors Limited  Partnership and Berkshire  Mortgage Advisors Limited
          Partnership  [Exhibit 10.2 to Registrant's report on Form 10-K for the
          year ended December 31, 1994 (File No. 0-20164)].*

     Mequon Trails

     (10.3) Supplement to Prospectus  dated January 1, 1993 for Federal National
          Mortgage   Association  pool  number   MX-073025   [Exhibit  19.1.  to
          Registrant's  Report on Form 10-Q for the quarter ended March 31, 1993
          (File No. 0-20164)].*

     (10.4) Subordinated  promissory note dated December 21, 1992 by and between
          Mequon  Trails  Townhomes  Limited  Partnership  and Krupp  Government
          Income Trust II [Exhibit 19.2 to Registrant's  Report on Form 10-Q for
          the quarter ended March 31, 1993 (File No. 0-20164)].*

     (10.5) Subordinate  Multifamily  Mortgage  dated  December 21, 1992 between
          Mequon  Trails  Townhomes  Limited  Partnership  and Krupp  Government
          Income Trust II.[Exhibit 10.5 to Registrant's  report on Form 10-K for
          the year ended December 31, 1995 (File No. 0-20164)].*

     (10.6)  Subordination  Agreement  dated  December  21, 1992  between  Krupp
          Mortgage  Company L.P.,  Krupp  Government  Income Trust II and Mequon
          Trails  Townhomes  Limited  Partnership.[Exhibit  10.6 to Registrant's
          report on Form 10-K for the year  ended  December  31,  1995 (File No.
          0-20164)].*

<PAGE>


     The Seasons

     (10.7) Subordinated  Promissory  Note,  dated  September 16, 1993,  between
          Maryland  Associates  Limited  Partnership and Krupp Government Income
          Trust  [Exhibit  10.1 to  Registrant's  Report  on Form  10-Q  for the
          quarter ended September 30, 1993 (File No. 0-20164)].*

     (10.8) Additional Loan Agreement dated September 16, 1993 between the Krupp
          Company Limited  Partnership-IV  and Krupp Government  Income Trust II
          [Exhibit  10.2 to  Registrant's  Report on Form  10-Q for the  quarter
          ended September 30, 1993 (file No. 0-20164)].*

     (10.9) Additional  Loan Note dated  September  16, 1993,  between the Krupp
          Company Limited  Partnership-IV  and Krupp Government  Income Trust II
          [Exhibit  10.3 to  Registrant's  Report on form  10-Q for the  quarter
          ended September 30, 1993 (File No. 0-20164)].*

     (10.10) Participation  and Servicing  Agreement dated September 16, 1993 by
          and between Krupp Mortgage  Corporation  and Krupp  Government  Income
          Trust-II  [Exhibit  10.4 to  Registrant's  Report on Form 10-Q for the
          quarter ended September 30, 1993 (File No.0-20164)].*

     (10.11) Deed of Trust Note dated September 16, 1993 for Maryland Associates
          Limited Partnership and Krupp Mortgage  Corporation  [Exhibit 10.11 to
          Registrant's  report on Form 10-K for the year ended December 31, 1994
          (File No. 0-20164)].*

     (10.12)  Assignment  and  Assumption  Agreement  dated  September  16, 1993
          between Krupp Government  Income Trust II and Krupp Government  Income
          Trust [Exhibit 10.12 to Registrant's  report on Form 10-K for the year
          ended December 31, 1994 (File No. 0-20164)].*

     (10.13) Agreement re  Subordinated  Note dated  September  16, 1993 between
          Krupp  Mortgage  Corporation  and  Krupp  Government  Income  Trust II
          [Exhibit 10.13 to Registrant's  report on Form 10-K for the year ended
          December 31, 1994 (File No. 0-20164)].*

     Martin's Landing

     (10.14) Subordinated  Loan Agreement,  dated November 9, 1993,  between TRC
          Realty   Incorporated   -  ML,  ML  Associates   Limited   Partnership
          ("Borrower") and Krupp Government Income Trust II ("Holder")  [Exhibit
          10.9 to Registrant's  annual report on Form 10-K for fiscal year ended
          December 31, 1993 (File No. 0-20164)].*

     (10.15)   Subordination   Agreement  dated  November  9,  1993  between  ML
          Associates,  L.P., and Krupp Government Income Trust II.[Exhibit 10.22
          to  Registrant's  report on Form 10-K for the year ended  December 31,
          1995 (File No. 0-20164)].*

     (10.16) Assignment of  Subordination  Agreement dated November 9, 1993 from
          Berkshire Mortgage Finance Limited Partnership to the Federal National
          Mortgage  Association  by and between ML Associates,  L.P.,  Berkshire
          Mortgage Finance Limited Partnership and Krupp Government Income Trust
          II.[Exhibit  10.23 to  Registrant's  report  on Form 10-K for the year
          ended December 31, 1995 (File No. 0-20164)].*

     (10.17)  Supplement  to  Prospectus  dated  December  1,  1993 for  Federal
          National Mortgage  Association pool number MX - 073029.[Exhibit  10.24
          to  Registrant's  report on Form 10-K for the year ended  December 31,
          1995 (File No. 0-20164)].*

     Crossings Village

     (10.18)  Subordinated  Loan  Agreement,  dated  September  28, 1993 between
          Crossings   Village   Westlake   Associates   ("Borrower")  and  Krupp
          Government  Income Trust II  ("Holder")[Exhibit  10.10 to Registrant's
          annual  report on Form 10-K for fiscal  year ended  December  31, 1993
          (File No. 0-20164)].*

<PAGE>

     (10.19)  Subordinated  Note dated  September  28,  1993  between  Crossings
          Village  Westlake  Associates  and Krupp  Government  Income  Trust II
          [Exhibit 10.16 to Registrant's  report on Form 10-K for the year ended
          December 31, 1994 (File No. 0-20164)].*

     (10.20) Subordination Agreement dated September 28, 1993 between Washington
          Capital DUS Inc.,  Crossings  Village  Westlake  Associates  and Krupp
          Government Income Trust  II.[Exhibit  10.27 to Registrant's  report on
          Form 10-K for the year ended December 31, 1995 (File No. 0-20164)].*

     Norumbega Point

     (10.21) Subordinated Promissory Note, dated December 14, 1993 between Longa
          Vita Corporation  ("Maker or Mortgagor") and Krupp  Government  Income
          Trust II  ("Holder")[Exhibit  10.11 to  Registrant's  annual report on
          Form  10-K  for  fiscal  year  ended   December  31,  1993  (File  No.
          0-20164)].*

     (10.22) Additional Loan Note dated December 14, 1993 between Evelyn Insoft,
          Sidney Insoft,  Richard Slifka, and Alfred A. Slifka ("Borrowers") and
          Krupp  Government  Income  Trust  II  ("Holder")   [Exhibit  10.12  to
          Registrant's annual report on Form 10-K for fiscal year ended December
          31, 1993 (File No. 0-20164)].*

     (10.23)  Participation  and Servicing  Agreement dated December 14, 1993 by
          and between Cambridge  Healthcare  Funding,  Inc. and Krupp Government
          Income Trust II.[Exhibit 10.30 to Registrant's report on Form 10-K for
          the year ended December 31, 1995 (File No. 0-20164)].*

     (10.24) Subordinated  Multifamily Mortgage Assignment of Rents and Security
          Agreement  dated  December 14, 1993 between Longa Vita Corp. and Krupp
          Government Income Trust  II.[Exhibit  10.31 to Registrant's  report on
          Form 10-K for the year ended December 31, 1995 (File No. 0-20164)].*

     (10.25)  Additional  Loan  Agreement  dated  December  14, 1993 between the
          Evelyn  Insoft,  Sidney  Insoft,  Richard Slifka and Alfred A. Silfka,
          Longa Vita Corp. and Krupp Government  Income Trust  II.[Exhibit 10.32
          to  Registrant's  report on Form 10-K for the year ended  December 31,
          1995 (File No. 0-20164)].*

     (10.26) Mortgage Note dated  December 14, 1993 between Longa Vita Corp. and
          Cambridge  Healthcare  Funding,  Inc.[Exhibit  10.33  to  Registrant's
          report on Form 10-K for the year  ended  December  31,  1995 (File No.
          0-20164)].*

     (10.27)  Agreement  re  Subordinated  Note dated  December 14, 1993 between
          Cambridge  Healthcare Funding,  Inc. and Krupp Government Income Trust
          II.[Exhibit  10.34 to  Registrant's  report  on Form 10-K for the year
          ended December 31, 1995 (File No. 0-20164)].*

     Sunset Summit

     (10.28) Subordinated  Loan Agreement dated November 24, 1993 between Sunset
          Summit  Limited  Partnership  and  Krupp  Government  Income  Trust II
          [Exhibit 10.21 to Registrant's  report on Form 10-K for the year ended
          December 31, 1994 (File No. 0-20164)].*

     (10.29)  Subordinated  Note dated  November 24, 1993 between  Sunset Summit
          Limited  Partnership  and Krupp  Government  Income  Trust II [Exhibit
          10.22 to Registrant's  report on Form 10-K for the year ended December
          31, 1994 (File No. 0-20164)].*

     (10.30)  Subordination  Agreement  dated  November 24, 1993 between  BMFLP,
          Sunset Summit Limited Partnership and Krupp Government Income Trust II
          [Exhibit 10.23 to Registrant's  report on Form 10-K for the year ended
          December 31, 1994 (File No. 0-20164)].*

     (10.31) Assignment of Subordination  Agreement dated November 24, 1993 from
          Berkshire Mortgage Finance Limited Partnership to the Federal National
          Mortgage Association by and between Sunset Summit Limited Partnership,
          Berkshire  Mortgage  Finance Limited  Partnership and Krupp Government
          Income Trust II [Exhibit 10.24 to Registrant's report on Form 10-K for
          the year ended December 31, 1994 (File No. 0-20164)].*

<PAGE>

     (10.32) Subordinate  Multifamily Mortgage Agreement dated November 24, 1993
          between Sunset Summit Limited  Partnership and Krupp Government Income
          Trust II [Exhibit  10.25 to  Registrant's  report on Form 10-K for the
          year ended December 31, 1994 (File No. 0-20164)].*

     (10.33) Supplement to Prospectus dated January 1, 1994 for Federal National
          Mortgage  Association  pool  number  MX -  073030  [Exhibit  10.26  to
          Registrant's  report on Form 10-K for the year ended December 31, 1994
          (File No. 0-20164)].*

     Windsor Lake

     (10.34) Subordinated  Loan Agreement dated June 16, 1994 between Cedar Lake
          L.  P.  and  Krupp  Government  Income  Trust  II  [Exhibit  10.27  to
          Registrant's  report on Form 10-K for the year ended December 31, 1994
          (File No. 0-20164)].*

     (10.35)  Subordinate  Note dated June 16, 1994 between Cedar Lake L. P. and
          Krupp Government Income Trust II [Exhibit 10.28 to Registrant's report
          on  Form  10-K  for  the  year  ended  December  31,  1994  (File  No.
          0-20164)].*

     (10.36)  Subordination  Agreement  dated June 16,  1994  between  Berkshire
          Mortgage  Finance  Limited  Partnership,  Cedar  Lake L. P. and  Krupp
          Government  Income Trust II [Exhibit 10.29 to  Registrant's  report on
          Form 10-K for the year ended December 31, 1994 (File No. 0-20164)].*

     (10.37)  Assignment  of  Subordination  Agreement  dated June 16, 1994 from
          Berkshire Mortgage Finance Limited Partnership to the Federal National
          Mortgage  Association  by and between,  Cedar Lake L.P. and  Berkshire
          Mortgage Finance Limited Partnership and Krupp Government Income Trust
          II  [Exhibit  10.30 to  Registrant's  report on Form 10-K for the year
          ended December 31, 1994 (File No. 0-20164)].*

     (10.38) Subordinate  Multifamily  Deed to Secure Debt Agreement  dated June
          16, 1994 between Cedar Lake L.P. and Krupp Government  Income Trust II
          [Exhibit 10.31 to Registrant's  report on Form 10-K for the year ended
          December 31, 1994 (File No. 0-20164)].*

     (10.39) Supplement to Prospectus dated October 1, 1994 for Federal National
          Mortgage  Association  pool  number  MX -  073039  [Exhibit  10.32  to
          Registrant's  report on Form 10-K for the year ended December 31, 1994
          (File No. 0-20164)].*

     Oasis at Springtree

     (10.40)  Subordinate  Note dated June 16, 1994 between Oasis at Springtree,
          Inc.  and  Krupp   Government   Income  Trust  II  [Exhibit  10.33  to
          Registrant's  report on Form 10-K for the year ended December 31, 1994
          (File No. 0-20164)].*

     (10.41)  Subordinated  Loan Agreement  dated August 11, 1994 between Joseph
          Kodsi  and  Albert  Kodsi,  Oasis  at  Springtree,   Inc.,  and  Krupp
          Government Income Trust  II.[Exhibit  10.48 to Registrant's  report on
          Form 10-K for the year ended December 31, 1995 (File No. 0-20164)].*

     (10.42)  Subordination  Agreement  dated August 11, 1994 between  Berkshire
          Mortgage Finance Limited  Partnership,  Oasis at Springtree,  Inc. and
          Krupp Government Income Trust II.[Exhibit 10.49 to Registrant's report
          on  Form  10-K  for  the  year  ended  December  31,  1995  (File.  No
          0-20164)].*

     (10.43) Assignment  of  Subordination  Agreement  dated August 11, 1994 for
          Berkshire  Mortgage Finance Limited  Partnership with Federal National
          Mortgage  Association  by  and  between  Oasis  at  Springtree,  Inc.,
          Berkshire  Mortgage  Finance Limited  Partnership and Krupp Government
          Income Trust II.[Exhibit 10.50 to Registrant's report on Form 10-K for
          the year ended December 31, 1995 (File No. 0-20164)].*

     (10.44) Subordinated  Multifamily Mortgage Assignment of Rents and Security
          Agreement dated August 11, 1994 between Oasis at Springtree,  Inc. and
          Krupp Government Income Trust II.[Exhibit 10.51 to Registrant's report
          on  Form  10-K  for  the  year  ended  December  31,  1995  (File  No.
          0-20164)].*

<PAGE>

     (10.45) Supplement to Prospectus dated January 1, 1994 for Federal National
          Mortgage  Association  pool  number  MX  -  073043.[Exhibit  10.52  to
          Registrant's  report on Form 10-K for the year ended December 31, 1995
          (File No. 0-20164)].*

     The Willows

     (10.46) Supplement to Prospectus dated January 1, 1994 for Federal National
          Mortgage  Association  pool  number  MX -  073057  [Exhibit  10.42  to
          Registrant's  report on Form 10-K for the year ended December 31, 1994
          (File No. 0-20164)].*

     Windmill Lakes

     (10.47)  Subordinated  Loan Agreement dated February 3, 1995 between Robert
          B. Kramer and Rose Berger,  Windmill Lakes, Inc., and Krupp Government
          Income Trust II [Exhibit 10.1 to Registrant's  report on Form 10-Q for
          the quarter ended September 30, 1995 (File No. 0-20164)].*

     (10.48)  Subordinate  Note dated February 3, 1995 between  Windmill  Lakes,
          Inc.,  and  Krupp   Government   Income  Trust  II  [Exhibit  10.2  to
          Registrant's  report on Form 10-Q for the quarter ended  September 30,
          1995 (File No. 0-20164)].*

     (10.49) Subordinate  Multifamily  Mortgage Agreement dated February 3, 1995
          between  Windmill Lakes,  Inc., and Krupp  Government  Income Trust II
          [Exhibit  10.3 to  Registrant's  report on Form  10-Q for the  quarter
          ended September 30, 1995 (File No. 0-20164)].*

     (10.50)  Subordination  Agreement dated February 3, 1995 by and among Green
          Park Financial Limited  Partnership,  Krupp Government Income Trust II
          and Windmill Lakes, Inc. [Exhibit 10.4 to Registrant's  report on Form
          10-Q for the quarter ended September 30, 1995 (File No. 0-20164)].*

     The Lakes

     (10.51)  Subordinated  Loan  Agreement  dated June 29,  1995,  between Lake
          Associates,  L. P. and Krupp Government  Income Trust II [Exhibit 10.5
          to  Registrant's  report on Form 10-Q for the quarter ended  September
          30, 1995 (File No. 0-20164)].*

     (10.52) Subordinate Note dated June 29, 1995,  between Lake Associates,  L.
          P. and Krupp Government  Income Trust II [Exhibit 10.6 to Registrant's
          report on Form 10-Q for the quarter ended September 30, 1995 (File No.
          0-20164)].*

     (10.53) Subordinate  Multifamily  Mortgage to Secure Debt  Agreement  dated
          June 29, 1995,  between Lake  Associates,  L. P. and Krupp  Government
          Income Trust II [Exhibit 10.7 to Registrant's  report on Form 10-Q for
          the quarter ended September 30, 1995 (File No. 0-20164)].*

     (10.54)  Subordination  Agreement  dated June 29, 1995,  between  Berkshire
          Mortgage Finance Limited Partnership, Lake Associates, L. P. and Krupp
          Government  Income Trust II [Exhibit  10.8 to  Registrant's  report on
          Form  10-Q  for  the  quarter  ended  September  30,  1995  (File  No.
          0-20164)].*

     (10.55) Assignment of  Subordination  Agreement  dated June 29, 1995,  from
          Berkshire Mortgage Finance Limited Partnership to the Federal National
          Mortgage  Association  by  and  between,  Lake  Associates,  L.P.  and
          Berkshire  Mortgage  Finance Limited  Partnership and Krupp Government
          Income Trust II [Exhibit 10.9 to Registrant's  report on Form 10-Q for
          the quarter ended September 30, 1995 (File No. 0-20164)].*

     (10.56)  Supplement  to  Prospectus  dated  November  1,  1994 for  Federal
          National  Mortgage  Association pool number MX - 073149 [Exhibit 10.10
          to  Registrant's  report on Form 10-Q for the quarter ended  September
          30, 1995 (File No. 0-20164)].*

<PAGE>

     The  Fountains

     (10.57)  Subordinated  Promissory  Note dated  April 24,  1995  between CSM
          Fountains  Limited  Partnership and Krupp  Government  Income Trust II
          [Exhibit  10.11 to  Registrant's  report on Form 10-Q for the  quarter
          ended September 30, 1995 (File No. 0-20164)].*

     (10.58)  Agreement  Re:  Subordinated  Note dated  April 24,  1995  between
          Berkshire  Mortgage Finance  Corporation and Krupp  Government  Income
          Trust II [Exhibit  10.12 to  Registrant's  report on Form 10-Q for the
          quarter ended September 30, 1995 (File No. 0-20164)].*

     (10.59) Subordinated  Multifamily Mortgage Assignment of Rents and Security
          Agreement   dated  April  24,  1995  between  CSM  Fountains   Limited
          Partnership  and Krupp  Government  Income Trust II [Exhibit  10.13 to
          Registrant's  report on Form 10-Q for the quarter ended  September 30,
          1995 (File No. 0-20164)].*

     Falls at Hunter Pointe

     (10.60)  Additional  Loan Note dated  August 5, 1993  between  Goulding  L.
          Stoddard    ("Borrower")   and   Krupp    Government    Income   Trust
          ("Holder").[Exhibit  10.92 to Registrant's report on Form 10-K for the
          year ended December 31, 1995 (File No. 0-20164)].*

     (10.61) Additional Loan Agreement dated August 5, 1993 between  Goulding L.
          Stoddard    ("Borrower")   and   Krupp    Government    Income   Trust
          ("Holder").[Exhibit  10.93 to Registrant's report on Form 10-K for the
          year ended December 31, 1995 (File No. 0-20164)].*

     (10.62) Subordinated  Promissory Note, dated August 4, 1993 between Hunters
          Pointe Associates,  Ltd. ("Maker" or "Mortgagor") and Krupp Government
          Income Trust  ("Holder").[Exhibit 10.94 to Registrant's report on Form
          10-K for the year ended December 31, 1995 (File No. 0-20164)].*

     (10.63)  Agreement  re  Subordinated  Note dated August 5, 1993 between TRI
          Capital Corporation and Krupp Government Income  Trust.[Exhibit  10.95
          to  Registrant's  report on Form 10-K for the year ended  December 31,
          1995 (File No. 0-20164)].*

     (10.64)  Subordinated  Multifamily  Deed of Trust,  Assignment of Rents and
          Security  Agreement  dated  August  5,  1993  between  Hunters  Pointe
          Associates,  Ltd. and Krupp Government Income  Trust.[Exhibit 10.96 to
          Registrant's  report on Form 10-K for the year ended December 31, 1995
          (File No. 0-20164)].*

     (10.65) Participation  and Servicing  Agreement dated August 5, 1993 by and
          between  TRI  Capital   Corporation   and  Krupp   Government   Income
          Trust.[Exhibit  10.97 to Registrant's report on Form 10-K for the year
          ended December 31, 1995 (File No. 0-20164)].*

     Rivergreens Apartments

     (10.66) Mortgage Note dated August 19, 1993 between Rivergreens  Associates
          II   Limited   Partnership   and  Krupp   Mortgage   Company   Limited
          Partnership.[Exhibit 10.98 to Registrant's report on Form 10-K for the
          year ended December 31, 1995 (File No. 0-20164)].*

     (10.67)  Subordinated  Promissory  Note,  dated  August 19,  1993,  between
          Rivergreens  Associates II Limited  Partnership  and Krupp  Government
          Income  Trust.[Exhibit  10.99 to Registrant's  report on Form 10-K for
          the year ended December 31, 1995 (File No. 0-20164)].*

     (10.68)  Subordinated  Multifamily  Deed of Trust,  Assignment of Rents and
          Security   Agreement   dated  August  19,  1993  between   Rivergreens
          Associates II Limited  Partnership and Krupp  Government  Income Trust
          II.[Exhibit  10.100 to  Registrant's  report on Form 10-K for the year
          ended December 31, 1995 (File No. 0-20164)].*

<PAGE>

     Mill Pond II Apartments

     (10.69)  Mortgage  Note  dated  July  26,  1994 for  Mill  Pond II  Limited
          Partnership and Krupp Mortgage  Company  Limited  Partnership.[Exhibit
          10.101 to Registrant's report on Form 10-K for the year ended December
          31, 1995 (File No. 0-20164)].*

     (10.70) Multifamily Subordinated Mortgage, Assignment of Rents and Security
          Agreement dated July 26, 1994 between Mill Pond II Limited Partnership
          and Krupp Government Income Trust  II.[Exhibit  10.102 to Registrant's
          report on Form 10-K for the year  ended  December  31,  1995 (File No.
          0-20164)].*

     (10.71) Subordinated  Promissory  Note,  dated July 26, 1994,  between Mill
          Pond II Limited Partnership and Krupp Government Income Trust.[Exhibit
          10.103 to Registrant's report on Form 10-K for the year ended December
          31, 1995 (File No. 0-20164)].*

     (10.72)  Agreement  re  Subordinated  Note  dated  July 26,  1994,  between
          Berkshire  Mortgage Finance  Corporation and Krupp  Government  Income
          Trust.[Exhibit 10.104 to Registrant's report on Form 10-K for the year
          ended December 31, 1995 (File No. 0-20164)].*

         * Incorporated by reference


(c)  Reports on Form 8-K
         The Trust did not file any reports on Form 8-K during the quarter ended
         December 31, 1999.


<PAGE>

                                  SIGNATURES

     Pursuant  to the  requirements  of Section  13 or 15 (d) of the  Securities
     Exchange  Act of 1934,  the  registrant  has duly  caused this report to be
     signed on its behalf by the undersigned,  thereunto duly authorized, on the
     9th day of March, 2000.

                       KRUPP GOVERNMENT INCOME TRUST II




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

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
     report  has been  signed  below by the  following  persons on behalf of the
     registrant and in the capacities indicated, on the 9th day of March, 2000.

            Signatures  Title(s)


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


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


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


 /s/ E. Robert Roskind            Trustee of Krupp Government Income Trust II
E. Robert Roskind


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


<PAGE>



                                        APPENDIX A

                             KRUPP GOVERNMENT INCOME TRUST II











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

                   ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                            For the Year Ended December 31, 1999







<PAGE>

                            KRUPP GOVERNMENT INCOME TRUST II

                 INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA






Report of Independent Accountants                                            F-3


Balance Sheets at December 31, 1999 and 1998                                 F-4


Statements of Income and Comprehensive Income for the Years Ended
 December 31, 1999, 1998, and 1997                                           F-5


Statements of Changes in Shareholders' Equity for the Years Ended
 December 31, 1999, 1998 and 1997                                            F-6


Statements of Cash Flows for the Years Ended
 December 31, 1999, 1998 and 1997                                            F-7


Notes to Financial Statements                                         F-8 - F-21

Schedule II - Valuation and Qualifying Accounts                             F-22

Supplementary Data - Selected Quarterly Financial Data (Unaudited)          F-23



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


<PAGE>



                                          REPORT OF INDEPENDENT ACCOUNTANTS







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

     In our opinion,  the accompanying balance sheets and the related statements
     of income and  comprehensive  income,  of shareholders'  equity and of cash
     flows present fairly, in all material  respects,  the financial position of
     Krupp  Government  Income  Trust II (the  "Trust") at December 31, 1999 and
     1998,  and the results of its operations and its cash flows for each of the
     three  years in the period  ended  December  31,  1999 in  conformity  with
     accounting  principles  generally  accepted  in the  United  States.  These
     financial   statements   are  the   responsibility   of   management;   our
     responsibility is to express an opinion on these financial statements based
     on our audits.  We conducted  our audits of these  statements in accordance
     with auditing  standards  generally  accepted in the United  States,  which
     require that we plan and perform the audit to obtain  reasonable  assurance
     about whether the financial  statements are free of material  misstatement.
     An audit  includes  examining,  on a test basis,  evidence  supporting  the
     amounts  and  disclosures  in  the  financial  statements,   assessing  the
     accounting  principles used and  significant  estimates made by management,
     and evaluating the overall  financial  statement  presentation.  We believe
     that our audits provide a reasonable basis for our opinion expressed above.














                                                     PricewaterhouseCoopers LLP


Boston, Massachusetts
March 9, 2000


<PAGE>
<TABLE>
<CAPTION>

                      KRUPP GOVERNMENT INCOME TRUST II

                               BALANCE SHEETS

                         December 31, 1999 and 1998


                                   ASSETS

                                                                           1999                   1998

Participating Insured Mortgage Investments
 ("PIMIs")(Notes B, C and I):
<S>                                                                    <C>                   <C>
    Insured mortgages                                                  $ 131,750,452         $ 133,132,325
    Additional loans, net of impairment provision of $2,994,000           21,298,351            23,298,351
Participating Insured Mortgages ("PIMs")
    (Notes B, D and I)                                                    37,994,412            38,331,257
Mortgage-Backed Securities ("MBS") and Insured
   mortgage loan
    (Notes B, E and I)                                                    21,127,474            41,834,199

           Total mortgage investments                                    212,170,689           236,596,132

Cash and cash equivalents (Notes B and I)                                  8,653,673            18,010,578
Prepaid acquisition fees and expenses, net of
 accumulated amortization of $8,093,170 and
 $7,167,563 (Note B)                                                       6,522,092             8,289,549
Prepaid participation servicing fees, net of
 accumulated amortization of $2,262,659 and
 $2,321,513  (Note B)                                                      2,233,060             2,830,857
Interest receivable and other assets                                       1,629,549             1,682,882

           Total assets                                                $ 231,209,063         $ 267,409,998

                                        LIABILITIES AND SHAREHOLDERS' EQUITY

Deferred income on Additional Loans (Note B)                           $   2,692,976         $   2,719,343
Other liabilities                                                            150,025                43,563

           Total liabilities                                               2,843,001             2,762,906

Shareholders' equity (Notes A and F):
    Common stock, no par value; 25,000,000
      Shares authorized; 18,371,477 Shares
      issued and outstanding                                             228,920,012           264,099,856

    Accumulated comprehensive (loss)
      income (Notes B and E)                                                (553,950)              547,236

                   Total Shareholders' equity                            228,366,062           264,647,092

                   Total liabilities and Shareholders'
                    equity                                             $ 231,209,063         $ 267,409,998

</TABLE>

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


<PAGE>
<TABLE>
<CAPTION>


                                  KRUPP GOVERNMENT INCOME TRUST II

                            STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                        For the Years Ended December 31, 1999, 1998 and 1997


                                                                1999                 1998              1997
Revenues:
    Interest income - PIMs and PIMIs:
<S>                                                        <C>                  <C>               <C>
      Basic interest                                       $ 11,998,012         $ 12,449,922      $ 13,828,125
      Additional Loan interest                                1,712,260            1,580,517         2,147,468
      Participation income                                    1,591,932            3,252,020         1,769,701
    Interest income - MBS including
       prepayment premium                                     3,251,078            3,264,905         2,847,442
    Interest income - other                                   1,059,900            1,082,305           697,819

         Total revenues                                      19,613,182           21,629,669        21,290,555

Expenses:
    Asset management fee to an
     affiliate (Note G)                                       1,718,942            1,889,509         2,002,992
    Expense reimbursements to
     affiliates (Note G)                                        276,901              227,556           446,357
    Amortization of prepaid fees and expenses                 2,365,254            2,900,106         2,186,556
    General and administrative                                  277,747              435,387           391,165
    Provision for impaired mortgage
      loans (Notes B and C)                                       -                2,994,000             -

         Total expenses                                       4,638,844            8,446,558         5,027,070

Net income (Notes B and H)                                   14,974,338           13,183,111        16,263,485

Other comprehensive income:
    Net change in unrealized (loss)
       gain on MBS                                           (1,101,186)              40,493           384,408

Total comprehensive income                                  $13,873,152          $13,223,604       $16,647,893

Basic earnings per share                                   $        .82         $        .72      $        .89

Weighted average shares
    outstanding                                              18,371,477           18,371,477        18,371,477

</TABLE>










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


<PAGE>
<TABLE>
<CAPTION>

                              KRUPP GOVERNMENT INCOME TRUST II

                        STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                     For the Years Ended December 31, 1999, 1998 and 1997



                                                                                   Accumulated            Total
                                                                  Retained        Comprehensive       Shareholders'
                                          Common Stock            Earnings           Income              Equity

<S>                                     <C>                   <C>               <C>                  <C>
Balance at December 31, 1996            $  296,565,241        $       -         $    122,335         $   296,687,576

Dividends                                   (6,700,914)         (16,263,485)           -                 (22,964,399)

Net income                                       -               16,263,485            -                  16,263,485

Change in unrealized gain on MBS                 -                    -              384,408                 384,408

Balance at December 31, 1997               289,864,327                -              506,743             290,371,070

Dividends                                  (25,764,471)         (13,183,111)           -                 (38,947,582)

Net income                                       -               13,183,111            -                  13,183,111

Change in unrealized gain on MBS                 -                    -               40,493                  40,493

Balance at December 31, 1998               264,099,856                -              547,236             264,647,092

Dividends                                  (35,179,844)         (14,974,338)           -                 (50,154,182)

Net income                                                       14,974,338            -                  14,974,338

Change in unrealized gain on MBS                 -                    -           (1,101,186)             (1,101,186)

Balance at December 31, 1999            $  228,920,012        $       -         $   (553,950)        $   228,366,062


</TABLE>

Shares issued and outstanding for each of the three years in the period ended
 December 31, are 18,371,477












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


<PAGE>
<TABLE>
<CAPTION>

                                         KRUPP GOVERNMENT INCOME TRUST II

                                             STATEMENTS OF CASH FLOWS

                               For the Years Ended December 31, 1999, 1998 and 1997


                                                                      1999                   1998                    1997

Operating activities:
<S>                                                             <C>                    <C>                    <C>
  Net income                                                    $   14,974,338         $   13,183,111         $    16,263,485
  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
    Premium amortization, net                                          173,055                185,276                 113,094
    Provision for impaired mortgage loans                                -                  2,994,000                   -
    Amortization of prepaid fees and expenses                        2,365,254              2,900,106               2,186,556

    Changes in assets and liabilities:
      Decrease in interest receivable
       and other assets                                                 53,333                428,271                 153,534
      (Decrease) increase in deferred income
           on Additional Loans                                         (26,367)               (36,362)              1,173,651
      Increase in other liabilities                                    106,462                 12,614                   3,864

     Net cash provided by
       operating activities                                         17,646,075             19,667,016              19,894,184

Investing activities:
  Investment in PIMs                                                     -                 (1,003,676)                  -
  Investment in Additional Loans                                         -                      -                    (465,000)
  Prepayment on Additional Loan                                      2,000,000              2,860,000               1,265,000
  Principal collections on MBS                                      19,432,484              9,192,319               4,775,477
  Principal collections on PIMs                                      1,718,718             12,722,410               1,800,237

         Net cash provided by
        investing activities                                        23,151,202             23,771,053               7,375,714

Financing activity:
  Dividends                                                        (50,154,182)           (38,947,582)            (22,964,399)

Net decrease increase in cash and
 cash equivalents                                                   (9,356,905)             4,490,487               4,305,499
Cash and cash equivalents, beginning
 of period                                                          18,010,578             13,520,091               9,214,592
Cash and cash equivalents, end of
  period                                                        $    8,653,673         $   18,010,578         $    13,520,091

Supplemental disclosure of noncash investing activities:
  Reclassification of investments in a
   PIM and PIMI to an MBS                                       $        -             $        -             $    15,093,814

Non cash activities:
    (Decrease) increase in Fair Value of MBS                    $   (1,101,186)        $       40,493         $       384,408
</TABLE>


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


<PAGE>

                                          KRUPP GOVERNMENT INCOME TRUST II

                                            NOTES TO FINANCIAL STATEMENTS


     A. Organization

     Krupp  Government  Income Trust II (the  "Trust") was formed on February 8,
     1991 by filing a Declaration of Trust in The Commonwealth of Massachusetts.
     The Trust is authorized to sell and issue not more than  25,000,000  shares
     of  beneficial  interest  (the  "Shares").  The Trust was organized for the
     purpose of  investing in  commercial  and  multi-family  loans and mortgage
     backed  securities.  Berkshire  Mortgage Advisors Limited  Partnership (the
     "Advisor")  acquired  10,000 of such  Shares for  $200,000  and  18,315,158
     Shares were sold for  $365,686,058  net of  purchase  volume  discounts  of
     $617,102 under a public  offering which commenced on September 11, 1991 and
     was completed on February 12, 1993.  Under the Dividend  Reinvestment  Plan
     ("DRP"), 46,319 Shares were sold for $880,061. The Trust shall terminate on
     December 31, 2030,  unless earlier  terminated by the  affirmative  vote of
     holders of a majority of the outstanding Shares entitled to vote thereon.

     B. Significant Accounting Policies

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

     MBS

     The Trust, in accordance with the Financial  Accounting  Standards  Board's
     Statement No. 115,  Accounting  for Certain  Investments in Debt and Equity
     Securities (FAS 115), under the classification of  available-for-sale.  The
     Trust  carries its MBS at fair market  value and  reflects  any  unrealized
     gains (losses) as a separate  component of Shareholders'  Equity. The Trust
     amortizes  purchase  premiums or discounts  over the life of the underlying
     mortgages using the effective interest method.

     Effective  January  1,  1998,  the Trust  adopted  Statement  of  Financial
     Accounting Standards No. 130, Reporting Comprehensive Income (FAS 130). FAS
     130 established standards for reporting and displaying comprehensive income
     and  its  components.   FAS  130  requires  comprehensive  income  and  its
     components,  as recognized under accounting standards, to be displayed in a
     financial statement with the same prominence as other financial statements,
     if  material.  FAS 130 had no  material  effect  on the  Trust's  financial
     position or results of operations.

     PIMs and PIMIs

     The Trust  accounts  for its MBS  portion  of a PIM or PIMI  investment  in
     accordance with FAS 115, under the classification of held to maturity.  The
     Trust carries these MBS at amortized cost.

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

     The  Additional  Loans are  carried at  amortized  cost  unless the Advisor
     believes  there  is an  impairment  in  value,  in which  case a  valuation
     allowance is established.





                                       Continued


<PAGE>

                            KRUPP GOVERNMENT INCOME TRUST II

                        NOTES TO FINANCIAL STATEMENTS, continued



     B. Significant Accounting Policies, Continued

     PIMs and PIMIs, continued

     Basic interest is recognized  based on the stated rate of the Department of
     Housing  and  Urban  Development  (HUD)  Insured  Mortgage  loan  (less the
     servicer's  fee) or the coupon  rate of the  Government  National  Mortgage
     Association (GNMA) or Fannie Mae MBS. The Trust recognizes interest related
     to the  participation  features  when these  amounts  are  collectible  and
     estimable.  The Trust defers the  recognition  of Additional  Loan interest
     payments as income to the extent these  interest  payments are from escrows
     established  with the proceeds of the Additional  Loan. When the properties
     underlying  the PIMIs  generate  sufficient  cash flow to make the required
     Additional  Loan  interest   payments  with  operating   funds,  the  Trust
     recognizes  income as earned and  commences  amortizing  deferred  interest
     amounts into income over the  remaining  estimated  term of the  Additional
     Loan.  During  periods where mortgage loans are impaired the Trust suspends
     amortizing deferred interest.

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

     Impaired Mortgage Loans

     Impaired  loans  are  those  loans  which  the  Advisor  believes  that the
     collection of all amounts due in accordance with the  contractual  terms of
     the loan agreement are not likely. Impaired loans are measured based on the
     fair value of the underlying collateral.  Interest received on the impaired
     loans is generally applied against the loan principal or as interest income
     if deemed collectable by the Advisor.

     Cash Equivalents

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

     Prepaid Fees and Expenses

     Prepaid fees and expenses  represent prepaid  acquisition fees and expenses
     and  prepaid  participation  servicing  fees paid for the  acquisition  and
     servicing of PIMs and PIMIs. The Trust amortizes  prepaid  acquisition fees
     and expenses using a method that approximates the effective interest method
     over a period of ten to twelve years,  which represents the actual maturity
     or  anticipated  payoff  date  of  the  underlying  mortgage.  The  prepaid
     participation servicing fees are amortized using a method that approximates
     the effective  interest  method over a ten-year  period  beginning at final
     endorsement  of the loan if a  HUD-insured  loan and at closing if a Fannie
     Mae loan.

     Income Taxes

     The Trust has elected to be taxed as a REIT under the Internal Revenue Code
     of  1986,  as  amended,  and  believes  it will  continue  to meet all such
     qualifications.  Accordingly,  the Trust  will not be  subject  to  federal
     income taxes on amounts distributed to shareholders provided it distributes
     annually at least 95% of its REIT taxable  income and meets  certain  other
     requirements for qualifying as a REIT. Therefore,  no provision for federal
     income taxes has been recorded in the financial statements.


                                    Continued

<PAGE>

                         KRUPP GOVERNMENT INCOME TRUST II

                     NOTES TO FINANCIAL STATEMENTS, continued


     B. Significant Accounting Policies, Continued

     Estimates and Assumptions

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

     C. PIMIs

     The Trust had investments in ten PIMIs at December 31, 1999 and at December
     31,  1998  that  provide  financing  for  multi-family  housing.  Each PIMI
     consists  of a  Fannie  Mae  MBS  or a  sole  participation  interest  in a
     HUD-insured  first mortgage loan  originated  under the FHA lending program
     (collectively,  the "insured  mortgages") and an "Additional  Loan" made to
     the borrower or the owners of the borrower to provide  additional funds for
     the  construction  or permanent  financing of the  property.  The FHA first
     mortgage loan and the first mortgage  underlying the Fannie Mae MBS provide
     the borrower  with a below market  interest rate loan,  and in return,  the
     Trust  receives  a  percentage  of the cash  generated  from  the  property
     operations   ("Participating   Income  Interest"),   a  percentage  of  any
     appreciation  of the  underlying  property  to a  preferred  return,  and a
     percentage  of any  appreciation  thereafter  ("Participating  Appreciation
     Interest") (collectively the "participation income").

     The  borrower  conveys the  participation  features to the Trust  through a
     subordinated  promissory note and mortgage or a subordinate  loan agreement
     (collectively the "Agreements").  The Trust makes the Additional Loan under
     the Fannie Mae PIMIs  directly to the borrower of the first  mortgage  loan
     underlying  the  Fannie  Mae  MBS,  and  the  borrower  collateralizes  the
     Additional Loan with a subordinated mortgage on the property. The owners of
     the  borrower  also pledge  their  ownership  interests  in the borrower as
     additional collateral.

     The Trust made the  Additional  Loans on the FHA PIMIs to the owners of the
     entity having the FHA first mortgage loan, and the owners collateralize the
     Additional  Loan by pledging  their  ownership  interests in the  borrowing
     entity,  their  share  of any  distributions  received,  and  the  proceeds
     realized upon the refinancing of the property, sale of the property or sale
     of the partnership interests.  Unlike the insured mortgages, the Additional
     Loans are neither guaranteed nor insured.

     The Trust  receives  level  monthly  payments  of  principal  and  interest
     payments,  amortizing  over thirty to forty years on the insured  mortgages
     and is also  entitled  to  receive  participation  income  and  semi-annual
     interest payments ("Additional Loan interest") and preferred interest under
     the Additional Loans and Agreements.  While principal and interest payments
     on the insured  mortgages are insured or guaranteed,  there are limitations
     to the amount and obligation to pay interest under the Additional  Loan and
     Agreements.

     The  Agreements  for Fannie  Mae PIMIs  entitles  the Trust to receive  (i)
     semi-annual  interest  payments on the Additional Loan, (ii)  Participating
     Income  Interest,  (iii)  Participating   Appreciation  Interest  and  (iv)
     Preferred Interest. Additional Loan interest accrues at the stated interest
     rate of the Additional Loan and  Participating  Income Interest  represents
     the Trust's share of the net revenue  generated by the property at a stated
     percentage  generally ranging from 25% to 35%. Additional Loan interest and
     Participating  Income  Interest are payable only to the extent there is net
     revenue  available to pay these  amounts.  However,  should the borrower be
     unable to make the full Additional Loan interest payment, the borrower must
     notify the Trust of the amount of the shortfall.  The Trust can require the
     partners  of the  borrower  to  make a  capital  call  contribution  to the
     borrower  to fund  50% of this  shortfall,  and the  Trust  will  fund  the
     remainder with an Operating Loan.  Also, the Trust is generally  limited to
     receiving no more than 50% of net revenue on any semi-annual payment date.

                                       Continued
<PAGE>


                            KRUPP GOVERNMENT INCOME TRUST II

                       NOTES TO FINANCIAL STATEMENTS, continued


     C. PIMIs, Continued

     Participating  Appreciation  Interest  provides  the  Trust  with a  stated
     percentage,  ranging  from 25% to 30%, of the excess  value of the property
     over  amounts  due  under  the  first  mortgage,  Additional  Loan  and any
     Operating Loans, the repayment of capital call contributions,  and a return
     of original equity to the partners of the borrower.

     Participating  Appreciation  Interest  is due upon the  sale,  refinancing,
     maturity or accelerated  maturity,  or permitted  prepayment of all amounts
     due under the insured  mortgage and Additional Loan.  Generally,  the Trust
     will not receive more than 50% of the excess of value over the  outstanding
     indebtedness,  the payment of Preferred Interest,  and the return of equity
     and capital call contributions to the partners of the borrower.

     Preferred  Interest refers to a non-compounded  cumulative  return from the
     closing date of the loan to the date of  calculation,  at a stated interest
     rate generally on the original  outstanding balance of the insured mortgage
     plus the  Additional  Loan and any other  funds  advanced  to the  borrower
     (reduced by principal payments received) less: (i) interest payments on the
     insured mortgage, (ii) Additional Loan interest, (iii) Participating Income
     Interest,  and (iv) Participating  Appreciation  Interest.  Generally,  the
     amount of Preferred  Interest  owed cannot  exceed the excess of value over
     the  outstanding  indebtedness.  Amounts due under the Additional  Loan and
     Agreements are neither insured nor guaranteed.

     The Agreements for FHA PIMIs entitle the Trust to receive (i) Participating
     Income Interest at a stated  percentage  usually ranging from 25% to 50% of
     (a) all distributable  Surplus Cash generated by the property as defined in
     the  regulatory  agreement of the  HUD-insured  first  mortgage  loan,  (b)
     unrestricted  cash  generated by property  operations,  and (c)  unexpended
     reserves and escrows;  and (ii)  Participating  Appreciation  Interest at a
     stated percentage  usually ranging from 20% to 50% of the proceeds or value
     of  the  property  less  the  outstanding   indebtedness   upon  the  sale,
     refinancing,  maturity or accelerated  maturity, or permitted prepayment of
     all amounts due under the insured  mortgage and  Additional  Loan.  Amounts
     received by the Trust pursuant to this Agreement  reduce amounts payable as
     Base Interest and Preferred Interest under the FHA PIMI Additional Loan.

     The FHA PIMI  Additional  Loan  interest  is  payable  from  the  following
     sources:  (i) any Surplus Cash received as  Participating  Income Interest,
     (ii)  amounts  conveyed  to  the  Trust  by  the  owners  of  the  borrower
     representing  distributions  of Surplus Cash,  and (iii) amounts in reserve
     accounts established with Additional Loan proceeds,  if available,  and any
     interest  earned  on these  amounts.  As with the  Fannie  Mae  PIMIs,  the
     borrower  must  notify  the  Trust of the  amount  of any  Additional  Loan
     interest  shortfall.  At its option the Trust can require the owners of the
     borrower to make a capital call for 50% of the  shortfall  and the Trust in
     certain  situations  could convert the remaining 50% into an operating loan
     or would forego the remainder.

     The FHA PIMIs also  require the payment of  Preferred  Interest at a stated
     interest rate from the date of final endorsement to the date of calculation
     on the  original  outstanding  balance  of the  insured  mortgage  plus the
     Additional  Loan and any other funds  advanced by the Trust to the borrower
     or owners of the borrowing entity (reduced by principal  payments received)
     less: (i) interest  payments paid to the Trust under the insured  mortgage,
     (ii) Participating Income Interest,  and (iii) interest payments made under
     the Additional Loan including amounts foregone by the Trust.


                                          Continued

<PAGE>


                               KRUPP GOVERNMENT INCOME TRUST II

                           NOTES TO FINANCIAL STATEMENTS, continued



     C. PIMIs, Continued

     The insured  mortgage and Agreements  generally have maturities of 15 to 40
     years, however,  under the Agreements the Trust can accelerate the maturity
     dates at any time after the ninth or tenth anniversary of final endorsement
     for the FHA PIMIs or the closing date of the Fannie Mae PIMIs,  upon giving
     twelve months written notice for the payment.

     If the Trust  accelerates  the maturity date, the Trust can require payment
     of all amounts due under the  Additional  Loan and  Agreements  through the
     accelerated  maturity  date  for the  payment  of  amounts  due  under  the
     Agreement and the  HUD-insured  first mortgage loan (providing the contract
     of insurance with the Secretary of HUD is canceled prior to the accelerated
     maturity  date) or prepayment of the first  mortgage  loan  underlying  the
     Fannie Mae MBS.

     FHA PIMIs  generally  cannot be  prepaid  for a term of five years from the
     construction  completion  date  or  final  endorsement.   After  the  fifth
     anniversary of construction  completion or final endorsement,  the FHA PIMI
     may be prepaid  without  penalty  providing  that all amounts due under the
     Agreements,  Additional Loan and FHA insured mortgage are paid.  Fannie Mae
     PIMIs  generally  cannot be prepaid  during the five  years  following  the
     closing date of the underlying first mortgage loan. Thereafter,  the Fannie
     Mae first mortgage loan may be prepaid subject to a prepayment penalty that
     declines each year for the next five years with no prepayment penalty after
     the tenth year.  Any  prepayment  of a Fannie Mae PIMI  generally  requires
     prepayment  of the first  mortgage loan  underlying  the Fannie Mae MBS and
     payment of amounts due under the Agreements and Additional Loan. The Fannie
     Mae  first  mortgage  loan  would  not  need to be  prepaid  if  there is a
     permitted assumption of the first mortgage loan, however, amounts due under
     the Agreement and Additional Loan would need to be prepaid.  Any prepayment
     usually  requires  not less  than 90 nor more than 180 days  prior  written
     notice.

     On December  16,  1999,  the Trust  received  $2,832,907  from Windsor Lake
     consisting of $2,000,000 from the payoff of the Additional Loan, $40,000 of
     base  interest  on  the  Additional  Loan  and  $792,907  of  participating
     appreciation  interest  income.  The payoff of the  balance on the  insured
     mortgage,  $9,172,642  was received on January 26,  2000.  The Trust paid a
     special dividend of $.66 per Share from the prepayment proceeds on February
     18, 2000.

     On July 31, 1998 and on August 25, 1998, the Trust received the prepayments
     of the St. Germain Additional Loan of $2,860,000 and the related Fannie Mae
     MBS with a remaining  principal  balance of $11,006,015.  In addition,  the
     Trust  received  participation  income  as  follows:  (i)  Additional  Loan
     interest  payable  through  the  date of sale of  $83,417,  (ii)  Preferred
     Interest payable through the date of sale of $89,975,  (iii)  Participating
     Appreciation Interest of $1,874,032. On October 9, 1998, the Trust received
     Participating Income Interest payable through the date of sale attributable
     to 1998 property  operations of $94,258.  On September 28, 1998,  the Trust
     used these  proceeds  to fund a special  dividend  of $.87 per Share to its
     Shareholders.

     During  the  second  quarter  of 1997,  the Trust  advanced  an  additional
     $465,000 to the owner of the Willows Apartments,  increasing the Additional
     Loan to $1,265,000. During the third quarter of 1997, as a result of a sale
     of the property to a third party,  the Trust  accepted a full  repayment of
     the $1,265,000  Additional Loan and received all of its Preferred  Interest
     of $789,336 that was earned as of the date of the sale. In conjunction with
     the repayment of the Additional  Loan,  the Trust  converted the investment
     from a PIMI to an insured  mortgage  when the  purchaser  assumed the first
     mortgage.




                                         Continued
<PAGE>
<TABLE>
<CAPTION>


                              KRUPP GOVERNMENT INCOME TRUST II

                          NOTES TO FINANCIAL STATEMENTS, continued




        At December 31, 1999 and 1998 there are no insured mortgage loans within the
        Trust's portfolio that are delinquent as to principal or interest.



The Trust's investments in PIMIs consists of the following at
 December 31, 1999 and 1998:

   Insured                      Loan          Monthly      Interest   Maturity     Balance Outstanding at December 31,
  Mortgages                    Amount         Payments       Rate       Date            1999             1998

FHA
<S>                      <C>              <C>               <C>        <C>         <C>              <C>
The Seasons (a)          $   23,224,649   $   162,635       7.875%     10/01/28    $  22,260,149    $  22,450,457

Hunters Pointe (g)           12,789,100        78,178       6.875%     01/01/35       12,447,138       12,526,503

Norumbega Point              15,598,500       101,053       7.375%     02/01/36       15,317,692       15,397,380

FNMA (b)
Crossings Village            12,907,334        82,164        6.75%     10/01/08       12,090,416       12,253,314

Martin's Landing             11,200,000        69,310        6.50%     12/01/08       10,478,301       10,622,947

Sunset Summit                10,192,801        63,122        6.50%     10/01/08        9,542,738        9,674,470

Oasis                        12,401,673        78,796        6.75%     07/01/09       11,760,701       11,906,186

Windsor Lake                  9,680,344        61,610        6.75%     07/01/09        9,172,642        9,287,879

Windmill Lakes               11,600,000        74,274       6.825%     03/01/10       11,062,433       11,193,107

The Lakes                    18,387,653       117,745       6.825%     07/01/10       17,618,242       17,820,082

                         $  137,982,054   $   888,887                              $ 131,750,452    $ 133,132,325
                                                                                       (f)

</TABLE>



                                              Continued
<PAGE>
<TABLE>
<CAPTION>


                                  KRUPP GOVERNMENT INCOME TRUST II

                              NOTES TO FINANCIAL STATEMENTS, continued
                                                          __________________

                                                                                                  Base       Preferred
                                                                                  Maturity      Interest     Interest
        Additional Loans                         1999              1998             Date          Rate         Rate
<S>                                        <C>                <C>                 <C>              <C>          <C>
        The Seasons (a)                    $   4,925,351      $   4,925,351       10/01/28         9%(c)        10%
        Hunters Pointe (g)                       650,000            650,000       01/01/35         7%            9%
        Norumbega Pointe                       3,063,000          3,063,000       07/02/06         7%           10%
        Crossings Village                      2,584,000          2,584,000       10/01/08         7%            9%
        Martin's Landing                       2,280,000          2,280,000       12/01/08         7%           12%
        Sunset Summit                          1,900,000          1,900,000       12/01/08         7%            9%(d)
        Oasis (h)                              2,290,000          2,290,000       09/01/09         7%         9.25%
        Windsor Lake                               -              2,000,000           -            8%           13%
        Windmill Lakes (e)                     2,000,000          2,000,000       03/01/10       7.5%          9.5%
        The Lakes                              4,600,000          4,600,000       07/01/10         7%            9%

                                           $ 24,292,351       $  26,292,351
</TABLE>
<TABLE>
<CAPTION>


     (a)  The total PIMI and Additional  Loan on this property are  $32,300,000,
          and $6,850,000 respectively,  of which 28% is held by Krupp Government
          Income Trust, an affiliate of the Advisor of the Trust.
     (b)  Monthly  principal  and  interest  payments  are  based  on a  30-year
          amortization.  The unpaid  principal  balances  due at maturity are as
          follows:

                    <S>                                          <C>
                    Crossings Village                            $    9,917,000
                    Martin's Landing                             $    8,524,000
                    Sunset Summit                                $    7,763,000
                    Oasis                                        $    9,550,000
                    Windsor Lake                                 $    7,517,000
                    Windmill Lakes                               $    8,907,000
                    The Lakes                                    $   14,118,000
</TABLE>

     (c)  The base  interest rate was 6% per annum for the first three years and
          beginning September 1, 1996 increased to 9% per annum.
     (d)  The Trust  will  receive  its  Additional  Loan  Interest  and its GIT
          Contingent  Interest on Investment (as defined in the Subordinate Loan
          Agreement) from net revenue up to the 9% Preferred  Interest Rate and,
          thereafter is entitled to 25% of net revenue.
     (e)  As of December 31, 1997 Windmill Lakes was in technical default on its
          Additional Loan for not making the full required base interest payment
          due on the  Additional  Loan.  The  Advisor  has  agreed  to defer the
          delinquent  Additional  Loan Interest  payments  pending a sale of the
          property.  If it becomes  apparent that a sale mutually  acceptable to
          both the Trust and the borrower will not be possible, the Advisor will
          re-assess the feasibility of extending long term debt service relief.
     (f)  The aggregate cost for federal income tax purposes is $131,750,452.
     (g)  As of November 12, 1999 Falls at Hunters  Point was in default for not
          making the  participation  income  payment due the Trust based on 1997
          and 1998  operations.  The  Advisor is  pursuing  remedies to cure the
          default.
     (h)  The  modification  agreement for the debt service  relief is currently
          being negotiated between the Advisor and the borrower.

                                         Continued

<PAGE>

                               KRUPP GOVERNMENT INCOME TRUST II

                           NOTES TO FINANCIAL STATEMENTS, continued


     C. PIMIs, Continued

     Impaired Mortgage Loans

     On December 31, 1998,  as a result of continued  deterioration  in property
     operations,  the Advisor of the Trust  determined  that the Windmill  Lakes
     Additional  Loan was  impaired.  As a  result,  a  valuation  allowance  of
     $2,000,000 was established to adjust the carrying amount of the loan to the
     estimated fair market value of the  collateral  less  anticipated  costs of
     sale.  The Trust did not recognize  interest  income on the Windmill  Lakes
     Additional Loan during 1999 or 1998.

     On December 31, 1998,  as a result of continued  deterioration  in property
     operations,  the Advisor of the Trust  determined that the Oasis Additional
     Loan was impaired.  As a result, a valuation  allowance of $994,000 has was
     established to adjust the carrying amount of the loan to the estimated fair
     market value of the collateral  less  anticipated  costs of sale. The Trust
     did not recognize  interest income on the Oasis Additional Loan during 1999
     or 1998.

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

                                        Recorded                Valuation            Carrying
                                          Value                 Allowance              Value

<S>                                     <C>                     <C>                  <C>
Windmill Lakes                          $2,000,000              $2,000,000           $   -

Oasis                                    2,290,000                 994,000            1,296,000

Balance at
December 31, 1999                       $4,290,000              $2,994,000           $1,296,000
</TABLE>


     The recorded value of the impaired mortgage loans did not differ materially
     from the balances  reported at the end of each quarter with  exception  for
     the  impairment  recorded  in the fourth  quarter of 1998 for the  Windmill
     Lakes and Oasis  additional  loans.  The  Trust  has also  deferred  income
     related to Oasis of $160,300.

<TABLE>
<CAPTION>

       Reconciliations of activity for 1999, 1998 and 1997 are as follows:

Insured Mortgages
                                                           1999               1998                   1997

<S>                                                   <C>                  <C>                    <C>
Balance at beginning of period                        $ 133,132,325        $145,537,234           $150,454,030

       Reclassification                                     -                   -                   (3,515,288)

       Principal collections                             (1,381,873)         (12,404,909)           (1,401,508)

Balance at end of period                              $ 131,750,452        $ 133,132,325          $145,537,234
</TABLE>



                                              Continued
<PAGE>

<TABLE>
<CAPTION>

                                   KRUPP GOVERNMENT INCOME TRUST II

                               NOTES TO FINANCIAL STATEMENTS, continued

C.      PIMIs, Continued


Additional Loans
                                                    1999              1998              1997

<S>                                          <C>                <C>                 <C>
Balance at beginning of period               $    23,298,351    $   29,152,351      $  29,952,351

        Additional loan prepayments               (2,000,000)       (2,860,000)        (1,265,000)

        Additional loan investments                    -                 -                465,000

        Valuation allowance                            -            (2,994,000)             -

Balance at end of period                     $    21,298,351    $   23,298,351      $  29,152,351
</TABLE>

Property Descriptions:

     o    The  Seasons  is a  1,088-unit  apartment  complex  located in Laurel,
          Maryland.
     o    The  Falls  at  Hunter's  Pointe  ("Hunters  Pointe")  is  a  276-unit
          apartment  complex located in Sandy City,  Utah, a suburb of Salt Lake
          City.
     o    Norumbega  Point is a 93-unit  assisted  living  facility  in  Weston,
          Massachusetts.
     o    Crossings  Village  Apartments  ("Crossings  Village")  is a  286-unit
          apartment complex located in Westlake, Ohio.
     o    Martin's  Landing  Apartments   ("Martin's  Landing")  is  a  300-unit
          apartment complex in Roswell, Georgia.
     o    Sunset Summit  Apartments  ("Sunset  Summit") is a 261-unit  apartment
          complex located in Portland, Oregon.
     o    Oasis at Springtree  ("Oasis") is a 276-unit apartment complex located
          in Sunrise, Florida.
     o    Windsor  Lake  Apartments  ("Windsor  Lake") is a  416-unit  apartment
          complex in Smyrna, Georgia.
     o    Windmill  Lakes  Apartments  ("Windmill  Lakes") is a 264-unit  garden
          style apartment complex in Pembroke Pines, Broward County, Florida.
     o    The Lakes at Vinings Apartments ("The Lakes") is a 464-unit garden and
          townhouse style apartment complex in Vinings, Georgia.


     D. PIMs

     The Trust has  investments  in four PIMs.  The  Trust's  PIMs  consist of a
     Fannie Mae MBS which represents the securitized  first mortgage loan on the
     underlying property or a sole participation  interest in the first mortgage
     loan originated  under the FHA lending  program on the underlying  property
     (collectively the "insured  mortgages") and participation  interests in the
     revenue stream and appreciation of the property above specified levels. The
     borrower  conveys  these  participation  features  to the  Trust  generally
     through a subordinated promissory note and mortgage (the "Agreement").  The
     Trust receives level monthly  principal and interest  payments,  amortizing
     over thirty to forty years on the Fannie Mae MBS  guaranteed by Fannie Mae,
     and HUD insures payment of principal and interest on the FHA first mortgage
     loan.

     The borrower  generally  cannot  prepay the first  mortgage loan during the
     first five years and may prepay the first mortgage loan thereafter  subject
     to a 9%  prepayment  penalty in years six  through  nine,  a 1%  prepayment
     penalty in year ten and no  prepayment  penalty  thereafter.  The Trust may
     receive interest related to its  participation  interests in the underlying
     property, however, these amounts are neither insured nor guaranteed.




                                         Continued

<PAGE>

                              KRUPP GOVERNMENT INCOME TRUST II

                          NOTES TO FINANCIAL STATEMENTS, continued

     D. PIMs, Continued

     Generally,  the  participation  features  consist  of  the  following:  (i)
     "Minimum  Additional  Interest" at rates ranging from .5% to .75% per annum
     calculated  on the unpaid  principal  balance of the first  mortgage on the
     underlying property,  (ii) "Shared Income Interest" ranging from 25% to 30%
     of the monthly gross rental income generated by the underlying  property in
     excess of a  specified  base,  but only to the extent  that it exceeds  the
     amount of Minimum  Additional  Interest  received during such month,  (iii)
     "Shared  Appreciation  Interest" ranging from 25% to 30% of any increase in
     value of the underlying  property in excess of a specified base. Payment of
     participation  income from the operations of the property is limited to 50%
     of  net  revenue  or  surplus  cash  as  defined  by  Fannie  Mae  or  HUD,
     respectively.  The total  amount of  participation  income  payable  by the
     underlying borrower generally cannot exceed 50% of any increase in value of
     the  property,   however,  generally  any  net  proceeds  from  a  sale  or
     refinancing  will be  available  to satisfy any accrued but unpaid  Minimum
     Additional or Shared Income Interest.

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

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

     At December  31, 1999 and 1998 there are no insured  mortgage  loans within
     the Trust's portfolio that are delinquent of principal or interest.

     During the second quarter of 1998,  the Trust  completed the funding of its
     commitment on the Fountains PIM.

     During the fourth quarter of 1997, the borrower on the Estates PIM sold the
     property to one of the Trust's affiliated entities.  To facilitate the sale
     transaction,  the  borrower  asked and the  Advisor  agreed to release  the
     participation  features  of the PIM and allow the  purchaser  to assume the
     obligations of the first mortgage loan. In exchange for this  modification,
     the  Advisor  required  the  borrower  to pay a  settlement  of $232,000 to
     provide  the Trust with a  financial  return  comparable  to what the Trust
     would  have  expected  to receive  had the  borrower  continued  to own the
     property.




                                       Continued

<PAGE>
<TABLE>
<CAPTION>

                            KRUPP GOVERNMENT INCOME TRUST II

                        NOTES TO FINANCIAL STATEMENTS, continued



The Trust's PIMs consisted of the following at December 31, 1999 and 1998:



                          Original        Monthly    Interest    Maturity
     PIM                  Amount         Payments     Rate         Date       Balance Outstanding at December 31,
                                                                                    1999                1998
FNMA
<S>                    <C>              <C>           <C>       <C>          <C>                 <C>
Mequon Trails          $  14,937,726    $   93,123    6.50%     01/01/08     $    13,756,994     $   13,971,630
                                                                   (a)
FHA
Rivergreens II             6,137,199        39,763    7.375%    01/01/35           5,992,928          6,026,715

Mill Ponds II              8,245,300        51,900    7.125%    12/01/35           8,082,848          8,127,964

The Fountains             10,336,000        70,803    7.50%     11/01/36          10,161,642         10,204,948
                                                        (b)
   Total               $  39,656,225    $  255,589                           $    37,994,412     $   38,331,257
                                                                                    (c)

</TABLE>

     (a)  Principal and interest  payments are based on a 30-year  amortization.
          Unpaid principal of approximately $11,267,000 is due at maturity.
     (b)  Construction-phase   interest   rate  was   7.875%.   Received   Final
          Endorsement in April 1998.
     (c)  The aggregate cost for federal income tax purposes is $37,994,412.

<TABLE>
<CAPTION>

Reconciliations of activity for 1999, 1998 and 1997 are as follows:

                                                           1999                 1998                 1997

<S>                                                    <C>                  <C>                   <C>
Balance at beginning of period                         $ 38,331,257         $ 37,645,082          $49,622,337

       Acquisitions                                           -                1,003,676                -

       Reclassification                                       -                    -              (11,578,526)

       Discount amortization                                    217                -                    -

       Principal collections                               (337,062)            (317,501)            (398,729)

Balance at end of period                               $ 37,994,412         $ 38,331,257          $37,645,082
</TABLE>

Property descriptions:

     -    Mequon  Trails  Townhomes  ("Mequon  Trails") is a 246-unit  apartment
          complex located in Mequon, Wisconsin.
     -    Rivergreens II Apartments  ("Rivergreens  II") is a 126-unit apartment
          complex in Gladstone, Oregon.
     -    Mill Ponds II  Apartments  ("Mill  Ponds  II")is a 150-unit  apartment
          complex in Bellbrook, Ohio.
     -    The Fountains  Apartments  ("The  Fountains") is a 204-unit  apartment
          complex in West Des Moines, Iowa.


                                             Continued

<PAGE>

                                 KRUPP GOVERNMENT INCOME TRUST II

                             NOTES TO FINANCIAL STATEMENTS, continued

     E.   Mortgage Backed Securities

     The Trust  received a payoff  from The Estates  MBS  consisting  of a first
     mortgage  of  $11,375,380  on October  18,  1999.  In  addition,  the Trust
     received  a  prepayment  premium  of  $1,023,784.  The Trust paid a special
     dividend of $.68 per Unit from the proceeds on October 27, 1999.

     At December 31, 1999,  the Trust's MBS portfolio  has an amortized  cost of
     $21,681,424 and gross unrealized gains and losses of approximately  $29,115
     and  $583,065 ,  respectively.  At  December  31,  1998,  the  Trust's  MBS
     portfolio had an amortized cost of $29,821,474 and gross  unrealized  gains
     and losses of approximately $556,799 and $9,563, respectively.  At December
     31,  1998,  the  Trust's   insured   mortgage  had  an  amortized  cost  of
     $11,465,489. The MBS have maturities ranging from 2009 to 2031.

<TABLE>
<CAPTION>



                         Maturity Date                        Fair Value                     Unrealized Loss
                          <S>                               <C>                                 <C>
                          2001 - 2005                       $       -                           $   -
                          2005 - 2010                           3,600,705                         (93,988)
                          2010 - 2031                          17,526,769                        (459,962)

                              Total                         $  21,127,474                       $(553,950)

</TABLE>

     F. Shareholders' Equity,

     Under the Declaration of Trust,  and commencing with the initial closing of
     the public offering of Shares, the Trust has declared and paid dividends on
     a  quarterly  basis.  During the period in which the Trust  qualifies  as a
     REIT, the Trust has and will pay quarterly  dividends  aggregating at least
     95%  of  taxable  income  on  an  annual  basis  to  be  allocated  to  the
     shareholders,  in proportion to their respective number of shares. In order
     for the Trust to maintain its REIT status with respect to the  requirements
     of Share  ownership,  the  Declaration of Trust prohibits any investor from
     owning,  directly or indirectly more than 9.80% of the  outstanding  Shares
     and empowers the Trustees to refuse to permit any transfer of Shares which,
     in their opinion, would jeopardize the status of the Trust as a REIT.

     G. Related Party Transactions

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

     The Trust also  reimburses  affiliates of the Advisor for certain  expenses
     incurred in connection with  maintaining the books and records of the Trust
     and the preparation and mailing of financial  reports,  tax information and
     other communications to investors.

     The Trust earned or received  $443,282,  $443,282,  and  $1,024,097 of base
     interest from The Seasons in 1999,  1998 and 1997,  respectively  (see Note
     C). In addition,  the Trust received $392,816 in 1999, $239,107 in 1998 and
     $83,360 in 1997 related to participating interest income.




                                         Continued

<PAGE>
<TABLE>
<CAPTION>

                             KRUPP GOVERNMENT INCOME TRUST II

                         NOTES TO FINANCIAL STATEMENTS, continued



H.     Federal Income Taxes

The  reconciliation of the income reported in the accompanying  statement of income with the income reported in the Trust's
1999 federal income tax return follows:

            <S>                                                                                 <C>
            Net income per statement of income                                                  $  14,974,338

              Add:
                      Book to tax difference for amortization
                                of prepaid fees and expenses                                          478,748

              Less:   Book to tax difference for Additional Loan interest income                      633,287


            Net income for federal income tax purposes                                          $  16,086,373
</TABLE>


     The Trust paid  dividends of $2.73 per share  during 1999 which  represents
     approximately  $.88 from ordinary income and $1.85 represents a non-taxable
     distribution for federal income tax purposes.

     The basis of the Trust's  assets for financial  reporting  purposes is less
     than its tax basis by approximately $10,156,000, and $8,347,000 at December
     31, 1999 and 1998,  respectively.  The basis of the Trust's liabilities for
     financial  reporting  purposes  exceeded  its tax  basis  by  approximately
     $2,693,000 and $2,289,000 at December 31, 1999 and 1998, respectively.

     I. Fair Value Disclosures of Financial Instruments

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

     Cash and Cash Equivalents

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

     MBS

     The Trust  estimates the fair value of MBS based on quoted  market  prices.
     Based on the  estimated  fair value  determined  using  these  methods  and
     assumptions,  the Trust's investments in MBS has gross unrealized gains and
     losses of  approximately  $29,000 and  $583,000  at  December  31, 1999 and
     $557,000 and $10,000 at December 31, 1998.

     PIMs and PIMIs

     There is no established  trading market for these  investments.  Management
     estimates  the fair value of the PIMs and the insured  mortgage  portion of
     the PIMIs using quoted  market  prices of MBS having the same stated coupon
     rate as the insured mortgages.  Additional Loans are based on the estimated
     fair value of the underlying  properties.  Management  does not include any
     participation  income  in  the  Trust's  estimated  fair  values,   because
     Management  does not believe it can predict the time of  realization of the
     feature with any certainty.

     Based on the  estimated  fair value  determined  using  these  methods  and
     assumptions, the Trust's investments in PIMs and PIMIs had gross unrealized
     gains and losses of approximately  $71,000 and $5,944,000,  respectively at
     December 31, 1999 and gross  unrealized  gains and losses of  approximately
     $4,181,000 and $1,309,000 at December 31, 1998.


                                            Continued

<PAGE>
<TABLE>
<CAPTION>

                                  KRUPP GOVERNMENT INCOME TRUST II

                             NOTES TO FINANCIAL STATEMENTS, continued


     I. Fair Value Disclosures of Financial Instruments, continued

     At December  31, 1999 and 1998,  the  estimated  fair values of the Trust's
     financial instruments are as follows:
                                                                      (rounded to thousands)
                                                                1999                        1998
                                                         Fair         Carrying        Fair       Carrying
                                                         Value         Value          Value        Value

         <S>                                        <C>           <C>            <C>          <C>
         Cash and cash equivalents                  $    8,654    $    8,654     $  18,011    $   18,011

         MBS                                            21,127        21,127        41,834        41,834

         PIMs and PIMIs:
             PIMs                                       36,763        37,994        39,056        38,331
             Insured mortgages                         127,108       131,750       135,279       133,132
             Additional loans                           21,298        21,298        23,298        23,298

                                                    $  214,950    $  220,823     $ 257,478    $  254,606
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                                   KRUPP GOVERNMENT INCOME TRUST II

                            SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS




                             Balance at           Charged to                              Balance at
                             Beginning            costs and                                 end of
Description                   of period            expenses          Revenues               period

Valuation
<S>                         <C>                  <C>                <C>                 <C>
Allowance                   $  2,994,000         $      -           $    -              $  2,994,000


</TABLE>
<PAGE>
<TABLE>
<CAPTION>




                                          KRUPP GOVERNMENT INCOME TRUST II

                                                 SUPPLEMENTARY DATA
                                          SELECTED QUARTERLY FINANCIAL DATA
                                                     (Unaudited)


                                               For the Quarter Ended


                               March 31,            June 30,           September 30,         December 31,
                                 1999                 1999                 1999                  1999

<S>                          <C>                  <C>                  <C>                   <C>
Total revenues               $  4,410,220         $  4,552,556         $  4,484,788          $  6,165,618

Net income                   $  3,381,041         $  3,400,890         $  3,397,863          $  4,794,544

Earnings per Share           $        .18         $        .19         $        .18          $       .27


                                               For the Quarter Ended

                               March 31,             June 30,           September 30,         December 31,
                                 1998                  1998                 1998                  1998

Total revenues               $  5,490,525         $  4,777,805         $  7,055,166          $ 4,306,173

Net income                   $  4,286,801         $  3,665,671         $  5,028,861          $   201,778

Earnings per Share           $        .23         $        .20         $        .27          $       .02


</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                                   (Unaudited)
                                (Amounts in thousands, except per Share amounts)

                                                                        Year                  Inception
                                                                       Ended                   Through
                                                                      12/31/99                 12/31/99
Distributable Cash Flow (a):

<S>                                                                  <C>                      <C>
Net income                                                           $ 14,974                 $ 111,825
Items not requiring the use
  of operating funds:

   Provision for impaired mortgage loans                                    -                     2,994
    Loss on sale of MBS                                                     -                     1,379
    Amortization of prepaid fees and
     expenses and organization costs                                    2,365                    13,273
    Additional Loan interest received
     and deferred, net                                                    (27)                    2,693

    Total Distributable Cash Flow ("DCF")                            $ 17,312                 $ 132,164

DCF per Share based on Shares
 outstanding at December, 31 1999                                    $    .94                 $    7.19(d)

Dividends:

 Total dividends to Shareholders                                     $ 48,823(b)              $ 229,120(c)

 Average dividend per Share based
  on Shares outstanding at
  December 31, 1999                                                  $   2.66(b)              $   12.47(c)(d)
</TABLE>



     (a)  Distributable  Cash Flow  consists  of  income  before  provision  for
          impaired mortgage loans, amortization of prepaid fees and expenses and
          organization  costs and includes  interest  collections  on Additional
          Loans which have not been recognized as income for book purposes.  The
          Trust believes Distributable Cash Flow is an appropriate  supplemental
          measure of operating performance, however, it should not be considered
          as  a  substitute  for  net  income  as  an  indication  of  operating
          performance or cash flows as a measure of liquidity.

     (b)  Represents  all  dividends  paid  in 1999  except  the  February  1999
          dividend  and  includes  an  estimate  of the  dividend  to be paid in
          February 2000.

     (c)  Includes an estimate of the distribution to be paid in February 2000.

     (d)  Shareholders average per Share return of capital on a cash basis as of
          February 2000 is $5.28 [$12.47- $7.19].  Return of capital  represents
          that  portion  of  dividends  which is not  funded  from DCF,  such as
          proceeds  from  the  sale  of  assets  and  substantially  all  of the
          principal collections received from MBS, PIMs and PIMIs.