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 SECURITIESx
             EXCHANGE ACT OF 1934 [FEE REQUIRED]

               For the fiscal year ended       December 31, 1997              
    

                                        OR

             TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
             SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

               For the transition period from                  to             
      

               Commission file number                0-20164              
                         Krupp Government Income Trust II
              (Exact name of registrant as specified in its charter)

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

   470 Atlantic Avenue, Boston, Massachusetts            02210
   (Address of principal executive offices)             (ZipCode)

   (Registrant's telephone number, including area code)  (617)423-2233 

   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 10-19.
<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 the Federal  National
   Mortgage  Association  ("FNMA") or  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 under  GNMA, FNMA  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.

      Prior to December  27, 1998  the Trust can  reinvest principal  proceeds
   received  from its mortgage investments in new mortgages.  Any reinvestment
   in  mortgages will be based on management's evaluation of market conditions
   for  participating mortgages.  When the reinvestment period ends, the Trust
   will distribute proceeds from prepayments or other realizations of mortgage
   assets  to investors  either  through quarterly  distributions or  possibly
   special distributions.

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

      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.

      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.

<PAGE>
      
    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, 1997, 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,  1997 was
   approximately 15,500.

      The Trust has and intends to continue to declaring and  paying dividends
   on  a quarterly basis.  The Trustees  established a dividend rate per Share
   per quarter of $.3125 for 1997 and 1996.

   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)

                                       1997       1996        1995       1994         1993

         <S>                            <C>        <C>         <C>        <C>        <C>
         Total revenues                 $ 21,291   $ 19,877    $ 20,033   $ 18,200   $ 15,867

         Net income                     $ 16,263   $ 14,999    $ 13,747   $ 13,882   $ 13,853

         Net income per Share           $    .89   $    .82    $    .75   $   .76    $    .75

         Weighted average Shares

          outstanding                     18,371     18,371      18,371    18,371      18,364

         Total assets at December 31    $293,158   $298,297    $306,965   $314,250   $322,855

         Average dividends per Share    $   1.25   $   1.25    $   1.25   $   1.25   $   1.60
</TABLE>



      The Trust completed its public offering in 1993, therefore the Selected
   Financial Data for 1993 is not indicative of the Trust's future results and
   is not comparable with 1997, 1996, 1995 and 1994.

   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.

   Liquidity and Capital Resources

      At December 31, 1997, the Trust has liquidity consisting of cash and
   cash equivalents, of approximately $13.5 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 are dividends paid
   to investors which currently approximate $23.0 million per year ($5.75
   million per quarter).  For 1997, the Trust declared an annual dividend of
   $1.25 per share, paid in quarterly installments of $.3125 per share.  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.

      The Advisor of the Trust periodically reviews the dividend rate to
   determine whether an adjustment to the dividend rate is necessary based on
   projected future cash flows.  Based on current projections, the Advisor
   believes the Trust can maintain the current dividend rate for the
   foreseeable future. In general, the Advisor tries to set a dividend rate
   that provides for level quarterly distribution.  To the extent quarterly
   dividends do not fully utilize the cash available for distribution and cash
   balances increase, the Advisor may reinvest the available proceeds, adjust
   the dividend rate or distribute such funds through a special distribution.

      During the second quarter of 1997, the Trust funded an additional
   $465,000 to the  owner of the Willows Apartments increasing the Additional
   Loan amount to $1,265,000.  Subsequent to the funding, the owner notified
   the Trust of its intention to sell the property to a third party during the
   third quarter.  During the third quarter of 1997, the Trust received the
   prepayment of the Additional Loan of $1,265,000 and the payment of $789,336
   which represents all of the Preferred Interest due on the Trust s
   investment through the date of sale.  In addition the Trust allowed the
   purchaser to assume the first mortgage.  The Trust converted the Willows
   Apartment PIMI to an insured mortgage.

      Many of the properties had stable or improving performances in 1997. 
   All but one of the underlying properties with stabilized operations had
   high average 1997 occupancies, generally between 90% and 100%.  Windmill
   Lakes is located in a South Florida county that has seen a significant
   housing boom, both in newly constructed multifamily projects as well as
   single family development.  Windmill Lakes operating performance during the
   third quarter continued to be adversely affected by the highly competitive
   housing market in Pembroke Pines, Florida.  New construction in all housing
   sectors is being fueled by strong job and population growth in the area. 
   Builders  marketing concessions to fill new properties lowers the cost of
   renting a new apartment and makes it more difficult for older properties
   like Windmill Lakes to attract residents.  The borrower has informed the
   Advisor that the property is being marketed for sale.  Should the borrower
   be unable to obtain a purchase offer adequate to cover the property s
   outstanding liabilities, the Advisor anticipates that some measure of debt
   service relief will be necessary until the market stabilizes. The Advisor
   continues to monitor this property closely.

     Two other properties moved towards stabilized occupancy during 1997 after
   completing construction.  Mill Pond II reached 95% by year-end, and
   Norumbega Point completed the initial lease-up of the assisted living
   community by reaching 100% occupancy by year-end.  Two other recently
   completed properties, the Fountains Apartments and Rivergreens II
   Apartments, faced more challenging lease-ups due to over saturated markets
   but achieved occupancy in the mid 90% range by year end.  Rental rate
   increases were achieved at more than half of the properties due to stable
   or improving markets or the unique character of the specific property.

      During the third quarter the borrower on the Estates PIM informed the
   Advisor that a sale to one of the Trust s affiliated entities of the
   property was pending.  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 that will be comparable to what the Trust would have expected to
   receive had the borrower continued to own the property.  The PIM was
   converted to an insured mortgage when the transaction was completed during
   the fourth quarter of 1997.

      In addition to funding its quarterly dividends paid to investors the
   Trust has a remaining commitment of approximately $1.0 million on a PIM in
   the construction phase.  The Trust has sufficient cash reserves to fund
   this commitment. 

      For the first five years of the PIMs and PIMIs the borrowers are
   prohibited from prepaying of loans.  For the second five years, the
   borrowers can prepay the loans by incurring a prepayment penalty for PIMs
   or paying all amounts due under the PIMIs and satisfying the required
   preferred return.  The Trust has the option of calling certain PIMs and all
   the PIMIs by accelerating their maturity if the loans are not prepaid by
   the tenth year after permanent funding.  The Trust will determine the
   merits of exercising the call option for each PIM or PIMI as economic
   conditions warrant.  Such factors as the condition of the asset, local
   market conditions, interest rates and available financing will have an
   impact on this decision.

<PAGE>

   Assessment of Credit Risk

      The Trust's investments in mortgages, with the exception of the
   Additional Loans, are guaranteed or insured by FNMA, FHLMC or 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.

      FNMA 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. FNMA 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
   FNMA 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.

      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 $10
   million of commercial paper, which is issued by entities with a credit
   rating equal to one of the top two rating categories of a nationally
   recognized statistical rating organization.

<TABLE>


<CAPTION>
            Operations
                                           (amounts in thousands, except per Shareamounts)
                                                       Year Ended December 31,
 
                                             1997               1996             1995
                                                 Per               Per                Per
                                       Amount   Share    Amount  Share       Amount Share

<S>             
Interest on PIMs:
<S>                                  <C>       <C>      <C>      <C>      <C>      <C>
Base interest                        $13,828   $ .75    $13,952  $.76     $12,371  $.67
Additional loan interest               2,147     .12      1,522   .08       1,474   .08
Participation interest                 1,770     .10        768   .04         422   .02
Interest income on MBS                 2,847     .16      3,123   .17       4,616   .25
Interest income - other                  698     .04        512   .03       1,150   .06
Trust Expenses                        (2,840)   (.16)    (2,783) (.15)     (2,997) (.15)
Loss on sale of MBS                      -        -         -      -       (1,379) (.08)
Amortization of prepaid fees and
 expenses and organization costs      (2,187)   (.12)    (2,095) (.11)     (1,910) (.10)
   Net
   income                            $16,263   $ .89    $14,999  $.82     $13,747  $.75


Weight Average Shares Outstanding     18,371,477          18,371,477        18,371,477

</TABLE>

<PAGE>


   The net income of the Trust for 1997 increased as compared to 1996 and
   1995. During the three years ended December 31, 1997 the Trust's operations
   underwent significant changes in the mix of interest income as the Trust
   continued to invest in PIMs and PIMIs during 1996 and 1995.  Interest
   income from PIMs and PIMIs increased by approximately $1,503,000 in 1997 as
   compared to 1996 and approximately $1,975,000 in 1996 as compared to 1995
   due to the investments in PIMs and PIMIs made during 1995.

   The Trust s total interest income for 1997 as compared to 1996 increased by
   approximately $1,413,000 due to higher Additional Loan interest,
   Participation interest and interest income other, which was partially
   offset by decreases in interest income on MBS and base interest on PIMs and
   PIMIs.  The increases in Additional Loan interest and Participation
   interest was primarily due to the Trust receiving participation
   appreciation interest of approximately $789,000 from the preferred return
   payment related to the Willows Additional Loan payoff and Participation
   income interest of approximately $980,000 from 10 of its PIMs and PIMIs, as
   compared to $768,000 from seven of its PIMs and PIMIs in 1996.  Management
   expects the strong operating performances of Crossings Village, Martin's
   Landing, St. Germain, The Lakes and Windsor Lakes will continue and the
   Trust will continue to receive Participation income interest.  The Seasons,
   which was completely renovated in 1994 and 1995, performed very well during
   1996 and 1997.  As a result of this in 1997, the Trust began recognizing
   additional loan income and Participation interest income from The Seasons
   and management expects it to continue to do so in 1998.  This was offset by
   a decrease in interest income on MBS and base interest on PIMs and PIMIs. 
   Interest income on MBS and base interest on  PIMs and PIMIs will continue
   to decline as principal collections reduce the outstanding balance of the
   MBS, PIM and PIMI portfolios.

   The Trust s expenses increased by approximately $57,000 or 2% in 1997 as
   compared to 1996 primarily due to an increase in expense reimbursements and
   general and administrative expense.  This was offset by lower asset
   management fees resulting from a declining asset base when comparing 1997
   to 1996.

   The Trust s total interest income for 1996 as compared to 1995 decreased by
   approximately $156,000, due to lower interest income on MBS and interest
   income other, which was partially offset by increases in interest income on
   PIMs.  Interest income on PIMs increased due to additional investments in
   PIMs and PIMIs.  Interest income-other and interest income on MBS decreased
   as the Trust used available cash to fund its commitments in PIMs and PIMIs,
   and funded a portion of its dividends with principal collections.  To the
   extent the Trust uses principal collections to fund a portion of the
   dividend it will continue to reduce the income generating assets of the
   Trust, which could reduce interest income in the future.

   Trust expenses, exclusive of losses from the sale of MBS, decreased by
   $214,000 in 1996 versus 1995 as a result of decreases in expenses
   reimbursements, lower asset management fees and reduced general and
   administrative expenses.


   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

                                       -10-
<PAGE>





      Name and Age    Government Income Trust II

      Douglas Krupp (51)                              Chairman of Board of
                                                      Trustees and Trustee
   *  Charles N. Goldberg (56)                        Trustee
   *  E. Robert Roskind (52)                          Trustee
   *  J. Paul Finnegan (72)                           Trustee
      Robert A. Barrows (40)                          Treasurer
      Scott D. Spelfogel (37)                         Clerk
      K. Scott Griggs (35)                            Assistant Clerk

   * Independent Trustee

          Douglas Krupp is Co-Founder and Chairman of The Berkshire Group. 
   Established in 1969 as the Krupp Companies and headquartered in Boston, the
   Berkshire Group is a privately held real estate-based firm that has
   expanded over the years within its areas of expertise including investment
   program sponsorship, property and asset management, mortgage banking and
   healthcare facility management. The Berkshire Group s interests include
   ownership of a mortgage company specializing in commercial mortgage
   financing with a portfolio of approximately $4.5 billion.  In addition, The
   Berkshire Group has a majority ownership interest in Harborside Healthcare
   (NYSE-HBR), a long-term and subacute care company and a significant
   ownership interest in Berkshire Realty Company, Inc. (NYSE-BRI), a real
   estate investment trust specializing in apartment investments.  Mr. Krupp
   is a graduate of Bryant College.  In 1989 he received an honorary Doctor of
   Science in Business Administration from this institution and was elected
   trustee in 1990. Mr. Krupp is Chairman of the Board and a Director of both
   Berkshire Realty Company, Inc. and Harborside Healthcare.  Mr. Krupp also
   serves as Chairman of the Board and Trustee of Krupp Government Income
   Trust. 

          Charles N. Goldberg is of counsel to the law firm of Broocks, Baker
   & Lange, L.L.P.  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 currently serves as a Trustee of Krupp Government Income Trust. 
   He is also currently a director of Berkshire Realty Company, Inc. (NYSE-
   BRI).  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.

          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 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 currently serves as a
   Trustee of Krupp Government Income Trust.  He is also currently a director
   of Berkshire Realty Company, Inc. (NYSE-BRI).  Mr. Roskind 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.

          J. Paul Finnegan retired as a partner of Coopers & Lybrand in 1987. 
   Since then, he has been engaged in business as a consultant, a 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. 
   He is also currently a director at Scituate Federal Savings Bank and a
   director of Berkshire Realty Company, Inc. (NYSE-BRI).  Mr. Finnegan is a
   Certified Public Accountant and an attorney.

          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, management information systems and loan closing and
   servicing 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.  He previously 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, the American Corporate Counsel Association and the American
   Society of Corporate Secretaries and is a licensed real estate broker in
   Massachusetts.

          K. Scott Griggs is the Assistant Clerk of the Trust and the Vice
   President and  Assistant General Counsel of The Berkshire Group.  Before
   joining The Berkshire Group in March 1991, he served as counsel to The
   Fafard Companies, a construction and real estate firm in Greater Boston. 
   He received a B.A. degree from Columbia University in 1984 and a J.D.
   degree from the Boston University School of Law in 1989.  He is a member of
   the American Bar Association, Massachusetts Bar Association and the Boston
   Bar Association.

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

          George Krupp (age 53) is the Co-Founder of The Berkshire Group. 
   Established in 1969 as the Krupp Companies and headquartered in Boston, the
   Berkshire Group is a privately held real estate-based firm that has
   expanded over the years within its areas of expertise including investment
   program sponsorship, property and asset management, mortgage banking and
   healthcare facility management. The Berkshire Group s interests include
   ownership of a mortgage company specializing in commercial mortgage
   financing with a portfolio of approximately $4.5 billion.  In addition, The
   Berkshire Group has a majority ownership interest in Harborside Healthcare
   (NYSE-HBR), a long-term and subacute care company and a significant
   ownership interest in Berkshire Realty Company, Inc. (NYSE-BRI), a real
   estate investment trust specializing in apartment investments.  Mr. Krupp
   received his undergraduate education from the University of Pennsylvania
   and Harvard University Extension School and holds a Master s Degree in
   History from Brown University.


                                       -12-
<PAGE>

          Peter F. Donovan (age 44) is Chief Executive Officer of Berkshire
   Mortgage Finance and overseas the strategic growth plans of this mortgage
   banking firm which is the 12th largest in the United States based on
   servicing and asset management of a $4.5 billion loan portfolio. 
   Previously he served as President of Berkshire Mortgage Finance and
   directed the production underwriting and 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.  

   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
          1997.


   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          As of February 5, 1997, 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.


   Class of  Name of Beneficial              Amount and Nature of   Percent
    Stock           Owner                    Beneficial Interest    of Class

   Shares of   Douglas Krupp
   Beneficial 470 Atlantic Avenue
   Interest   Boston, Ma. 02210              10,000 Shares**          ***

   Shares of
   Beneficial
   Interest   All Directors and              10,000 Shares            ***
              Officers

      ** 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.

                                       -13-
<PAGE>

      *** The amount owned does not exceed one percent of the shares of
   beneficial interest of the Trust outstanding as of February 5, 1998.


   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

                                     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)].*

                  The Estates

               (10.7)       Deed of Trust Note dated May 14, 1993 for The
                            Estates [Exhibit 19.1 to Registrant's Report on
                            Form 10-Q for the quarter ended June 30,
                            1993.[Exhibit 10.7 to Registrant s report on Form
                            10-K for the year ended December 31, 1995 (File
                            No. 0-20164)].*

               (10.8)       Deed of Trust dated May 14, 1993 for The Estates
                            Limited Partnership and Maryland National Mortgage
                            Corporation.[Exhibit 10.8 to Registrant s report
                            on Form 10-K for the year ended  December 31, 1995
                            (File No. 0-20164)].*

               (10.9)       Multifamily Deed of Trust, Assignment of Rents and
                            Security Agreement dated May 14, 1993 between The
                            Estates Limited Partnership and Krupp Government
                            Income Trust.[Exhibit 10.9 to Registrant s report
                            on Form 10-K for the year ended December 31, 1995
                            (File No. 0-20164)].*

               (10.10)      Subordinated Promissory Note, dated May 14, 1993,
                            between Maryland National Mortgage Corporation and
                            Krupp Government Income Trust.[Exhibit 10.10 to
                            Registrant s report on Form 10-K for the year
                            ended December 31, 1995 (File No. 0-20164)].*

               (10.11)      Participation and Servicing Agreement dated May
                            14, 1993 by and between Maryland National Mortgage
                            Corporation and Krupp Government Income Trust II
                            [Exhibit 19.2 to Registrant's Report on Form 10-Q
                            for the quarter ended June 30, 1993 (File No. 0-
                            20164)].*

                  The Seasons

               (10.12)      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)].*

               (10.13)      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)].*

               (10.14)      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)].*

               (10.15)      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)].*

               (10.16)      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)].*

               (10.17)      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)].*

               (10.18)      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

               (10.19)      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)].*

               (10.20)      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)].*

               (10.21)      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)].*

               (10.22)      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

               (10.23)      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)].*

               (10.24)      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)].*




                                       -17-
<PAGE>

               (10.25)      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

               (10.26)      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)].*

               (10.27)      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)].*

               (10.28)      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)].*

               (10.29)      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)].*

               (10.30)      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)].*

               (10.31)      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)].*

               (10.32)      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)].*

                                       -18-
<PAGE>

                  Sunset Summit

               (10.33)      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)].*
     
               (10.34)      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)].*

               (10.35)      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)].*

               (10.36)      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)].*

               (10.37)      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)].*

               (10.38)      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

               (10.39)      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)].*

               (10.40)      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)].*

               (10.41)      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)].*

               (10.42)      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)].*

               (10.43)      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)].*

               (10.44)      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

               (10.45)      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)].*

               (10.46)      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)].*

               (10.47)      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)].*

               (10.48)      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)].*

               (10.49)      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)].*

               (10.50)      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)].*

                  St Germain

               (10.51)      Supplement to Prospectus dated April 1, 1994 for
                            Federal National Mortgage Association pool number
                            MX - 073031 [Exhibit 10.34 to Registrant's report
                            on Form 10-K for the year ended December 31, 1994
                            (File No. 0-20164)].*

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

               (10.53)      Subordinate Note dated December 17, 1993 between
                            Abbey St. Germain Limited Partnership and Krupp
                            Government Income Trust II.[Exhibit 10.55 to
                            Registrant s report on Form 10-K for the year
                            ended December 31, 1995 (File No. 0-20164)].*
    
               (10.54)      Multifamily  Mortgage Assignment of Rents and
                            Security Agreement dated December 17, 1993 between
                            Abbey St. Germain Limited   Partnership and Krupp
                            Government Income Trust II.[Exhibit 10.56 to
                            Registrant s report on Form 10-K for the year
                            ended December 31, 1995 (File No. 0-20164)].*

               (10.55)      Subordination Agreement dated December 17, 1993
                            between   Berkshire Mortgage Finance Limited
                            Partnership, Abbey St. Germain Limited Partnership
                            and Krupp Government Income Trust II.[Exhibit
                            10.57 to Registrant s report on Form 10-K for the
                            year ended December 31, 1995 (File No. 0-20164)].*

               (10.56)      Supplement to Prospectus dated April 1, 1994 for
                            Federal National Mortgage Association pool number
                            MX - 073032 [Exhibit 10.36 to Registrant's report
                            on Form 10-K for the year ended December 31, 1994
                            (File No. 0-20164)].*

                                       -21-
<PAGE>


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

               (10.58)      Subordinated Note dated December 17, 1993 between
                            Abbey St. Germain Limited Partnership and Krupp
                            Government Income Trust II.[Exhibit 10.60 to
                            Registrant s report on Form 10-K for the year
                            ended December 31, 1995 (File No. 0-20164)].*

               (10.59)      Multifamily  Mortgage Assignment of Rents and
                            Security Agreement dated December 17, 1993 between
                            Abbey St. Germain Limited Partnership and Krupp
                            Government Income Trust II.[Exhibit 10.61 to
                            Registrant s report form 10-K for the year ended
                            December 31, 1995 (File No. 0-20164)].*

               (10.60)      Subordination Agreement dated December 17, 1993
                            between Berkshire Mortgage Finance Limited
                            Partnership, Abbey St. Germain Limited Partnership
                            and Krupp Government Income Trust II.[Exhibit
                            10.62 to Registrant s report on Form 10-K for the
                            year ended December 31, 1995 (File No. 0-20164)].*
    
               (10.61)      Supplement to Prospectus dated April 1, 1994 for
                            Federal National Mortgage Association pool number
                            MX - 073033 [Exhibit 10.38 to Registrant's report
                            on Form 10-K for the year ended December 31, 1994
                            (File No. 0-20164)].*

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

               (10.63)      Subordinated Note dated December 17, 1993 between
                            Abbey St. Germain Limited Partnership and Krupp
                            Government Income Trust II.[Exhibit 10.65 to
                            Registrant s report on Form 10-K for the year
                            ended December 31, 1995 (File No. 0-20164)].*

               (10.64)      Multifamily Mortgage Assignment of Rents and
                            Security Agreement dated December 17, 1993 between
                            Abbey St. Germain Limited Partnership and Krupp
                            Government Income Trust II.[Exhibit 10.66 to
                            Registrant s report on Form 10-K for the year
                            ended December 31, 1995 (File No. 0-20164)].*

               (10.65)      Subordination Agreement dated December 17, 1993
                            between   Berkshire Mortgage Finance Limited
                            Partnership, Abbey St. Germain Limited Partnership
                            and Krupp Government Income Trust II.[Exhibit
                            10.67 to Registrant s report on Form 10-K for the
                            year ended December 31, 1995 (File No. 0-20164)].*
    
               (10.66)      Supplement to Prospectus dated April 1, 1994 for
                            Federal National Mortgage Association pool number
                            MX - 073034 [Exhibit 10.40 to Registrant's report
                            on Form 10-K for the year ended December 31, 1994
                            (File No. 0-20164)].*

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

               (10.68)      Subordinated Note dated December 17, 1993 between
                            Abbey St. Germain Limited Partnership and Krupp
                            Government Income Trust II.[Exhibit 10.70 to
                            Registrant s report on Form 10-K for the year
                            ended December 31, 1995 (File No. 0-20164)].*

               (10.69)      Multifamily Mortgage Assignment of Rents and
                            Security Agreement dated December 17, 1993 between
                            Abbey St. Germain Limited Partnership and Krupp
                            Government Income Trust II.[Exhibit 10.71 to
                            Registrant s report on Form 10-K for the year
                            ended December 31, 1995 (File No. 0-20164)].*

               (10.70)      Subordination Agreement dated December 17, 1993
                            between Berkshire Mortgage Finance Limited
                            Partnership, Abbey St. Germain Limited Partnership
                            and Krupp Government Income Trust II.[Exhibit
                            10.72 to Registrant s report on Form 10-K for the
                            year ended December 31, 1995 (File No. 0-20164)].*

                  The Willows

               (10.71)      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

               (10.72)      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)].*

               (10.73)      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)].*

               (10.74)      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)].*

               (10.75)      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

               (10.76)      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)].*

               (10.77)      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)].*

               (10.78)      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)].*

               (10.79)      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)].*

               (10.80)      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)].*

               (10.81)      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)].*

                  The Fountains

               (10.82)      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)].*

               (10.83)      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)].*

               (10.84)      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

               (10.85)      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)].*
     
               (10.86)      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)].*

               (10.87)      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)].*

               (10.88)      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)].*

               (10.89)      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)].*

               (10.90)      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

               (10.91)      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)].*

               (10.92)      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)].*

               (10.93)      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)].*

                  Mill Pond II Apartments

               (10.94)      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)].*

               (10.95)      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)].*

               (10.96)      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)].*

                                       -26-
<PAGE>

               (10.97)      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, 1997.



                                                 -27-
<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 12th day of March, 1998.

                            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 12th day of March, 1998.

               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
   Robert A. Barrows        Trust II


   /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




                                       -28-
<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, 1997





<PAGE>






                         KRUPP GOVERNMENT INCOME TRUST II

               INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                               





Report of Independent Accountants                                       F-3


Balance Sheets at December 31, 1997 and 1996                            F-4


Statements of Income for the Years Ended December 31, 1997, 1996
and 1995                                                               F-5


Statements of Changes in Shareholders' Equity for the Years
Ended December 31, 1997, 1996 and 1995                                 F-6


Statements of Cash Flows for the Years Ended December 31, 1997,
1996 and 1995                                                          F-7


Notes to Financial Statements                                   F-8 - F-19

Supplementary Data - Selected Quarterly Financial Data (Unaudited)    F-20



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



                                                  F-2
<PAGE>



                                   REPORT OF INDEPENDENT ACCOUNTANTS
                                                        






   To the Shareholders of
   Krupp Government Income Trust II:

          We have audited the financial statements of Krupp Government Income
   Trust II (the "Trust") listed in the index on page F-2 of this Form 10-K. 
   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 in accordance with generally accepted
   auditing standards.  Those standards require that we plan and perform the
   audit to obtain reasonable assurance about whether these financial
   statements are free of material misstatement.  An audit includes examining,
   on a test basis, evidence supporting the amounts and disclosures in the
   financial statements.  An audit also includes assessing the accounting
   principles used and significant estimates made by management, as well as
   evaluating the overall financial statement presentation.  We believe that
   our audits provide a reasonable basis for our opinion.

          In our opinion, these financial statements referred to above present
   fairly, in all material respects, the financial position of Krupp
   Government Income Trust II as of December 31, 1997 and 1996 and the results
   of its operations and its cash flows for each of the three years in the
   period ended December 31, 1997 in conformity with generally accepted
   accounting principles.




                                                  COOPERS & LYBRAND L.L.P.









   Boston, Massachusetts
   March 9, 1998
<PAGE>



<TABLE>

<CAPTION>
                                   KRUPP GOVERNMENT INCOME TRUST II

                                            BALANCE SHEETS

                                      December 31, 1997 and 1996
                                                         

                                                ASSETS

                                                               1997           1996

            <S>
            Participating Insured Mortgage Investments
             ("PIMIs")(Notes B, C and I):                     
              <S>                                           <C>            <C>
              Insured mortgages                             $145,537,234   $150,454,030
              Additional loans                                29,152,351     29,952,351
            Participating Insured Mortgages ("PIMs")  
              (Notes B, D and I)                              37,645,082     49,622,337
            Mortgage-Backed Securities ("MBS")
              (Notes B, E and I)                              51,171,301     40,581,650

                    Total mortgage investments               263,505,968    270,610,368

            Cash and cash equivalents (Notes B and I)         13,520,091      9,214,592
            Prepaid acquisition fees and expenses, net of 
             accumulated amortization of $6,099,180 and 
             $4,510,838 (Note B)                              10,384,462     11,972,804
            Prepaid participation servicing fees, net of       
             accumulated amortization of $1,858,497 and
             $1,260,283 (Note B)                               3,636,050      4,234,264
            Interest receivable and other assets               2,111,153      2,264,687

                    Total assets                            $293,157,724   $298,296,715

                                 LIABILITIES AND SHAREHOLDERS' EQUITY

            Deferred income on Additional Loans (Note B)    $  2,755,705   $  1,582,054
            Other liabilities                                     30,949         27,085

                    Total liabilities                          2,786,654      1,609,139

            Commitments (Notes D and I)

            Shareholders' equity (Notes A and F):
              Common stock, no par value; 25,000,000
               Shares authorized; 18,371,477 Shares
               issued and outstanding                        289,864,327    296,565,241

              Unrealized gain on MBS (Notes B and E)             506,743        122,335
                                                                           Total
            Shareholders' equity                             290,371,070    296,687,576

                    Total liabilities and Shareholders'
                     equity                                 $293,157,724   $298,296,715

</TABLE>



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


                                                  F-5
<PAGE>




<TABLE>
<CAPTION>
                                   KRUPP GOVERNMENT INCOME TRUST II

                                         STATEMENTS OF INCOME

                         For the Years Ended December 31, 1997, 1996 and 1995
                                                          

                                                      1997         1996          1995   

            <S>     
            Revenues:
              Interest income - PIMs and PIMIs:
                <S>                               <C>          <C>           <C>
                Base interest                     $13,828,125  $13,952,237   $12,371,386
                Additional Loan interest            2,147,468    1,521,980     1,473,597
                Participation interest              1,769,701      767,747       422,195
              Interest income - MBS                 2,847,442    3,122,508     4,615,991
              Interest income - other                 697,819      512,459     1,149,519

                  Total revenues                   21,290,555   19,876,931    20,032,688

            Expenses:
              Asset management fee to an
               affiliate (Note G)                   2,002,992    2,056,861     2,121,271
              Expense reimbursements to 
               affiliates (Note G)                    446,357      391,260       484,718
              Amortization of prepaid expenses,
               fees and organization costs          2,186,556    2,094,905     1,909,898
              General and administrative              391,165      334,723       391,013
              Loss on sale of MBS                      -            -          1,379,074

                  Total expenses                    5,027,070    4,877,749     6,285,974

            Net income (Notes B and H)            $16,263,485  $14,999,182   $13,746,714

            Earnings per share                    $       .89  $       .82   $       .75

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



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


</TABLE>


                                                  F-7
<PAGE>




<TABLE>

<CAPTION>
                                       KRUPP GOVERNMENT INCOME TRUST II

                                STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                             For the Years Ended December 31, 1997, 1996 and 1995
                                                             

                                                                                      Total
                                                        Retained    Unrealized     Shareholders'
                                       Common Stock     Earnings    Gain on MBS       Equity    

      <S>                              <C>            <C>  <S>      <C>   <S>    <C>
      Balance at December 31, 1994     $313,748,150   $    -        $     -      $  313,748,150

      Dividends                          (9,217,690)  (13,746,714)        -         (22,964,404)

      Net income                             -         13,746,714         -          13,746,714

      Change in unrealized gain on MBS       -              -          1,387,525      1,387,525

      Balance at December 31, 1995      304,530,460         -          1,387,525    305,917,985

      Dividends                          (7,965,219)  (14,999,182)        -         (22,964,401)

      Net income                             -         14,999,182         -          14,999,182

      Change in unrealized gain on MBS       -              -         (1,265,190)    (1,265,190)

      Balance at December 31, 1996      296,565,241         -            122,335    296,687,576

      Dividends (Notes F and H)          (6,700,914)  (16,263,485)        -         (22,964,399)

      Net income (Note H)                    -         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

      Shared issued and outstanding for each of the three years ended December 31, 1997 are
      18,371,477 


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

</TABLE>


                                                  F-9
<PAGE>




<TABLE>

<CAPTION>
                                 KRUPP GOVERNMENT INCOME TRUST II

                                     STATEMENTS OF CASH FLOWS

                        For the Year Ended December 31, 1997, 1996 and 1995
                                                       

                                                     1997           1996            1995

      <S>                 
      Operating activities:
       <S>                                       <C>             <C>            <C>
       Net income                                $16,263,485     $ 14,999,182   $ 13,746,714
       Adjustments to reconcile net income
        to net cash provided by operating
        activities:
        Loss on sale of MBS                           -                -           1,379,074
        Premium amortization                         113,094          169,589        232,104
        Amortization of prepaid expenses,
         fees and organization costs               2,186,556        2,094,905      1,909,898
        Changes in assets and liabilities:
         Decrease in interest receivable 
           and other assets                          153,534           33,162        253,750
         Increase(decrease) in other
          liabilities                                  3,864            6,509           (967)

         Net cash provided by
          operating activities                    18,720,533       17,303,347     17,520,573

      Investing activities:
       Investment in PIMs                              -           (5,824,611)   (46,065,971)
       Investment in Additional Loans               (465,000)          -          (6,600,000)
       Prepayment on Additional Loan               1,265,000           -              -
       Proceeds from sale of MBS                       -               -          39,885,582
       Principal collections on MBS                4,775,477        7,427,029      8,404,511
       Principal collections on PIMs               1,800,237        1,633,902      1,299,930
       Acquisition of MBS                              -             (591,600)        -
       Increase in deferred income on
         Additional Loans                          1,173,651          555,432        546,081

         Net cash provided by (used 
           for) investing activities               8,549,365        3,200,152    ( 2,529,867)

      Financing activity:
       Dividends                                 (22,964,399)     (22,964,401)   (22,964,404)

      Net increase (decrease) in cash and
       cash equivalents                            4,305,499       (2,460,902)    (7,973,698)

      Cash and cash equivalents, beginning
       of period                                   9,214,592       11,675,494     19,649,192

      Cash and cash equivalents, end of 
       period                                    $13,520,091     $  9,214,592   $ 11,675,494

      Supplemental disclosure of noncash
       investing activities:

      Reclassification of investments in a
       PIM and PIMI to an MBS                    $15,093,814     $     -        $     -     


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


</TABLE>



                                                  F-11
<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").  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 accounts for its MBS in accordance with the Financial
         Accounting Standards 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.

         PIMs and PIMIs

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

         The Federal Housing Administration Participating Insured Mortgages
         and all Additional Loans are carried at amortized cost unless the
         Advisor of the Trust believes there is an impairment in value, in 
         which case a valuation allowance is established in accordance with 
         Financial Accounting Standards No. 114,  Accounting by
         Creditors for Impairment of a Loan,  and Financial AccountingStandard
         No. 118,  Accounting by Creditors for Impairment of a Loan - Income
         Recognition and Disclosures. 

         Base interest is recognized based on the stated rate of the
         Department of Housing and Urban Development ("HUD") insured mortgage
         (less the servicer's fee) or the stated coupon rate of the Federal
         National Mortgage Association ("FNMA") MBS.  The Trust recognizes
         interest related to the participation features as earned and when it
         deems these amounts to be collectible.  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 from operations to make the
         required interest payments under the Additional Loans, the Trust will
         commence amortizing the deferred interest payments into income over
         the remaining estimated term of the Additional Loan.

                                       F-12
<PAGE>






                         KRUPP GOVERNMENT INCOME TRUST II

                     NOTES TO FINANCIAL STATEMENTS, Continued

                                                

                                    Continued
   B.  Significant Accounting Policies, Continued

         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 commercial
         paper and money market funds with a commercial bank and has not
         experienced any loss to date on its invested cash.

         Prepaid Expenses and Fees

         Prepaid expenses and fees 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 FNMA 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.

         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 has investments in eleven PIMIs that provide financing
       primarily for multi-family housing.  Each PIMI consists of a FNMA 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 FNMA MBS provide the borrower with a
       below market interest rate loan, and in return, the Trust receives a
       percentage of the cash generated from 



                                    Continued

   C.  PIMIs, Continued

       the property operations ( Participating Income Interest ) and a
       percentage of any appreciation of the underlying property to a
       preferred return, then a percentage of any appreciation thereafter
       ( Participating Appreciation Interest ) (collectively the
        Participation Interest ).  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 FNMA
       PIMIs directly to the borrower of the first mortgage loan underlying
       the FNMA 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 of 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 monthly payments of principal and interest from the
       insured mortgages and is also entitled to receive Participation
       Interest and semi-annual interest payments ("Base 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 Additional Loan and Agreements for FNMA PIMIs entitles the Trust to
       receive (i) semi-annual payments of Base Interest on the Additional
       Loan, (ii) Participating Income Interest, (iii) Participating
       Appreciation Interest and (iv) Preferred Interest.  Base 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%.  Base 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 Base 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. 
       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.

<PAGE>
                                    Continued

   C.  PIMIs, Continued

       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) Base Interest payments
       on the Additional Loan, (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 Base 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
       FNMA PIMIs, the borrower must notify the Trust of the amount of any
       Base 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 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)
       Base Interest payments made under the Additional Loan including amounts
       foregone by the Trust.

       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 FNMA 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 FNMA MBS.



                                    Continued

   C.  PIMIs, Continued

       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.
       FNMA PIMIs generally cannot be prepaid during the five years following 
     the closing date of the underlying first mortgage loan.  Thereafter, the
       FNMA 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 fifth year.  Any prepayment of a FNMA PIMI generally
       requires prepayment of the first mortgage loan underlying the FNMA MBS
       and payment of amounts due under the Agreements and Additional Loan. 
       The FNMA 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.

       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.

       At December 31, 1997 and 1996 there are no insured mortgage loans
       within the Trust s portfolio that are delinquent of principal or
       interest.

       The Trust's investments in PIMIs consists of the following at December
       31, 1997 and 1996:


                                                 F-17
<PAGE>




<TABLE>
<CAPTION>
                         KRUPP GOVERNMENT INCOME TRUST II

                     NOTES TO FINANCIAL STATEMENTS, Continued

                                                

                                               Continued

            C.   PIMIs, Continued

               Insured          Loan        Interest      Maturity    Balance Outstanding               
               Mortgages        Amount       Rate          Date       at December 31,
                                                                           1997   1996

          <S>
          FHA
          <S>               <C>               <C>           <C>       <C>            <C>
          The Seasons (a)   $ 23,224,649      7.875%        10/1/28   $  22,626,180  $ 22,788,436
          Hunters Pointe      12,789,100      6.875%         1/1/35      12,600,517    12,669,542

          Norumbega Point     15,598,500      7.375%         2/1/36      15,471,328    15,539,949
                                 (b)           (c)
          FNMA (d)
          Crossings Village   12,907,334       6.75%        10/1/08      12,403,728    12,542,615

          Martin's Landing    11,200,000       6.5%         12/1/08      10,756,840    10,880,778
          Sunset Summit       10,192,801       6.5%         10/1/08       9,796,408     9,909,281

          Oasis               12,401,673       6.75%         9/1/09      12,040,522    12,164,562

          Windsor Lake         9,680,344       6.75%         7/1/09       9,394,283     9,492,533
          St. Germain         11,772,494       6.75%         1/1/09      11,127,209    11,322,292

          The Willows          3,600,000      7.075%        12/1/09         -           3,540,322

          Windmill Lakes      11,600,000      6.825%         3/1/10     11,313,766     11,425,179

          The Lakes           18,387,653      6.825%         7/1/10     18,006,453     18,178,541
                            $153,354,548                              $145,537,234
                                                                            (h)      $150,454,030


</TABLE>
        

<TABLE>
       
<CAPTION>
                                                                  Base        Preferred
                                                                 Interest      Interest
                 Additional Loan          1997            1996     Rate          Rate

                 <S>                   <C>           <C>            <C>           <C>
                 The Seasons (a)       $4,925,351    $ 4,925,351    9%(e)         10%
                 Hunters Pointe           650,000        650,000    7%             9%
                 Norumbega Pointe       3,063,000      3,063,000    7%            10%
                 Crossings Village      2,584,000      2,584,000    7%             9%
                 Martin s Landing       2,280,000      2,280,000    7%            12%
                 Sunset Summit          1,900,000      1,900,000    7%             9%(f)
                 St. Germain            2,860,000      2,860,000    7%
                 Oasis                  2,290,000      2,290,000    7%          9.25%
                 Windsor Lake           2,000,000      2,000,000    8%            13%
                 The Willows                 -           800,000    7%           9.5%

                 Windmill Lakes(g)      2,000,000      2,000,000  7.5%           9.5%
                 The Lakes              4,600,000      4,600,000    7%             9%

                                      $29,152,351    $29,952,351

</TABLE>

                                    Continued
   C.  PIMIs, Continued

       (a)       The total PIM 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)       The FHA approved an increase of the total loan commitment to
                 $15,598,500.
       (c)       The Trust received interest during the construction phase at
                 a rate of 8.125% per annum.
       (d)       Monthly principal and interest payments are based on a 30-
                 year amortization with the exception of St. Germain which is
                 based on a 25-year amortization.  The unpaid principal
                 balances due at maturity are as follows:

                 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
                 St. Germain                   $ 7,489,000
                 Windmill Lakes                $ 8,907,000
                 The Lakes                     $14,118,000

       (e)       The base interest rate was 6% per annum for the first three
                 years and beginning September 1, 1996 increased to 9% per
                 annum.
       (f)       The Trust will receive its Base Interest Rate 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.
       (g)       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 is reviewing the property s operating results to
                 determine whether an operating loan may be required.
       (h)       The aggregate cost for federal income tax purposes is
                 $145,537,234.

                                       F-19
<PAGE>




                         KRUPP GOVERNMENT INCOME TRUST II

                     NOTES TO FINANCIAL STATEMENTS, Continued
<TABLE>
                                                
<CAPTION>
       Reconciliations of activity for 1997, 1996 and 1995 are as follows:

                                                 1997            1996            1995

            <S>                              <C>            <C>             <C>
            Balance at beginning of period   $150,454,030   $150,448,995    $116,047,812

                 Acquisitions                       -          1,303,436      35,427,771

                 Reclassification              (3,515,288)          -               -

                 Principal collections         (1,401,508)    (1,298,401)    (1,026,588)

            Balance at end of period         $145,537,234   $150,454,030   $150,448,995

</TABLE>

   Property Descriptions:

 The Seasons is a 1,088-unit apartment complex located in Laurel,
 Maryland. 
 The Falls at Hunter's Pointe ("Hunter's Pointe") is a 276-unit
 apartment complex located in Sandy City, Utah, a suburb of Salt Lake
 City. 
 Norumbega Point is a 93-unit assisted living facility in Weston,
 Massachusetts.
 Crossings Village Apartments ("Crossings Village") is a 286-unit
 apartment complex located in Westlake, Ohio.
                                    Continued


                                       F-20
<PAGE>




                         KRUPP GOVERNMENT INCOME TRUST II

                     NOTES TO FINANCIAL STATEMENTS, Continued

                                                

            C.PIMIs, Continued

      Martin's Landing Apartments ("Martin's Landing") is a 300-unit
       apartment complex in Roswell, Georgia.
      Sunset Summit Apartments ("Sunset Summit") is a 261-unit apartment
       complex located in Portland, Oregon.
      Oasis at Springtree ("Oasis") is a 276-unit apartment complex located
       in Sunrise, Florida.
      Windsor Lake Apartments ("Windsor Lake") is a 416-unit apartment
       complex in Smyrna, Georgia.
      St. Germain Apartments ("St. Germain") is a 207-unit apartment complex
       in Boston, Massachusetts.
      The Willows Apartments ("The Willows") is a 100-unit apartment complex
       in Redmond, Washington.
      Windmill Lakes Apartments ("Windmill Lakes") is a 264-unit garden style
       apartment complex in Pembroke Pines, Broward County, Florida.
      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 five PIMs.  Currently four PIMs are for
       existing properties and one is funding the construction of multi-family
       housing.  The Trust's PIMs consist of a FNMA 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 monthly principal and interest payments on the FNMA MBS
       guaranteed by FNMA, and HUD insures payment of principal and interest
       on the FHA first mortgage loan.

       Construction-phase PIMs provide interest only payments on the amount
       invested during construction, and upon final endorsement (final draw
       and completion of construction) these construction-phase PIMs convert
       to permanent PIMs.

       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.

       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 interest from the operations of the property
       is limited to 50% of net revenue or surplus cash as defined by FNMA or
       HUD, respectively.  The total amount of Participation interest 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.

       During the fourth quarter, 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.  In conjunction with this tranaction,
       the Trust converted the investment from a PIM to an insured mortgage.

       At December 31, 1997 and 1996, the Trust had outstanding commitments on
       its closed construction-phase PIMs of $1,006,000. The remaining
       commitment will be funded from cash and cash equivalents and MBS
       principal collections.

       At December 31, 1997 and 1996 there are no insured mortgage loans
       within the Trust s portfolio that are delinquent of principal or
       interest.
       The Trust's PIMs consisted of the following at December 31, 1997 and
   1996:
<TABLE>
       
<CAPTION>
                                    Interest  Maturity
                   PIM          Amount       Rate       Date        Balance at December31,
                                                                     1997          1996
            <S>
            FNMA
            <S>              <C>            <C>      <C>         <C>           <C>
            Mequon Trails    $14,937,726    6.50%    1/01/08     $14,170,803   $14,355,629
                                                       (a)
            FHA
            The Estates       12,000,000    6.875%   6/01/28           -        11,692,400

            Rivergreens II     6,137,199    7.375%    1/1/35       6,058,069     6,087,163

            Mill Ponds II      8,245,300    7.125%   12/1/35       8,169,935     8,208,979
                                              (c) 

            The Fountains     10,336,000    7.875%   11/1/36       9,246,275     9,278,166
                                              (d)
                      Total  $51,656,225                         $37,645,082   $49,622,337
                                                                     (e)

</TABLE>


                                                 F-24
<PAGE>






                         KRUPP GOVERNMENT INCOME TRUST II

                     NOTES TO FINANCIAL STATEMENTS, Continued

                                                

    D.PIMs, Continued

   (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 8.875% per annum.  Received Final
       Endorsement in August 1995.
   (c) Construction-phase interest rate was 7.125%.  Received Final
       Endorsement in May 1996.
   (d) Construction-phase interest rate is 7.875%.
   (e) The aggregate cost for federal income tax purposes is $37,645,082.

   Reconciliations of activity for 1997, 1996 and 1995 are as follows:


<TABLE>


<CAPTION>
                                                    1997           1996          1995
            <S>                                 <C>            <C>            <C>
            Balance at beginning of period      $49,622,337    $45,436,663    $35,071,805

                 Acquisitions                         -          4,521,175     10,638,200

                 Reclassification               (11,578,526)         -              -

                 Principal collections             (398,729)      (335,501)      (273,342)

            Balance at end of period            $37,645,082    $49,622,337    $45,436,663

</TABLE>


   Property descriptions:

   Mequon Trails Townhomes ("Mequon Trails") is a 246-unit apartment
   complex located in Mequon, Wisconsin.
   The Estates Apartments is a 208-unit apartment complex located in
   Pikesville, Maryland.
   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") will be a 204-unit apartment
       complex in West Des Moines, Iowa.

   E.  Mortgage Backed Securities

       At December 31, 1997, the Trust's MBS portfolio has an amortized cost
       of approximately $50,664,558 and gross unrealized gains and losses of
       approximately $547,435 and $40,692, respectively.  At December 31,
       1996, the Trust's MBS portfolio has an amortized cost of $40,459,315
       and gross unrealized gains of approximately $122,335. The MBS have
       maturities ranging from 2008 to 2023.

   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.

                                       F-26
<PAGE>



                     NOTES TO FINANCIAL STATEMENTS, Continued

                                                

   F.  Shareholders' Equity, continued

       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 $1,024,097, $295,522 and $295,522 of base
       interest from The Seasons in 1997, 1996 and 1995, respectively (see
       Note C).  In addition, the Trust received $83,360 in 1997 related to
       participating interest income.

   H.  Federal Income Taxes

       The reconciliation of the income reported in the accompanying
       statement of income with the income reported in the Trust's 1997
       federal income tax return follows:

       Net income per statement of income                    $16,263,485

        Add: Book to tax difference for amortization             966,743
               of prepaid fees and expenses                    
              Additional Loan interest deferred for book
              purposes                                         1,073,578

       Net income for federal income tax purposes            $18,303,806

         The Trust paid dividends of $1.25 per share during 1997 which
         represents approximately $1.00 from ordinary income and $.25
         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 $4,728,000 and $4,157,000 at
         December 31, 1997 and 1996, respectively.  The basis of the Trust s
         liabilities for financial reporting purposes exceeded its tax basis
         by approximately $2,545,000 and $1,582,000 at December 31, 1997 and
         1996, respectively


<PAGE>



   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.
              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 and
              Additional Loans based on the estimated fair value of the
              underlying properties.  Management does not include any
              participation income in the Trust s estimated fairvalues,
              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 losses of approximately $3,804,000 at December
              31, 1997 and gross unrealized losses and gains of approximately
              $8,932,000 and $119,000 at December 31, 1996.

              Commitments to Fund Construction Loans and PIMIs

              For the years ended December 31, 1997 and 1996 the Trust
              approximates the fair values of its commitments on closed PIMs
              to be equal to the commitment amount of approximately
              $1,006,000. 

              At December 31, 1997 and 1996, the estimated fair values of the
              Trust's financial instruments are as follows:

<TABLE>

<CAPTION>
                                                    (rounded to thousands)
                                                      1997           1996  

          <S>                                       <C>            <C>
          Cash and cash equivalents                 $ 13,520       $  9,215

          MBS                                         51,171         40,582

          PIMs and PIMIs:
             PIMs                                     37,534         48,132
             Insured mortgages                       144,599        145,768
             Additional loans                         26,397         27,315

                                                    $273,221       $271,012

</TABLE>

                                                 F-30
<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,
                                   1997           1997          1997           1997    

            <S>                 <C>            <C>           <C>           <C>
            Total revenues      $5,306,978     $5,057,310    $6,072,765    $4,853,502

            Net income          $4,012,616     $3,822,465    $4,788,267    $3,640,137

            Earnings per Share  $      .22     $      .21    $      .26    $      .20


                                               For the Quarter Ended


                                 March 31,      June 30,    September 30,  December 31,
                                   1996           1996          1996           1996    

            Total revenues      $5,234,390     $4,884,080    $4,935,430    $4,823,031

            Net income          $3,975,003     $3,665,234    $3,706,177    $3,652,768

            Earnings per Share  $      .22     $      .20    $      .20    $      .20

</TABLE>























































































                                         F-32
<PAGE>