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

                                   Form 10-QSB

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                    For the quarterly period ended June 30, 2003


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


                For the transition period from _________to _________

                         Commission file number 0-14483


                    Davidson Diversified Real Estate II, L.P.
             (Exact name of registrant as specified in its charter)



           Delaware                                              62-1207077
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                         55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29602
                    (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)

<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS



                    Davidson Diversified Real Estate II, L.P.

                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                        (in thousands, except unit data)

                                  June 30, 2003

<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $   511
   Receivables and deposits                                                      567
   Restricted escrows                                                             85
   Other assets                                                                  466
   Investment properties:
      Land                                                    $ 1,953
      Buildings and related personal property                   45,620
                                                                47,573
      Less accumulated depreciation                            (21,388)       26,185
                                                                            $ 27,814

Liabilities and Partners' Deficit

Liabilities
   Accounts payable                                                          $ 908
   Tenant security deposit liabilities                                           136
   Accrued property taxes                                                        604
   Other liabilities                                                             378
   Due to affiliates                                                           7,650
   Mortgage notes payable                                                     20,248

Partners' Deficit
   General partners                                            $ (161)
   Limited partners (1,224.25 units issued and
      outstanding)                                              (1,949)       (2,110)
                                                                            $ 27,814

            See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                    Davidson Diversified Real Estate II, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                      (in thousands, except per unit data)

<TABLE>
<CAPTION>

                                                Three Months Ended         Six Months Ended
                                                     June 30,                  June 30,
                                                 2003        2002         2003          2002
Revenues:                                                 (Restated)                 (Restated)
<S>                                            <C>          <C>          <C>          <C>
  Rental income                                $ 1,342      $ 1,220      $ 2,603      $ 2,367
  Other income                                       70         116           285          238
  Casualty gain (Note D)                              8          --             8           --
       Total revenues                             1,420       1,336         2,896        2,605

Expenses:
  Operating                                         564         792         1,166        1,307
  General and administrative                         75          85           156          175
  Depreciation                                      379         372           755          741
  Interest                                          223         279           378          542
  Property taxes                                    151          92           283          184
       Total expenses                             1,392       1,620         2,738        2,949

Income (loss) from continuing
  operations                                         28        (284)          158         (344)
Loss from discontinued operations                    --         (49)         (202)        (125)
Gain on sale of discontinued
  operations (Note C)                                73          --         5,543           --

Net income (loss)                               $ 101       $ (333)      $ 5,499       $ (469)

Net income (loss) allocated to general
  partners                                       $ 6         $ (6)        $ 426         $ (9)
Net income (loss) allocated to limited
  partners                                           95        (327)        5,073         (460)

                                                $ 101       $ (333)      $ 5,499       $ (469)
Per limited partnership unit:
  Income (loss) from continuing
    operations                                 $ 22.05     $(227.89)    $ 126.61      $ (275.27)
  Loss from discontinued operations                  --      (39.21)      (161.73)     (100.47)
  Gain on sale of discontinued operations         55.55          --      4,178.88           --

Net income (loss)                              $ 77.60     $(267.10)    $4,143.76    $ (375.74)

            See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                    Davidson Diversified Real Estate II, L.P.

               CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
                                   (Unaudited)
                        (in thousands, except unit data)

<TABLE>
<CAPTION>

                                     Limited
                                     Partnership     General      Limited
                                        Units        Partners    Partners     Total

<S>                                   <C>              <C>        <C>        <C>
Original capital contributions        1,224.25         $ 1        $24,485    $24,486

Partners' deficit at
   December 31, 2002                  1,224.25        $ (587)     $(7,022)   $(7,609)

Net income for the six months
   ended June 30, 2003                      --           426        5,073      5,499

Partners' deficit at
   June 30, 2003                      1,224.25        $ (161)     $(1,949)   $(2,110)

            See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                    Davidson Diversified Real Estate II, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                   Six Months Ended
                                                                        June 30,
                                                                    2003        2002
Cash flows from operating activities:
<S>                                                               <C>         <C>
  Net income (loss)                                               $ 5,499     $ (469)
  Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
     Depreciation                                                     799        999
     Casualty gain                                                     (8)        --
     Gain on sale of discontinued operations                       (5,543)        --
     Loss on early extinguishment of debt                              68         --
     Amortization of debt discounts and loan costs                    141        184
     Change in accounts:
      Receivables and deposits                                        (86)      (181)
      Other assets                                                    (88)       (94)
      Accounts payable                                               (126)      (396)
      Tenant security deposit liabilities                             (21)        16
      Accrued property taxes                                           76        (91)
      Other liabilities                                              (126)       132
      Due to affiliate                                                119        149
         Net cash provided by operating activities                    704        249

Cash flows from investing activities:
  Property improvements and replacements                           (3,513)    (4,182)
  Net proceeds from sale of investment property                     2,547         --
  Insurance proceeds received                                          13         --
  Net deposits to restricted escrows                                   --        (49)
         Net cash used in investing activities                       (953)    (4,231)

Cash flows from financing activities:
  Advances from affiliates                                          3,176      2,587
  Payments on advances from affiliates                             (2,778)       (77)
  Payments on mortgage notes payable                                 (221)      (255)
  Proceeds from mortgage note payable                                  --      1,742
  Loan costs paid                                                      (8)       (19)
         Net cash provided by financing activities                    169      3,978

Net decrease in cash and cash equivalents                             (80)        (4)
Cash and cash equivalents at beginning of period                      591        743
Cash and cash equivalents at end of period                         $ 511      $ 739

Supplemental disclosure of cash flow information:
  Cash paid for interest                                           $ 580      $ 807
Supplemental disclosure of non-cash activity:
  Property improvements and replacements in accounts payable       $ 856       $ --
  Mortgage assumed by buyer on sale of investment property        $ 6,899      $ --

At  December  31, 2002  approximately  $527,000  of  property  improvements  and
replacements  were  included  in accounts  payable and are  included in property
improvements and replacements at June 30, 2003.

            See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>
                    Davidson Diversified Real Estate II, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited  consolidated  financial  statements  of  Davidson
Diversified Real Estate II, L.P. (the  "Partnership" or "Registrant")  have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-QSB and Item 310(b)
of Regulation S-B.  Accordingly,  they do not include all of the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of Davidson Diversified  Properties,  Inc.
(the  "Managing  General  Partner"),   all  adjustments  (consisting  of  normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included. Operating results for the three and six months ended June 30, 2003 are
not  necessarily  indicative  of the results that may be expected for the fiscal
year  ending  December  31,  2003.  For  further   information,   refer  to  the
consolidated   financial  statements  and  footnotes  thereto  included  in  the
Partnership's  Annual  Report on Form 10-KSB for the fiscal year ended  December
31, 2002. The Managing  General Partner is a subsidiary of Apartment  Investment
and  Management  Company  ("AIMCO"),  a publicly  traded real estate  investment
trust.

Effective  January 1, 2002,  the  Partnership  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  144,  "Accounting  for the  Impairment  or
Disposal of  Long-Lived  Assets"  which  established  standards for the way that
public business  enterprises report information about long-lived assets that are
either  being held for sale or have  already  been  disposed of by sale or other
means.  The standard  requires that results of operations for a long-lived asset
that is being held for sale or has  already  been  disposed  of be reported as a
discontinued  operation  on  the  statement  of  operations.  As a  result,  the
accompanying  consolidated  statements  of  operations  have been restated as of
January 1, 2002 to reflect the  operations  of  LaFontenay I and II  Apartments,
which was sold January 2003 (see Note C), as loss from discontinued operations.

Effective  April  1,  2002,  the  Partnership  adopted  Statement  of  Financial
Accounting  Standards ("SFAS") No. 145, "Rescission of FASB Statements No. 4, 44
and 64" which requires that gains and losses from  extinguishment of debt should
only be  classified  as  extraordinary  if they are  unusual in nature and occur
infrequently. Neither of these criteria applies to the Partnership. As a result,
the accompanying consolidated statements of operations reflect the loss on early
extinguishment  of debt at LaFontenay I and II Apartments (see "Note C") in loss
from discontinued operations rather than as an extraordinary item.

Note B - Transactions with Affiliated Parties

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The Partnership Agreement provides for (i) payments to
affiliates for services and (ii)  reimbursement of certain expenses  incurred by
affiliates on behalf of the Partnership.

During the six months ended June 30, 2003 and 2002,  affiliates  of the Managing
General  Partner were  entitled to receive 5% of gross  receipts from all of the
Partnership's   properties  for  providing  property  management  services.  The
Partnership paid to such affiliates  approximately $144,000 and $178,000 for the
six months  ended June 30,  2003 and 2002,  respectively,  which is  included in
operating expenses and loss from discontinued operations.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $117,000 and
$730,000 for the six months ended June 30, 2003 and 2002, respectively, which is
included in general  and  administrative  expenses  and  investment  properties.
Included in these amounts are fees related to construction  management  services
provided by an affiliate of the Managing General Partner of approximately $3,000
and $560,000 for the six months ended June 30, 2003 and 2002, respectively.  The
fees  are  calculated  based  on a  percentage  of  current  year  additions  to
investment properties.

In accordance with the Partnership  Agreement,  the Managing General Partner has
loaned the Partnership funds to cover operational  expenses and to assist in the
closing of the refinancing required at Reflections Apartments. At June 30, 2003,
the amount of the outstanding  loans and accrued  interest to cover  operational
expenses was approximately $3,010,000 and the amount of the outstanding loan and
accrued  interest to assist with the refinancing was  approximately  $4,640,000.
Both amounts are included in due to affiliates on the accompanying  consolidated
balance  sheet.  Interest is charged at prime plus 1% or 5.25% at June 30, 2003.
Interest  expense was  approximately  $186,000 for both of the six month periods
ended June 30, 2003 and 2002. The Managing  General  Partner is considering  the
remedies it can pursue including accelerating repayment of the outstanding loans
it has made to the  Partnership to cover  operational  expenses and to assist in
the  refinancing  of  Reflections  Apartments.  In  connection  with the sale of
LaFontenay I and II Apartments  and funds  received from the operating cash flow
of Big Walnut and The Trails  Apartments,  payments of approximately  $2,778,000
were made on the  outstanding  loans to the Managing  General Partner during the
six months ended June 30, 2003.

The  Partnership  accrued a real estate  commission  of $48,000 upon the sale of
Shoppes at River Rock due to the Managing  General Partner during the year ended
December  31,  1999.  Approximately  $18,000 is accrued at June 30,  2003 and is
included in other  liabilities in the accompanying  consolidated  balance sheet.
Payment of the  remaining  accrued  commission  is  subordinate  to the  limited
partners   receiving   their  original   invested   capital  plus  a  cumulative
non-compounded annual return of 8% on their adjusted invested capital.

The  Partnership  insures most of its  properties up to certain  limits  through
coverage  provided by AIMCO  which is  generally  self-insured  for a portion of
losses and liabilities  related to workers  compensation,  property casualty and
vehicle liability. The Partnership insures its properties above the AIMCO limits
through insurance policies obtained by AIMCO from insurers unaffiliated with the
Managing  General  Partner.  During the six months ended June 30, 2003 and 2002,
the  Partnership was charged by AIMCO and its affiliates  approximately  $54,000
and $155,000,  respectively,  for insurance  coverage and fees  associated  with
policy claims  administration.  During 2003 the Partnership did not pay AIMCO or
its  affiliates for insurance  coverage for  Reflections  Apartments,  which was
issued by an unaffiliated insurance company, Royal Insurance.

Note C - Sale of Investment Property

On January 30, 2003, the  Partnership  sold LaFontenay I and II Apartments to an
unaffiliated  third  party for  $9,700,000.  After  payment of closing  costs of
approximately $254,000, and the assumption of the mortgage debt of approximately
$6,899,000 by the purchaser,  the net proceeds  received by the Partnership were
approximately  $2,547,000.  The sale of the  property  resulted in a gain on the
sale during the first half of 2003 of approximately  $5,543,000.  The additional
gain of  approximately  $73,000  recorded during the three months ended June 30,
2003 was due to the write off of an accrual for additional sale related expenses
that was not  needed.  In  addition,  the  Partnership  recorded a loss on early
extinguishment of debt of approximately  $68,000 as a result of the write off of
unamortized loan costs. The loss on early  extinguishment of debt is included in
the loss from discontinued  operations in the accompanying financial statements.
The Partnership used the proceeds received from the sale to make payments on the
loan balances due to the Managing  General Partner (see "Note B"). In accordance
with Statement of Financial  Accounting Standards No. 144, the operations of the
property have been shown as loss from discontinued operations for the six months
ended June 30, 2003 and 2002.

Note D - Casualty

During the six months ended June 30, 2003 a net casualty  gain of  approximately
$8,000 was recorded at Big Walnut  Apartments.  The  casualty  gain related to a
fire that occurred at Big Walnut Apartments that damaged two apartments in March
2003. The gain was the result of insurance  proceeds  received of  approximately
$13,000  less the net book value of the  damaged  property  of  approximately  $
5,000.

Note E - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking  dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint, which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The Court dismissed without leave to amend certain of the plaintiffs' claims. On
February 11, 2002, plaintiffs filed a motion seeking to certify a putative class
comprised  of all  non-affiliated  persons  who own or have  owned  units in the
partnerships. The Managing General Partner and affiliated defendants opposed the
motion.  On April 29, 2002, the Court held a hearing on  plaintiffs'  motion for
class certification and took the matter under submission after further briefing,
as ordered by the court,  was  submitted by the parties.  On July 10, 2002,  the
Court  entered an order  vacating the trial date of January 13, 2003 (as well as
the pre-trial and discovery  cut-off  dates) and stayed the case in its entirety
through  November  7, 2002 so that the  parties  could  have an  opportunity  to
discuss  settlement.  On October 30, 2002, the court entered an order  extending
the stay in effect through January 10, 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first  amended  complaint.  The  Heller  action  was  brought  as a  purported
derivative  action,  and  asserted  claims for,  among other  things,  breach of
fiduciary duty, unfair competition,  conversion, unjust enrichment, and judicial
dissolution.  Plaintiffs in the Nuanes action filed a motion to consolidate  the
Heller action with the Nuanes action and stated that the Heller action was filed
in order to preserve the derivative  claims that were dismissed without leave to
amend in the Nuanes action by the Court order dated July 10, 2001. On October 5,
2001, the Managing General Partner and affiliated defendants moved to strike the
first amended  complaint in its entirety for violating the Court's July 10, 2001
order  granting in part and denying in part  defendants'  demurrer in the Nuanes
action, or  alternatively,  to strike certain portions of the complaint based on
the  statute of  limitations.  Other  defendants  in the action  demurred to the
fourth amended complaint, and, alternatively,  moved to strike the complaint. On
December 11, 2001,  the court heard argument on the motions and took the matters
under  submission.  On February 4, 2002,  the Court  served  notice of its order
granting defendants' motion to strike the Heller complaint as a violation of its
July 10, 2001 order in the Nuanes  action.  On March 27,  2002,  the  plaintiffs
filed a notice  appealing the order  striking the complaint.  Before  completing
briefing on the appeal, the parties stayed further  proceedings in the appeal in
light of a settlement.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action described below.

In general  terms,  the  proposed  settlement  provides  for  certification  for
settlement  purposes of a settlement class consisting of all limited partners in
this  Partnership and others (the  "Partnerships")  as of December 20, 2002, the
dismissal  with  prejudice  and  release  of claims  in the  Nuanes  and  Heller
litigation,  payment by AIMCO of $9.9  million  (which shall be  distributed  to
settlement  class  members  after  deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent  appraisals of the  Partnerships'  properties  by a Court  appointed
appraiser.  An affiliate of the Managing General Partner has also agreed to make
a tender offer to purchase all of the partnership  interests in the Partnerships
within one year of final  approval,  if it is granted,  and to provide  partners
with the  independent  appraisals  at the time of these  tenders.  The  proposed
settlement  also provided for the  limitation  of the allowable  costs which the
Managing  General  Partner or its  affiliates  will charge the  Partnerships  in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation.  On April 11, 2003,  notice was distributed to limited
partners providing the details of the proposed settlement.

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.

The  Managing  General  Partner  does  not  anticipate  that  any  costs  to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including,  without limitation:  national and local
economic  conditions;  the terms of  governmental  regulations  that  affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates;  financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest;  real estate risks, including variations of real estate values and
the general  economic  climate in local markets and  competition  for tenants in
such markets;  litigation,  including  costs  associated  with  prosecuting  and
defending  claims  and  any  adverse   outcomes,   and  possible   environmental
liabilities.   Readers  should  carefully  review  the  Registrant's   financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Registrant  files  from  time to time  with the  Securities  and
Exchange Commission.

The Partnership's  investment  properties consist of three apartment  complexes.
The following  table sets forth the average  occupancy of the properties for the
six months ended June 30, 2003 and 2002:

                                                     Average Occupancy
                                                      2003       2002
      Big Walnut Apartments
         Columbus, Ohio (1)                           93%         96%
      The Trails Apartments
         Nashville, Tennessee                         94%         94%
      Reflections Apartments
         Indianapolis, Indiana (2)                    59%         41%

(1)   The Managing  General Partner  attributes the decrease in occupancy at Big
      Walnut  Apartments to a slow economy in the Columbus,  Ohio area and lower
      mortgage rates.

(2)   The low occupancy at Reflections  Apartments is due to  rehabilitation  at
      the  property.  The  property is currently  undergoing a major  renovation
      project to enhance the  appearance  of the  property to attract  desirable
      tenants.  As of June 30, 2003, 20.62% of the units cannot be rented due to
      the  rehabilitation.  The increase in occupancy over the prior year is due
      to the completion of some of the rehabilitated apartment units.

Results of Operations

The  Partnership's  net  income  for the six  months  ended  June  30,  2003 was
approximately $5,499,000 as compared to a net loss of approximately $469,000 for
the  six  months  ended  June  30,  2002.  The  Partnership  had net  income  of
approximately $101,000 for the three months ended June 30, 2003 as compared to a
net loss of approximately $333,000 for the three months ended June 30, 2002. The
increase in net income for the six months ended June 30, 2003 was  primarily due
to a gain on the sale of LaFontenay I and II Apartments.

On January 30, 2003, the  Partnership  sold LaFontenay I and II Apartments to an
unaffiliated  third  party for  $9,700,000.  After  payment of closing  costs of
approximately $254,000, and the assumption of the mortgage debt of approximately
$6,899,000 by the purchaser,  the net proceeds  received by the Partnership were
approximately  $2,547,000.  The sale of the  property  resulted in a gain on the
sale during the first half of 2003 of approximately $5,543,000. In addition, the
Partnership  recorded a loss on early  extinguishment  of debt of  approximately
$68,000 as a result of the write off of unamortized  loan costs. The Partnership
used the proceeds  received  from the sale to make payments on the loan balances
due to the  Managing  General  Partner.  The  additional  gain of  approximately
$73,000 that was recorded during the three months ended June 30, 2003 was due to
the write off of an accrual for  additional  sale related  expenses that was not
needed.

Effective  January 1, 2002,  the  Partnership  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  144,  "Accounting  for the  Impairment  or
Disposal of  Long-Lived  Assets"  which  established  standards for the way that
public business  enterprises report information about long-lived assets that are
either  being held for sale or have  already  been  disposed of by sale or other
means.  The standard  requires that results of operations for a long-lived asset
that is being held for sale or has  already  been  disposed  of be reported as a
discontinued  operation  on  the  statement  of  operations.  As a  result,  the
accompanying  consolidated  statements  of  operations  have been restated as of
January 1, 2002 to reflect the  operations  of LaFontenay I and II Apartments as
loss from discontinued operations.

Effective  April  1,  2002,  the  Partnership  adopted  Statement  of  Financial
Accounting  Standards ("SFAS") No. 145, "Rescission of FASB Statements No. 4, 44
and 64" which requires that gains and losses from  extinguishment of debt should
only be  classified  as  extraordinary  if they are  unusual in nature and occur
infrequently. Neither of these criteria applies to the Partnership. As a result,
the accompanying consolidated statements of operations reflect the loss on early
extinguishment  of  debt  at  LaFontenay  I  and  II  Apartments  in  loss  from
discontinued operations rather than as an extraordinary item.

The income from continuing operations for the six months ended June 30, 2003 was
approximately  $158,000 as compared to a loss of approximately  $344,000 for the
six months ended June 30, 2002.  The income from  continuing  operations for the
three months ended June 30, 2003 was approximately $28,000 as compared to a loss
of approximately $284,000 for the three months ended June 30, 2002. The increase
in income from continuing operations for the three and six months ended June 30,
2003 was due to a decrease in total expenses and an increase in total revenues.

Total revenues increased for the six months ended June 30, 2003 primarily due to
an increase in rental income and other income.  Total revenues increased for the
three months ended June 30, 2003  primarily  due to an increase in rental income
partially offset by a decrease in other income. Rental income increased for both
the three and six month  periods  primarily  due to an increase in  occupancy at
Reflections  Apartments and an increase in the average rental rate at Big Walnut
Apartments,  which was partially offset by a decrease in occupancy at Big Walnut
Apartments,  a decrease in average  rental rates at  Reflections  and The Trails
Apartments,  an increase  in bad debt  expense at Big Walnut  Apartments  and an
increase in concessions  at all of the  Partnership's  properties.  Other income
increased  for the six months ended June 30, 2003 due  primarily to increases in
utility   reimbursements   at  Reflections   Apartments   and  increased   lease
cancellation  fees at Big Walnut  Apartments,  partially offset by reduced lease
cancellation  fees at  Reflections  Apartments.  Other income  decreased for the
three  months  ended  June 30,  2003 due to reduced  late  charges at Big Walnut
Apartments  and  reduced  lease  cancellation  fees  at  Reflections  Apartments
partially offset by increased utility reimbursements at Reflections Apartments.

Total expenses decreased for the three and six months ended June 30, 2003 due to
decreases  in  operating,  interest  and  general  and  administrative  expenses
partially  offset by an increase in property  tax  expense.  Operating  expenses
decreased due to decreased  property expenses partially offset by an increase in
maintenance  expense.  Property expense decreased  primarily due to decreases in
utilities,  commissions and bonuses and payroll and related benefits expenses at
Reflections Apartments.  Maintenance expenses increased primarily due to reduced
operating  costs  capitalized as part of the  renovation  project at Reflections
Apartments.  Interest expense decreased due to variable rate interest  mortgages
at all of the Partnership's  properties whereby the interest rates were lower in
2003  compared to 2002.  Property  tax expense  increased  for the three and six
months  ended  June 30,  2003 at  Reflections  Apartments,  which is  located in
Indiana.  During  2003,  Indiana has  adjusted  its  methodology  for  assessing
property  taxable  values and tax rates,  which has  resulted  in a  significant
increase in property tax expense.

General and administrative expenses decreased for the three and six months ended
June 30, 2003 primarily due to reduced taxes and  professional  fees  associated
with  administration of the Partnership.  Included in general and administrative
expenses  at both  June 30,  2003 and 2002 are  reimbursements  to the  Managing
General  Partner  allowed  under the  Partnership  Agreement.  Also  included in
general and administrative expenses at both June 30, 2003 and 2002 are the costs
associated  with the quarterly  communications  with  investors  and  regulatory
agencies and the annual audit required by the Partnership Agreement.

As part of the ongoing  business plan of the  Partnership,  the Managing General
Partner monitors the rental market  environment of the investment  properties to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of this
plan, the Managing  General Partner attempts to protect the Partnership from the
burden of  inflation-related  increases  in  expenses  by  increasing  rents and
maintaining a high overall  occupancy  level.  However,  due to changing  market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At June 30, 2003, the Partnership had cash and cash equivalents of approximately
$511,000 as compared to  approximately  $739,000 at June 30, 2002. Cash and cash
equivalents  decreased  approximately  $80,000 since December 31, 2002 primarily
due to  approximately  $953,000 of cash used in investing  activities  which was
partially  offset  by  approximately  $704,000  of cash  provided  by  operating
activities and approximately  $169,000 of cash provided by financing activities.
Cash  used in  investing  activities  consisted  of  property  improvements  and
replacements  partially  offset by proceeds from the sale of LaFontenay I and II
Apartments  and the receipt of insurance  proceeds.  Cash  provided by financing
activities consisted of advances from affiliates partially offset by payments on
advances from affiliates,  principal  payments on the mortgages  encumbering the
Partnership's  properties  and loan costs  paid.  The  Partnership  invests  its
working capital reserves in interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the various  properties  to  adequately  maintain  the
physical  assets and other operating needs of the Partnership and to comply with
Federal,  state,  and local  legal and  regulatory  requirements.  The  Managing
General  Partner  monitors  developments  in the  area of legal  and  regulatory
compliance and is studying new federal laws, including the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act of 2002 mandates or suggests additional  compliance
measures with regard to governance,  disclosure, audit and other areas. In light
of these changes,  the  Partnership  expects that it will incur higher  expenses
related  to  compliance,  including  increased  legal  and audit  fees.  Capital
improvements  planned  for each of the  Partnership's  properties  are  detailed
below.

Big Walnut Apartments

During  the  six  months  ended  June  30,  2003,  the   Partnership   completed
approximately   $71,000  of  capital  improvements  at  Big  Walnut  Apartments,
consisting  primarily of floor  covering and roofing  replacements,  heating and
plumbing  fixture  upgrades  and  building  repairs  relating  to the March 2003
casualty at Big Walnut Apartments. These improvements were funded from operating
cash  flow  and  insurance  proceeds.  The  Partnership  evaluates  the  capital
improvement  needs of the  property  during  the year and  currently  expects to
complete an additional $51,000 in capital  improvements  during the remainder of
2003.  The  additional  capital  improvements  will  consist  primarily of floor
covering  and  air  conditioning  unit  replacements,   fencing  upgrades,   and
structural  improvements.  Additional capital improvements may be considered and
will depend on the physical condition of the property as well as the anticipated
cash flow generated by the property.

The Trails Apartments

During  the  six  months  ended  June  30,  2003,  the   Partnership   completed
approximately   $41,000  of  capital  improvements  at  The  Trails  Apartments,
consisting  primarily of floor  covering  replacements,  water heater  upgrades,
major landscaping,  and structural improvements.  These improvements were funded
from  operating  cash flow. The  Partnership  evaluates the capital  improvement
needs of the  property  during the year and  currently  expects to  complete  an
additional  $47,000 in capital  improvements  during the remainder of 2003.  The
additional  capital  improvements  will  consist  primarily  of floor  covering,
appliance,  air conditioning unit, and cabinet  replacements and parking lot and
swimming pool upgrades.  Additional  capital  improvements may be considered and
will depend on the physical condition of the property as well as the anticipated
cash flow generated by the property.

Reflections Apartments

In  January  2001,  the  Managing   General  Partner   refinanced  the  mortgage
encumbering   this   property.   The   proceeds  are  being  used  to  fund  the
rehabilitation  project for this property with anticipated completion by the end
of 2003.  During the six months ended June 30, 2003, the  Partnership  completed
approximately  $3,706,000 of capital  improvements  at  Reflections  Apartments,
consisting primarily of development services,  building construction,  furniture
and fixtures,  and floor  covering  replacements.  These  expenditures  included
capitalized  construction  period interest of  approximately  $338,000,  tax and
insurance  expenses  of  approximately  $77,000  and other  construction  period
expenses of approximately  $118,000.  These  improvements were funded from loans
from the Managing  General  Partner and  operating  cash flow.  The  Partnership
evaluates  the capital  improvement  needs of the  property  during the year and
currently expects to complete an additional  $4,573,000 in capital  improvements
during the remainder of 2003. The additional  capital  improvements will consist
primarily  of floor  covering and roofing  replacements  and  completion  of the
rehabilitation  project.  Additional capital  improvements may be considered and
will depend on the physical condition of the property as well as the anticipated
cash flow generated by the property and further refinancing proceeds.

LaFontenay I and II Apartments

During  the  six  months  ended  June  30,  2003,  the   Partnership   completed
approximately  $24,000 of capital improvements at LaFontenay I and II Apartments
consisting  primarily of floor covering  replacements.  These  improvements were
funded from operating cash flow. The property was sold January 30, 2003.

The additional  capital  expenditures will be incurred only if cash is available
from operations,  Partnership reserves or further refinancing  proceeds.  To the
extent that such budgeted capital  improvements are completed,  the Registrant's
distributable cash flow, if any, may be adversely affected at least in the short
term.

On September 16, 2002, the Partnership  refinanced the mortgages encumbering Big
Walnut  Apartments.  The refinancing  replaced a first mortgage of approximately
$3,930,000 and a second mortgage of  approximately  $167,000 with a new mortgage
of $5,720,000.  Total capitalized loan costs were approximately  $155,000 during
the year ended December 31, 2002 and an additional $8,000 was capitalized during
the six months ended June 30, 2003.

Big Walnut Apartments was initially  refinanced under an interim credit facility
("Interim Credit  Facility") which had a term of six months.  The Interim Credit
Facility included  properties in other partnerships that are affiliated with the
Partnership.  However,  the Interim Credit Facility  created  separate loans for
each property that were not  cross-collateralized  or  cross-defaulted  with the
other property loans.  During the six month term of the Interim Credit Facility,
the properties were required to make interest-only  payments.  The first month's
interest, which was paid at the date of the refinancing, was calculated at LIBOR
plus 70 basis points.  Interest for the  following two months was  calculated at
LIBOR plus 150 points and was due monthly.

During  December  2002,  the  Interim  Credit  Facility  encumbering  Big Walnut
Apartments was sold to Fannie Mae under a permanent credit facility  ("Permanent
Credit  Facility").  The Permanent Credit Facility has a maturity of five years,
with one five-year extension option. This Permanent Credit Facility also creates
separate  loans  for  each  property  that  are  not   cross-collateralized   or
cross-defaulted  with the other property  loans.  Each note under this Permanent
Credit Facility will begin as a variable rate loan with the option of converting
to a fixed rate loan after three years.  The interest  rate on the variable rate
loan is the Fannie Mae discounted  mortgage-backed  security index plus 85 basis
points.  The rate was 2.06% at June 30, 2003 and will reset  monthly.  Each loan
will  automatically  renew  at the  end of  each  month.  In  addition,  monthly
principal payments are required based on a 30-year amortization schedule,  using
the interest  rate in effect  during the first month that any property is on the
Permanent Credit Facility. The loans are prepayable without penalty.

The  Partnership's  assets are thought to be sufficient for any near-term  needs
(exclusive  of  capital   improvements)   of  the   Partnership.   The  mortgage
indebtedness of approximately  $20,248,000,  net of discount,  is amortized over
varying  periods with  required  balloon  payments  ranging from January 2004 to
December 2009.  The Managing  General  Partner will attempt to refinance  and/or
sell the properties  prior to such maturity dates.  If the properties  cannot be
refinanced or sold for a sufficient amount, the Partnership may risk losing such
properties through foreclosure.

Pursuant to the Partnership Agreement,  the term of the Partnership is scheduled
to expire on December 31, 2008. Accordingly,  prior to such date the Partnership
will need to either  sell the  investment  properties  or extend the term of the
Partnership.

No cash  distributions  were made  during the six months  ended June 30, 2003 or
2002. The Partnership's cash available for distribution is reviewed on a monthly
basis. Future cash distributions will depend on the levels of net cash generated
from  operations,  the  availability  of cash  reserves,  and the timing of debt
maturities,  refinancings  and/or property sales. In light of the rehabilitation
project  at  Reflections  Apartments  and  the  significant  amounts  due to the
Managing  General  Partner  at June 30,  2003,  it is not  anticipated  that the
Partnership will make distributions in the foreseeable future.

Other

In addition to its indirect  ownership of the  managing  and  associate  general
partner  interest in the  Partnership,  AIMCO and its  affiliates  owned  620.25
limited  partnership units ("Units") in the Partnership  representing  50.66% of
the  outstanding  units at June 30, 2003. A number of these Units were  acquired
pursuant to tender offers made by AIMCO or its  affiliates.  It is possible that
AIMCO or its affiliates will acquire  additional Units in exchange for cash or a
combination  of cash and  units in the  operating  partnership  of AIMCO  either
through  private  purchases  or  tender  offers.  Pursuant  to  the  Partnership
Agreement,  unitholders  holding a majority  of the Units are  entitled  to take
action with  respect to a variety of matters that  include,  but are not limited
to,  voting on certain  amendments  to the  Partnership  Agreement and voting to
remove the Managing General  Partner.  As a result of its ownership of 50.66% of
the outstanding Units, AIMCO and its affiliates are in a position to control all
such voting  decisions  with respect to the  Partnership.  Although the Managing
General  Partner  owes  fiduciary   duties  to  the  limited   partners  of  the
Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as
its sole stockholder.  As a result,  the duties of the Managing General Partner,
as managing  general  partner,  to the Partnership and its limited  partners may
come into conflict with the duties of the Managing  General Partner to AIMCO, as
its sole stockholder.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to  make  estimates  and  assumptions.  The  Partnership  believes  that  of its
significant  accounting  policies,  the following may involve a higher degree of
judgment and complexity.

Impairment of Long-Lived Assets

Investment  properties  are  recorded at cost,  less  accumulated  depreciation,
unless  considered  impaired.  If  events  or  circumstances  indicate  that the
carrying  amount of a property may be  impaired,  the  Partnership  will make an
assessment of its  recoverability  by estimating  the  undiscounted  future cash
flows,  excluding  interest  charges,  of the property.  If the carrying  amount
exceeds the aggregate  future cash flows,  the  Partnership  would  recognize an
impairment  loss to the extent the carrying amount exceeds the fair value of the
property.

Real  property  investments  are  subject  to varying  degrees of risk.  Several
factors  may  adversely  affect  the  economic  performance  and  value  of  the
Partnership's  investment  properties.  These  factors  include  changes  in the
national,  regional and local economic  climate;  local  conditions,  such as an
oversupply  of  multifamily   properties;   competition   from  other  available
multifamily  property  owners and changes in market  rental  rates.  Any adverse
changes in these factors could cause an impairment in the Partnership's assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
Rental income  attributable to leases is recognized  monthly as it is earned and
the Partnership  fully reserves all balances  outstanding  over thirty days. The
Partnership will offer rental concessions during  particularly slow months or in
response to heavy  competition  from other  similar  complexes in the area.  Any
concessions  given at the inception of the lease are amortized  over the life of
the lease.

ITEM 3.     CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.  The Partnership's management,  with the
participation of the principal executive officer and principal financial officer
of the Managing  General  Partner,  who are the equivalent of the  Partnership's
principal executive officer and principal financial officer,  respectively,  has
evaluated  the  effectiveness  of  the  Partnership's  disclosure  controls  and
procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)  under the
Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report.  Based on such  evaluation,  the principal
executive  officer  and  principal  financial  officer of the  Managing  General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal  financial officer,  respectively,  have concluded that, as of the
end of such period,  the  Partnership's  disclosure  controls and procedures are
effective.

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fiscal quarter to which this report relates that have  materially  affected,  or
are reasonably likely to materially affect,  the Partnership's  internal control
over financial reporting.


<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purported  to  assert  claims  on  behalf  of a class of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  that are named as nominal  defendants,  challenging,  among  other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc.  ("Insignia") and entities that were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged into AIMCO.  The plaintiffs  sought  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking  dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint, which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The Court dismissed without leave to amend certain of the plaintiffs' claims. On
February 11, 2002, plaintiffs filed a motion seeking to certify a putative class
comprised  of all  non-affiliated  persons  who own or have  owned  units in the
partnerships. The Managing General Partner and affiliated defendants opposed the
motion.  On April 29, 2002, the Court held a hearing on  plaintiffs'  motion for
class certification and took the matter under submission after further briefing,
as ordered by the court,  was  submitted by the parties.  On July 10, 2002,  the
Court  entered an order  vacating the trial date of January 13, 2003 (as well as
the pre-trial and discovery  cut-off  dates) and stayed the case in its entirety
through  November  7, 2002 so that the  parties  could  have an  opportunity  to
discuss  settlement.  On October 30, 2002, the court entered an order  extending
the stay in effect through January 10, 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first  amended  complaint.  The  Heller  action  was  brought  as a  purported
derivative  action,  and  asserted  claims for,  among other  things,  breach of
fiduciary duty, unfair competition,  conversion, unjust enrichment, and judicial
dissolution.  Plaintiffs in the Nuanes action filed a motion to consolidate  the
Heller action with the Nuanes action and stated that the Heller action was filed
in order to preserve the derivative  claims that were dismissed without leave to
amend in the Nuanes action by the Court order dated July 10, 2001. On October 5,
2001, the Managing General Partner and affiliated defendants moved to strike the
first amended  complaint in its entirety for violating the Court's July 10, 2001
order  granting in part and denying in part  defendants'  demurrer in the Nuanes
action, or  alternatively,  to strike certain portions of the complaint based on
the  statute of  limitations.  Other  defendants  in the action  demurred to the
fourth amended complaint, and, alternatively,  moved to strike the complaint. On
December 11, 2001,  the court heard argument on the motions and took the matters
under  submission.  On February 4, 2002,  the Court  served  notice of its order
granting defendants' motion to strike the Heller complaint as a violation of its
July 10, 2001 order in the Nuanes  action.  On March 27,  2002,  the  plaintiffs
filed a notice  appealing the order  striking the complaint.  Before  completing
briefing on the appeal, the parties stayed further  proceedings in the appeal in
light of a settlement.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action described below.

In general  terms,  the  proposed  settlement  provides  for  certification  for
settlement  purposes of a settlement class consisting of all limited partners in
this  Partnership and others (the  "Partnerships")  as of December 20, 2002, the
dismissal  with  prejudice  and  release  of claims  in the  Nuanes  and  Heller
litigation,  payment by AIMCO of $9.9  million  (which shall be  distributed  to
settlement  class  members  after  deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent  appraisals of the  Partnerships'  properties  by a Court  appointed
appraiser.  An affiliate of the Managing General Partner has also agreed to make
a tender offer to purchase all of the partnership  interests in the Partnerships
within one year of final  approval,  if it is granted,  and to provide  partners
with the  independent  appraisals  at the time of these  tenders.  The  proposed
settlement  also provided for the  limitation  of the allowable  costs which the
Managing  General  Partner or its  affiliates  will charge the  Partnerships  in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation.  On April 11, 2003,  notice was distributed to limited
partners providing the details of the proposed settlement.

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.

The  Managing  General  Partner  does  not  anticipate  that  any  costs  to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits

                  Exhibit 3.1,  Partnership  Agreement  dated June 11, 1984,  as
                  amended  is  incorporated  by  reference  to  Exhibit A to the
                  Prospectus of the  Registrant  dated October 16, 1984 as filed
                  with the Commission pursuant to Rule 424(b) under the Act.

                  Exhibit  3.2,  Amendment  No. 1 to the  Partnership  Agreement
                  dated August 1, 1985 is  incorporated  by reference to Exhibit
                  3B to the  Registrant's  Annual  Report  on Form  10-K for the
                  fiscal year ended December 31, 1985.

                  Exhibit 4.1, Certificate of Limited Partnership dated June 11,
                  1984  is  incorporated  by  reference  to  Exhibit  4  to  the
                  Registrant's  Annual  Report on Form 10-K for the fiscal  year
                  ended December 31, 1987.

                  Exhibit 4.2,  Certificate of Amendment of Limited  Partnership
                  dated July 17, 1984 is incorporated by reference to Exhibit 4A
                  to the Registrant's  Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1987.

                  Exhibit 4.3, Restated Certificate of Limited Partnership dated
                  October 5, 1984 is  incorporated by reference to Exhibit 4B to
                  the  Registrant's  Annual  Report on Form 10-K for the  fiscal
                  year ended December 31, 1987.

                  Exhibit 31.1,  Certification  of equivalent of Chief Executive
                  Officer   pursuant   to   Securities    Exchange   Act   Rules
                  13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

                  Exhibit 31.2,  Certification  of equivalent of Chief Financial
                  Officer   pursuant   to   Securities    Exchange   Act   Rules
                  13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

                  Exhibit  32.1,  Certification  Pursuant  to 18 U.S.C.  Section
                  1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.

            b) Reports on Form 8-K filed during the quarter ended June 30, 2003:

                  None.



<PAGE>


                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                                    DAVIDSON DIVERSIFIED REAL ESTATE II, L.P.


                                    By:   Davidson Diversified Properties, Inc.
                                          Managing General Partner


                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President


                                    By:   /s/Thomas C. Novosel
                                          Thomas C. Novosel
                                          Senior Vice President
                                          and Chief Accounting Officer


                                    Date: August 13, 2003



<PAGE>




Exhibit 31.1


                                  CERTIFICATION


I, Patrick J. Foye, certify that:


1.    I  have  reviewed  this  quarterly  report  on  Form  10-QSB  of  Davidson
      Diversified Real Estate II, L.P.;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The  registrant's  other  certifying  officer(s) and I are responsible for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            registrant,  including its consolidated subsidiaries,  is made known
            to us by others  within  those  entities,  particularly  during  the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant's  board of directors  (or persons  performing  the  equivalent
      functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.

Date:  August 13, 2003

                                /s/Patrick J. Foye
                                Patrick J. Foye
                                Executive    Vice    President    of    Davidson
                                Diversified Properties,  Inc., equivalent of the
                                chief executive officer of the Partnership


<PAGE>



Exhibit 31.2


                                  CERTIFICATION


I, Paul J. McAuliffe, certify that:


1.    I  have  reviewed  this  quarterly  report  on  Form  10-QSB  of  Davidson
      Diversified Real Estate II, L.P.;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The  registrant's  other  certifying  officer(s) and I are responsible for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            registrant,  including its consolidated subsidiaries,  is made known
            to us by others  within  those  entities,  particularly  during  the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant's  board of directors  (or persons  performing  the  equivalent
      functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.

Date:  August 13, 2003

                                /s/Paul J. McAuliffe
                                Paul J. McAuliffe
                                Executive  Vice  President  and Chief  Financial
                                Officer of Davidson Diversified Properties,
                                Inc.,  equivalent of the chief financial officer
                                of the Partnership


<PAGE>


Exhibit 32.1


                          Certification of CEO and CFO
                       Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002



In connection with the Quarterly  Report on Form 10-QSB of Davidson  Diversified
Real Estate II, L.P. (the  "Partnership"),  for the quarterly  period ended June
30, 2003 as filed with the Securities and Exchange Commission on the date hereof
(the  "Report"),  Patrick  J. Foye,  as the  equivalent  of the chief  executive
officer of the  Partnership,  and Paul J.  McAuliffe,  as the  equivalent of the
chief financial officer of the Partnership,  each hereby certifies,  pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                           /s/Patrick J. Foye
                                    Name:  Patrick J. Foye
                                    Date:  August 13, 2003


                                           /s/Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  August 13, 2003

This  certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.