SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM l0-Q

                   Quarterly Report Under Section 13 or 15(d)
                     of The Securities Exchange Act of 1934

                        For Quarter Ended March 31, 1998

                         Commission file number O-17248


                         OWENS MORTGAGE INVESTMENT FUND,
                        a California Limited Partnership
             (Exact Name of Registrant as specified In Its charter)


             California                                        68-0023931
    (State or other jurisdiction                              (I.R.S. Employer
  of incorporation or organization)                          Identification No.)


       2221 Olympic Boulevard
      Walnut Creek, California                                    94595
(Address of principal executive office)                         (Zip Code)

   Registrant's Telephone number,
         including area code                                  (925) 935-3840



        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_________


<PAGE>



PART I. FINANCIAL INFORMATION


Item 1. Financial Statements


                         OWENS MORTGAGE INVESTMENT FUND
                       (A California Limited Partnership)

             BALANCE SHEETS -- MARCH 31, 1998 AND DECEMBER 31, 1997


                                                March 31             December 31
                                                  1998                  1997

                                     ASSETS
Cash and cash equivalents (Note 2)             $  13,025,018      $   3,073,115
Certificates of Deposit (Note 2)                   1,000,000          1,000,000
Loans secured by trust deeds (Notes 2 and 3)     173,623,270        174,714,607
less:  Allowance for loan losses (Note 2)         (3,500,000)        (3,500,000)
Real estate held for sale (Note 4)                11,377,231         14,151,141
Interest receivable                                2,026,153          1,883,435
Other assets                                          59,074            112,583
                                                 -----------        -----------
Total Assets                                    $197,610,746       $191,434,881
                                                 ===========        ===========


                        LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued distributions payable                   $    529,194       $    544,385
Accounts payable and accrued liabilities             570,293            159,361
                                                  ----------         ----------

Total Liabilities                                  1,099,487            703,746
                                                  ----------         ----------

PARTNERS' CAPITAL:
General partners (Note 5)                          1,922,738          1,864,033
Limited partners (Note 5)                        194,588,521        188,867,102
                                                 -----------        -----------
Total Partners' Capital                          196,511,259        190,731,135
                                                 -----------        -----------
Total Liabilities and Partners' Capital         $197,610,746       $191,434,881
                                                 ===========        ===========

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


<PAGE>
<TABLE>
<CAPTION>


                         OWENS MORTGAGE INVESTMENT FUND
                       (A California Limited Partnership)

                              STATEMENTS OF INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997

                                                                           FOR THE THREE MONTHS ENDED
                                                                         March 31              March 31
                                                                           1998                  1997
                                                                           ----                  ----
  REVENUES:
<S>                                                                    <C>                   <C>          
     Interest income on loans secured by trust deeds                   $   4,707,266         $   4,342,168
     Gain on sale of real estate (Note 4)                                  1,042,704             1,096,353
     Other interest income                                                   112,841               151,185
                                                                        ------------          ------------
     Total revenues                                                    $   5,862,811         $   5,589,706
                                                                         -----------           -----------

OPERATING EXPENSES:
     Management Fees paid to General Partner (Note 7)                 $      486,171         $   1,299,458
     Servicing Fees paid to General Partner (Note 7)                         107,641               120,238
     Promotional interest (Note 5)                                            23,969                22,974
     Administrative                                                           14,129                14,129
     Legal and accounting                                                     55,786                40,412
     Real Estate Owned operations, net                                        49,973                23,356
     Other                                                                     3,435                   230
                                                                      --------------       ---------------
     Total operating expenses                                         $      741,104         $   1,520,797
                                                                        ------------           -----------
     Net income                                                        $   5,121,707         $   4,068,909
                                                                         ===========           ===========

     Net income allocated to general partner                         $        50,710       $        40,286
                                                                       =============         =============

Net income allocated to limited partners                               $   5,070,997         $   4,028,623
                                                                         ===========           ===========

Net income per limited partnership unit (Note 8)                               $.026                 $.022
                                                                                ====                  ====

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


<PAGE>
<TABLE>
<CAPTION>



                         OWENS MORTGAGE INVESTMENT FUND
                       (A California Limited Partnersbip)

                            STATEMENTS OF CASH FLOWS

               For the Three Months Ended March 31, 1998 and 1997

                                                                              March 31                March 31
                                                                                1998                    1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                       <C>                     <C>           
     Net Income                                                           $    5,121,707          $    4,068,909

Adjustments to reconcile net income
      to net cash provided by operating activities
     Gain on sale of real estate by limited partnership                       (1,017,831)                      -
     Loss on sale of real estate property                                          2,701                       -
     Increase in interest receivable                                            (142,718)               (168,109)
     Decrease in accrued distribution payable                                    (15,191)                 (8,048)
     Increase in accounts payable and accrued liabilities                        410,932                 128,350
     Decrease in other assets                                                     53,509                       0
     Increase in deferred income                                                       -                 162,820
     Increase in other liabilities                                                     -                  25,268
                                                                              ----------              ----------
     Total adjustment                                                           (708,598)                140,281
                                                                              ----------              ----------
       Net cash provided by operating activities                               4,413,109               4,209,190
                                                                              ----------              ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of loans secured by  trust deeds                               (8,164,033)            (16,697,126)
     Principal collected                                                         488,794                 534,850
     Loan payoffs                                                              9,863,394              10,072,287
     Investment in real estate                                                   (19,127)                933,268
     Investment in limited partnership                                          (838,419)               (693,362)
     Distribution received from limited partnership                            3,575,910               2,139,564
     Investment in corporate joint venture                                       (26,142)                      -
     Investments in Certificates of Deposit (net)                                      0                (150,000)
                                                                              ----------              ----------
       Net cash provided by (used in) investing activities                     4,880,377              (3,860,519)
                                                                              ----------              ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of partnership Units                                   5,509,894               5,023,868
     Cash distributions                                                       (1,575,916)             (1,526,796)
     Capital withdrawals                                                      (3,275,561)             (2,872,551)
                                                                              ----------              ----------
       Net cash provided by financing activities                                 658,417                 624,521
                                                                              ----------              ----------

INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                                                  9,951,903                 973,192
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                                          3,073,115              11,386,661
                                                                              ----------              ----------
CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                                             $ 13,025,018            $ 12,359,853
                                                                              ==========              ==========

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


<PAGE>


                         OWENS MORTGAGE INVESTMENT FUND
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1998



    (1)  Organization

         Owens Mortgage Investment Fund (the Partnership),  a California limited
         partnership,  was formed on June 14, 1984 to invest in loans secured by
         first,  second  and third  trust  deeds,  wraparound  and  construction
         mortgage  loans  and  leasehold  interest  mortgages.  The  Partnership
         commenced  operations on the date of formation and will continue  until
         December 31, 2034 unless  dissolved  prior thereto under the provisions
         of the partnership agreement.

         The general  partners  include Owens  Financial  Group,  Inc. (OFG) and
         certain  individuals  who are  OFG's  shareholders  and  officers.  The
         individual  partners have assigned to OFG their interest in any present
         or  future  promotional  allowance  from  the  Partnership.  OFG  is  a
         California  corporation  engaged  in the  origination  of  real  estate
         mortgage loans for eventual sale and the subsequent  servicing of those
         mortgages for the Partnership and other third-party investors.

         The  general  partners  are  authorized  to offer and sell units in the
         Partnership  up to an aggregate of  250,000,000  units  outstanding  at
         $1.00  per  unit,  representing  $250,000,000  of  limited  partnership
         interests in the Partnership.  Limited  partnership  units  outstanding
         were  194,784,543 and  189,063,122,  at March 31, 1998 and December 31,
         1997, respectively.

    (2)  Summary of Significant Accounting Policies

         (a)    Management Estimates

                The  preparation  of financial  statements  in  conformity  with
                generally accepted accounting  principles requires management to
                make estimates and assumptions  that affect the reported amounts
                of assets and  liabilities  and disclosure of contingent  assets
                and liabilities at the date of the financial  statements and the
                reported  amounts of revenues and expenses  during the reporting
                period. Actual results could differ from those estimates.

         (b)    Loans Secured by Trust Deeds

                Loans  secured  by trust  deeds  are  acquired  from OFG and are
                recorded  at cost.  Interest  income on loans is  accrued by the
                simple interest method.



<PAGE>



    (2)  Summary of Significant Accounting Policies, Continued

                In accordance with the Financial  Accounting  Standards  Board's
                Statement No. 114,  Accounting by Creditors for  Impairment of a
                Loan,  and No. 118,  Accounting by Creditors for Impairment of a
                Loan--Income  Recognition and  Disclosures.  Under Statement No.
                114, a loan is impaired when,  based on current  information and
                events, it is probable that a creditor will be unable to collect
                the  contractual  interest  and  principal  payments  of a  loan
                according  to  the  contractual  terms  of the  loan  agreement.
                Statement No. 114 requires  that  impaired  loans be measured on
                the present  value of expected  future cash flows  discounted at
                the loan's effective interest rate or, as a practical expedient,
                at the loan's  observable  market price or the fair value of the
                collateral  if the loan is collateral  dependent.  Statement No.
                118  clarifies   interest  income   recognition  and  disclosure
                provisions   of  Statement   No.  114.  The  adoption  of  these
                statements  did not  have a  material  effect  on the  financial
                statements of the Partnership.

                The Partnership does not recognize interest income on loans once
                they  are  determined  to be  impaired  until  the  interest  is
                collected  in cash.  Cash  receipts  are  allocated  to interest
                income, except when such payments are specifically designated as
                principal  reduction  or when  management  does not  believe the
                Partnership's investment in the loan is fully recoverable.

         (c)    Allowance for Loan Losses

                The Partnership  maintains an allowance for loan losses equal to
                $3,500,000   as  of  March  31,  1998  and  December  31,  1997.
                Management of the Partnership  believes that based on historical
                experience  and a  review  of the  loans  and  their  respective
                collateral, the allowance for loan losses is adequate in amount.

                The  outstanding  balance of all loans  delinquent  greater than
                ninety days is  $11,579,000  and  $5,236,000 and as of March 31,
                1998  and  December  31,  1997,  respectively.  The  Partnership
                discontinues  the  accrual of  interest  on loans  when,  in the
                opinion  of  management,  there is  significant  doubt as to the
                collectibility  of interest or  principal  from the  borrower or
                when the  payment of  principal  or interest is ninety days past
                due,  unless OFG  purchases  the  interest  receivable  from the
                Partnership.  As of March 31, 1998 and December  31,  1997,  the
                aforementioned   loans  totaling   $11,579,000  and  $5,236,000,
                respectively, are classified as non-accrual loans.

                OFG advances  certain  payments to the  Partnership on behalf of
                borrowers, such as property taxes, mortgage interest pursuant to
                senior  indebtedness,   and  development  costs.   Purchases  of
                interest receivable and payments made on loans by OFG during the
                three  months  ended March 31, 1998 and the year ended  December
                31, 1997 but not collected as of March 31, 1998 and December 31,
                1997, respectively, totaled approximately $ 23,000 and $219,000,
                respectively.



<PAGE>



    (2)  Summary of Significant Accounting Policies, Continued

         (d)    Cash and Cash Equivalents

                For  purposes of the  statements  of cash  flows,  cash and cash
                equivalents  include  interest-bearing  and  noninterest-bearing
                bank  deposits  and  short-term  certificates  of  deposit  with
                original maturities of three months or less.

         (e)    Certificates of Deposit

                Certificates   of  deposit  are  held  with  various   financial
institutions with original maturities of up to one year.

         (f)    Real Estate Held for Sale

                Real estate held for sale includes real estate acquired  through
                foreclosure  and  is  carried  at  the  lower  of  the  recorded
                investment in the loan, inclusive of any senior indebtedness, or
                the  property's  estimated fair value,  less estimated  costs to
                sell.

                Certain real estate held for sale acquired by the Partnership is
                held in a limited  partnership and corporate joint venture.  The
                Partnership  accounts for its investments in limited partnership
                and   corporate   joint  venture  under  the  equity  method  of
                accounting.  The limited partnership and corporate joint venture
                investment  in real  estate is  carried  at the lower of cost or
                estimated  fair  value,   less  estimated  costs  to  sell.  The
                Partnership  increases  its  investment  by advances made to the
                limited  partnership  and corporate  joint  venture.  Any profit
                generated  from  the  investment  in  limited   partnership  and
                corporate  joint  venture is  recorded as a gain on sale of real
                estate.

                In accordance with Statement of Financial  Accounting  Standards
                No. 121, "Accounting for the Impairment of Long-lived Assets and
                Long-lived   Assets  to  Be  Disposed   Of",   the   Partnership
                periodically compares the carrying value of real estate held for
                sale to expected  future cash flows for the purpose of assessing
                the  recoverability  of the  recorded  amounts.  If the carrying
                value exceeds future cash flows,  the assets are reduced to fair
                value.  There were no required  reductions to the carrying value
                of real estate  held for sale made for the  quarter  ended March
                31, 1998 and 1997.

         (g)    Income Taxes

                No provision is made for income taxes since the  Partnership  is
                not a  taxable  entity.  Accordingly,  any  income  or  loss  is
                included in the tax returns of the partners.



<PAGE>



   (3)   Loans Secured by Trust Deeds

         Loans secured by trust deeds as of March 31, 1998 and December 31, 1997
are as follows:
<TABLE>
<CAPTION>
                                                                                March 31            December 31
                                                                                 1998                  1997
                                                                                 ----                  ----

              <S>                                                           <C>                 <C>           
              Income-producing properties                                   $  163,441,519      $  165,201,582
              Single-family residences                                           2,087,879           2,088,606
              Unimproved land                                                    8,093,872           7,424,419
                                                                             -------------       -------------

                                                                            $  173,623,270       $ 174,714,607
                                                                               ===========         ===========


              First mortgages                                               $  158,664,190         161,275,350
              Second mortgages                                                  14,272,485          12,744,274
              Third mortgages or all-inclusive deeds of trust                      686,595             694,983
                                                                             -------------       -------------

                                                                            $  173,623,270      $  174,714,607
                                                                               ===========        ============
</TABLE>

         Scheduled  maturities  of loans  secured by trust deeds as of March 31,
         1998 and the interest rate sensitivity of such loans is as follows:
<TABLE>
<CAPTION>

                                                   Fixed             Variable
             Year ending                          interest           interest
            December 31,                           rate                rate              Total

              <S>                            <C>                    <C>               <C>       
              1998                           $  48,160,493          9,986,504         58,146,997
              1999                              35,664,254          8,754,923         44,419,177
              2000                               1,424,345         25,595,700         27,020,045
              2001                               1,062,916          2,964,577          4,027,493
              2002                               1,823,218         10,937,238         12,760,456
              Thereafter (through 2012)          6,503,411         20,745,691         27,249,102
                                             -------------      -------------      -------------

                                             $  94,638,637         78,984,633        173,623,270
                                             =============      =============      ==============
</TABLE>

         Variable  rate  loans use as  indices  the one and five  year  Treasury
         Constant Maturity Index (5.39% and 5.62%, respectively, as of March 31,
         1998),  the prime rate  (8.50% as of March 31,  1998) and the  weighted
         average cost of funds index for Eleventh District savings  institutions
         (4.917% as of March 31, 1998).  Premiums over these indices have varied
         from 250-550 basis points depending upon market  conditions at the time
         the loan is made.

         The scheduled maturities for 1998 include approximately  $26,036,000 of
         loans which are past maturity as of March 31, 1998, of which $9,751,000
         represents  loans for which interest  payments are  delinquent  over 90
         days.  During the three  months ended March 31, 1998 and the year ended
         December 31, 1997, the Partnership  refinanced loans totaling  $325,000
         and $2,741,000,  respectively,  thereby extending the maturity dates of
         such loans.

    (3)  Loans Secured by Trust Deeds, Continued

         The Partnership's  total investment in loans delinquent over 90 days is
         $11,579,000  and $5,236,000 as of March 31, 1998 and December 31, 1997,
         respectively.  OFG has  purchased  the  Partnership's  receivables  for
         delinquent interest of $23,000 and $18,000, related to delinquent loans
         for the three months  ended March 31, 1998 and the year ended  December
         31, 1997, respectively.

         The  Partnership's  investment in delinquent loans as of March 31, 1998
         totals  approximately  $11,579,000,  of which $3,596,000 has a specific
         related allowance for credit losses totaling approximately  $1,683,000.
         There is a  non-specific  allowance for credit losses of $1,817,000 for
         the remaining balance of $7,983,000 and for other current loans.  There
         was no  additional  allowance for credit losses during the three months
         ended March 31, 1998.

         Interest  income  received on impaired  loans  during the three  months
         ended  March 31, 1998 and the year ended  December  31,  1997,  totaled
         approximately  $194,000  and  $722,000,   respectively,   $194,000  and
         $670,000  of which was paid by  borrowers  and $0 and  $52,000 of which
         related to purchases of interest receivable by OFG, respectively.

         As of March 31, 1998 and  December 31, 1997,  the  Partnership's  loans
         secured  by  deeds  of trust on real  property  collateral  located  in
         Northern  California  totaled  approximately 60% ($104,360,000) and 67%
         ($117,352,000),  respectively,  of the  loan  portfolio.  The  Northern
         California  region  (which  includes  the  following  counties  and all
         counties north:  Monterey,  Fresno,  Kings, Tulare and Inyo) is a large
         geographic  area which has a diversified  economic base. The ability of
         borrowers to repay loans is influenced by the economic  strength of the
         region and the impact of prevailing  market  conditions on the value of
         real  estate.  Such loans are  secured by deeds of trust in real estate
         properties  and are  expected  to be  repaid  from the cash flow of the
         properties or proceeds from the sale or refinancing of the  properties.
         The policy of the  Partnership  is to require real property  collateral
         with a value,  net of senior  indebtedness,  that  exceeds the carrying
         amount  of the  loan  balance  and to  record  a deed of  trust  on the
         underlying property.

4)Real Estate Held for Sale

     Real estate held for sale includes the following components as of March 31,
1998 and December 31, 1997:
                                                     March 31        December 31
                                                      1998              1997
                                                      ----             ----

     Real estate properties held for sale       $   8,619,244       $  9,699,656
     Investment in limited partnership              2,092,482          3,812,122
     Investment in corporate joint venture            665,505            639,363
                                                  -----------        -----------

                                                $  11,377,231         14,151,141
                                                  ===========        ===========



<PAGE>



    (4)  Real Estate Held for Sale, Continued

         Gain on sale of real estate  includes the following  components for the
years ended March 31, 1998 and 1997:

<TABLE>
<CAPTION>
                                                                        March 31           March 31
                                                                          1998               1997

     <S>                                                          <C>                         <C>   
     Gain on sale of real estate properties                       $       24,873              75,766
     Gain on sale of real estate by limited partnership                1,017,831           1,020,587
                                                                      ----------         -----------

                                                                   $   1,042,704           1,096,353
                                                                      ==========         ===========
</TABLE>

         (a)    Real Estate Properties Held for Sale

                  Real  estate  properties  held for sale at March 31,  1998 and
                December 31, 1997 consists of the following  properties acquired
                through foreclosure in 1993 through 1998:
<TABLE>
<CAPTION>

                                                                                                March 31        December 31
                                                                                                 1998              1997
                <S>                                                                          <C>                  <C>    
                Warehouse, Merced, California, net of valuation allowance of $350,000         $    650,000        650,000
                Undeveloped land, Vallejo, California                                            1,039,116      1,030,566
                Commercial lot, Sacramento, California, net of valuation
                  allowance of $250,000                                                            299,828        299,828
                Office building and undeveloped land, Monterey, California,
                  net of valuation allowance of $200,000                                         1,902,548      1,902,855
                Manufactured home subdivision development, Ione, California,
                  net of valuation allowance of $384,000                                         2,469,059      2,451,286
                Commercial storage and office buildings, Oakland, California                       444,466        444,063
                Undeveloped land, Reno, Nevada                                                     215,000        230,000
                Manufactured home subdivision development, Sonora,
                  California, net of valuation allowance of $712,000 as
                  of December 31, 1997                                                             ---          1,149,807
                Light industrial building, Paso Robles, California                               1,546,042      1,541,251
                22% interest in 6-unit residential building, Oakland,
                  California                                                                      53,185            ---
                                                                                                -----------    ----------

                                                                                               $ 8,619,244      9,699,656
                                                                                                 =========      =========
</TABLE>

                The  acquisition  of certain  of these  properties  resulted  in
                non-cash  increases  in real estate  held for sale and  non-cash
                decreases  in loans  secured  by  trust  deeds  of  $53,185  and
                $3,279,349  for the three  months  ended  March 31, 1998 and the
                year ended December 31, 1997, respectively.

                During 1997, the Partnership  sold three  properties for a sales
                price  of  approximately   $1,659,000.   On  one  of  the  three
                properties,  the Partnership took back a loan secured by a trust
                deed in the amount of $840,000.



<PAGE>



    (4)  Real Estate Held for Sale, Continued

                During 1997,  the  Partnership  sold two loans secured by second
                deeds of trust to OFG for $600,000 (face value). The Partnership
                subsequently  purchased  the  property  (located in Paso Robles,
                California) securing the loans at the senior lienholders trustee
                sale for  $1,350,000;  thus,  wiping out OFG's  junior  deeds of
                trust.  OFG  recorded  a loss of  $600,000  as a result  of this
                transaction.

                In  February   1998,   OFG  purchased  the   manufactured   home
                subdivision development property located in Sonora,  California,
                from the  Partnership for  $1,150,000.  The Partnership  carried
                back a loan secured by a trust deed for the full purchase price.

         (b)    Investment in Limited Partnership

                In 1993, the  Partnership  foreclosed on a loan in the amount of
                $600,000 secured by a junior lien on 30 residential lots located
                in Carmel Valley,  California,  and in 1994, paid off the senior
                loan  in  the  amount  of  $500,000.  The  Partnership  incurred
                additional  costs of $502,798 in 1994 to protect its investment,
                increasing  the carrying  value of the lots to  $1,602,798.  The
                Partnership began to develop the lots and incurred an additional
                $671,118 in costs during 1995.

                During 1995, the Partnership entered into a limited partnership,
                WV-OMIF  Partners,  L.P.  (WV-OMIF  Partners)  with an unrelated
                developer/builder,  Wood Valley Development,  Inc. (Woodvalley),
                for the purpose of  constructing  single-family  homes on the 30
                lots. The Partnership  contributed the lots to WV-OMIF  Partners
                in 1996 in  exchange  for a limited  partnership  interest.  The
                $671,118 in capitalized  costs incurred in 1995 were  considered
                an  advance  to  WV-OMIF   Partners   pursuant  to  the  limited
                partnership  agreement  in 1996 when the lots were  contributed.
                The  Partnership  provides  advances to the WV-OMIF  Partners to
                develop and construct the homes.  The Partnership is entitled to
                receive  interest at a rate of prime plus 2% on the  advances to
                WV-OMIF Partners.

                OFG and Woodvalley  have the option of purchasing and developing
                34 similar lots which are  interspersed  among the 30 lots being
                developed by WV-OMIF Partners. WV-OMIF Partners is incurring the
                infrastructure costs which benefit all 64 lots, including the 34
                lots  that  can be  developed  by OFG  and  Woodvalley.  OFG and
                Woodvalley are reimbursing WV-OMIF Partners their pro rata share
                of the  infrastructure  costs with the funds  received  from the
                sale of the developed  homes.  As of March 31, 1998,  Woodvalley
                had purchased thirty-one lots and developed and sold eighteen of
                them.  The  remaining  three  lots as of  March  31,  1998  were
                purchased  in  April,  1998.  As of  March  31,  1998,  OFG  and
                Woodvalley  had  reimbursed  $667,213  in  development  costs to
                WV-OMIF  Partners  from  the  sale  of  homes.  The  balance  of
                development costs due by OFG and Woodvalley totals $83,461 as of
                March 31, 1998.



<PAGE>



    (4)  Real Estate Held for Sale, Continued

                During 1997 and 1996,  the  Partnership  advanced an  additional
                $4,152,918 and $2,895,261, respectively, to WV-OMIF Partners for
                the continued  development and construction of the homes. During
                the three months ended March 31, 1998, the Partnership  advanced
                an  additional  $838,419  to WV-OMIF.  WV-OMIF  sold eight homes
                during the three  months  ended March 31,  1998 for  proceeds of
                $4,023,753,  and the net gain allocable to the  Partnership  was
                $1,017,831,  including  interest  income  of  $121,962.  WV-OMIF
                Partners   distributed    $3,605,646   (including   $19,116   in
                reimbursements  from  OFG and  Woodvalley)  to OMIF  during  the
                quarter  ended March 31,  1998.  WV-OMIF  Partners  sold fifteen
                homes  in 1997  for  proceeds  of  $8,011,960  and the net  gain
                allocable  to the  Partnership  was  $2,355,075,  plus  interest
                income of  $295,957.  WV-OMIF  Partners  distributed  $7,573,669
                (including  $648,069 in reimbursements  from OFG and Woodvalley)
                to OMIF in  1997.  WV-OMIF  Partners  sold  one home in 1996 and
                distributed  $462,103 to OMIF. The  Partnership's  investment in
                WV-OMIF Partners  totaled  $2,092,482 and $3,812,122 as of March
                31, 1998 and December 31, 1997, respectively.

                WV-OMIF Partners is distributing  cash received from the sale of
                the lots in the following priority:  (1) to third parties,  such
                as real property taxes and  assessments,  lenders,  contractors,
                etc.; (2) to pay the  Partnership the amount of $70,000 per lot,
                as each lot sells;  (3) to pay the  Partnership  the interest on
                the cash advances in full,  as each lot sells;  (4) to reimburse
                the  Partnership  for its  out-of-pocket  cash advances for each
                lot, as each lot sells;  and (5) the remainder to Woodvalley and
                the  Partnership  at a rate of 30% to Woodvalley  and 70% to the
                Partnership.

                The  WV-OMIF  Partners  Partnership  Agreement  states  that the
                Partnership  shall  take no part in the  conduct  or  control of
                WV-OMIF  Partner's  business  or  in  the  operation,  right  or
                authority to act for WV-OMIF  Partners.  Thus,  the  Partnership
                does not have  control of WV-OMIF  Partners and accounts for its
                investment  in  WV-OMIF  Partners  under  the  equity  method of
                accounting.

         (c)    Investment in Corporate Joint Venture

                In 1995, the  Partnership  foreclosed on a loan in the amount of
                $571,853 secured by a senior lien on a commercial parcel of land
                located in Los Gatos,  California.  During 1997, the Partnership
                contributed the land into 720 University,  LLC (the Company),  a
                corporate  joint venture formed between the  Partnership and BGC
                Properties, LLC (BGC). The purpose of the Company is to develop,
                construct  and  operate  a  commercial  office  building  or R&D
                facility  on the land to be held  for  investment  and  eventual
                sale.  The  Partnership  may  provide  loans to the  Company  to
                develop  and  construct  the  building or the  Partnership  will
                obtain  loans  from  third  parties  for  such   purposes.   The
                Partnership  is entitled to receive  interest at a rate of prime
                plus 2% on the loans it makes to the Company.



<PAGE>



(4)Real Estate Held for Sale, Continued

                During 1997, the Partnership  capitalized $56,889 in costs prior
                to the property  being  contributed  to the Company and advanced
                $10,621 to the Company for development.  During the three months
                ended March 31, 1998,  the  Partnership  advanced an  additional
                $26,141 to the Company for development.  The total investment in
                the corporate  joint venture totals  $665,505 and $639,363 as of
                March 31, 1998 and December 31, 1997, repectively.

                The net cash flows from the  operations of the Company are to be
                distributed in accordance with the following priorities:  1) 70%
                to the  Partnership  and 30% to BGC until the sum of all current
                and prior  distributions  of net cash flows  equals the members'
                priority return on capital as of the end of the calendar quarter
                immediately preceding  distribution;  and 2) thereafter,  70% to
                the Partnership and 30% to BGC.

                The distribution  upon  dissolution  shall be made in accordance
                with the  following  priorities:  1) to third parties to pay all
                debts;  2) to the members to pay all debts; 3) to the members in
                accordance with and to the extent of their  respective  positive
                capital account  balances;  4) 70% to the Partnership and 30% to
                BGC.

                The Company is considered a corporate joint venture,  and, thus,
                the Partnership accounts for its investment in the Company under
                the equity method of accounting.

    (5)  Partners' Capital

         (a)    Contributions

                Limited partners of the Partnership  contributed  $1.00 for each
                unit subscribed.  Registration costs incurred by the Partnership
                have been offset against contributed capital.  Such costs, which
                were incurred in 1989, amounted to approximately $198,000.

         (b)    Allocations, Distributions and Withdrawals

                In accordance with the partnership agreement,  the Partnership's
                profits,  gains and losses are allocated to each limited partner
                and the  general  partners  in  proportion  to their  respective
                capital contributions.

                Distributions  are  made  monthly  to the  limited  partners  in
                proportion to their  respective  units as of the last day of the
                preceding   calendar  month.   Accrued   distributions   payable
                represent amounts to be paid in January and April, 1998 based on
                their  capital  balances as of  December  31, 1997 and March 31,
                1998, respectively.



<PAGE>



    (5)  Partners' Capital, Continued

                The  Partnership  makes  cash  distributions  to  those  limited
                partners who elect to receive such distributions.  Those limited
                partners who elect not to receive cash  distributions have their
                distributions   reinvested  in  additional  limited  partnership
                units.  Such  reinvested  distributions  totaled  $2,614,765 and
                $10,077,144  for the three  months  ended March 31, 1998 and the
                year  ended   December   31,  1997,   respectively.   Reinvested
                distributions are not shown as partners'  distributions or sales
                of partnership units in the accompanying statements of partners'
                capital.

                The limited partners may withdraw,  or partially withdraw,  from
                the  Partnership  and  obtain  the  return of their  outstanding
                capital  accounts at $1.00 per unit (book value)  within 91 days
                after  written  notices are  delivered to the general  partners,
                subject to the following limitations:

                o Any such  payments  are  required  to be made  only  from cash
                  available   for   distribution,   net   proceeds  and  capital
                  contributions (as defined) during said 91-day period.

                o A maximum of $75,000 per partner may be  withdrawn  during any
                  calendar  quarter  (or  $100,000  in the  case  of a  deceased
                  limited partner).

                o The general  partners  are not required to establish a reserve
fund for the purpose of funding such payments.

                o No  more  than  10% of  the  outstanding  limited  partnership
                  interest may be withdrawn during any calendar year except upon
                  dissolution of the Partnership.

         (c)    Promotional Interest of General Partners

                The general partners  contributed  capital to the Partnership in
                the amount of 0.5% of the limited  partners'  aggregate  capital
                contributions and, together with their promotional interest, the
                general  partners  have an  interest  equal to 1% of the limited
                partners'  contributions.   This  promotional  interest  of  the
                general partners of up to 1/2 of 1% is recorded as an expense of
                the  Partnership  and credited as a contribution  to the general
                partners'  capital  account as  additional  compensation.  As of
                March 31,  1998,  the  general  partners  had made cash  capital
                contributions  of  $981,634  to  the  Partnership.  The  general
                partners are required to continue cash capital  contributions to
                the  Partnership  in order to maintain  their  required  capital
                balance.

                The promotional  interest expense charged to the Partnership was
                $23,969 and $22,974  for the three  months  ended March 31, 1998
                and 1997, respectively.



<PAGE>



    (6)  Contingency Reserves

         In  accordance  with  the  partnership  agreement  and to  satisfy  the
         Partnership's  liquidity  requirements,  the Partnership is required to
         maintain  cash as  contingency  reserves  (as  defined) in an aggregate
         amount of at least 1-1/2% of the gross  proceeds of the sale of limited
         partnership  units.  The  cash  capital  contribution  of  the  general
         partners  (amounting to $981,133 at March 31, 1998), up to a maximum of
         1/2 of 1% of the  limited  partners'  capital  contributions,  will  be
         available as an additional contingency reserve, if necessary.

The      contingency  reserves  required at March 31, 1998 and December 31, 1997
         were   approximately    $3,956,000   and   $3,829,000,    respectively.
         Certificates  of deposit and certain  cash  equivalents  as of the same
         dates were accordingly maintained as reserves.

    (7)  Transactions with Affiliates

         OFG is entitled to receive from the  Partnership a management fee of up
         to 2.75% per annum of the average unpaid  balance of the  Partnership's
         mortgage  loans at the end of each of the  preceding  twelve months for
         services rendered as manager of the Partnership. The maximum management
         fee is  reduced to 1.75% per annum if OFG has not  provided  during the
         preceding  calendar  year any of the  certain  services  defined in the
         limited partnership agreement.

         All of the  Partnership's  loans are serviced by OFG, in  consideration
         for which OFG  receives  up to .25% per annum of the  unpaid  principal
         balance of the loans.  Servicing fees are paid from the interest income
         of the loans collected from the borrowers.

         Interest income on loans secured by trust deeds is collected by OFG and
         is remitted monthly to the Partnership, net of servicing fees earned by
         OFG. Interest receivable from OFG amounted to $2,026,153 and $1,773,608
         at March 31, 1998 and December 31, 1997, respectively.

         OFG,  at its sole  discretion  may,  on a  monthly  basis,  adjust  the
         management  and  servicing  fees as long  as  they  do not  exceed  the
         allowable  limits  calculated on an annual basis.  In  determining  the
         management and servicing  fees and hence the yield to the  Partnership,
         OFG may consider a number of factors, including the then-current market
         yields.  Even though the fees for a month may exceed one-twelfth of the
         maximum  limits,  at the end of the  calendar  year the sum of the fees
         collected  for each of the  twelve  months is equal to or less than the
         stated limits.  Management fees amounted to approximately  $486,000 and
         $1,299,000  for the  three  months  ended  March  31,  1998  and  1997,
         respectively,  and  are  included  in the  accompanying  statements  of
         income.  Service fee payments to OFG approximated $108,000 and $120,000
         for the three months ended March 31, 1998 and 1997,  respectively,  and
         are included in the accompanying statements of income.

         OFG receives late payment  charges from  borrowers who make  delinquent
         payments.  Such  charges  are in addition  to the normal  monthly  loan
         payments  and totaled  approximately  $24,000 and $55,000 for the three
         months ended March 31, 1998 and 1997, respectively.



<PAGE>



    (7)  Transactions with Affiliates, Continued

         OFG  originates  all loans the  Partnership  invests in and receives an
         investment evaluation fee payable from payments made by borrowers. Such
         fees earned by OFG amounted to approximately  $143,000 and $485,000 for
         the three months ended March 31, 1998 and 1997, respectively.

         During  the three  months  ended  March 31,  1998,  OFG  purchased  the
         manufactured  home  subdivision  development  in Sonora  Vista from the
         Partnership at a loss of approximately $2,000. An allowance for loss on
         this property in the amount of $712,000 had been recorded in 1997.  The
         Partnership carried back a loan from OFG for the entire purchase price.

         During the year ended  December 31,  1997,  OFG  purchased  three loans
         secured by trust deeds from OMIF at face values in the total  amount of
         $613,000 for cash of $340,000 and assumption of a loan in the amount of
         $273,000.  OFG  then  foreclosed  on  the  loans  and  sold  one of the
         properties during 1997 for a gain of approximately $42,000.

         Included in loans secured by trust deeds at March 31, 1998 and December
         31, 1997 are notes totaling  $1,915,332 and  $2,215,549,  respectively,
         which are secured by  properties  owned by OFG. The loans bear interest
         at 8% per  annum  and  are  due on  demand.  The  Partnership  received
         interest income of  approximately  $15,000 and $62,000 during the three
         months  ended  March 31,  1998 and 1997,  respectively,  from OFG under
         loans secured by trust deeds and the unsecured loan due from OFG.

    (8)  Net Income Per Limited Partner Unit

         Net income per limited  partnership unit is computed using the weighted
         average of limited  partnership units  outstanding  during the quarter,
         which was  192,678,000 and 181,664,000 for the three months ended March
         31, 1998 and 1997, respectively.


<PAGE>



Item 2. Management's Discussion and Ana1ysis of Financial Condition and
Results of Operations

Results of Operations

The net income  increases  of  approximately  $1,053,000  (25.9%)  for the three
months ended March 31, 1998 as compared to the three months ended March 31, 1997
was  primarily  attributable  to the  decrease  in  management  fees paid to the
Corporate General Partner from $1,299,000 to $486,000 for the three months ended
March 31, 1997 and 1998, respectively.

Although net income increased by 25.9% for the three months ended March 31, 1998
as compared to the three months ended March 31, 1997, the average annualized net
yield of the  Partnership  decreased  from  8.73% to 8.53% for the three  months
ended March 31, 1997 and 1998,  respectively.  The net yield  represents the net
cash  distribution of the Partnership in relation to the total limited  partners
invested capital.  This distribution  takes into account all items of income and
expense with the  exception of the  provision for losses on loans or Real estate
held for sale or the accrual of income on loans in which interest is paid at the
maturity  date of the loan.  During the three months  ended March 31, 1998,  the
Partnership disposed of a property at a loss of approximately $2,000. However, a
loss allowance of $712,000 had previously been  attributed to this property.  In
addition,  $258,000 of interest  income due to be paid at the maturity of a loan
was accrued  during the three months ended March 31, 1998.  Although these items
had the  effect of  increasing  net  income,  they did not effect the net yield.
These variations in yield are minor and not considered significant.


Portfolio Review

The number of Partnership mortgage investments decreased from 236 to 206 and the
average loan balance  increased  from  approximately  $679,000 to $843,000 as of
March 31, 1997 and 1998,  respectively.  The average mortgage investment made by
the  Partnership  during the period of April 1, 1997 through  March 31, 1998 was
approximately   $1,427,000  showing  a  trend  of  increasing  average  mortgage
investments.  These average loan increases reflect the Partnership's  ability to
invest in larger mortgage loans meeting the Partnership's objectives.

The Corporate General Partner had previously  purchased all interest  receivable
of  the  Partnership  on  all  delinquent  loans  made  or  invested  in by  the
Partnership. However, on loans originated by the Corporate General Partner on or
after May 1, 1993,  and  effective  November 1, 1994,  for  certain  other loans
originated  prior to May 1, 1993, the Corporate  General Partner has adopted the
policy to not purchase  delinquent  interest or principal.  As of March 31, 1998
and 1997, there were approximately $10,896,000 and $8,528,000,  respectively, in
loans  held  by the  Partnership  on  which  payments  were  more  than  90 days
delinquent and on which such delinquent  interest was not being purchased by the
Corporate General Partner. The Corporate General Partner purchased approximately
$23,000 and $18,000 in delinquent interest receivables of the Partnership during
the three months ended March 31, 1998 and 1997, respectively,  that had not been
collected  from the borrower by the  Corporate  General  Partner as of March 31,
1998 or 1997.

Approximately  $11,579,000 (6.7%) and $5,236,000 (3.0%) of the loans invested in
by the Fund were more than 90 days  delinquent  in payment as of March 31,  1998
and December 31, 1997, respectively. Of these amounts,  approximately $3,834,000
(2.2%) and $3,279,000  (1.9%) were in the process of foreclosure as of March 31,
1998 and December 31, 1997, respectively.

A loan loss reserve in the amount of $3,500,000  was  maintained on the books of
the  Partnership as of March 31, 1998 and December 31, 1997. As of this date the
General Partners have determined that this loan loss reserve is adequate.

As of  March  31,  1998  and  December  31,  1997  approximately  60%  and  67%,
respectively,  of the mortgage loans made or invested in by the  Partnership are
secured by real property  located in Northern  California.  The following  table
sets forth the principal amount of mortgage  investments,  by  classification of
property  securing  each loan,  held by the  Partnership  on March 31,  1998 and
December 31, 1997:

                                                 Principal Amount
                                              March 31               December 31
                                                1998                    1997
                                                ----                    ----
                                                (000)                   (000)

Single-Family Dwellings                     $    2,088              $    2,089
Income-Producing Property                      163,441                 165,202
Unimproved Land                                  8,094                   7,424
                                               -------                 -------
                                            $  173,623              $  174,715
                                               =======                 =======

First Mortgages                             $  158,664              $  161,275
Second Mortgages                                14,272                  12,745
Third Mortgages or All-inclusive
  Deeds of Trust                                   687                     695
                                               -------                 -------
                                            $  173,623              $  174,715
                                               =======                 =======

The  following  amount of  delinquent  loans held by the  Partnership  have been
acquired and foreclosed  upon by the Corporate  General  Partner from January 1,
1994 through March 31, 1998:

                                     Delinquent                   Year
           Principal                 Interest                  Foreclosed
             58,000                    4,417                      1994
          1,184,223                  252,810                      1995
          2,320,000                   86,981                      1996
            613,400                   50,625                      1997
                 --                       --                      1998

The Corporate General Partner has purchased all delinquent  interest  receivable
from the Partnership on the loans foreclosed on in 1994 and 1995. The delinquent
interest on the loans  foreclosed on in 1996 and 1997 was never  purchased  from
the Partnership by the Corporate General Partner. Of these foreclosed loans, the
Partnership held three mortgages totaling $765,332 as of March 31, 1998 on which
the  Corporate  General  Partner  was making  payments  which were  current.  In
addition, the Partnership held a mortgage in the amount of $1,150,000 secured by
a property sold to the Corporate  General  Partner during the three months ended
March 31, 1998.


Real Estate Owned
The Partnership currently holds title to the following ten properties which were
foreclosed on from January 1, 1993 through March 31, 1998:
<TABLE>
<CAPTION>

                                                           Fund               Additional
                                                           Loan               Capitalized           Delinquent
Description                                               Amount                 Costs               Interest
Light Industrial Warehouse
<S>                                                    <C>                  <C>                   <C>        
Merced, CA                                             $ 1,000,000 (1)      $         0           $   175,333

Commercial Lot/Residential
  Development, Vallejo, CA                             $   525,000          $   505,566 (2)       $    83,949

Commerical Lot
Sacramento, CA                                         $   500,000 (3)      $    49,828           $    36,500

Office Building
Monterey, CA                                           $   550,000 (4)      $ 1,581,165 (5)       $    30,077


Undeveloped Land
Reno, NV                                               $   215,000          $         0           $         0

Residential Lots
Ione, CA                                               $ 2,821,675 (6)      $    31,384           $ 1,032,637

Self Storage
Oakland, CA                                            $   464,000          $         0           $   209,612

Light Industrial Bldg.
Paso Robles, CA                                        $   600,000 (7)      $   946,042 (7)       $   131,416

23% interest in Multi-
Unit Residential Bldg., Oakland, CA                    $    53,185          $         0           $     4,052
<FN>

(1)    The book value of this asset is net of a loss allowance of $350,000.
(2)    Of this additional  capitalized cost, $450,000 represents the purchase of
       a minority investor's interest in the property to provide the Partnership
       with complete ownership.
(3)    The book value of this asset is net of a loss allowance of $250,000.
(4)    The book value of this asset is net of a loss allowance of $200,000.
(5)    Included in this  balance is the payoff of a senior loan in the amount of
       $1,425,000.  This senior loan was  originally  $2,102,646  including late
       charges and fees. The Corporate General Partner arranged for this loan to
       be discounted at payoff.
(6)    The book value of this asset is net of a loss allowance of $384,000.
(7)    The Partnership  held two junior deeds of trust secured by this property.
       Prior to  foreclosure  by the senior  lienholder,  the Corporate  General
       Partner  purchased  the  $600,000  of  loans  from the  Partnership.  The
       Partnership  then  purchased  the  property at the  foreclosure  sale for
       $1,350,000, and wiped out the Corporate General Partner's junior deeds of
       trust.  The  Corporate  General  Partner  incurred a loss of  $600,000 at
       foreclosure.
</FN>
</TABLE>

The properties located in Merced,  Vallejo and Sacramento,  California and Reno,
Nevada do not  currently  general  revenue and, as such,  contribute to the Real
estate  held for sale  operating  at a  deficit.  Although  income  from  rental
properties  has  increased  from  $69,000 to $170,000 for the three months ended
March 31, 1997 and 1998, respectively, expenses associated with these properties
have also  increased  from  $92,000 to $220,000 for the three months ended March
31, 1997 and 1998, respectively.

Since  1993,  the  Partnership's  investment  in Real  estate  held for sale has
increased due to the Corporate General Partner's policy to generally not acquire
property  subject  to  foreclosure  on which the  Partnership  has a trust  deed
investment. During the three months ended March 31, 1998, the Partnership sold a
property to the Corporate  General  Partner at a book loss of $2,000,  net of an
allowance for losses attributable to the property of $712,000 which was recorded
in  1997.  The  Partnership  also  acquired  a  23%  interest  in  a  multi-unit
residential property located in Oakland, California through foreclosure in which
it had invested $53,185.


Development Limited Partnership

In 1993, the Partnership  foreclosed on a $600,000 loan secured by a junior lien
on 30 residential lots located in Carmel Valley, California,  and, in 1994, paid
off the $500,000  senior loan.  The  Partnership  incurred  additional  costs of
$503,000 in protecting its investment, thus increasing the carrying value of the
lots to $1,603,000.  During 1995, the Partnership  began to develop the lots and
in 1995 incurred an additional $671,000 in costs.

In  1995,  the  Partnership  became  the  sole  limited  partner  in  a  limited
partnership   formed  with  Wood  Valley   Development,   Inc.,   an   unrelated
developer/builder  and sole general partner, for the development and buildout of
these  lots.  In  exchange  for  its  interest  in  this   development   limited
partnership,  the  Partnership in 1996  contributed  the lots to the development
limited  partnership  and  agreed  to  make  additional  advances  to  fund  the
development costs.  During the year ended December 31, 1997 and the three months
ended March 31, 1998, the Partnership had advanced additional  development costs
aggregating  $4,153,000 and $838,000,  respectively.  The amount  invested in or
advanced by the  Partnership  at December 31, 1997 and March 31,  1998,  equaled
$3,812,000 and $2,092,000, net of distributions through such date.

Under the terms of the agreement governing the development limited  partnership,
the Partnership is entitled to receive certain  distributions of cash before the
developer  receives  any funds.  The cash  received by the  development  limited
partnership from sales of developed lots is distributed as follows: (i) to third
parties (e.g.,  contractors,  taxing authorities,  etc.) for amounts incurred by
the  development  limited  partnership and related to the lots sold; (ii) to the
Partnership,  in an  amount  equal  to  $70,000  per  lot  sold;  (iii)  to  the
Partnership,  in an amount equal to a pro rata portion of the development  costs
advanced, plus interest at prime plus 2%; (iv) to the Partnership,  in an amount
equal to other  out-of-pocket  expenses  incurred by Partnership with respect to
the lots sold, plus interest at prime plus 2%; and (v) the balance,  if any, 70%
to the Partnership, and 30% to the developer.

The  development  limited  partnership is building  single-family  residences of
between  approximately  2,200 and 2,800 square feet on the lots During 1997,  15
homes  were sold for  aggregate  proceeds  of  $8,012,000,  and the  development
limited  partnership  distributed  $7,574,000 to the Partnership,  $2,355,000 of
which represented  profit and interest.  During the three months ended March 31,
1998,  eight  homes  were sold for  aggregate  proceeds  of  $4,024,000  and the
development limited partnership  distributed  $3,576,000 (including $19,000 from
the joint venture formed between the Corporate  General Partner and Wood Valley,
Inc.) to the Partnership,  $1,018,000 of which represented  profit and interest.
As of  March  31,  1998,  a total of 24 homes  had been  completed  and sold and
construction had been completed or commenced on the remaining 6 lots.

The Corporate  General Partner has entered into a joint venture with Wood Valley
Development, Inc. to purchase and build out up to 34 lots that are contiguous to
and interspersed with the lots in Carmel Valley owned by the development limited
partnership formed between the Partnership and Wood Valley Development,  Inc. As
of March 31, 1997, the joint venture  between the Corporate  General Partner and
Wood Valley Development, Inc. had purchased 31 lots and developed and sold 18 of
these lots. The remaining  three lots are expected to be purchased by this joint
venture during 1998.

The Partnership  does not have any direct or indirect  interest in these 34 lots
nor do any of these lots provide any security for the original  Partnership loan
which was  foreclosed  on in 1993.  The  development  limited  partnership  has,
however,  incurred certain infrastructure and soft costs that benefited not only
the 30 lots owned by the development limited partnership,  but the 34 contiguous
lots owned by the Corporate General Partner/Wood Valley Development,  Inc. joint
venture. As sales of these 34 lots occur, the development limited partnership is
being reimbursed on a pro rata basis,  without  interest,  for such development,
infrastructure and soft costs incurred by the development  limited  partnership.
Upon  receipt  of any  such  funds  the  development  limited  partnership  will
distribute  monies as outlined  above.  During the three  months ended March 31,
1998, the development limited partnership  received  reimbursement of $19,000 in
development costs and the balance of development  advances receivable is $83,000
as of March 31, 1998.


Development Limited Liability Company/Corporate Joint Venture

In 1995, the  Partnership  foreclosed on a $571,853 loan and obtained title to a
commercial  lot in Los Gatos,  California.  In 1997,  the  Partnership  formed a
limited   liability   company  (the  "Company")  with  BGC  Properties  LLC,  an
unaffiliated  developer,  and  contributed  the land  valued at  $760,000 to the
newly-formed  limited  liability  company in exchange  for a 70% interest in the
profits  and  losses of the  Company.  The sole  purpose  of the  Company  is to
develop,  construct and operate a commercial  office building on the land, to be
held for investment or sale. The Partnership is required to provide construction
financing to the Company in the form of additional contributions or loans to the
Company,  or to obtain  such  financing  from third  parties.  To the extent the
Partnership  lends such funds, it will receive  interest at a rate of prime plus
2%. Upon completion of construction of improvements, the Partnership is required
to obtain or provide permanent financing.

The Partnership is the sole manager of the Company. As such, the Partnership has
exclusive control and authority over the Company's  affairs,  subject to certain
rights of BGC. The Partnership  will not receive any compensation for serving as
manager of the Company.

BGC will provide certain development  services to the Company and will receive a
development fee. At BGC's election, BGC may defer payment of all or a portion of
the  fee,  and  earn  interest  thereon  at the  rate of 8% per  annum,  simple.
Additionally,  an  affiliate  of BGC will serve as property  manager and earn an
asset management fee.

Prior  to  contributing  the  land  to the  Company,  the  Partnership  invested
approximately  $629,000  (including  $57,000 in capitalized  costs subsequent to
foreclosure)  in such  land.  Since  contributing  the land to the  Company  the
Partnership has loaned $37,000 to the Company, which amount will be repaid, with
interest,  as discussed above. The Company expects to have development rights by
mid-1998 and have construction completed in 1999.


Liquidity and Capital Resources
The Partnership relies upon purchases of limited partnership  interests and loan
payoffs for the creation of capital for mortgage  investments.  The  Partnership
has not and does not intend to borrow money for investment purposes.


Contingency Reserves
The  Partnership  maintains  cash and  certificates  of deposit  as  contingency
reserves in an aggregate amount of at least 2% of the gross proceeds of the sale
of Limited  Partners' Units. To the extent that such funds are not sufficient to
pay expenses in excess of revenues or to meet any obligation of the Partnership,
it may be necessary for the Partnership to sell or otherwise  liquidate  certain
of its investments on terms which may not be favorable to the Partnership.


Current Economic Conditions
The  Partnership has been affected by regional  declines in commercial  property
values  and  general  economic  conditions;  however,  the  Partnership  has not
sustained any principal  losses to date. Due to the  conservative  loan-to-value
criteria  established by the Corporate General Partner,  the mortgage loans held
by the  Partnership  appear in  general  to be, in the  opinion  of the  General
Partners, adequately secured.

The Partnership generally invests in relatively short-term commercial loans (1-7
years).  In addition,  the Corporate  General  Partner is generally able to fund
loans in a shorter  time frame than  institutional  lenders  which  allows it to
collect a higher rate of interest from those  borrowers that consider time to be
an essential  factor.  Due to this,  the net income of the  Partnership  has, in
recent  years,  remained  in the range of 8.5-9.0  percent of limited  partners'
capital per year.  If there were a reduction in the demand for loans  originated
by the Corporate  General Partner and, thus,  fewer loans for the Partnership to
invest in, the  Partnership  would have to invest  excess  cash in shorter  term
investments  or reduce the interest  rate charged on mortgage  loans which would
yield considerably less than the current investment portfolio.

The Partnership continues to receive substantial additional investments from new
and existing  Limited  Partners  which provide  capital for loans,  purchases of
existing notes and redemption of existing Limited Partnership Units.


<PAGE>


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

The Partnership is not presently involved in any material legal proceedings.


Item 6(b).  Reports on Form 8-K

No reports on Form 8-K have been filed  during the quarter for which this report
is filed.


<PAGE>



                                   SIGNATURES

 Pursuant  to the  requirements  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.



Dated:  May 15, 1998                  OWENS MORTGAGE INVESTMENT FUND
                                      a California Limited Partnership
                                      (Registrant)

                                       By:   Owens Financial Group, Inc.
                                             a General Partner


                                             By:  \s\ William C. Owens
                                                  William C. Owens
                                                  President


                                             By:  \s\ Bryan H. Draper
                                                  Bryan H. Draper
                                                  Chief Financial Officer
                                                  Principal Financial and
                                                   Accounting Officer