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 June 30, 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)


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


        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

<TABLE>
<CAPTION>

                                              OWENS MORTGAGE INVESTMENT FUND
                                            (A California Limited Partnership)

                                                      BALANCE SHEETS
                                           June 30, 1998 and December 31, 1997


                                                                              June 30             December 31
                                                                               1998                  1997
                                                                            (Unaudited)
                                                          ASSETS

<S>                                                                       <C>                   <C>           
Cash and cash equivalents (Note 2)                                        $  14,469,028         $    3,073,115
Certificates of deposit (Note 2)                                              1,000,000              1,000,000
Loans secured by trust deeds (Notes 2 and 3)                                173,831,159            174,714,607
Less:  Allowance for loan losses (Note 2)                                    (3,500,000)            (3,500,000)
Real estate held for sale, net of allowance
  for losses (Notes 2 and 4)                                                 10,254,784             14,151,141
Interest receivable (Note 7)                                                  2,247,968              1,773,608
Other receivables                                                                59,074                112,583
                                                                         --------------          -------------
     Total Assets                                                          $198,362,013           $191,325,054
                                                                            ===========            ===========


                                            LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
Accrued distributions payable (Note 5)                                    $     531,063         $      544,385
Accounts payable and accrued liabilities                                        126,672                 49,534
                                                                          -------------         --------------

     Total Liabilities                                                          657,735                593,919
                                                                          -------------          -------------

PARTNERS' CAPITAL:
General partners (Note 5)                                                     1,954,038              1,864,033
Limited partners (Note 5) (Units Subject to Redemption)                     195,750,240            188,867,102
                                                                            -----------            -----------
     Total Partners' Capital                                                197,704,278            190,731,135
                                                                            -----------            -----------
     Total Liabilities and Partners' Capital                               $198,362,013           $191,325,054
                                                                            ===========            ===========
</TABLE>

              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 and Six Months Ended June 30, 1998 and 1997 (Unaudited)

                                                            For the Three Months Ended                  For the Six Months Ended
                                                              June 30               June 30            June 30             June 30
                                                               1998                  1997               1998                1997
                                                               ----                  ----               ----                ----
REVENUES:
<S>                                                     <C>                   <C>                 <C>                 <C>          
     Interest income on loans secured by trust deeds    $   4,541,925         $   4,336,941       $   9,237,100       $   8,679,110
     Gain on sale of real estate (Note 4)                      83,705               779,541           1,254,018           1,800,127
     Other income                                             210,578               107,288             345,856             334,238
                                                          -----------           -----------        ------------        ------------
     Total revenues                                         4,836,208             5,223,770          10,836,974          10,813,475
                                                          -----------           -----------        ------------        ------------

OPERATING EXPENSES:
     Management fees paid to General Partner (Note 7)         188,189               926,109             772,839           2,225,567
     Servicing fees paid to General Partner (Note 7)          105,326               118,421             248,733             238,658
     Promotional interest (Note 5)                              6,738                17,679              38,460              40,653
     Administrative                                            13,752                14,129              32,591              28,258
     Legal and accounting                                         531                37,442              56,317              77,854
     Real estate operations, net                              (21,694)               49,385              19,526              72,276
     Other                                                      9,662                 8,613              13,097               8,843
                                                          -----------           -----------         -----------         -----------
     Total operating expenses                                 302,504             1,171,778           1,181,563           2,692,109
                                                          -----------           -----------         -----------         -----------
     Net income                                         $   4,533,704         $   4,051,992       $   9,655,411       $   8,121,366
                                                          ===========           ===========         ===========         ===========

     Net income allocated to general partner            $      44,888         $      38,465       $      95,598       $      78,781
                                                          ===========           ===========         ===========         ===========

Net income allocated to limited partners                $   4,488,816         $   4,013,527       $   9,559,813       $   8,042,585
                                                          ===========           ===========         ===========         ===========

Net income allocated to limited partners
    per weighted limited partnership unit (Note 8)      $.023                 $.022               $.049               $.044
                                                         ====                  ====                ====                ====

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


<PAGE>

<TABLE>
<CAPTION>

                                                                                       6
                         OWENS MORTGAGE INVESTMENT FUND
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS
           For the Six Months Ended June 30, 1998 and 1997 (Unaudited)

                                                                               June 30                 June 30
                                                                                1998                    1997
<S>                                                                        <C>                    <C>  
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Income                                                            $   9,655,411          $    8,121,366
Adjustments to reconcile net income
      to net cash provided by operating activities:
     Gain on sale of real estate by limited partnership                       (1,229,145)             (1,800,127)
     Gain on sale of real estate properties                                      (24,873)                      -
     Changes in operating assets and liabilities:
       Interest receivable                                                      (474,360)                (32,924)
       Other receivables                                                          53,509                       -
       Accrued distributions payable                                             (13,322)                 (6,442)
       Accounts payable and accrued liabilities                                   77,138                  10,421
       Deferred income                                                                 -                  69,895
                                                                           -------------           -------------
          Net cash provided by operating activities                            8,044,358               6,362,189
                                                                           -------------           -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of loans secured by trust deeds                               (34,539,107)            (41,741,933)
     Principal collected                                                         936,019                 960,583
     Loan payoffs                                                             35,127,850              29,046,332
     Investment in real estate properties                                        (39,172)                952,289
     Net proceeds from disposition of real estate properties                      90,035                       -
     Investment in limited partnership                                          (926,487)             (2,415,369)
     Distributions received from limited partnership                           5,457,464               4,893,212
     Investment in corporate joint venture                                       (72,778)                      -
     Unsecured loan to General Partner                                                 -                 488,764
     Investments in Certificates of deposit (net)                                      -                (150,000)
                                                                            ------------            ------------
         Net cash provided by (used in) investing activities                   6,033,824              (7,966,122)
                                                                            ------------            ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of partnership Units                                   8,015,888               9,007,634
     Partners' cash distributions                                             (3,162,264)             (3,046,271)
     Partners' capital withdrawals                                            (7,535,893)             (5,831,143)
                                                                            ------------            ------------
         Net cash (used in) provided by financing activities                  (2,682,269)                130,220
                                                                            -------------           ------------

INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                                                 11,395,913              (1,473,713)
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                                          3,073,115              11,386,661
                                                                             -----------              ----------
CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                                             $ 14,469,028             $ 9,912,948
                                                                             ===========              ==========
</TABLE>

See notes 3, 4 and 5 for  supplemental  disclosure  of  non-cash  investing  and
financing activities.

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


<PAGE>


                         OWENS MORTGAGE INVESTMENT FUND
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 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  195,945,988  and  189,063,122,  at June 30, 1998 and December 31,
         1997, respectively.

    (2)  Summary of Significant Accounting Policies

         (a)    General

                In  the  opinion  of the  management  of  the  Partnership,  the
                accompanying   unaudited   financial   statements   contain  all
                adjustments,   consisting  of  normal,   recurring  adjustments,
                necessary to present fairly the financial  information  included
                therein.   These   financial   statements   should  be  read  in
                conjunction with the audited  financial  statements  included in
                the  Partnership's  Form 10-K for the fiscal year ended December
                31, 1997 filed with the Securities and Exchange Commission.  The
                results of operations for the three-month and six-month  periods
                ended  June  30,  1998  are not  necessarily  indicative  of the
                operating results to be expected for the full year.

         (b)    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.



    (2)  Summary of Significant Accounting Policies, Continued

         (c)    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.

                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 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.

         (d)    Allowance for Loan Losses

                The Partnership  maintains an allowance for loan losses equal to
                $3,500,000 as of June 30, 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  $12,330,000  and  $5,236,000  and as of June 30,
                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 June 30, 1998 and  December  31,  1997,  the
                aforementioned   loans  totaling   $12,330,000  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
                six months  ended June 30, 1998 and the year ended  December 31,
                1997 but not  collected  as of June 30,  1998 and  December  31,
                1997, respectively, totaled approximately $134,000 and $219,000,
                respectively.



<PAGE>



    (2)  Summary of Significant Accounting Policies, Continued

         (e)    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.

         (f)    Certificates of Deposit

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

         (g)    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  the  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 and six months
                ended June 30, 1998 and 1997.

         (h)    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 June 30, 1998 and  December  31,
           1997 are as follows:

<TABLE>
<CAPTION>

                                                                                June 30             December 31
                                                                                 1998                  1997

              <S>                                                           <C>               <C>             
              Income-producing properties                                   $  157,109,041    $    165,201,582
              Single-family residences                                           1,985,615           2,088,606
              Unimproved land                                                   14,736,503           7,424,419
                                                                               -----------         -----------

                                                                            $  173,831,159    $    174,714,607
                                                                               ===========         ===========


              First mortgages                                               $  155,811,661         161,275,350
              Second mortgages                                                  15,946,934          12,744,274
              Third mortgages or all-inclusive deeds of trust                    2,072,564             694,983
                                                                           ---------------       -------------

                                                                            $  173,831,159    $    174,714,607
                                                                               ===========         ===========
</TABLE>

         Scheduled  maturities  of loans  secured by trust  deeds as of June 30,
1998 and the interest rate sensitivity of such loans is as follows:
<TABLE>
<CAPTION>

                                                              Fixed             Variable
             Year ending                                    interest            interest
              June 30,                                        rate                rate                Total

              <S>                                       <C>                      <C>               <C>       
              1998 (Past Maturity)                      $    23,478,337          4,025,141         27,503,478
              1999                                           28,358,625          6,343,462         34,702,087
              2000                                           40,201,841         19,824,591         60,026,432
              2001                                            3,816,574          5,102,511          8,919,085
              2002                                            1,817,865          6,234,757          8,052,622
              2003                                              847,026          9,721,242         10,568,268
              Thereafter (through 2012)                       7,672,429         16,386,758         24,059,187
                                                          -------------      -------------      -------------

                                                        $   106,192,697         67,638,462        173,831,159
                                                          =============      =============      ==============
</TABLE>

         Variable  rate  loans use as  indices  the one and five  year  Treasury
         Constant Maturity Index (5.38% and 5.46%, respectively,  as of June 30,
         1998),  the prime  rate  (8.50% as of June 30,  1998) and the  weighted
         average cost of funds index for Eleventh District savings  institutions
         (4.881% as of June 30,  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  $27,503,000 of
         loans which are past maturity as of June 30, 1998, of which  $7,177,000
         represents  loans for which interest  payments are  delinquent  over 90
         days.  During  the six months  ended  June 30,  1998 and the year ended
         December 31, 1997, the Partnership refinanced loans totaling $7,581,000
         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
         $12,330,000  and  $5,236,000 as of June 30, 1998 and December 31, 1997,
         respectively. Of these amounts, approximately $3,094,000 and $3,279,000
         were in the process of foreclosure as of June 30, 1998 and December 31,
         1997. OFG has purchased the  Partnership's  receivables  for delinquent
         interest of $56,000 and $54,000,  related to  delinquent  loans for the
         six months ended June 30, 1998 and 1997, respectively.

         The  Partnership's  investment in delinquent  loans as of June 30, 1998
         totals  approximately  $12,330,000,  of which $8,194,000 has a specific
         related allowance for credit losses totaling approximately  $2,205,000.
         There is a  non-specific  allowance for credit losses of $1,295,000 for
         the remaining balance of $4,136,000 and for other current loans.  There
         was no  additional  allowance  for credit  losses during the six months
         ended June 30, 1998.

         Interest  income received on impaired loans during the six months ended
         June  30,  1998  and  the  year  ended   December  31,  1997,   totaled
         approximately  $380,000  and  $722,000,   respectively,   $350,000  and
         $670,000  of  which  was paid by  borrowers  and  963949075$30,000  and
         $52,000 of which  related to purchases of interest  receivable  by OFG,
         respectively.

         As of June 30, 1998 and  December  31, 1997,  the  Partnership's  loans
         secured  by  deeds  of trust on real  property  collateral  located  in
         Northern  California  totaled  approximately  53% ($92,909,000) 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 on 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
           June 30, 1998 and December 31, 1997:
<TABLE>
<CAPTION>
                                                                                 June 30            December 31
                                                                                  1998                 1997
                                                                                  ----                 ----

              <S>                                                            <C>                  <C>         
              Real estate properties held for sale                           $   9,032,352        $  9,699,656
              Investment in limited partnership                                    510,291           3,812,122
              Investment in corporate joint venture                                712,141             639,363
                                                                               -----------         -----------

                                                                              $ 10,254,784        $ 14,151,141
                                                                                ==========          ==========

</TABLE>


<PAGE>



    (4)  Real Estate Held for Sale, Continued

           Gain on sale of real estate includes the following components for the
           six months ended June 30, 1998 and 1997:

<TABLE>
<CAPTION>
                                                                                  June 30              June 30
                                                                                   1998                 1997

              <S>                                                            <C>                   <C>  
              Gain on sale of real estate properties                         $      24,873         $         -
              Gain on sale of real estate by limited partnership                 1,229,145           1,800,127
                                                                                 ---------         -----------

                                                                             $   1,254,018           1,800,127
                                                                                ==========         ===========
</TABLE>

         (a)    Real Estate Properties Held for Sale

                   Real  estate  properties  held for sale at June 30,  1998 and
                   December  31,  1997  consists  of  the  following  properties
                   acquired through foreclosure in 1993 through 1998:
<TABLE>
<CAPTION>

                                                                                      June 30          December 31
                                                                                       1998               1997
                <S>                                                               <C>                  <C>   
                Light industrial warehouse, Merced, California, net of valuation
                     allowance of $350,000                                        $    650,000           650,000
                Commercial lot/residential development, 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                          1,885,054         1,902,855
                Manufactured home subdivision development, Ione, California, 
                    net of valuation allowance of $384,000                           2,443,203         2,451,286
                Self storage, Oakland, California                                      444,467           444,063
                Undeveloped land, Reno, Nevada                                         215,420           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                   1,546,522         1,541,251
                Commercial building, Sacramento, California                             30,000               ---
                Commercial building, Gresham, Oregon                                   425,557               ---
                22% interest in 6-unit residential building, Oakland,
                    California                                                          53,185               ---
                                                                                     ---------         ---------

                                                                                   $ 9,032,352         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 $508,742  for the
                six months ended June 30, 1998.  There were no  acquisitions  in
                the six months ended June 30, 1997.

                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 on the property for the full
                purchase  price.  The note bears interest at 8% per annum and is
                due on demand.



    (4)  Real Estate Held for Sale, Continued

                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.

                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.

         (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 was 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 June 30, 1998, Woodvalley had
                purchased  all 34 lots and  developed and sold 22 of them. As of
                June 30, 1998, OFG and  Woodvalley  had  reimbursed  $735,673 in
                development  costs to WV-OMIF  Partners  from the sale of homes.
                The  balance  of  development  costs  due by OFG and  Woodvalley
                totals $15,002 as of June 30, 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 six months ended June 30, 1998, the Partnership  advanced an
                additional $926,487 to WV-OMIF. WV-OMIF sold twelve homes during
                the six months ended June 30, 1998 for  proceeds of  $5,972,110,
                and the net gain allocable to the  Partnership  was  $1,229,145,
                including   interest  income  of  $148,420.   WV-OMIF   Partners
                distributed $5,457,464 (including $87,577 in reimbursements from
                OFG and Woodvalley) to OMIF during the six months ended June 30,
                1998.  WV-OMIF  Partners sold eleven homes during the six months
                ended June 30, 1997 for proceeds of $5,910,261  and the net gain
                allocable to the Partnership was $1,800,127,  including interest
                income of  $206,715.  WV-OMIF  Partners  distributed  $4,893,212
                (including  $264,921 in reimbursements  from OFG and Woodvalley)
                to OMIF during this  period.  The  Partnership's  investment  in
                WV-OMIF  Partners totaled $510,291 and $3,812,122 as of June 30,
                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
                incurred prior to the property being  contributed to the Company
                and advanced $10,621 to the Company for development.  During the
                six months  ended June 30,  1998,  the  Partnership  advanced an
                additional  $72,778 to the  Company for  development.  The total
                investment in the corporate  joint venture  totals  $712,141 and
                $639,363  as  of  June  30,   1998  and   December   31,   1997,
                respectively.

                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 July, 1998 based on
                their  capital  balances  as of  December  31, 1997 and June 30,
                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  $5,221,488 and
                $4,933,183  for the six  months  ended  June 30,  1998 and 1997,
                respectively.   Reinvested   distributions   are  not  shown  as
                partners'   cash   distributions   or  proceeds   from  sale  of
                partnership units in the accompanying statements of cash flows.

                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 June
                30,   1998,   the  general   partners   had  made  cash  capital
                contributions  of  $995,622  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
                $38,460 and  $40,653 for the six months  ended June 30, 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 $995,622 at June 30, 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 June 30, 1998 and  December 31,
         1997  were  approximately  $3,975,000  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 $2,247,968 and $1,773,608
         at June 30, 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  $773,000 and
         $2,226,000   for  the  six  months   ended  June  30,  1998  and  1997,
         respectively,  and  are  included  in the  accompanying  statements  of
         income.  Service fee payments to OFG approximated $249,000 and $239,000
         for the six months ended June 30, 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  $193,000 and $113,000 for the six
         months ended June 30, 1998 and 1997, respectively.



<PAGE>



    (7)  Transactions with Affiliates, Continued

         OFG  originates  all loans the  Partnership  invests in and receives an
         investment  evaluation  fee from  borrowers.  Such  fees  earned by OFG
         amounted to  approximately  $702,000 and  $1,138,000 for the six months
         ended June 30, 1998 and 1997, respectively.

         During  the  six  months  ended  June  30,  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,
         therefore,  the  loss for the six  months  ended  June 30,  1998 was an
         additional $2,000. The Partnership carried back a loan from OFG for the
         entire purchase price of $1,150,000.

         During  the six months  ended June 30,  1998,  OFG  purchased  one loan
         secured by a trust deed from OMIF at face value in the total  amount of
         $273,000 for assumption of a loan of the same amount.  OFG subsequently
         foreclosed on the loan.

         Included in loans  secured by trust deeds at June 30, 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 earned interest
         income of approximately $62,000 and $91,000 during the six months ended
         June 30, 1998 and 1997,  respectively,  from OFG under loans secured by
         trust deeds.

    (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 three and
         six month periods.  These amounts were  approximately  196,095,000  and
         185,445,000  for the  three  months  ended  June  30,  1998  and  1997,
         respectively,  and 194,387,000 and 183,555,000 for the six months ended
         June 30, 1998 and 1997, respectively.


<PAGE>



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

Results of  Operations  - Three  Months  Ended June 30,  1998  Compared to Three
Months Ended June 30, 1997

The net income increase of  approximately  $482,000 (11.9%) for the three months
ended June 30,  1998 as  compared  to the three  months  ended June 30, 1997 was
primarily  attributable to the decrease in management fees paid to the Corporate
General Partner from approximately  $926,000 to $188,000 ($738,000 or 79.7%) for
the three  months  ended June 30, 1997 and 1998,  respectively.  The decrease in
management  fees was  partially  offset by the  decrease  in total  revenues  of
approximately  $388,000 (7.4%) which was primarily  attributable to the decrease
in gain on sale of real estate of  $696,000  (89.3%).  Management  fees paid are
pursuant to the  Partnership  Agreement  (maximum  of 2.75%  annually of average
mortgage  loans).  The decrease in gain on sale of real estate was a result of a
decrease  in gain on sales of homes  from the  development  limited  partnership
between the Partnership and Wood Valley  Development,  Inc. (see  "Investment in
Development Limited Partnership"  below).  Although only one fewer home was sold
in the three  months  ended June 30, 1998 as compared to the three  months ended
June 30, 1997,  the income earned by the  Partnership  decreased by 89.3% due to
the fact  that the  homes  sold in the  quarter  ended  June 30,  1998 were less
expensive  homes with smaller profit  margins and due to increased  construction
costs.


Results of Operations - Six Months Ended June 30, 1998 Compared to Six Months
Ended June 30, 1997

The net income increase of approximately  $1,534,000  (18.9%) for the six months
ended  June 30,  1998 as  compared  to the six months  ended  June 30,  1997 was
primarily  attributable to the decrease in management fees paid to the Corporate
General  Partner  pursuant  to  the  Partnership  Agreement  from  approximately
$2,226,000 to $773,000  ($1,453,000  or 65.3%) for the six months ended June 30,
1997 and 1998, respectively. Gain on sale of real estate decreased approximately
$546,000  (30.3%)  during the six months  ended June 30, 1998 as compared to the
six months ended June 30, 1997 due to the factors  discussed above. In addition,
interest income on loans secured by trust deeds increased approximately $558,000
(6.4%) due primarily to the growth in the loan portfolio.


Loan Portfolio

The number of Partnership mortgage investments decreased from 215 to 198 and the
average loan balance  increased  from  approximately  $813,000 to $878,000 as of
December  31,  1997  and June  30,  1998,  respectively.  The  average  mortgage
investment  made by the  Partnership  during the period of December  31, 1997 to
June 30, 1998 was approximately $1,498,000 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 June 30, 1998 and
December  31,  1997,  there  were  approximately   $10,674,000  and  $3,751,000,
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  $56,000 and $54,000 in  delinquent  interest  receivables  of the
Partnership  during the six months  ended June 30, 1998 and 1997,  respectively,
that had not been collected from borrowers by the Corporate  General  Partner as
of June 30, 1998 or 1997.

Approximately  $12,330,000 (7.1%) and $5,236,000 (3.0%) of the loans invested in
by the  Partnership  were more than 90 days delinquent in payment as of June 30,
1998 and  December  31,  1997,  respectively.  Of these  amounts,  approximately
$3,094,000 (1.8%) and $3,279,000 (1.9%) were in the process of foreclosure as of
June 30,  1998 and  December  31,  1997,  respectively.  Loans more than 90 days
delinquent  increased by  $7,094,000  (135%) from  December 31, 1997 to June 30,
1998  primarily  due to two large loans which  became  delinquent  during  1998.
Management  believes that there is adequate security in one of the loans with an
outstanding  principal  balance  of  approximately   $3,751,000,   and  that  an
additional loan loss reserve for this loan is not needed. The other loan with an
outstanding  principal balance of approximately  $4,235,000 may result in a loss
of principal to the Partnership,  and,  therefore,  management has established a
loan loss reserve for this loan in the amount of $450,000.

A loan loss reserve in the amount of $3,500,000  was  maintained on the books of
the Partnership as of June 30, 1998 and December 31, 1997. The Corporate General
Partner has determined that this loan loss reserve is adequate.

As  of  June  30,  1998  and  December  31,  1997  approximately  53%  and  67%,
respectively,  of the mortgage loans made or invested in by the  Partnership are
secured by real  property  located in Northern  California.  The decrease in the
percentage  of  loans  secured  by real  property  in  Northern  California  has
primarily  been due to the payoff of several  loans  secured  by  properties  in
Northern  California and the purchase of new loans secured by properties outside
of Northern  California.  In particular,  the  Partnership  made one loan in the
amount of $10,600,000 during the six months ended June 30, 1998 which is secured
by two  income-producing  properties  located  in the states of  Washington  and
Montana.  Also, as the real estate market in Southern  California  has gradually
improved over the past six to eighteen months, more loans secured by real estate
in Southern  California  have been invested in by the  Partnership.  In general,
there  has been  increased  competition  in the  lending  business  in  Northern
California,  particularly in the San Francisco Bay Area,  which has required the
Corporate  General  Partner to expand its  pursuit of loans in areas  outside of
this region.

<PAGE>




The following table sets forth the principal amount of mortgage investments,  by
classification  of property  securing each loan, held by the Partnership on June
30, 1998 and December 31, 1997:
<TABLE>
<CAPTION>

                                                                         Principal Amount
                                                                   June 30               December 31
                                                                    1998                    1997
                                                                    ----                    ----
                                                                    (000)                   (000)

<S>                                                              <C>                     <C>       
Single-Family Dwellings                                          $    1,986              $    2,089
Income-Producing Property                                           157,109                 165,202
Unimproved Land                                                      14,736                   7,424
                                                                   --------                --------
                                                                   $173,831                $174,715
                                                                   ========                ========

First Mortgages                                                    $155,812                $161,275
Second Mortgages                                                     15,947                  12,745
Third Mortgages or All-inclusive
  Deeds of Trust                                                      2,072                     695
                                                                   --------                --------
                                                                   $173,831                $174,715
                                                                   ========                ========
</TABLE>

The  Partnership's  investment in loans secured by unimproved land has increased
by 98% since December 31, 1997  primarily due to an overall  improvement in real
estate  market  conditions  in the past six to  twelve  months  which  have made
development  and, thus,  loans on unimproved  land more  attractive.  All of the
Partnership's  loans secured by unimproved  land or land in the process of being
developed  are first trust deeds.  In  addition,  only one of these loans in the
amount of  $802,200  is more than 90 days  delinquent  in payment as of June 30,
1998.  The  Partnership's  investment  in loans  secured by third  mortgages has
increased by 198% due to the purchase of one loan in the amount of $1,500,000 by
the  Partnership  during the six months ended June 30, 1998.  This loan was paid
off in full in July 1998.

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 June 30, 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 not purchased from the
Partnership by the Corporate  General Partner.  Of these  foreclosed  loans, the
Partnership held three mortgages  totaling $765,332 as of June 30, 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 six months ended
June 30, 1998, on which the payments were current.


Real Estate Properties Held for Sale

The Partnership currently holds title to eleven properties which were foreclosed
on from January 1, 1993 through June 30,  1998.  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 six
months ended June 30, 1998, the Partnership  acquired through  foreclosure a 22%
interest in a multi-unit  residential building in Oakland,  California,  a light
industrial warehouse located in Sacramento, California and a commercial building
located in Gresham,  Oregon on which it had trust deed  investments  of $53,185,
$30,000  and  $425,000,   respectively.  In  addition,  in  February  1998,  the
Partnership sold the manufactured home subdivision  development property located
in Sonora, California to the Corporate General Partner for $1,150,000, resulting
in a loss of approximately $2,000.

The properties  located in Merced,  Vallejo and  Sacramento,  California,  Reno,
Nevada and Gresham, Oregon do not currently generate revenue.  Although expenses
from rental  properties have increased from $131,000 to $159,000 (21.4%) for the
three months  ended June 30, 1997 and 1998,  respectively,  revenues  associated
with these  properties  have also increased from $83,000 to $181,000  (118%) for
the three months ended June 30, 1997 and 1998, respectively, thus generating net
income from real estate held for sale of $22,000  during the quarter  ended June
30, 1998.  The increase in expenses is primarily  attributable  to the increased
number of real estate  properties  owned.  The  increase  in rental  revenues is
attributable  to the increased  number of properties  held which are  generating
income as of June 30, 1998 as compared to June 30, 1997.


Investment in Development Limited Partnership

The  development  limited  partnership is building  single-family  residences of
between  approximately 2,200 and 2,800 square feet on the lots. During the three
months ended June 30, 1998 and 1997,  three and four homes,  respectively,  were
sold for aggregate proceeds of $1,431,772 and $2,251,997,  respectively, and the
development   limited   partnership   distributed   $1,851,818   and   $971,074,
respectively,  (including  $68,461 and  $117,911,  respectively,  from the joint
venture formed between the Corporate  General Partner and Wood Valley,  Inc.) to
the Partnership, $83,705 and $672,402, respectively, of which represented profit
and  interest.  During the six months  ended June 30, 1998 and 1997,  twelve and
eleven homes,  respectively,  were sold for aggregate proceeds of $5,972,110 and
$5,910,261,  respectively,  and the development limited partnership  distributed
$5,457,464  and  $4,893,212,  respectively,  (including  $87,577  and  $264,921,
respectively,  from the joint  venture  formed  between  the  Corporate  General
Partner and Wood Valley,  Inc.) to the  Partnership,  $1,229,145 and $1,800,127,
respectively,  of which represented profit and interest.  As of June 30, 1998, a
total of 28 homes had been completed and sold and  construction  had been nearly
completed on the remaining two lots.

During  the six  months  ended  June 30,  1998,  the  Partnership  had  advanced
additional  development  costs  aggregating  $926,487 to WV-OMIF  Partners.  The
Partnership's  investment in WV-OMIF Partners totaled $510,291 and $3,812,122 as
of June 30, 1998 and December 31, 1997, respectively.

As of June 30, 1998, OFG and  Woodvalley had reimbursed  $735,673 in development
costs to WV-OMIF  Partners (an additional  $87,604 since December 31, 1997). The
balance of development costs due by OFG and Woodvalley is $15,002 as of June 30,
1998.


Investment in Corporate Joint Venture

During  the six  months  ended  June  30,  1998,  the  Partnership  advanced  an
additional  $72,778 to the corporate  joint venture for  development.  The total
investment in the  corporate  joint venture was $712,141 and $639,363 as of June
30, 1998 and December 31, 1997, respectively.  The Company expects to obtain all
development  approvals  by the Fall of 1998 and have  construction  completed in
1999.


Cash and Cash Equivalents

Cash and cash equivalents of the Partnership  have increased from  approximately
$3,073,000  as of  December  31,  1997  to  $14,469,000  as of  June  30,  1998,
respectively.  This increase is primarily  attributable  to the pay off of trust
deed  investments  and  distributions  received  from  the  development  limited
partnership during the six months ended June 30, 1998 without the origination of
new loans of the same  amount  during  the period  and from  continuing  limited
partner contributions  (including rollover of limited partner income) during the
period.


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.

There has been little  variation in the  percentage  of capital  withdrawals  to
total  capital  invested  by the  limited  partners  in recent  years  excluding
distributions of net income to limited partners.  This withdrawal percentage has
been 7.37%,  6.11%, 7.85% and 6.63% for the years ended December 31, 1994, 1995,
1996 and 1997 and 7.72%  (annualized)  for the six months  ended June 30,  1998.
These  percentages are calculated by averaging,  on an annual basis,  the sum of
the capital  withdrawals for each calendar  quarter divided by the total limited
partner  capital as of the end of each quarter.  Management  of the  Partnership
does not expect the trend of capital  withdrawals  in relation to total  capital
invested to change substantially in subsequent periods.

The limited partners may withdraw,  or partially withdraw,  from the Partnership
and obtain the return of their outstanding capital accounts 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.


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

Although  the current  economic  climate in  Northern  California  is  generally
strong,  many areas outside of the San Francisco Bay Area continue to experience
depressed values created by the real estate recession of the early 1990's. Other
than the loss  incurred in February  1998 on the sale to the  Corporate  General
Partner of the Sonora property acquired by the Partnership through  foreclosure,
the  Partnership  has not sustained any material losses to date due primarily to
the Corporate General Partner's prior practice of purchasing delinquent interest
and purchasing  loans prior to  foreclosure.  The Corporate  General Partner has
ceased such  practices,  with very limited  exceptions.  Assuming the  Corporate
General Partner  continues in this manner,  the Partnership is likely to sustain
losses with respect to loans secured by properties located in areas of declining
real estate values.

Despite the  Partnership's  ability to purchase  mortgage loans with  relatively
strong yields during 1997 and 1998 from the Corporate General Partner,  there is
increased  competition  from a variety  of  lenders  that has had the  effect of
reducing  mortgage yields in the past twelve months and could have the affect of
reducing  mortgage  yields  further in the future.  As such,  current loans with
relatively high yields could be replaced with loans with lower yields,  which in
turn could reduce the net yield paid to the Limited Partners. In addition,  when
there is a reduction  in the demand by  borrowers  for loans  originated  by the
Corporate  General Partner and, thus,  fewer loans for the Partnership to invest
in, the  Partnership  will  invest its excess cash in shorter  term  investments
yielding considerably less than the current investment portfolio.

Effective  May  1,  1998,  the  Partnership   became  generally  closed  to  new
investments  on a  temporary  basis and  remained  closed  as of June 30,  1998.
However,  when the  Partnership  is open,  additional  investments  from new and
existing  Limited Partners are received on a monthly basis which provide capital
for loans,  purchases  of existing  notes and  redemption  of  existing  Limited
Partnership Units.


Year 2000

The Corporate General Partner depends on the use of computers to provide timely,
accurate   information   essential  to  the  management  and  operation  of  the
Partnership.  The computer  programs  used by the Corporate  General  Partner to
account for mortgage loan  investments,  investments in Units and other items is
in the process of being reviewed, remedied and tested by independent consultants
engaged to determine whether these programs are able to recognize the year 2000.
To the extent the  programs  recognize  calendar  years by their last two digits
only, there exists what commonly is referred to as a Year 2000 issue.

Based on the  preliminary  results of the  consultants'  testing,  the Corporate
General Partner does not anticipate significant costs, uncertainties or problems
associated  with  becoming Year 2000  compliant.  The total costs to remedy Year
2000 issues will be paid by the Corporate  General  Partner.  None of such costs
will be reimbursed by the Partnership. The consultants expect all problems to be
remedied by December 31, 1998. Although not anticipated by the Corporate General
Partner,  a failure to adequately  address the Year 2000 issue,  however,  could
result in the misstatement of reported information,  the inability to accurately
track mortgage investments and payments due or other operational problems.


<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:  August 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 Officer

                                           By:  \s\ Melina A. Platt
                                                    Melina A. Platt
                                                    Controller
                                                    Principal Accounting Officer