<Page>

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

                                   FORM 10-K/A

(MARK ONE)

   /X/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

        For the fiscal year ended December 31, 2001

                                       OR

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

        For the transition period from____________to____________

        Commission file number 0-16817

                    Krupp Insured Plus-II Limited Partnership
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         Massachusetts                                    04-2955007
--------------------------------------------------------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

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

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

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

Securities registered pursuant to Section 12(g) of the Act: Units of Depositary
Receipts representing Units of Limited Partner Interests.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/   No / /

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act).
Yes  / /    No  /X/

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

Documents incorporated by reference: See Item 15

The exhibit index is located on pages 11-12.

<Page>

                                     PART I

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

ITEM 1.   BUSINESS

Krupp Insured Plus-II Limited Partnership (the "Partnership") is a Massachusetts
limited partnership which was formed on October 29, 1986. The Partnership raised
approximately $292 million through a public offering of limited partner
interests evidenced by units of depositary receipts ("Units") and used the
investable proceeds primarily to acquire participating insured mortgages
("PIMs") and mortgage-backed securities ("MBS"). The Partnership considers
itself to be engaged only in the industry segment of investment in mortgages.

The Partnership's remaining PIM investment is a multi-family residential
property consisting of a MBS guaranteed as to principal and basic interest. This
MBS was issued or originated under or in connection with the housing program of
the Government National Mortgage Association ("GNMA"). This PIM provides the
Partnership with monthly payments of principal and basic interest and may also
provide for Partnership participation in the current revenue stream and in
residual value, if any, from a sale or other realization of the underlying
property (participation interest). The borrower conveys these rights to the
Partnership through a subordinated promissory note and mortgage. The
participation feature is neither insured nor guaranteed.

The Partnership also has investments in MBS and insured mortgages collateralized
by single-family or multi-family mortgage loans issued or originated by GNMA,
Fannie Mae, the Department of Housing and Urban Development ("HUD") or the
Federal Home Loan Mortgage Corporation ("FHLMC"). Fannie Mae and FHLMC guarantee
the principal and basic interest of the Fannie Mae and FHLMC MBS, respectively.
GNMA guarantees the timely payment of principal and basic interest on its MBS,
and HUD insures the pooled mortgage loans underlying the GNMA MBS and its own
direct mortgage loans.

Although the Partnership will terminate no later than December 31, 2026, it is
expected that the value of the PIMs generally will be realized by the
Partnership through repayment or sale as early as ten years from the dates of
the closings of the permanent loans and that the Partnership will realize the
value of all of its other investments within that time frame thereby resulting
in a dissolution of the Partnership significantly prior to December 31, 2026.

The Partnership's investments are not expected to be subject to seasonal
fluctuations. Any ultimate realization of the participation features of the PIMs
are subject to similar risks associated with equity real estate investments,
including: reliance on the owner's operating skills, ability to maintain
occupancy levels, control operating expenses, maintain the properties and
provide adequate insurance coverage; adverse changes in general economic
conditions, adverse local conditions, and changes in governmental regulations,
real estate zoning laws, or tax laws; and other circumstances over which the
Partnership may have little or no control.

The Partnership anticipates that there will be sufficient cash flow from the
mortgages to meet cash requirements. To the extent that the Partnership's cash
flow should be insufficient to meet the Partnership's operating expenses and
liabilities, it will be necessary for the Partnership to obtain additional funds
by liquidating its investment in one or more mortgages or by borrowing. The
Partnership may borrow money on an unsecured or secured basis to further the
purposes of the Partnership. The Partnership may pledge mortgages as security
for any permitted borrowing. The Partnership, under some circumstances, may
borrow funds from any general partner or an affiliate of any general partner.
However, the transaction must include interest rates and other finance charges
and fees not in excess of the amounts that are charged by unaffiliated lenders
for comparable loans and must satisfy other conditions specified in the
partnership agreement. The Partnership has not borrowed any funds during the
past and does not intend to do so in the future.

The Partnership expects that it will sell its remaining assets in the near
future, because its final PIM investment will be repaid soon. Once that happens,
the Partnership will proceed with an orderly liquidation of the fund.

The Partnership will not underwrite securities of other issuers, offer
securities in exchange for property, invest in securities of other issuers for
the purpose of exercising control or issue senior securities and has not engaged
in any of these activities during the past. The Partnership has not repurchased
or reacquired any of the partner interests from partners or units from unit
holders in the past and does not intend to do so in the future. The Partnership
may not make loans to any general partner or any affiliate of any general
partner and will not make loans to any other person other than mortgage
investments of the type described above.

The requirements for compliance with federal, state and local regulations to
date have not had an adverse effect on the

                                       -2-
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Partnership's operations, and no adverse effect is anticipated in the future.

As of December 31, 2001, there were no personnel directly employed by the
Partnership.

ITEM 2.   PROPERTIES

None

ITEM 3.   LEGAL PROCEEDINGS

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

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

None.

                                     PART II

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

There currently is no established trading market for the Units.

The number of investors holding Units as of December 31, 2001 was approximately
12,500. One of the objectives of the Partnership is to provide quarterly
distributions of cash flow generated by its investments in mortgages. The
Partnership anticipates that future operations will continue to generate cash
available for distribution. Adjustments may be made to the distribution rate in
the future due to the realization and payout of the existing mortgages.

On July 18, 2001, the Partnership paid a special distribution of $.31 per
Limited Partner interest from the Orchard Landing MBS principal proceeds
received during May 2001 in the amount of $4,440,315.

On March 30, 2000, the Partnership paid a special distribution of $.58 per
Limited Partner interest from the prepayment proceeds received during February
2000 on the Greenhouse Apartments PIM in the amount of $8,428,984. The
underlying property was foreclosed on by the first mortgage lender during
January 1999. The Partnership continued to receive its full principal and basic
interest payments due on the PIM while the underlying mortgage was in default
because those payments were guaranteed by GNMA. The Partnership did not receive
any participation interest from this transaction.

On January 11, 2000, the Partnership paid a special distribution of $.43 per
Limited Partner interest from the Saratoga Apartments PIM prepayment proceeds
received in December 1999 in the amount of $6,204,960. The underlying property
value had not increased sufficiently to meet the criteria for the Partnership to
earn any participation interest.

The Partnership will make special distributions in the future when its PIM
prepays and when it liquidates any remaining assets.

The Partnership made the following distributions to its Partners during the two
years ended December 31, 2001 and 2000:

<Table>
<Caption>
                                                       2001                             2000
                                          ----------------------------     ----------------------------
                                              Amount          Per Unit        Amount           Per Unit
                                          -------------       --------     -------------       --------
<S>                                       <C>                 <C>          <C>                 <C>
Quarterly Distributions:
   Limited Partners                       $   5,862,204       $    .40     $   5,862,204       $    .40
   General Partners                              69,366              -            97,176              -
                                          -------------                    -------------

                                              5,931,570                        5,959,380
                                          -------------                    -------------

Special Distributions:
   Limited Partners                           4,543,209       $    .31        14,802,066       $   1.01
                                          -------------                    -------------

Total Distributions                       $  10,474,779                    $  20,761,446
                                          =============                    =============
</Table>

ITEM 6.   SELECTED FINANCIAL DATA

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

<Table>
<Caption>
                                   2001                2000              1999                1998             1997
                                   ----                ----              ----                ----             ----
<S>                          <C>                 <C>                 <C>                <C>               <C>
Total revenues               $     2,790,634     $    3,520,446      $   7,822,665      $   15,335,618    $  16,672,558

Net income                         2,171,571          2,770,378          6,146,718          12,017,670       12,972,600

Net income allocated to:
   Limited Partners ("LP")         2,106,424          2,687,267          5,962,316          11,657,140       12,583,422
   Average per LP interest               .14                .18                .41                 .80              .86

   General Partners                   65,147             83,111            184,402             360,530          389,178
Total assets at:
   December 31                    34,466,969         42,256,448         60,161,993         117,626,762      180,126,977

Distributions to:
   Quarterly to LPs                5,862,204          5,862,204         11,138,189          16,414,173       16,414,173
   Average per LP interest               .40                .40                .76                1.12             1.12

   Specials to LPs                 4,543,209         14,802,066         51,587,401          56,716,830       24,767,815
   Average per LP interest               .31               1.01               3.52                3.87             1.69

   General Partners                   69,366             97,176            217,645             385,355          436,626
</Table>

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

Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Form 10-K constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the Partnership's actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by these forward-looking statements. These factors include, among other
things, federal, state or local regulations; adverse changes in general economic
or local conditions; pre-payments of mortgages; failure of borrowers to pay
participation interests due to poor operating results at properties underlying
the mortgages; uninsured losses and potential conflicts of interest between the
Partnership and its Affiliates, including the General Partners.

LIQUIDITY AND CAPITAL RESOURCES

The most significant demands on the Partnership's liquidity are the quarterly
distributions paid to investors. Funds for investor distributions come from the
monthly principal and interest payments received on the PIMs and MBS, the
principal prepayments of the PIMs and MBS, and interest earned on the
Partnership's cash and cash equivalents. In general, the General Partners try to
set a distribution rate that provides for level quarterly distributions. To the
extent that quarterly distributions do not fully utilize the cash available for
distribution and cash balances increase, the General Partners may adjust the
distribution rate or distribute such funds through a special distribution. The
portion of distributions attributable to the principal collections reduces the
capital resources of the Partnership. As the capital resources decrease, the
total cash flows to the Partnership also will decrease and over time will result
in periodic adjustments to the distributions paid to investors. The General
Partners periodically review the distribution rate to determine whether an
adjustment is necessary based on projected future cash flows. Based on current
projections, the General Partners have determined that the Partnership will
adjust the current distribution rate beginning with the distribution payable in
February 2002 to $.05 per Limited Partner interest per quarter. This will result
in a payment of approximately $733,000 each quarter.

In addition to providing insured or guaranteed monthly principal and basic
interest payments, the Partnership's PIM investment also may provide
participation interest if the underlying property operates successfully. The
Partnership may receive a share in any operating cash flow that exceeds debt
service obligations and capital needs or a share in any

                                       -4-
<Page>

appreciation in value when the property is sold or refinanced. However, this
participation is neither guaranteed nor insured, and it is dependent upon
whether property operations or its terminal value meet certain criteria.

During May 2001, the Partnership received a payoff of the Orchard Landing MBS in
the amount of $4,440,315. On July 18, 2001 the Partnership paid a special
distribution of $.31 per Limited Partner interest from the principal proceeds.

Also during May 2001, the Partnership received $30,769 from the borrowers of the
Richmond Park PIM as a settlement to release the loan's participation features.
The property was not generating sufficient cash flow to pay any participation
from property operations nor did it have sufficient appreciation in value to
meet the threshold to pay any participation based on value if the property was
sold or refinanced. Considering the property's physical condition, there was
little likelihood that its status would improve. Rental rate increase and
occupancy levels had been difficult to achieve. Consequently, all of the cash
flow generated by the property went back into operations. While the borrower had
assured that the insured first mortgage debt was serviced, no major capital
improvements were undertaken to enhance the property's leasing efforts.
Furthermore, routine maintenance and repairs were beginning to be prioritized
according to need and available cash. The condition of the property and its
inability to generate sufficient cash flow seriously impaired the ability of the
borrower to either sell the property or refinance it without taking a loss.
Their business plan was to make a significant investment in the property to
correct deferred maintenance and functional obsolescence and to market it for
leasing in order to reposition the property for a successful sale or refinance.
They were unwilling to make the significant investments necessary while the
property was encumbered with the PIM's participation features. As a result, the
borrowers requested a release of the participation features while keeping the
insured first mortgage in place until the property turns around. The General
Partners agreed to this request in return for the settlement because there was
no expectation that the Partnership would be entitled to any participation
proceeds now or in the future in the property's physical condition. Upon this
settlement, the insured first mortgage loan on Richmond Park was reclassified
from a PIM to a MBS as the only remaining portion of the investment is a GNMA
MBS. The Partnership also reclassified this investment to available for sale
concurrent with the release of the participation feature. The Partnership will
continue to receive the scheduled principal and interest payments on the first
mortgage until the property is refinanced or sold.

On March 30, 2000, the Partnership paid a special distribution of $.58 per
Limited Partner interest from the prepayment proceeds received during February
2000 on the Greenhouse Apartments PIM in the amount of $8,428,984. The
underlying property was foreclosed on by the first mortgage lender during
January 1999. The Partnership continued to receive its full principal and basic
interest payments due on the PIM while the underlying mortgage was in default
because those payments were guaranteed by GNMA. The Partnership did not receive
any participation interest from this transaction.

On January 11, 2000, the Partnership paid a special distribution of $.43 per
Limited Partner interest from the Saratoga Apartments PIM prepayment proceeds
received in December 1999 in the amount of $6,204,960. The underlying property
value had not increased sufficiently to meet the criteria for the Partnership to
earn any participation interest.

On November 22, 1999, the Partnership paid a special distribution of $.72 per
Limited Partner interest from the Le Coeur du Monde Apartments PIM prepayment
proceeds received in October 1999 in the amount of $9,422,001. The Partnership
also received $472,587 of accrued and unpaid participation interest attributable
to property operations from its Le Coeur du Monde PIM investment and $1,102,701
of participation interest attributable to the Partnership's share in the
increase in the property's value.

On June 18, 1999, the Partnership paid a special distribution of $.83 per
Limited Partner interest from the Country Meadows Apartments PIM prepayment
proceeds received in May 1999 in the amount of $12,015,224. The underlying
property value had not increased sufficiently to meet the criteria for the
Partnership to earn any participation interest. The Partnership did receive a
$60,076 prepayment premium for the early payoff of the Country Meadows PIM.

On February 26, 1999, the Partnership paid a special distribution of $1.97 per
Limited Partner interest from the prepayments of the Stanford Court, Hillside
Court, Carlyle Court and Waterford Court Apartments PIMs. On January 25, 1999,
the Partnership received prepayments of the Stanford Court, Hillside Court,
Carlyle Court and Waterford Court Apartments PIMs in the amounts of $6,609,242,
$4,266,759, $7,696,897 and $9,394,386, respectively. In addition to the
prepayments, the Partnership received $860,052 of Shared Appreciation Interest
and prepayment penalties and $432,877 of Minimum Additional Interest and Shared
Income Interest during December 1998.

The Partnership's only remaining PIM investment is the GNMA security backed by
the first mortgage loan on Denrich

                                       -5-
<Page>

Apartments. Presently, the borrower is working on refinancing the underlying
first mortgage as there are no contractual obligations remaining that would
prevent a prepayment of the underlying first mortgage. The property is thirty
years old, and rental rate increases have not kept pace with the increasing
costs of maintenance, repairs and replacements. Denrich Apartments does not
compete successfully in the Philadelphia neighborhood where it is located.
Occupancy, which generally fluctuates in the mid 80% range, is adversely
affected by cash constraints that have led to extensive deferred maintenance.
Denrich Apartments operated under a long-term workout agreement with the
Partnership that expired at the end of 2000. The General Partners do not expect
the Partnership to receive participation interest from Denrich Apartments. The
property is currently negotiating a refinancing agreement and the General
Partners expect that the borrower will close his refinancing transaction during
2002. If the borrower is successful, it would result in a payoff of the Denrich
PIM to the Partnership followed by a liquidation of the remaining assets and a
final special distribution to the Partners.

CRITICAL ACCOUNTING POLICY

The Partnership's critical accounting policy relates primarily to revenue
recognition related to the participation feature of the Partnership's PIM
investment. The Partnership's policy is as follows:

Basic interest on the PIM is recognized based on the stated coupon rate of the
GNMA MBS. The Partnership's recognizes interest related to the participation
feature when the amount becomes fixed and the transaction that gives rise to
such amount is finalized, cash is received and all contingencies are resolved.
This could be the sale or refinancing of the underlying real estate, which
results in a cash payment to the Partnership or a cash payment made to the
Partnership from surplus cash relative to the participation feature.

ITEM 7A   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSESSMENT OF CREDIT RISK

The Partnership's investments in its MBS portion of its PIM and its MBS are
guaranteed and/or insured by GNMA, Fannie Mae, FHLMC or HUD and therefore the
certainty of their cash flows and the risk of material loss of the amounts
invested depends on the creditworthiness of these entities.

Fannie Mae is a federally chartered private corporation that guarantees
obligations originated under its programs. FHLMC is a federally chartered
corporation that guarantees obligations originated under its programs. These
obligations are not guaranteed by the U.S. Government or the Federal Home Loan
Bank Board. However, Fannie Mae and FHLMC are two of the largest corporations in
the United States with significant experience in mortgage securitizations. In
addition, their MBS instruments carry the highest credit rating given to
financial instruments. GNMA guarantees the timely payment of principal and basic
interest on the securities it issues, which represent interests in pooled
mortgages insured by HUD. Obligations insured by HUD, an agency of the U.S.
Government, are backed by the full faith and credit of the U.S. Government.

At December 31, 2001 the Partnership includes in cash and cash equivalents
approximately $699,000 of commercial paper, which is issued by entities with a
credit rating equal to one of the top two rating categories of a nationally
recognized statistical rating organization.

INTEREST RATE RISK

The Partnership's primary market risk exposure is to interest rate risk, which
can be defined as the exposure of the Partnership's net income, comprehensive
income or financial condition to adverse movements in interest rates. At
December 31, 2001, the Partnership's PIM and MBS comprise the majority of the
Partnership's assets. Decreases in interest rates may accelerate the prepayment
of the Partnership's investments. The Partnership does not utilize any
derivatives or other instruments to manage this risk as the Partnership plans to
hold its PIM investment to expected maturity, while it is expected that
substantially all of the MBS will prepay over the same time period, thereby
mitigating any potential interest rate risk to the disposition value of any
remaining MBS.

The Partnership monitors prepayments and considers prepayment trends, as well as
distribution requirements of the

                                       -6-
<Page>

Partnership, when setting regular distribution policy. For MBS, the Partnership
forecasts prepayments based on trends in similar securities as reported by
statistical reporting entities such as Bloomberg. For its remaining PIM, the
Partnership continues to monitor the borrower's intention to refinance the
underlying first mortgage.

The table on the following page provides information about the Partnership's
financial instruments that are sensitive to changes in interest rates. For
mortgage investments, the table presents principal cash flows and related
weighted average interest rates ("WAIR") by expected maturity dates. The
expected maturity date is contractual maturity adjusted for expectations of
prepayments.

<Table>
<Caption>
                                                 Expected maturity dates ($ in thousands)
                                   ----------------------------------------------------------------------------------------------
                                                                                                              Total
                                                                                                               Face        Fair
                                     2002        2003        2004        2005        2006      Thereafter     Value      Value(1)
                                   ----------------------------------------------------------------------------------------------
<S>                                <C>         <C>         <C>         <C>         <C>         <C>           <C>         <C>
Interest-sensitive assets:

MBS                                $  1,059    $    984    $    929    $    891    $    868    $   24,876    $ 29,607    $ 30,575
WAIR                                   7.56%       7.56%       7.56%       7.56%       7.56%         7.56%       7.56%

PIM                                   3,101           -           -           -           -             -       3,101       3,247
WAIR                                   8.00%       0.00%       0.00%       0.00%       0.00%         0.00%       8.00%
                                   --------    --------    --------    --------    --------    ----------    --------    --------

Total Interest-sensitive assets    $  4,160    $    984    $    929    $    891    $    868    $   24,876    $ 32,708    $ 33,822
                                   ========    ========    ========    ========    ========    ==========    ========    ========
</Table>

(1)  The methodology used by the Partnership to estimate the fair value of each
     class of financial instruments is described in Note H to the Partnership's
     financial statements presented in Appendix A to this report. As described
     in that note, the Partnership does not include an estimate of value for the
     participation interest associated with its PIM investment.

     RESULTS OF OPERATIONS

     The following discussion relates to the operation of the Partnership during
     the years ended December 31, 2001, 2000 and 1999.

<Table>
<Caption>
                                                                       (Amounts in thousands)
                                                               2001             2000            1999
                                                            ---------        ---------        ---------
         <S>                                                <C>              <C>              <C>
         Interest income on PIMs:
           Basic interest                                   $     613        $   1,360        $   3,682
           Participation interest                                  31                -            1,635
         Interest income on MBS                                 2,022            1,685            1,826
         Other interest income                                    125              475              680
         Partnership expenses                                    (553)            (628)            (778)
         Amortization of prepaid fees and expenses                (66)            (122)            (898)
                                                            ---------        ---------        ---------

              Net Income                                    $   2,172        $   2,770        $   6,147
                                                            =========        =========        =========
</Table>

     Net income decreased during 2001 as compared to 2000 primarily due to lower
     basic interest on PIMs and other interest income. This decrease was
     partially offset by an increase in interest income on MBS. The reduction in
     basic interest on PIMs is primarily due to the reclassification of the
     Richmond Park PIM to an MBS in May 2001. Interest income on MBS increased
     due to the reclassification, but was partially offset by the payoff of the
     Orchard Landing

                                       -7-
<Page>

     MBS in May 2001. Other interest income decreased due to significantly lower
     average interest rates earned on cash balances available for short-term
     investing in 2001 versus 2000.

     Net income decreased during 2000 as compared to 1999 primarily due to lower
     basic and participation interest on PIMs. This was partially offset by a
     decrease in amortization. The reduction in basic interest on PIMs is due to
     the payoff of the Greenhouse PIM in 2000 and the payoffs of the Saratoga,
     Le Coeur du Monde, Country Meadows, Stanford Court, Hillside Court, Carlyle
     Court and Waterford Court PIMs in 1999. Participation interest was higher
     in 1999 than 2000 as the loans that paid off in 1999 generated higher
     Shared Appreciation Interest and prepayment premiums than the Greenhouse
     PIM which paid off in 2000. The decrease in amortization was also related
     to the payoff activity in 1999 which resulted in the write-off of the
     remaining deferred expenses attributed to those loans.

     As the Partnership distributes principal collections on MBS and PIMs
     through quarterly or special distributions, the invested assets of the
     Partnership will decline which should result in a continuing decline in net
     income.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Appendix A to this report.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Partnership has no directors or executive officers. Information as to the
directors and executive officers of Krupp Plus Corporation which is a General
Partner of the Partnership and is the general partner of Mortgage Services
Partners Limited Partnership, which is the other General Partner of the
Partnership, is as follows:

<Table>
<Caption>
                                                            Position with
                Name and Age                           Krupp Plus Corporation
                ------------                           ----------------------
               <S>                                     <C>
               Douglas Krupp (55)                      President, Co-Chairman of the Board and Director
               George Krupp (57)                       Co-Chairman of the Board and Director
               Peter F. Donovan (48)                   Senior Vice President
               Ronald Halpern (60)                     Senior Vice President
               Robert A. Barrows (44)                  Vice President and Treasurer
               Carol J.C. Mills (52)                   Vice President
</Table>

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

George Krupp is the Co-Founder and Co-Chairman of The Berkshire Group, an
integrated real estate financial services firm engaged in real estate
acquisitions, property management, investment sponsorship, venture capital
investing, mortgage banking and financial management, and ownership of two
operating companies through private equity investments. Mr. Krupp has held the
position of Co-Chairman since The Berkshire Group was established as The Krupp
Companies in 1969. Mr. Krupp has been an instructor of history at the New Jewish
High School in Waltham,

                                       -8-
<Page>

Massachusetts since September of 1997. Mr. Krupp attended the University of
Pennsylvania and Harvard University and holds a Master's Degree in History from
Brown University. Douglas and George Krupp are brothers.

Peter F. Donovan is Chief Executive Officer of Berkshire Mortgage Finance which
position he has held since January of 1998 and in this capacity, he oversees the
strategic growth plans of this mortgage banking firm. Berkshire Mortgage Finance
is the 10th largest commercial mortgage servicer in the United States with a
servicing and asset management portfolio of $14.1 billion. Previously he served
as President of Berkshire Mortgage Finance from January of 1993 to January of
1998 and in that capacity he directed the production, underwriting, servicing
and asset management activities of the firm. Prior to that, he was Senior Vice
President of Berkshire Mortgage Finance and was responsible for all
participating mortgage originations. Before joining the firm in 1984, he was
Second Vice President, Real Estate Finance for Continental Illinois National
Bank & Trust, where he managed a $300 million construction loan portfolio of
commercial properties. Mr. Donovan received a B.A. from Trinity College and an
M.B.A. degree from Northwestern University. Mr. Donovan is currently a member of
the Advisory Council for Fannie Mae.

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

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

Carol J.C. Mills is Senior Vice President for Loan Management of Berkshire
Mortgage Finance and in this capacity, she is responsible for the Loan Servicing
and Asset Management functions of Berkshire Mortgage Finance. She manages the
estimated $14.1 billion portfolio of loans. Ms. Mills joined Berkshire in
December 1997 as Vice President and was promoted to Senior Vice President in
January 1999. From January 1989 through November 1997, Ms. Mills was Vice
President of First Winthrop Corporation and Winthrop Financial Associates, in
Cambridge, MA. Ms. Mills earned a B.A. degree from Mount Holyoke College and a
Master of Architecture degree from Harvard University. Ms. Mills is a member of
the Real Estate Finance Association, New England Women in Real Estate, the
Mortgage Bankers Association and the Servicing Advisory Council for Freddie Mac.

ITEM 11.  EXECUTIVE COMPENSATION

The Partnership has no directors or executive officers.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of December 31, 2001, no person owned of record or was known by the General
Partners to own beneficially more than 5% of the Partnership's 14,655,512
outstanding Limited Partner interests. The only interests held by management or
its affiliates consist of the 2.5% general partner interest held by Krupp Plus
Corporation, the 97.5% general partner interest held by Mortgage Services
Partners Limited Partnership and the 100 limited partner interests (0.0007% of
the total outstanding) held by Krupp Depositary Corporation, an affiliate of the
General Partners.

Profits and losses from Partnership operations and Distributable Cash Flow are
allocated 97% to the Unitholders and Corporate Limited Partner (the "Limited
Partners") and 3% to the General Partners.

Upon the occurrence of a capital transaction, as defined in the Partnership
Agreement, net cash proceeds will be distributed first, to the Limited Partners
until they have received a return of their total invested capital, second, to
the General Partners until they have received a return of their total invested
capital, third, 99% to the Limited Partners and 1% to the General Partners until
the Limited Partners receive an amount equal to any deficiency in the 11%
cumulative

                                       -9-
<Page>

return on their invested capital that exists through fiscal years prior to the
date of the capital transaction, fourth, to the class of General Partners until
they have received an amount equal to 4% of all amounts of cash distributed
under all capital transactions and fifth, 96% to the Limited Partners and 4% to
the General Partners.

Upon the occurrence of a terminating capital transaction, as defined in the
Partnership Agreement, the net cash proceeds and winding up of the affairs of
the Partnership will be allocated among the Partners first, to each class of
Partners in the amount equal to, or if less than, in proportion to, the positive
balance in the Partner's capital accounts, second, to the Limited Partners until
they have received a return of their total invested capital, third, to the
General Partners until they have received a return of their total invested
capital, fourth, 99% to the Limited Partners and 1% to the General Partners
until the Limited Partners have received to any deficiency in the 11% cumulative
return on their invested capital that exists through fiscal years prior to the
date of the capital transaction, fifth, to the General Partners until they have
received an amount equal to 4% of all amounts of cash distributed under all
capital transactions and sixth, 96% to the Limited Partners and 4% to the
General Partners.

Profits arising from a capital transaction, will be allocated in the same manner
as related cash distributions. Losses from a capital transaction will be
allocated 97% to the Limited Partners and 3% to the General Partners.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Under the terms of the Partnership Agreement, the General Partners or their
affiliates are entitled to an asset management fee for the management of the
Partnership's business, equal to .75% per annum of the value of the
Partnership's actual and committed mortgage assets, payable quarterly. The
General Partners may also receive an incentive management fee in an amount equal
to .3% per annum on the Partnership's total invested assets provided the
Unitholders have received their specified non-cumulative annual return on their
Invested Capital. Total fees payable to the General Partners for management
services shall not exceed 10% of Distributable Cash Flow over the life of the
Partnership. During 2001, Mortgage Services Partners Limited Partnership, a
General Partner, received $261,650 related to the Asset Management Fee.

Additionally, the Partnership reimburses affiliates of the General Partners for
certain costs incurred in connection with maintaining the books and records of
the Partnership the preparation and mailing of financial reports, tax
information and other communications to investors and legal fees and expenses.
During 2001, the Berkshire Companies Limited Partnership and Berkshire Mortgage
Finance Limited Partnership, affiliates of the General Partners, received a
total of $119,166 in reimbursements.

During 2001, the General Partners received distributions totaling $69,366
related to their 3% share of Distributable Cash Flow.

ITEM 14. CONTROLS AND PROCEDURES.

Not applicable.

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

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

(b)  REPORTS ON FORM 8-K

During the last quarter of the year ended December 31, 2001, the Partnership did
not file any reports on Form 8-K.

(c)  Exhibits:

                                      -10-
<Page>

NUMBER AND DESCRIPTION
UNDER REGULATION S-K

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

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

     (4.1)     Amended and Restated Agreement of Limited Partnership dated as of
               May 29, 1987 [Exhibit A to Prospectus included in Post Effective
               Amendment No. 1 of Registrant's Registration Statement on Form
               S-11 dated June 18, 1987 (File No. 33-9889)].*

     (4.2)     Second Amendment to Agreement of Limited Partnership dated as of
               June 17, 1987 [Exhibit 4.6 in Post Effective Amendment No. l of
               Registrant's Registration Statement on Form S-11 dated June 18,
               1987 (File No. 33-9889)].*

     (4.3)     Subscription Agreement whereby a subscriber agrees to purchase
               Units and adopts the provisions of the Amended and Restated
               Agreement of Limited Partnership [Exhibit D to Prospectus
               included in Post Effective Amendment No. 1 of Registrant's
               Registration Statement on Form S-11 dated June 18, 1987 (File No.
               33-9889)].*

     (4.4)     Copy of Amended Certificate of Limited Partnership filed with the
               Massachusetts Secretary of State on April 28, 1987. [Exhibit 4.4
               in Amendment No. 1 of Registrant's Registration Statement on Form
               S-11 dated May 14, 1987 (File No. 33-9889)].*

(10) Material Contracts:

     (10.1)    Form of agreement between the Partnership and Krupp Mortgage
               Corporation. [Exhibit 10.3 in Amendment No. 1 of Registrant's
               Registration Statement on Form S-11 dated May 14, 1987 (File No.
               33-9889)].*

     DENRICH APARTMENTS

     (10.2)    Prospectus for GNMA Pool No. 267075 (PL). [Exhibit 10.29 to
               Registrant's Report on Form 10-K for the year ended December 31,
               1988 (File No. 0-16817)].*

     (10.3)    Subordinated Multifamily Mortgage (including Subordinated
               Promissory Note) dated November 3, 1988 between Arthur J.
               Stagnaro and Krupp Insured Plus-II Limited Partnership. [Exhibit
               10.30 to Registrant's Report on Form 10-K for the year ended
               December 31, 1988 (File No. 0-16817)].*

     (10.4)    Modification Agreement dated June 28, 1995 between Arthur J.
               Stagnaro and Krupp Insured Plus-II Limited Partnership [Exhibit
               10.1 to Registrant's Report on Form 10-Q for the quarter ended
               June 30, 1995 (File No. 0-16817)].*

     RICHMOND PARK APARTMENTS

     (10.5)    Prospectus for GNMA Pool No. 260865 (PL) [Exhibit 1 to
               Registrant's Report on Form 8-K dated August 30, 1989 (File No.
               0-16817)].*

(99) Other:

                                      -11-
<Page>

     (99.1)    Principal Executive Officer Certification pursuant to 18 U.S.C.
               Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.+

     (99.2)    Chief Accounting Officer Certification pursuant to 18 U.S.C.
               Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.+

* Incorporated by reference.
+ Filed herein

                                      -12-
<Page>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 7th day of
January, 2003.


                                   KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                                   By: Krupp Plus Corporation,
                                     a General Partner



                                   By: /s/ Douglas Krupp
                                      ------------------
                                     Douglas Krupp, President, Co-Chairman
                                     (Principal Executive Officer) and
                                     Director of Krupp Plus Corporation


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on the 7th day of January, 2003.

      SIGNATURES                TITLE(S)

 /s/ Douglas Krupp              President, Co-Chairman (Principal Executive
--------------------------           Officer) and Director of Krupp Plus
Douglas Krupp                        Corporation, a General Partner


 /s/ George Krupp               Co-Chairman (Principal Executive Officer) and
--------------------------           Director of of Krupp Plus Corporation,
George Krupp                         a General Partner


 /s/ Peter F. Donovan           Senior Vice President of Krupp Plus Corporation,
--------------------------           a General Partner
Peter F. Donovan


 /s/ Robert A. Barrows          Treasurer and Chief Accounting Officer of Krupp
--------------------------           Plus Corporation, a General Partner
Robert A. Barrows

                                      -13-
<Page>

CERTIFICATIONS

     I, Douglas Krupp, certify that:

          1.   I have reviewed this annual report on Form 10-K/A of Krupp
               Insured Plus - II Limited Partnership;

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

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


     Date: January 7, 2003


                                                    /s/ Douglas Krupp
                                                ---------------------------
                                                       Douglas Krupp
                                                Principal Executive Officer


                                      -14-
<Page>

CERTIFICATIONS

     I, Robert A. Barrows, certify that:

          1.   I have reviewed this annual report on Form 10-K/A of Krupp
               Insured Plus - II Limited Partnership;

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

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


     Date: January 7, 2003


                                                 /s/ Robert A. Barrows
                                                ------------------------
                                                   Robert A. Barrows
                                                Chief Accounting Officer


                                      -15-
<Page>

                                   APPENDIX A

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                                   ----------


                        FINANCIAL STATEMENTS AND SCHEDULE
                               ITEM 8 of FORM 10-K

             ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                      For the Year Ended December 31, 2001

                                       F-1
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

                                   ----------

<Table>
<S>                                                                           <C>
Report of Independent Accountants                                                    F-3

Balance Sheets at December 31, 2001 and 2000                                         F-4

Statements of Income and Comprehensive Income for
the Years Ended December 31, 2001, 2000 and 1999                                     F-5

Statements of Changes in Partners' Equity for the Years
Ended December 31, 2001, 2000 and 1999                                               F-6

Statements of Cash Flows for the Years Ended December 31, 2001,
2000 and 1999                                                                        F-7

Notes to Financial Statements                                                 F-8 - F-16
</Table>

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

                                       F-2
<Page>

                        REPORT OF INDEPENDENT ACCOUNTANTS

                                   ----------

To the Partners of Krupp Insured Plus-II Limited Partnership:

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Krupp
Insured Plus- II Limited Partnership (the "Partnership") at December 31, 2001
and 2000 and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.


PricewaterhouseCoopers LLP
Boston, Massachusetts
March 22, 2002

                                       F-3
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                                 BALANCE SHEETS

                           December 31, 2001 and 2000

                                   ----------

<Table>
<Caption>
                                                                                   2001                 2000
                                                                              -------------        -------------
<S>                                                                           <C>                  <C>
                                     ASSETS

Participating Insured Mortgages ("PIMs")
  (Notes B, C and H)                                                          $   3,101,005        $  17,541,596
Mortgage-Backed Securities and insured
  mortgage ("MBS") (Notes B, D and H)                                            30,211,162           21,247,646
                                                                              -------------        -------------

      Total mortgage investments                                                 33,312,167           38,789,242

Cash and cash equivalents (Notes B, C and H)                                        933,678            3,125,710
Interest receivable and other assets                                                221,124              275,591
Prepaid acquisition fees and expenses, net of
  accumulated amortization of $0 and $733,572, respectively (Note B)                      -               65,905
                                                                              -------------        -------------

      Total assets                                                            $  34,466,969        $  42,256,448
                                                                              =============        =============

                        LIABILITIES AND PARTNERS' EQUITY

Liabilities                                                                   $      17,875        $      17,889
                                                                              -------------        -------------

Partners' equity (deficit) (Notes A, C and E):

Limited Partners
  (14,655,512 Limited Partner interest outstanding)                              34,084,355           42,383,344

General Partners                                                                   (341,667)            (337,448)

Accumulated comprehensive income (Note B)                                           706,406              192,663
                                                                              -------------        -------------

      Total Partners' equity                                                     34,449,094           42,238,559
                                                                              -------------        -------------

      Total liabilities and Partners' equity                                  $  34,466,969        $  42,256,448
                                                                              =============        =============
</Table>

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

                                       F-4
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

              For the Years Ended December 31, 2001, 2000 and 1999

                                   ----------

<Table>
<Caption>
                                                                    2001                  2000                 1999
                                                               ---------------      ----------------      --------------
<S>                                                            <C>                  <C>                   <C>
Revenues:
   Interest income - PIMs:
     Basic interest                                            $       613,152      $      1,360,247      $    3,681,868
     Participation interest                                             30,769                     -           1,634,686
   Interest income - MBS                                             2,021,867             1,685,246           1,826,026
   Other interest income                                               124,846               474,953             680,085
                                                               ---------------      ----------------      --------------

          Total revenues                                             2,790,634             3,520,446           7,822,665
                                                               ---------------      ----------------      --------------

Expenses:
   Asset management fee to an affiliate (Note F)                       261,650               299,983             496,464
   Expense reimbursement to affiliates (Note F)                        119,166               125,209              94,160
   Amortization of prepaid fees and expenses (Note B)                   65,905               122,275             898,457
   General and administrative                                          172,342               202,601             186,866
                                                               ---------------      ----------------      --------------

          Total expenses                                               619,063               750,068           1,675,947
                                                               ---------------      ----------------      --------------

Net income (Notes E and G)                                           2,171,571             2,770,378           6,146,718

Other Comprehensive Income:

   Net change in unrealized gain  on MBS                               513,743                87,582            (435,431)
                                                               ---------------      ----------------      --------------

Total Comprehensive Income                                     $     2,685,314      $      2,857,960      $    5,711,287
                                                               ===============      ================      ==============

Allocation of net income (Notes E and G.):

   Limited Partners                                            $     2,106,424      $      2,687,267      $    5,962,316
                                                               ===============      ================      ==============

   Average net income per Limited Partner
   Interest (14,655,512 Limited Partner
     interests outstanding)                                    $           .14      $            .18      $          .41
                                                               ===============      ================      ==============

   General Partners                                            $        65,147      $         83,111      $      184,402
                                                               ===============      ================      ==============
</Table>

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

                                       F-5

<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY

              For the Years Ended December 31, 2001, 2000 and 1999

                                   ----------

<Table>
<Caption>
                                                                                      Accumulated            Total
                                                   Limited            General        Comprehensive        Partners'
                                                  Partners           Partners            Income             Equity
                                               -------------       ------------      -------------      -------------
<S>                                            <C>                 <C>               <C>                <C>
Balance at December 31, 1998                   $ 117,123,621       $   (290,140)     $     540,512      $ 117,373,993

Net income                                         5,962,316            184,402                  -          6,146,718

Quarterly distributions                          (11,138,189)          (217,645)                 -        (11,355,834)

Special distributions                            (51,587,401)                 -                  -        (51,587,401)

Change in unrealized gain on MBS                           -                  -           (435,431)          (435,431)
                                               -------------       ------------      -------------      -------------

Balance at December 31, 1999                      60,360,347           (323,383)           105,081         60,142,045

Net income                                         2,687,267             83,111                  -          2,770,378

Quarterly distributions                           (5,862,204)           (97,176)                 -         (5,959,380)

Special distributions                            (14,802,066)                 -                  -        (14,802,066)

Change in unrealized gain on MBS                           -                  -             87,582             87,582
                                               -------------       ------------      -------------      -------------

Balance at December 31, 2000                      42,383,344           (337,448)           192,663         42,238,559

Net income                                         2,106,424             65,147                  -          2,171,571

Quarterly distributions                           (5,862,204)           (69,366)                 -         (5,931,570)

Special distributions                             (4,543,209)                 -                  -         (4,543,209)

Change in unrealized gain on MBS                           -                  -            513,743            513,743
                                               -------------       ------------      -------------      -------------

Balance at December 31, 2001                   $  34,084,355       $   (341,667)     $     706,406      $  34,449,094
                                               =============       ============      =============      =============
</Table>

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

                                       F-6
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS

              For the Years Ended December 31, 2001, 2000 and 1999

                                   ----------

<Table>
<Caption>
                                                                     2001                 2000                 1999
                                                                -------------        --------------       -------------
<S>                                                             <C>                  <C>                  <C>
Operating activities:
 Net income                                                     $   2,171,571        $    2,770,378       $   6,146,718
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Amortization of prepaid fees and expenses                           65,905               122,275             898,457
   Premium Amortization                                                22,153                     -                   -
   Shared Appreciation Interest and prepayment premiums                     -                     -          (1,162,777)
   Changes in assets and liabilities:
       Decrease in interest receivable
          and other assets                                             54,467               102,695             352,543
       Decrease in liabilities                                            (14)               (2,059)           (232,821)
                                                                -------------        --------------       -------------

            Net cash provided by operating activities               2,314,082             2,993,289           6,002,120
                                                                -------------        --------------       -------------

Investing activities:
   Principal collections on PIMs including Shared Appreciation
       Interest and prepayment premium of $1,162,777 in 1999          119,842             8,682,792          57,196,596
   Principal collections on MBS                                     5,848,823             1,117,892           2,078,965
                                                                -------------        --------------       -------------

            Net cash provided by investing activities               5,968,665             9,800,684          59,275,561
                                                                -------------        --------------       --------------

Financing activities:
   Quarterly distributions                                         (5,931,570)           (5,959,380)        (11,355,834)
   Special distributions                                           (4,543,209)          (14,802,066)        (51,587,401)
                                                                -------------        --------------       -------------

            Net cash used for financing activities                (10,474,779)          (20,761,446)        (62,943,235)
                                                                -------------        --------------       -------------

Net (decrease) increase in cash and equivalents                    (2,192,032)           (7,967,473)          2,334,446

Cash and cash equivalents, beginning of year                        3,125,710            11,093,183           8,758,737
                                                                -------------        --------------       -------------

Cash and cash equivalents, end of year                          $     933,678        $    3,125,710       $  11,093,183
                                                                =============        ==============       =============

Supplemental disclosure of non-cash investing activities:
    Reclassification of investment in a PIM to MBS              $  14,320,749        $            -       $           -
                                                                =============        ==============       =============

 Non cash activities:
    Increase (decrease) in fair value of MBS                    $     513,743        $       87,582       $    (435,431)
                                                                =============        ==============       =============
</Table>

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

                                       F-7
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   ----------

A.   ORGANIZATION

     Krupp Insured Plus-II Limited Partnership (the "Partnership") was formed on
     October 29, 1986 by filing a Certificate of Limited Partnership in The
     Commonwealth of Massachusetts. The Partnership was organized for the
     purpose of investing in multi-family loans and mortgage backed securities.
     The Partnership issued all of the General Partner Interests to Krupp Plus
     Corporation and Mortgage Services Partners Limited Partnership in exchange
     for capital contributions aggregating $3,000. The Partnership terminates on
     December 31, 2026, unless terminated earlier upon the occurrence of certain
     events as set forth in the Partnership Agreement.

     The Partnership commenced the public offering of Limited Partner interests
     on May 29, 1987 and completed its public offering having sold 14,655,412
     Limited Partner interests for $292,176,381 net of purchase volume discounts
     of $931,859 as of May 27, 1988. In addition, Krupp Depositary Corporation
     owns one hundred Limited Partner interests.

B.   SIGNIFICANT ACCOUNTING POLICIES

     The Partnership uses the following accounting policies for financial
     reporting purposes, which may differ in certain respects from those used
     for federal income tax purposes (Note G).

     BASIS OF PRESENTATION

     The accompanying financial statements have been prepared on the accrual
     basis of accounting in accordance with accounting principles generally
     accepted in the United States of America ("GAAP").

     MBS

     The Partnership, in accordance with Financial Accounting Standards Board's
     Statement 115, "Accounting for Certain Investments in Debt and Equity
     Securities" ("FAS 115"), classifies its MBS portfolio as
     available-for-sale. The Partnership classifies its MBS portfolio as
     available-for-sale as the Partnership expects that a portion of the MBS
     portfolio will remain after all of the PIMs pay off and that it will be
     necessary to then sell the remaining MBS portfolio at that time in
     order to close out the Partnership. In addition, other situations such
     as liquidity needs could arise which would necessitate the sale of a
     portion of the MBS portfolio. As such the Partnership carries its MBS at
     fair market value and reflects any unrealized gains (losses) as a
     separate component of Partners' Equity.

     The Partnership amortizes purchase premiums or discounts over the life of
     the underlying mortgages using the effective interest method. The
     Partnership also holds a Federal Housing Administration ("FHA") insured
     mortgage which is classified as MBS. The Partnership holds this loan at
     amortized cost and does not establish loan loss reserves on this
     investment as it is fully insured by the FHA.

     PIMs

     The Partnership accounts for its MBS portion of a PIM investment in
     accordance with FAS 115, under the classification of held to maturity
     as this investment has a participation feature. As a result, the
     Partnership would not sell or otherwise dispose of the MBS. Accordingly,
     the Partnership has both the intention and ability to hold this
     investment to expected maturity. The Partnership carries this MBS at
     amortized cost.

     Basic interest on the PIM is recognized based on the stated coupon rate of
     the Government National Mortgage Association ("GNMA") MBS. The
     Partnership's recognizes interest related to the participation feature
     when the amount becomes fixed and the transaction that gives rise to
     such amount is finalized, cash is received and all contingencies
     resolved.

     CASH AND CASH EQUIVALENTS

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

                                    Continued

                                       F-8
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

B.   SIGNIFICANT ACCOUNTING POLICIES, continued

     PREPAID FEES AND EXPENSES

     Prepaid fees and expenses consisted of acquisition fees and expenses paid
     for the acquisition of PIMs. The Partnership amortized prepaid acquisition
     fees and expenses using a method that approximated the effective interest
     method over a period of ten to twelve years, which represented the
     estimated life of the underlying mortgage.

     Upon the repayment of a PIM, any unamortized acquisition fees and expenses
     related to such loan were expensed.

     INCOME TAXES

     The Partnership is not liable for federal or state income taxes because
     Partnership income is allocated to the partners for income tax purposes. If
     the Partnership's tax returns are examined by the Internal Revenue Service
     or state taxing authority and such an examination results in a change in
     Partnership taxable income, such change will be reported to the partners.

     ESTIMATES AND ASSUMPTIONS

     The preparation of financial statements in accordance with GAAP requires
     management to make estimates and assumptions that affect the reported
     amount of assets and liabilities, contingent assets and liabilities and
     revenues and expenses during the period. Actual results could differ from
     those estimates.

C.   PIMs

     At December 31, 2001 and 2000, the Partnership had investments in one PIM
     and two PIMs, respectively. The Partnership's remaining PIM consists of a
     GNMA MBS representing the securitized first mortgage loan on the underlying
     property and participation interests in the revenue stream and appreciation
     of the underlying property above specified base levels. The borrower
     conveys these participation features to the Partnership generally through a
     subordinated promissory note and mortgage (the "Agreement").

     The Partnership receives guaranteed monthly payments of principal and basic
     interest on the GNMA MBS and HUD insures the first mortgage loan underlying
     the GNMA MBS.

     The Partnership may receive income related to its participation interests
     in the underlying property, however, these amounts are neither insured nor
     guaranteed.

     The participation features consist of the following: (i) "Minimum
     Additional Interest" equal to .5% per annum calculated on the unpaid
     principal balance of the first mortgage on the underlying property, (ii)
     "Shared Income Interest" is 25% of the monthly gross rental income
     generated by the underlying property in excess of a specified base, but
     only to the extent that it exceeds the amount of Minimum Additional
     Interest received during such month and (iii) "Shared Appreciation
     Interest" is 25% of any increase in the value of the underlying property in
     excess of a specified base. Payment of Minimum Additional Interest and
     Shared Income Interest from the operations of the property is limited to
     50% of net revenue or Surplus Cash as defined by HUD.

                                    Continued

                                       F-9
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

C.   PIMs, continued

     The total amount of Minimum Additional Interest, Shared Income Interest and
     Shared Appreciation Interest payable on the maturity date by the underlying
     borrower usually cannot exceed 50% of any increase in value of the
     property.

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

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

     During May 2001, the Partnership received $30,769 from the borrowers of the
     Richmond Park PIM as a settlement to release the loan's participation
     features. The property was not generating sufficient cash flow to pay any
     participation from property operations nor did it have sufficient value to
     meet the threshold to pay any participation based on value if the property
     was sold or refinanced. The borrowers asked for a release of the
     participation features while keeping the insured first mortgage in place
     until the property turns around. The General Partners agreed to this
     request in return for the settlement because there was no expectation that
     the Partnership would be entitled to any participation proceeds now or in
     the future in the property's current condition. Upon this settlement, the
     insured first mortgage loan on Richmond Park was reclassified from a PIM to
     a MBS as the only remaining portion of the investment is a GNMA MBS. The
     Partnership also reclassified this investment to available for sale
     concurrent with the release of the participation feature. The Partnership
     will continue to receive the scheduled principal and interest payments on
     the first mortgage until the property is refinanced or sold.

     On March 30, 2000, the Partnership paid a special distribution of $.58 per
     Limited Partner interest from the prepayment proceeds received during
     February 2000 on the Greenhouse Apartments PIM in the amount of $8,428,984.
     The underlying property was foreclosed on by the first mortgage lender
     during January 1999. The Partnership continued to receive its full
     principal and basic interest payments due on the PIM while the underlying
     mortgage was in default because those payments were guaranteed by GNMA. The
     Partnership did not receive any participation interest from this
     transaction.

     On January 11, 2000, the Partnership paid a special distribution of $.43
     per Limited Partner interest from the Saratoga Apartments PIM prepayment
     proceeds received in December 1999 in the amount of $6,204,960. The
     underlying property value had not increased sufficiently enough to meet the
     criteria for the Partnership to earn any participation interest.

     In September 1999, the Partnership received Shared Appreciation Interest
     and accrued Minimum Additional and Shared Income Interest of $1,102,701 and
     $472,587, respectively in connection with the Le Coeur du Monde PIM. The
     Partnership also received $279,447 relating to repayment of interest rate
     rebates. The Partnership received the principal proceeds of $9,422,001 in
     October. The principal proceeds and Shared Appreciation Interest were
     distributed to the Limited Partners through a special distribution of $.72
     per Limited Partner interest on November 22, 1999.

                                    Continued

                                       F-10
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

C.   PIMs, continued

     On June 18, 1999, the Partnership made a special distribution of $.83 per
     Limited Partner interest with the proceeds of the Country Meadows PIM. The
     Partnership received principal of $12,015,224 and a prepayment premium of
     $60,076 from this prepayment.

     On February 26, 1999, the Partnership made a special distribution to the
     Limited Partners of $1.97 per Limited Partner Interest. This special
     distribution was the result of the prepayment of the Stanford Court,
     Hillside Court, Carlyle Court and Waterford Court Apartments PIMs. The
     Partnership received principal of $27,967,284 during January 1999, Shared
     Appreciation Interest and prepayment premiums of $860,052 and accrued
     Minimum Additional and Shared Income Interest of $432,877 during December
     1998 from these prepayments.

     At December 31, 2001 and 2000 there were no loans within the Partnership's
     portfolio that were delinquent as to principal or interest.

     The Partnership's PIMs consisted of the following at December 31, 2001 and
     2000:

<Table>
<Caption>
                                                                                                 Investment Basis at
                                                                                                     December 31,
                              Original        Interest      Maturity       Monthly        --------------------------------
GNMA                         Face Amount      Rates(a)      Dates(e)      Payment(f)           2001              2000
--------------------       --------------    ----------    ---------      ----------      -------------      -------------
<S>                        <C>                   <C>        <C>           <C>             <C>                <C>
Denrich Apartments
Philadelphia, PA           $    3,500,000        8%         12/15/23      $   24,800      $   3,101,005      $   3,148,969
                                                  (b)(c)
                                                  (d)(g)

Richmond Park(h)
Richmond Heights, OH           16,000,000        -                 -               -                  -         14,392,627
                           --------------                                                 -------------      -------------

                           $   19,500,000                                                 $   3,101,005(j)   $  17,541,596
                           ==============                                                 =============      =============
</Table>

(a)  Represents the permanent interest rate of the GNMA MBS. In addition, the
     Partnership receives participation interest consisting of (i) Minimum
     Additional Interest, (ii) Shared Income Interest and (iii) Shared
     Appreciation Interest.

(b)  Minimum Additional Interest is at a rate of .5% per annum calculated on the
     unpaid principal balance of the first mortgage note.

(c)  Shared Income Interest is based on 25% of monthly gross rental income over
     a specified base amount.

(d)  Shared Appreciation Interest is based on 25% of any increase in the value
     of the project over the specified base value.

(e)  The Partnership's GNMA MBS has a call provision, which allows the
     Partnership to accelerate the maturity date.

                                       F-11
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

C.   PIMs, continued

(f)  The normal monthly payment consisting of principal and basic interest is
     payable monthly at level amounts over the term of the GNMA MBS.

(g)  On June 28, 1995, the Partnership entered into a temporary basic interest
     rate reduction agreement on the Denrich Apartments PIM. Beginning July 1,
     1995, the basic interest rate decreased from 8% per annum to 6.25% per
     annum for thirty months, then increased to 6.75% per annum for the
     following thirty-six month period and then increased to the original rate
     of 8% per annum. The difference between basic interest at the original
     interest rate and the reduced rates accumulated and will be payable from
     surplus cash or from the net proceeds of a sale or refinancing. These
     accumulated amounts will be due and payable prior to any distributions to
     the borrower or payment of participation interest to the Partnership. Also
     under the agreement, the Base Value for calculating Shared Appreciation
     Interest decreased from $4,025,000 to $3,500,000.

(h)  During May 2001, the Partnership received $30,769 as a settlement to
     release the loan's participation features. The insured first mortgage loan
     was reclassified from a PIM to a MBS.

(i)  The aggregate cost of the PIM for federal income tax purposes is
     $3,101,005.

     A reconciliation of the carrying value of PIMs for each of the three years
     in the period ended December 31, 2001 is as follows:

<Table>
<Caption>
                                                        2001                  2000                1999
                                                   --------------        --------------      --------------
<S>                                                <C>                   <C>                 <C>
Balance at beginning of period                     $   17,541,596        $   26,224,388      $   82,258,207

Deductions during period:
   Prepayments and principal collections                 (119,842)           (8,682,792)        (56,033,819)
   Reclass to MBS                                     (14,320,749)                    -                   -
                                                   --------------        --------------      --------------

Balance at end of period                           $    3,101,005        $   17,541,596      $   26,224,388
                                                   ==============        ==============      ==============
</Table>

The underlying mortgage of the Denrich Apartments PIM is collateralized by a
multi-family apartment complex located in Philadelphia, Pennsylvania. The
apartment complex has 89 units.


                                       F-12
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

D.   MBS

     During May 2001, the Partnership received a payoff of the Orchard Landing
     MBS in the amount of $4,440,315. On July 18, 2001 the Partnership paid a
     special distribution of $.31 per Limited Partner interest from the
     principal proceeds.

     At December 31, 2001, the Partnership's MBS portfolio had an amortized cost
     of $17,982,354 and unrealized gains of $706,406. At December 31, 2001, the
     Partnership's insured mortgage had an amortized cost of $11,522,402 and an
     unrealized gain of $363,763. At December 31, 2000, the Partnership's MBS
     portfolio has an amortized cost of $9,407,384 and unrealized gains and
     losses of $233,123 and $40,460, respectively. At December 31, 2000, the
     Partnership's insured mortgage had an amortized cost of $11,647,599 and an
     unrealized gain of $203,833. The portfolio has maturities ranging from 2007
     to 2028.

<Table>
<Caption>
                                                                        Unrealized
                Maturity Date                      Fair Value              Gain
               ---------------                   --------------        -------------
                <S>                              <C>                   <C>
                2002 - 2006                      $            -        $           -
                2007 - 2011                           1,643,717              159,611
                2012 - 2028                          28,931,208              910,558
                                                 --------------        -------------

                   Total                         $   30,574,925        $   1,070,169
                                                 ==============        =============
</Table>

E.   PARTNERS' EQUITY

     Profits and losses from Partnership operations and Distributable Cash Flow
     are allocated 97% to the Unitholders and Corporate Limited Partner (the
     "Limited Partners") and 3% to the General Partners.

     Upon the occurrence of a capital transaction, as defined in the Partnership
     Agreement, net cash proceeds will be distributed first, to the Limited
     Partners until they have received a return of their total invested capital,
     second, to the General Partners until they have received a return of their
     total invested capital, third, 99% to the Limited Partners and 1% to the
     General Partners until the Limited Partners receive an amount equal to any
     deficiency in the 11% cumulative return on their invested capital that
     exists through fiscal years prior to the date of the capital transaction,
     fourth, to the class of General Partners until they have received an amount
     equal to 4% of all amounts of cash distributed under all capital
     transactions and fifth, 96% to the Limited Partners and 4% to the General
     Partners.

     Upon the occurrence of a terminating capital transaction, as defined in the
     Partnership Agreement, the net cash proceeds and winding up of the affairs
     of the Partnership will be allocated among the Partners first, to each
     class of Partners in the amount equal to, or if less than, in proportion
     to, the positive balance in the Partner's capital accounts, second, to the
     Limited Partners until they have received a return of their total invested
     capital, third, to the General Partners until they have received a return
     of their total invested capital, fourth, 99% to the Limited Partners and 1%
     to the General Partners until the Limited Partners have received to any
     deficiency in the 11% cumulative return on their invested capital that
     exists through fiscal years prior to the date of the capital transaction,
     fifth, to the General Partners until they have received an amount equal to
     4% of all amounts of cash distributed under all capital transactions and
     sixth, 96% to the Limited Partners and 4% to the General Partners.

     Profits arising from a capital transaction, will be allocated in the same
     manner as related cash distributions. Losses from a capital transaction
     will be allocated 97% to the Limited Partners and 3% to the General
     Partners.

     During 2001, 2000 and 1999 the Partnership made quarterly distributions
     totaling $.40, $.40 and $.76 per Limited Partner interest, respectively.
     The Partnership made special distributions of $.31, $1.01 and $3.52 per
     Limited Partner interest in 2001, 2000 and 1999, respectively.


                                       F-13
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

E.   PARTNERS' EQUITY, continued

     As of December 31, 2001, the following cumulative partner contributions and
     allocations have been made since the inception of the Partnership:

<Table>
<Caption>
                                                       Corporate                           Accumulated
                                                        Limited           General         Comprehensive
                                   Unitholders          Partner          Partners             Income              Total
                                 --------------      ------------      ------------       -------------      --------------
<S>                              <C>                 <C>               <C>                <C>                <C>
Capital contributions            $  292,176,381      $      2,000      $      3,000       $           -      $  292,181,381

Syndication costs                   (15,580,734)                -                 -                   -         (15,580,734)

Quarterly distributions            (249,750,539)           (1,740)       (5,898,928)                  -        (255,651,207)

Special distributions              (172,347,642)           (1,176)                -                   -        (172,348,818)

Net income                          179,586,552             1,253         5,554,261                   -         185,142,066

Unrealized gains on MBS                       -                 -                 -             706,406             706,406
                                 --------------      ------------      ------------       -------------      --------------

Total at December 31, 2001       $   34,084,018      $        337      $   (341,667)      $     706,406      $   34,449,094
                                 ==============      ============      ============       =============      ==============
</Table>

F.   RELATED PARTY TRANSACTIONS

     Under the terms of the Partnership Agreement, the General Partners or their
     affiliates are entitled to an asset management fee for the management of
     the Partnership's business, equal to .75% per annum of the value of the
     Partnership's actual and committed mortgage assets, payable quarterly. The
     General Partners may also receive an incentive management fee in an amount
     equal to .3% per annum on the Partnership's total invested assets provided
     the Unitholders have received their specified non-cumulative annual return
     on their Invested Capital. Total fees payable to the General Partners for
     management services shall not exceed 10% of Distributable Cash Flow over
     the life of the Partnership.

     Additionally, the Partnership reimburses affiliates of the General Partners
     for certain costs incurred in connection with maintaining the books and
     records of the Partnership the preparation and mailing of financial
     reports, tax information and other communications to investors and legal
     fees and expenses.

                                    Continued

                                       F-14
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

G.   FEDERAL INCOME TAXES

     The reconciliation of the income reported in the accompanying financial
     statements with the income reported in the Partnership's 2001 federal
     income tax return is as follows:

<Table>
     <S>                                                             <C>
     Net income per statement of income                              $    2,171,571

     Less: Book to tax difference for amortization of
             prepaid fees and expenses                                     (232,139)
                                                                     --------------

     Net income for federal income tax purposes                      $    1,939,432
                                                                     ==============
</Table>

     The allocation of the 2001 net income for federal income tax purposes is as
     follows:

<Table>
<Caption>
                                                                          Portfolio
                                                                           Income
                                                                       --------------
              <S>                                                      <C>
              Unitholders                                              $    1,881,236
              Corporate Limited Partner                                            13
              General Partners                                                 58,183
                                                                       --------------

                                                                       $    1,939,432
                                                                       ==============
</Table>

     For the years ended December 31, 2001, 2000 and 1999 the average per unit
     net income to the Unitholders for federal income tax purposes was $.13,
     $.15 and $.33 respectively.

     The basis of the Partnership's assets for financial reporting purposes was
     less than its tax basis by approximately $183,000 and $929,000 at December
     31, 2001 and 2000, respectively. The basis of the Partnership's liabilities
     for financial reporting purposes were the same as its tax basis at December
     31, 2001 and 2000, respectively.

H.   FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS

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

     CASH AND CASH EQUIVALENTS

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

     MBS

     The Partnership estimates the fair value of MBS based on quoted market
     prices while it estimates the fair value of insured mortgages based on
     quoted prices of MBS with similar interest rates. Based on the estimated
     fair value determined using these methods and assumptions, the
     Partnership's investments in MBS had gross unrealized gains of
     approximately $1,070,000 at December 31, 2001 and gross unrealized gains
     and losses of $437,000 and $40,000, respectively, at December 31, 2000.

                                    Continued

                                       F-15
<Page>

                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   ----------

H.   FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS, continued

     PIMs

     As there is no active trading market for these investments, Management
     estimates the fair value of the PIMs using quoted market prices of MBS
     having a similar interest rate. Management does not include any
     participation interest in the Partnership's estimated fair value arising
     from the properties as Management does not believe it can predict the time
     of realization of the feature with any certainty. Based on the estimated
     fair value determined using these methods and assumptions, the
     Partnership's investments in PIMs had gross unrealized gains of
     approximately $146,000 at December 31, 2001 and gross unrealized gains of
     approximately $46,000 at December 31, 2000.

     At December 31, 2001 and 2000, the estimated fair values of the
     Partnership's financial instruments are as follows (amounts rounded to
     nearest thousand):

<Table>
<Caption>
                                                               2001                             2000
                                                     ------------------------       -----------------------
                                                       Fair         Carrying           Fair       Carrying
                                                       Value          Value           Value         Value
                                                     ---------      ---------       ---------     ---------
     <S>                                             <C>            <C>             <C>           <C>
     Cash and cash equivalents                       $     934      $     934       $   3,126     $   3,126

     MBS and insured mortgages                          30,575         30,211          21,451        21,248

     PIMs                                                3,247          3,101          17,588        17,542
                                                     ---------      ---------       ---------     ---------

                                                     $  34,756      $  34,246       $  42,165     $  41,916
                                                     =========      =========       =========     =========
</Table>


                                       F-16