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

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 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            0-20164

Krupp Government Income Trust II

Massachusetts
(State or other jurisdiction of incorporation or organization)

04-3073045
(IRS employer identification no.)

One Beacon Street, Boston, Massachusetts
(Address of principal executive offices)

02108
(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    X         No

Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

This Form 10-Q 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.

                                            KRUPP GOVERNMENT INCOME TRUST II

                                                     BALANCE SHEETS


                                                         ASSETS
                                                                                   September 30,     December 31,
                                                                                       2001              2000
                                                                                   -------------    ---------------
Participating Insured Mortgage Investments
 ("PIMIs")(Note 2)
 Insured mortgages                                                                 $  85,925,543    $   121,208,064
 Additional loans, net of impairment provision of $1,437,500 and
   $2,000,000, respectively                                                           16,717,000         22,292,351
Participating Insured Mortgages ("PIMs")(Note 2)                                      37,340,539         37,631,330
Mortgage-Backed Securities ("MBS")(Note 3)                                            16,661,418         19,124,031
                                                                                    -------------   ---------------

           Total mortgage investments                                                156,644,500        200,255,776

Cash and cash equivalents                                                              7,906,904          7,089,453
Prepaid acquisition fees and expenses, net of
   accumulated amortization of $7,704,495 and
   $8,957,065, respectively                                                            3,173,693          4,838,771
Prepaid participation servicing fees, net of
   accumulated amortization of $2,333,045 and
   $2,711,086, respectively                                                             1,190,127         1,784,633
Interest receivable and other assets                                                    1,021,266         1,552,568
                                                                                   --------------   ---------------

           Total assets                                                            $  169,936,490   $   215,521,201
                                                                                   ==============   ===============

                                          LIABILITIES AND SHAREHOLDERS' EQUITY

Deferred income on Additional Loans (Note 2)                                       $    1,242,282   $     2,503,604
Other liabilities                                                                         403,409           153,273
                                                                                   --------------   ---------------

           Total liabilities                                                            1,645,691         2,656,877
                                                                                   --------------   ---------------


Shareholders' equity (Note 4) Common stock, no par value; 25,000,000 Shares
   authorized; 18,371,477 Shares
    issued and outstanding                                                            167,836,673       212,783,023


   Accumulated comprehensive income                                                       454,126            81,301
                                                                                   --------------   ---------------

           Total Shareholders' equity                                                 168,290,799       212,864,324
                                                                                   --------------   ---------------

           Total liabilities and Shareholders' equity                              $  169,936,490   $   215,521,201
                                                                                   ==============   ===============


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

                                            KRUPP GOVERNMENT INCOME TRUST II

                                      STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



                                                       For the Three Months              For the Nine Months
                                                        Ended September 30,               Ended September 30,
                                               --------------------------------------------------------------------        ---------

                                                    2001              2000             2001               2000
                                               --------------    ---------------   --------------    --------------

 Revenues:
    Interest income - PIMs and PIMIs:
     Basic interest                            $    2,242,454    $     2,811,216   $    7,543,463     $   8,456,060
     Additional loan interest                         907,038            474,684        1,968,997         1,315,467
     Participation interest                         9,248,722            270,606       11,873,054         1,651,508
    Interest income - MBS                             272,019            359,862          920,710         1,111,168
    Interest income - cash and
       cash equivalents                               138,024            115,312          338,914           360,398
                                               --------------    ---------------   --------------    --------------

       Total revenues                              12,808,257          4,031,680       22,645,138        12,894,601
                                               --------------    ---------------   --------------    --------------

 Expenses:
   Asset management fee to an affiliate               299,650            383,360        1,012,248         1,147,883
   Expense reimbursements to affiliates                75,192             78,825          192,367           221,528
   Amortization of prepaid
    fees and expenses                                 923,775            441,591        2,259,584         1,690,156
   General and administrative                         160,639            124,313          389,619           351,305
   Reduction of provision for impaired
    additional loan (Note 2)                         (562,500)          -                (562,500)        -
                                               --------------    ---------------   --------------    --------------

        Total expenses                                896,756          1,028,089        3,291,318         3,410,872
                                               --------------    ---------------   --------------    --------------

 Net income                                        11,911,501          3,003,591       19,353,820         9,483,729

 Other comprehensive income:

   Net change in unrealized gain/loss
     on MBS                                           323,641            214,289          372,825           186,205
                                               --------------    ---------------   --------------    --------------

 Total comprehensive income                    $   12,235,142    $     3,217,880   $   19,726,645    $    9,669,934
                                               ==============    ===============   ==============    ==============

 Basic earnings per Share                      $          .64    $           .17   $         1.05    $          .52
                                               ==============    ===============   ==============    ==============

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





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

                                         KRUPP GOVERNMENT INCOME TRUST II

                                             STATEMENTS OF CASH FLOWS



                                                                                  For the Nine Months
                                                                                   Ended September 30,
                                                                            ----------------------------------

                                                                                 2001                 2000
                                                                            -------------         ------------

Operating activities:
   Net income                                                               $  19,353,820         $  9,483,729
   Adjustments to reconcile net income to net
    cash provided by operating activities:
      Amortization of net premium                                                  61,243               41,351
      Amortization of prepaid fees and expenses                                 2,259,584            1,690,156
      Reduction of provision for impaired additional loan                        (562,500)             -
      Changes in assets and liabilities:
         Decrease in interest receivable and other assets                         531,302              761,315
         (Decrease) increase in deferred income on Additional Loans            (1,261,322)              33,252
           Increase (decrease) in other liabilities                               250,136               (6,256)
                                                                            -------------        -------------

 Net cash provided by operating activities                                     20,632,263           12,003,547
                                                                            -------------        -------------

 Investing activities:
   Principal collections on MBS                                                 2,774,005            1,906,136
   Principal collections on Additional Loans                                    6,137,851               -
   Principal collections on PIMs and Insured Mortgages                         35,573,502           10,459,746
                                                                            -------------        -------------

 Net cash provided by investing activities                                     44,485,358           12,365,882
                                                                            -------------        -------------

 Financing activity:
   Dividends                                                                  (64,300,170)         (25,352,639)
                                                                            -------------        -------------

 Net increase (decrease) in cash and cash equivalents                             817,451             (983,210)

 Cash and cash equivalents, beginning of period                                 7,089,453            8,653,673
                                                                            -------------        -------------

 Cash and cash equivalents, end of period                                   $   7,906,904        $   7,670,463
                                                                            =============        =============

 Non cash activities:
   Increase in fair value of MBS                                            $     372,825        $     186,205
                                                                            =============        =============





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

                        KRUPP GOVERNMENT INCOME TRUST II

                          NOTES TO FINANCIAL STATEMENTS


    1.    Accounting Policies

          Certain  information  and footnote  disclosures  normally  included in
          financial  statements  prepared in accordance with generally  accepted
          accounting principles have been condensed or omitted in this report on
          Form 10-Q pursuant to the Rules and  Regulations of the Securities and
          Exchange  Commission.  However,  in the opinion of Berkshire  Mortgage
          Advisors Limited Partnership (the "Advisor"),  which is the advisor to
          Krupp  Government  Income  Trust  II (the  "Trust"),  the  disclosures
          contained  in  this  report  are  adequate  to  make  the  information
          presented  not  misleading.  See Notes to Financial  Statements in the
          Trust's Form 10-K for the year ended  December 31, 2000 for additional
          information  relevant to significant  accounting  policies followed by
          the Trust.

          In the opinion of the Advisor of the Trust, the accompanying unaudited
          financial statements reflect all adjustments  (consisting primarily of
          normal  recurring  accruals)  necessary to present  fairly the Trust's
          financial  position  as of  September  30,  2001,  the  results of its
          operations for the three and nine months ended  September 30, 2001 and
          2000 and its cash flows for the nine months ended  September  30, 2001
          and 2000.

          The  results  of  operations  for the  three  and  nine  months  ended
          September 30, 2001 are not necessarily indicative of the results which
          may be expected for the full year.  See  Management's  Discussion  and
          Analysis of Financial  Condition and Results of Operations included in
          this report.

    2.    PIMs and PIMIs

          At  September  30,  2001,  the  Trust's  PIMs  and  PIMIs,   including
          Additional   Loans,  had  a  fair  value  of  $143,900,624  and  gross
          unrealized  gains of  $3,917,542.  The PIMs and PIMIs  had  maturities
          ranging  from 2006 to 2036.  At  September  30,  2001,  there  were no
          insured  mortgage  loans  within  the  Trust's   portfolio  that  were
          delinquent of principal or interest.

          On July 25, 2001,  the Trust  finalized an agreement with the owner of
          the Windmill  Lakes  property  which will allow for the release of the
          participation  features  on the  PIMI  in the  event  that  the  first
          mortgage, the Additional Loan and any accrued but unpaid base interest
          on the  Additional  Loan are all paid off by  September  1,  2002.  In
          addition,  the Trust  required  the owner to bring  current the unpaid
          additional  loan  base  interest  as of March 1,  2001  which  was due
          totaling  $512,500.  In the event that the  required  payments are not
          received, the participation features will remain in force. As a result
          of the performance of the property,  the Trust initially established a
          valuation  allowance of $2,000,000 on the Additional Loan in 1998. The
          Trust has  reflected  the $512,500  received  plus $50,000  previously
          received as a reduction  in the  principal  balance of the  Additional
          Loan and related impairment provision.

          The  payoff  of the  Seasons  PIMI  was a  result  of the  sale of the
          underlying  property  by the  borrower,  Maryland  Associates  Limited
          Partnership  ("MALP"),  which is an affiliate  of the  Adviser,  to an
          affiliate  of  MALP's  general  partner.   Because  the  sale  of  the
          underlying property was to an affiliate,  the Independent  Trustees of
          the Trust were  required  to approve the  transaction,  which they did
          based  upon  a  number  of  factors,  including  an  appraisal  of the
          underlying  property  prepared  by  an  independent  third  party  MAI
          appraiser. The purchase price paid by the affiliate for the underlying
          property  was $1.6 million  greater  than the value  indicated by such
          appraisal.

          On July 23,  2001,  the Trust  received a  prepayment  of the  Seasons
          Subordinated Promissory Note and the Seasons Additional Loan Note. The
          Trust received  $4,925,351 of the Additional Loan principal,  $462,983
          of surplus  cash,  $2,168,701  of Preferred  Interest,  $2,693,326  of
          contingent interest,  $176,908 of Base Interest on Additional Loan and
          $3,325,696 which represents the Trust's portion of the residual split.
          The Trust received $21,926,006  representing the principal proceeds on
          the first  mortgage  note on July 26,  2001.  In  addition,  the Trust
          recognized   $624,023  of  Additional  Loan  interest  that  had  been
          previously  received  and  recorded in deferred  income on  additional
          loans.  The  Advisor  paid a  special  dividend  of $1.95 per share on
          August 17, 2001 from the proceeds of the Seasons PIMI prepayment.


                                    Continued

                        KRUPP GOVERNMENT INCOME TRUST II

                    NOTES TO FINANCIAL STATEMENTS, Continued


  2.    PIMs and PIMIs, continued

        During the first quarter of 2001, the Trust received a payoff of the
        Hunters Pointe PIMI. The Trust received the outstanding balance on the
        insured mortgage of $12,347,267, the outstanding balance on the
        Additional Loan of $650,000, Participating Income Interest of $496,207
        (including all of the delinquent amounts), Preferred Interest of
        $492,543, Participating Appreciation Interest of $1,070,304 and late
        fees on the delinquent Participating Income Interest of $11,021. In
        addition, the Trust recognized $196,710 of additional loan interest and
        $311,132 of Participating Income Interest that had been previously
        received and recorded in deferred income on additional loans. On March
        20, 2001, the Trust paid a special dividend of $.83 per share from the
        proceeds of the Hunters Pointe PIMI payoff.


 3.     MBS

        At September 30, 2001, the Trust's MBS portfolio had an amortized cost
        of approximately $16,207,292 and gross unrealized gains of approximately
        $454,126. The MBS portfolio had maturities ranging from 2008 to 2031.

 4.     Changes in Shareholder's Equity

        A summary of changes in Shareholders' equity for the nine months ended
        September 30, 2001 is as follows:

                                                                                   Accumulated           Total
                                            Common             Retained           Comprehensive      Shareholders'
                                             Stock             Earnings               Income             Equity
                                        --------------      --------------        -------------     ----------------

 Balance at December 31, 2000           $  212,783,023      $        -            $      81,301     $    212,864,324

 Net income                                      -              19,353,820                 -              19,353,820

 Dividends                                 (44,946,350)        (19,353,820)                -             (64,300,170)

 Change in unrealized gain on MBS                -                   -                   372,825             372,825
                                        --------------      --------------        --------------    ----------------

 Balance at September 30, 2001          $  167,836,673      $        -            $      454,126    $    168,290,799
                                        ==============      ==============        ==============    ================



5.      Related Party Transactions

        The Trust received $176,908 and $221,641 of Additional Loan Interest
        during the three months ended September 30, 2001 and 2000, respectively,
        from an affiliate of the Advisor. The Trust also received participation
        interest of $8,650,706 and $270,606 from an affiliate of the Advisor
        during the three months ended September 30, 2001 and 2000, respectively.

        The Trust received $398,549 and $443,282 of Additional Loan Interest
        from an affiliate of the Advisor during the nine months ended September
        30, 2001 and 2000, respectively. The Trust also received participation
        interest of $8,780,579 and $446,574 from an affiliate of the Advisor
        during the nine months ended September 30, 2001 and 2000, respectively.

          Item 2. 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 quarterly report on Form 10-Q 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 Trust'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; the inability of the borrower to meet financial obligations on additional loans; 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 Trust and its Affiliates, including the Advisor.

Liquidity and Capital Resources

At September 30, 2001 the Trust had liquidity consisting of cash and cash equivalents, of approximately $7.9 million as well as the cash inflows provided by PIMs, PIMIs, MBS, cash and cash equivalents. The Trust may also receive additional cash flow from the participation features of its PIMs and PIMIs. The Trust anticipates that these sources will be adequate to provide the Trust with sufficient liquidity to meet its obligations, including providing dividends to its investors.

The most significant demand on the Trust's liquidity is quarterly dividends paid to investors of approximately $4.4 million, and special dividends. Funds for dividends come from interest income received on PIMs, PIMIs, MBS and cash and cash equivalents net of operating expenses, and the principal collections received on PIMs, PIMIs and MBS. The portion of dividends funded from principal collections reduces the capital resources of the Trust. As the capital resources of the Trust decrease, the total cash flows to the Trust will also decrease which may result in periodic adjustments to the dividends paid to the investors.

The Advisor periodically reviews the dividend rate to determine whether an adjustment is necessary based on projected future cash flows. The current dividend rate is $.24 per Share per quarter. The Trustees, based on the Advisor's recommendations, generally set a dividend rate that provides for level quarterly distributions. To the extent quarterly dividends do not fully utilize the cash available for distribution and cash balances increase, the Trustees may adjust the dividend rate or distribute such funds through a special dividend.

In addition to providing guaranteed or insured monthly principal and interest payments, the Trust's investments in the PIMs and PIMIs also may provide additional income through the interest on the Additional Loan portion of the PIMIs as well as participation income based on operating cash flow and increase in the value realized upon the sale or refinance of the underlying properties. However, these payments are neither guaranteed nor insured and depend on the successful operations of the underlying properties.

The payoff of the Seasons PIMI was a result of the sale of the underlying property by the borrower, Maryland Associates Limited Partnership ("MALP"), which is an affiliate of the Adviser, to an affiliate of MALP's general partner. Because the sale of the underlying property was to an affiliate, the Independent Trustees of the Trust were required to approve the transaction, which they did based upon a number of factors, including an appraisal of the underlying property prepared by an independent third party MAI appraiser. The purchase price paid by the affiliate for the underlying property was $1.6 million greater than the value indicated by such appraisal.

On July 23, 2001, the Trust received a prepayment of the Seasons Subordinated Promissory Note and the Seasons Additional Loan Note. The Trust received $4,925,351 of the Additional Loan principal, $462,983 of surplus cash, $2,168,701 of preferred interest, $2,693,326 of contingent interest, $176,908 of unpaid Base Interest on Additional Loan and $3,325,696 which represents the Trust's portion of the residual split. The Trust received $21,926,006 representing the principal proceeds on the first mortgage note on July 26, 2001. In addition, the Trust recognized $624,023 of Additional Loan interest that had been previously received and recorded in deferred income on additional loans. The Advisor paid a special dividend of $1.95 per share on August 17, 2001 from the proceeds of the Seasons PIMI prepayment.

In addition to the amounts received from the payoffs of the Seasons and Hunters Pointe PIMIs, the Trust received both installments of Additional Loan interest due in 2001 from four of the PIMI investments and the first installment on one other PIMI during the nine months ended September 30, 2001. For the PIMI that has only paid the first installment, the Trust received the second installment in October. During 1999, the Advisor determined that the borrower on the Norumbega PIMI had paid Additional Loan interest from funds other than surplus cash, which resulted in overpayments during the previous three years; consequently, the Trust will not receive any Additional Loan interest until the overpayment has been absorbed.

The Trust received participation interest based on cash flow generated by property operations from four of its investments during the nine months ended September 30, 2001. Sunset Summit paid $113,253, Martin's Landing paid $217,585, the Lakes paid $380,431 and the Seasons paid $129,872 In addition, the Trust received and recognized participation interest related to the payoffs of the Seasons and Hunters Pointe PIMIs.

Windmill Lakes is a twelve-year old, basic apartment community that has not been able to compete against the influx of new apartment communities that have extensive amenity packages. Builders use deep marketing concessions to fill the new properties, lowering the cost of renting a new apartment and making it more difficult for older properties like Windmill Lakes to attract residents. During the fourth quarter of 2000, occupancy was in the 70% range. The property's curb appeal, a critical element in a competitive market, has suffered as well because there has not been enough cash flow for adequate maintenance. The borrower on the Windmill Lakes PIMI has been unable to secure a purchaser for the property at a price high enough to cover all of the ownership entity's outstanding liabilities and has decided to sell the apartments off as condominiums. Converting a multifamily property to condominium ownership is often a long process that requires resources and expertise in marketing, financing, legal matters and construction. Local and state agencies regulate the conversion of existing housing into condominium ownership, and there are various compliance regulations governing the process as well. On July 25, 2001, the borrower finalized an agreement with the Trust which will allow for the release of the participation features on the PIMI in the event that the first mortgage, the additional loan and any accrued but unpaid base interest on the additional loan are paid in full by September 1, 2002. In addition, the Trust required the owner to bring current the unpaid additional loan base interest as of March 1, 2001 which was due totaling $512,500. In the event that the required payments are not received, the participation features will remain in force. As a result of the performance of the property, the Trust initially established a valuation allowance of $2,000,000 on the Additional Loan in 1998. The Trust has reflected the $512,500 received plus $50,000 previously received as a reduction in the principal balance of the Additional Loan and related impairment provision.

In November 1999, the Trust notified the borrower on the Falls at Hunters Pointe PIMI that he was in default for non-payment of participating interest due to the Trust based on 1997 and 1998 operating results. The borrower failed to cure the default. Consequently, the Trust elected to use a portion of the borrower's funds held in escrow to cure the 1997 portion of the default. The Borrower remained in default for 1998 and 1999 operating results. The Trust filed a complaint against the partners of the borrowing entity to collect the delinquent participation interest related to 1998 and 1999 operations along with late payment penalties and legal fees. In response to this action, the borrower on the PIMI put the property up for sale. During the first quarter of 2001, the Trust received a payoff of the Falls at Hunters Pointe PIMI as a result of the sale of the property. The Trust received the outstanding balance on the insured mortgage of $12,347,267, the outstanding balance on the Additional Loan of $650,000, Participating Income Interest on the Additional Loan of $496,207 (including all of the delinquent amounts), Preferred Interest on the Additional Loan of $492,543, Participating Appreciation Interest on the subordinate loan agreement of $1,070,304 and late fees on the delinquent Participating Income Interest of $11,021. In addition, the Trust recognized $196,710 of additional loan interest and $311,132 of Participating Income Interest that had been previously received and recorded in deferred income on additional loans. On March 20, 2001, the Trust paid a special dividend of $.83 per share from the proceeds of the Falls at Hunters Pointe PIMI payoff.

Whether the operating performance of any of the properties mentioned above will provide sufficient cash flow from operations to pay either the Additional Loan interest or participation income will depend on factors over which the Trust has little or no control over. Should the properties be unable to generate sufficient cash flow to pay the Additional Loan interest, it would reduce the Trust's distributable cash flow and could affect the value of the Additional Loan collateral.

There are contractual restrictions on the prepayment of the PIMs and PIMIs. During the first five years of the investment, borrowers are generally prohibited from repayment. During the second five years, the PIM borrowers can prepay the insured first mortgage by paying the greater of a prepayment premium or the participation income due at the time of the prepayment. Similarly, the PIMI borrowers can prepay the insured mortgage and the Additional Loan by satisfying the Preferred Return obligation. The participation features and the Additional Loans are neither insured nor guaranteed. If the prepayment of the PIM or PIMI results from the foreclosure on the underlying property or an insurance claim, the Trust generally would not receive any participation income or any amounts due under the Additional Loan.

The Trust has the option to call certain PIMs and all the PIMIs by accelerating their maturity if the loans are not prepaid by the tenth year after permanent funding. The Advisor will determine the merits of exercising the call option for each PIM and PIMI as economic conditions warrant. Such factors as the condition of the asset, local market conditions, the interest rate environment and available financing will have an impact on these decisions.

Results of Operations

The Trust's net income increased in the three months ended September 30, 2001 as compared to September 30, 2000 primarily due to increases in Additional Loan and participation interest on PIMs and PIMIs and decreases in asset management fees and the provision for impaired mortgage loan. This was partially offset by an increase in amortization expense and a decrease in basic interest from PIMs and PIMIs. Additional Loan and participation interest increased primarily due to the Seasons payoff in July 2001. Asset management fees decreased due to the decrease in the Trust's investments as a result of the Seasons payoff in July 2001 and the Falls at Hunters Pointe payoff in March 2001. The payoffs also caused basic interest from PIMs and PIMIs to decrease and amortization expense increased as the prepaid fees and expenses associated with the Seasons PIMI were fully amortized. The provision for impaired mortgage decreased due to the reduction of the impairment provision for the Windmill Lakes PIMI in the third quarter of 2001.

The Trust's net income increased in the nine months ended September 30, 2001 as compared to September 30, 2000 primarily due to increases in Additional Loan and participation interest on PIMs and PIMIs and decreases in asset management fees and the provision for impaired mortgage loan. This was partially offset by an increase in amortization expense and a decrease in basic interest from PIMs and PIMIs. Additional Loan and participation interest increased primarily due to the Seasons payoff in July 2001 and the Falls at Hunters Pointe payoff in March 2001. Asset management fees decreased due to the decrease in the Trust's investments as a result of the payoffs mentioned above. The payoffs also caused basic interest from PIMs and PIMIs to decrease and amortization expense to increase as the prepaid fees and expenses associated with these PIMIs were fully amortized. The provision for impaired mortgage decreased due to the reduction of the impairment provision for the Windmill Lakes PIMI in the third quarter of 2001.

          Item 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          -------

Assessment of Credit Risk

The Trust's investments in insured mortgages and MBS are guaranteed or insured by Fannie Mae, the Federal Home Loan Mortgage Corporation (FHLMC), the Government National Mortgage Association (GNMA) or the Department of Housing and Urban Development (HUD) and therefore, the certainty of their cash flows and the risk of material loss of the amounts invested depends upon the creditworthiness of these institutions.

Fannie Mae is a federally chartered private corporation that guarantees obligations originated under its programs. However, obligations of Fannie Mae are not backed by the U.S. Government. Fannie Mae is one of the largest corporations in the United States and the Secretary of the Treasury of the United States has discretionary authority to lend up to $2.25 billion to Fannie Mae at any time. FHLMC is a federally chartered corporation that guarantees obligations originated under its programs and is wholly-owned by the twelve Federal Home Loan Banks. These obligations are not guaranteed by the U.S. Government or the Federal Home Loan Bank Board. GNMA guarantees the full and timely payment of principal and basic interest on the securities it issues, which represent interests in pooled mortgages insured by HUD. HUD, an agency of the U.S. Government, insures the obligations originated under its programs, which are backed by the full faith and credit of the U.S. Government.

The Trust's Additional Loans have similar risks as those associated with higher risk debt instruments, including: reliance on the owner's operating skills, ability to maintain occupancy levels, control operating expenses, ability to maintain the properties and obtain adequate insurance coverage. Operations also may be effected by adverse changes in general economic conditions, adverse local conditions, and changes in governmental regulations, real estate zoning laws, or tax laws; and other circumstances over which the Trust may have little or no control.

The Trust includes in cash and cash equivalents approximately $6.9 million of Agency paper, which is issued by Government Sponsored Enterprises with a credit rating equal to the top rating category of a nationally recognized statistical rating organization.

Interest Rate Risk

The Trust's primary market risk exposure is to interest rate risk, which can be defined as the exposure of the Trust's net income, comprehensive income or financial condition to adverse movements in interest rates. At September 30, 2001, the Trust's PIMs, PIMIs and MBS comprise the majority of the Trust's assets. As such, decreases in interest rates may accelerate the prepayment of the Trust's investments. The Trust does not utilize any derivatives or other instruments to manage this risk as the Trust plans to hold all of its investments to expected maturity.

The Trust monitors prepayments and considers prepayment trends, as well as dividend requirements of the Trust, when setting regular dividend policy. For MBS, the fund forecasts prepayments based on trends in similar securities as reported by statistical reporting entities such as Bloomberg. For PIMs and PIMIs, the Trust incorporates prepayment assumptions into planning as individual properties notify the Trust of the intent to prepay or as they mature.

                        KRUPP GOVERNMENT INCOME TRUST II

                           PART II - OTHER INFORMATION



 Item 1.      Legal Proceedings
              Response:  None

 Item 2.      Changes in Securities
              Response:  None

 Item 3.      Defaults upon Senior Securities
              Response:  None

 Item 4.      Submission of Matters to a Vote of Security Holders
              Response:  None

 Item 5.      Other Information
              Response:  None

 Item 6.      Exhibits and Reports on Form 8-K
              Response:  None

                                    SIGNATURE



 Pursuant to the requirements of the Securities Exchange Act of 1934, the
 registrant has duly caused this report to be signed on its behalf by the
 undersigned, thereunto duly authorized.



                                     Krupp Government Income Trust II
                                     --------------------------------
                                                (Registrant)



                                     BY:    / s / Robert A. Barrows
                                     -------------------------------------

                                     Robert A. Barrows
                                     Treasurer and Chief Accounting Officer of
                                     Krupp Government Income Trust II.






 DATE:  November 2, 2001

                                   (Unaudited)
                 Amounts in thousands, except per Share amounts)

                                                                      Period                   Inception
                                                                       Ended                    Through
                                                                      9/30/01                    9/30/01
Distributable Cash Flow (a):
- ---------------------------

Net income                                                           $ 19,353                  $ 144,803
Items providing or not requiring (not providing)
    the use of operating funds:

   Additional Loan Base interest collected and reflected as
     Reduction of provision for impaired mortgage loan                    562                        562
   Provision for impaired mortgage loans                                 (562)                     1,438
    Loss on sale of MBS                                                  -                         1,379
    Amortization of prepaid fees and
     expenses and organization costs                                    2,260                     17,664
    Additional Loan interest received
     and deferred, net                                                 (1,262)                     1,242
                                                                     --------                -----------

    Total Distributable Cash Flow ("DCF")                            $ 20,351                $   167,088
                                                                     ========                ===========

DCF per Share based on Shares
 outstanding at September 30, 2001 (18,371,477)                      $   1.12                $      9.10(d)
                                                                     ========                ===========

Dividends:

 Total dividends to Shareholders                                     $ 64,299(b)             $   323,182(c)
                                                                     ========                ===========

 Average dividend per Share based
  on Shares outstanding at
  September 30, 2001                                                 $   3.50(b)             $     17.59(c)(d)
                                                                     ========                ===========


(a)   Distributable Cash Flow consists of income before provision for impaired
      mortgage loans, Loss on sale of MBS, amortization of prepaid fees and
      expenses and organization costs and includes interest collections on
      Additional Loans which have not been recognized as income for book
      purposes. The Trust believes Distributable Cash Flow is an appropriate
      supplemental measure of operating performance, however, it should not be
      considered as a substitute for net income as an indication of operating
      performance or cash flows as a measure of liquidity.

(b)   Represents all dividends paid through September 2001 except the February
      2001 quarterly dividend and includes an estimate of the November 2001
      quarterly dividend.

(c)   Includes an estimate of the November 2001 quarterly dividend.

(d)   Shareholders average per Share return of capital on a cash basis as of
      September 2001 is $8.49 [$17.59 - $9.10 ]. Return of capital represents
      that portion of dividends which is not funded from DCF, such as proceeds
      from the sale of assets and substantially all of the principal
      collections received from MBS, PIMs and PIMIs.