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

                                FORM 10-K

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

                   For The Year Ended December 31, 1998

                                    OR

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

                For the transition period from N/A to N/A
                                               ---    ---

                      Commission File No. 0-16683

                TECHNOLOGY FUNDING SECURED INVESTORS II
          ----------------------------------------------------
         (Exact name of Registrant as specified in its charter)

          CALIFORNIA                            94-3034262
-------------------------------     ---------------------------------
(State or other jurisdiction of    (I.R.S. Employer Identification No.)
incorporation or organization) 

2000 Alameda de las Pulgas, Suite 250
San Mateo, California                                            94403
---------------------------------------                       --------
(Address of principal executive offices)                     (Zip Code)



                              (650) 345-2200
             --------------------------------------------------
            (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited 
Partnership Units

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.                      [  ]

No active market for the units of limited partnership interests ("Units") 
exists, and therefore the market value of such Units cannot be 
determined.

Documents incorporated by reference:  Portions of the Prospectus dated 
June 4, 1987, forming a part of Registration Statement No. 33-12566 and 
of Supplement No. 2 dated February 12, 1988, and filed pursuant to Rule 
424(c) of the General Rules and Regulations under the Securities Act of 
1933 and of the Amended Prospectus dated March 8, 1988, that forms a part 
of Post-Effective Amendment No. 1 to the Registration Statement are 
incorporated by reference in Parts I and III, hereof.  Portions (pages 23 
to 25) of the Prospectus of Technology Funding Venture Capital Fund VI, 
LLC, as revised June 4, 1998 (accession number 0000950133-98-002220), 
forming a part of December 5, 1997, Pre-Effective Amendment No. 1 to the 
Form N-2 Registration Statement No. 333-23913 dated July 11, 1997, are 
incorporated by reference in Part III hereof.

<PAGE>

                                   PART I

Item 1.  BUSINESS
------   --------
 
Technology Funding Secured Investors II (hereinafter referred to 
as the "Partnership" or the "Registrant") was formed as a 
California limited partnership on August 31, 1984, and commenced 
operations on June 4, 1987, with the sale of Units.  The 
business of the Partnership is to provide loans secured by 
equipment and other assets to new and developing companies and 
to acquire equity interests in these companies as described in 
the "Summary of the Offering" and "Business of the Partnership" 
sections of the Prospectus originally dated June 4, 1987, and in 
Supplement No. 2 thereto dated February 12, 1988, (the 
"Supplement"), that forms a part of the Registrant's Form S-1 
Registration Statement No. 33-12566 and in the Amended 
Prospectus dated March 8, 1988, that forms a part of Post-
Effective Amendment No. 1 to the Registration Statement as filed 
with the Securities and Exchange Commission on March 8, 1988, 
(such Prospectus, as supplemented and amended on March 8, 1988, 
is hereinafter referred to as the "Prospectus"), which sections 
are incorporated herein by reference.  Additional 
characteristics of the Partnership's business are discussed in 
the "Risk Factors" and "Conflicts of Interest" sections of the 
Prospectus, which sections are also incorporated herein by 
reference.  The Partnership had been inactive until it commenced 
selling units of limited partnership interest ("Units") on June 
4, 1987.  The Partnership's Amended and Restated Limited 
Partnership Agreement ("Partnership Agreement") provides that 
the Partnership will continue until December 31, 1996, unless 
further extended for up to two additional two-year periods by 
the General Partners.  In September 1996, the General Partners 
exercised their right and extended the term of the Partnership 
to December 31, 1998.  In April 1998, the General Partners 
further extended the term of the Partnership to December 31, 
2000, unless dissolved earlier.

Item 2.  PROPERTIES
------   ----------

The Registrant has no material physical properties.

Item 3.  LEGAL PROCEEDINGS
------   -----------------

There are no material pending legal proceedings to which the 
Registrant is party or of which any of its property is the 
subject, other than routine litigation incidental to the 
business of the Partnership.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------   ---------------------------------------------------

No matter was submitted to a vote of the holders of units of 
limited partnership interests ("Units") during 1998.

                                    PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
------   -------------------------------------------------------------
MATTERS
-------

(a)  There is no established public trading market for the 
Units.

(b)  At December 31, 1998, there were 5,086 record holders of 
Units.

(c)  The Registrant, being a partnership, does not pay 
dividends.  Cash distributions, however, may be made to the 
partners in the Partnership pursuant to the Registrant's 
Partnership Agreement.

Item 6.  SELECTED FINANCIAL DATA
------   -----------------------

<TABLE>
<CAPTION>
                                              For the Years Ended and As of December 31,
                                 -----------------------------------------------------------------
                                  1998            1997           1996          1995          1994
                                 ------          ------         ------        ------        ------
<S>                           <C>              <C>           <C>         <C>           <C>
Total income                  $   8,703         111,351        328,865     1,305,344     1,159,042
Net operating (loss)
 income                        (774,340)       (731,548)      (560,566)     (470,089)      194,471
Net realized (loss) gain
 from sales of equity 
 investments                    (67,034)        267,869         48,824     2,438,619        25,813
Realized losses from 
 investment write-downs      (1,284,518)             --       (125,104)   (2,367,660)   (2,460,743)
Recoveries from investments
 previously written off          93,837           7,387        113,214        28,690            --
Net realized loss            (2,032,055)       (456,292)      (523,632)     (370,440)   (2,240,459)
Change in net unrealized
 fair value:
  Equity investments           (514,375)         95,677     (1,033,488)    1,604,675    (1,220,545)
  Notes receivable            2,145,000         (15,000)       (67,000)      346,000      (286,000)
Net (loss) income              (401,430)       (375,615)    (1,624,120)    1,580,235    (3,747,004)
Net realized loss per unit          (13)             (3)            (3)           (2)          (14)
Total assets                  5,899,774       6,274,226      7,168,026    10,266,004     7,661,352
Distributions declared               --              --             --       466,804       300,003
Distributions declared
 per Unit (1)                        --              --             --             3             2

(1) Calculation is based on weighted average number of Limited Partner Units
 outstanding during the year.

Refer to financial statement notes entitled "Summary of Significant Accounting Policies" and 
"Allocation of Profits and Losses" for a description of the method of calculation for net realized 
(loss) income per Unit. 

</TABLE

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

Liquidity and Capital Resources
-------------------------------

In 1998, net cash used by operating activities totaled $731,952.  
The Partnership paid management fees of $104,386 to the Managing 
General Partner and reimbursed related parties for operating 
expenses of $509,667.  Other operating expenses of $126,602 were 
paid, and interest income of $8,703 was received.

During 1998, the Partnership funded $445,246 in equity 
investments primarily to a portfolio company in the industrial 
and business automation industry.  Proceeds from sales of equity 
investments and recoveries from investments previously written 
off provided cash of $194,767 and $93,837, respectively. As 
disclosed in Note 10 to the Financial Statements, certain funds 
escrowed as collateral for a note payable of a portfolio company 
were released in 1998, providing cash of $247,574.

Cash and cash equivalents at December 31, 1998, were $28,836.  
Operating cash reserves combined with repayments of secured 
notes receivable and future proceeds from the sales of 
investments are expected to be sufficient to fund Partnership 
operations through the next twelve months.

Results of Operations
---------------------

1998 compared to 1997
---------------------

Net losses were $401,430 and $375,615 for the years ended 
December 31, 1998 and 1997, respectively.  The increased loss 
was primarily due to a $1,284,518 increase in realized losses 
from investment write-downs, a $610,052 decrease in the change 
in net unrealized fair value of equity investments, and a 
$334,903 decrease in realized gain from sales of equity 
investments.  Additionally, there was a $131,577 increase in 
operating expenses, and a $102,648 decrease in total income.  
These decreases were partially offset by a $2,160,000 increase 
in the change in net unrealized fair value of notes receivable 
and a $174,274 decrease in other investment expenses.

Realized losses from investment write-downs totaled $1,284,518 
in 1998 and resulted primarily from the write-down of equity 
investments in Wasatch Education Systems Corporation.  This 
write-down was based on the opinion of the Managing General 
Partner that the operating status of the company and the highly 
competitive educational software market indicated a permanent 
decline in value of the company's equity investment.  There were 
no investment write-downs in 1997.

The Partnership recorded a $514,375 decrease in the change in 
fair value of equity investments in 1998 as compared to a 
$95,677 increase in 1997.  The 1998 decrease was comprised of a 
decrease in the fair value of a portfolio company in the 
industrial/business automation industry and the sale of an 
investment in a portfolio company in the microelectronics 
industry.  These decreases in fair value were partially offset 
by an increase resulting from the realization of the loss from 
the write-down of Wasatch Education Systems Corporation.  The 
1997 gain was primarily due to increases in a portfolio company 
in the microelectronics industry, partially offset by decreases 
in portfolio companies in the telecommunications and medical 
industries.

During 1998, the Partnership's $67,034 net realized loss from 
sales of equity investments resulted from the sale of Celeritek, 
Inc. common shares, partially offset by a gain on the sale of 
3Com Corporation common shares.  The 1997 net realized gain from 
sales of equity investments resulted from the sale of the 
Partnership's investment in MTI Technology Corporation. 

Total operating expenses were $668,624 and $537,047 in 1998 and 
1997, respectively.  As disclosed in Note 2 to the financial 
statements, the Managing General Partner re-evaluated 
allocations to the Partnership in 1998 and determined that they 
had not fully recovered allocable operating expenses, primarily 
salary, benefits, and professional fees as permitted by the 
Partnership agreement.  As a result, the Partnership was charged 
$154,704 of additional operating expenses in 1998 of which 
$17,151 and $137,553 related to 1997 and prior years, 
respectively.  If the additional expense had been recorded in 
prior years, total operating expenses would have been $513,920 
and $554,198 for 1998 and 1997, respectively.

Total income in 1998 decreased to $8,703 from $111,351 in 1997 
primarily due to a decrease in interest income earned on short-
term investments as a result of declining cash reserves.

The Partnership recorded a $2,145,000 increase in the fair value 
of notes receivable in 1998 compared to a $15,000 decrease in 
1997.  The increase in 1998 was primarily due to an increase in 
expected loan repayments resulting from the improved financial 
condition of borrowing companies in the computer and computer 
equipment and industrial/business automation industries.

Other investment expenses of $174,274 in 1997 related to 
litigation which was settled in 1997.  There were no such 
expenses in 1998.

Given the inherent risk associated with the business of the 
Partnership, the future performance of portfolio company 
investments may significantly impact future operations.

1997 compared to 1996
---------------------

Net losses in 1997 and 1996 were $375,615 and $1,624,120, 
respectively.  This improvement was primarily a result of an 
$1,181,165 increase in the change in net unrealized fair value 
of investments and a $219,045 increase in net realized gain from 
sales of investments, partially offset by a $213,273 decrease in 
interest income.

The $80,677 increase in net unrealized fair value of investments 
in 1997 was primarily due to increases in a portfolio company in 
the microelectronics industry, partially offset by decreases in 
portfolio companies in the telecommunications and medical 
industries.  During 1996, the decrease in investment fair value 
of $1,100,488 primarily related to portfolio companies in the 
computer software and systems and industrial/business automation 
industries.

During 1997, the Partnership's net realized gain from sales of 
equity investments of $267,869 primarily resulted from the sale 
of its investment in MTI Technology Corporation.  During 1996, 
the Partnership realized a gain of $48,824 from sales of 
Hybridon, Inc. and Allegiant Physician Services, Inc. stock.

Interest income was $111,351 and $324,624 in 1997 and 1996, 
respectively.  The decrease is a result of lower cash balances 
on hand and loans to portfolio companies on non-accrual status 
due to uncertainty of the borrowers' financial condition.

Total operating expenses were $537,047 and $522,232 in 1997 and 
1996, respectively.  Included in 1997 operating expenses are the 
costs of the Partnership's relocation of its administrative and 
investor service operations to Santa Fe, New Mexico.  As 
disclosed in Note 2 to the financial statements, the 1997 and 
1996 operating expenses were reduced by reimbursements of $3,572 
and $41,542, respectively, for prior period collection expenses.  
Had the reimbursements not been received, total operating 
expenses for 1997 and 1996 would have been $540,619 and 
$563,774, respectively.

YEAR 2000
---------

Widespread use of computer programs that use two digits rather 
than four to store, calculate, and display year values in dates 
may cause computer systems to malfunction in the year 2000, 
resulting in significant business delays and disruptions.

The Partnership's State of Readiness
------------------------------------

Computer services are provided to the Partnership by its 
Managing General Partner, Technology Funding Inc. ("TFI".)  For 
several years, TFI has sought to use Year 2000 compliant storage 
formats and algorithms in its internally-developed and 
maintained systems.  TFI has also completed initial evaluations 
of computer systems, software, and embedded technologies.  Those 
evaluations confirmed that certain components of its network 
server hardware and operating systems, voice mail system, e-mail 
system, and accounting software may have Year 2000 compliance 
issues.  These resources and several less-critical components of 
the systems environment were all scheduled as part of normal 
maintenance and replacement cycles to be replaced or upgraded as 
Year 2000 compatible components became available from vendors 
during 1998 and 1999.  That program remains on schedule to 
provide Year 2000 capable systems timely without significant 
expenditures or disruption of Partnership operations.  However, 
the risk remains that TFI may not be able to verify whether Year 
2000 compatibility claims by vendors are accurate, or whether 
changes undertaken to achieve Year 2000 compatibility will 
create other undetected problems in associated systems.  
Therefore, TFI anticipates that Year 2000 compliance testing and 
maintenance of these systems will continue as needed into the 
first quarter of 2000.  

As part of Year 2000 evaluation, TFI has also assembled a 
database listing its significant suppliers to assess the extent 
to which it needs to prepare for any of those parties' potential 
failure to remediate their Year 2000 compliance issues.  TFI is 
reviewing public Year 2000 statements of those suppliers and 
preparing questionnaires to be sent to mission-critical vendors 
whose public statements were not adequate for assessment.  TFI 
will continue to monitor its significant suppliers as part of 
its Year 2000 evaluation.  However, there can be no guarantee 
that the systems of other companies on which TFI relies will be 
timely converted, or that failure to convert will not have a 
material adverse effect on the Partnership and its operations.  
TFI is also working with the Partnership's portfolio companies 
to determine the extent to which their operations are vulnerable 
to Year 2000 issues.  There can be no guarantee that the systems 
of portfolio companies in which the Partnership has invested 
will be timely converted, or that their failure to convert will 
not have a material adverse effect on the Partnership.  

The Cost to Address Year 2000 Issues
------------------------------------

Expenditures in 1998 related to Year 2000 issues were not 
material to the Partnership's financial statements.  TFI expects 
that additional expenditures for Year 2000 compliance will not 
be material to the Partnership.  

The Risks Associated with Year 2000 Issues
------------------------------------------

Any failure by the portfolio companies in which the Partnership 
has invested, or by those portfolio companies' key suppliers or 
customers, to anticipate and avoid Year 2000 related problems at 
reasonable cost could have a material adverse effect on the 
value of and/or the timing of realization of value from the 
Partnership's investments.  If Year 2000 compliance issues are 
not resolved by December 31, 1999, internal system failures or 
miscalculations could cause a temporary inability to process 
transactions, loss of ability to send or receive e-mail and 
voice mail messages, or disruptions in other normal business 
activities.  Additionally, failure of third parties on whom TFI 
relies to remediate their Year 2000 issues timely could result 
in disruptions in the Partnership's relationship with its 
financial institutions, temporary disruptions in processing 
transactions, unanticipated costs, and problems related to the 
Partnership's daily operations.  While TFI continues to address 
its internal Year 2000 issues, until TFI receives and evaluates 
responses from a significant number of its suppliers, the 
overall risks associated with the Year 2000 issue remain 
difficult to describe and quantify.  There can be no guarantee 
that the Year 2000 issue will not have a material adverse effect 
on the Partnership and its operations.

TFI's Contingency Plan
----------------------

As part of its normal efforts to assure business continuation in 
the event of natural disasters, systems failures, or other 
disruptions, TFI has prepared contingency plans including an 
extensive Year 2000 contingency plan.  Taken together with TFI's 
Year 2000 remediation plan, it identifies potential points of 
failure, approaches to correcting known Year 2000 problems, 
dates by which the preferred corrections are anticipated to be 
made and tested, and alternative approaches if the corrections 
are not completed timely or are later found to be inadequate.  
Although backup systems and contingency approaches have been 
identified for most mission-critical systems and vendor 
dependencies, there remain some systems for which no good 
alternative exists, and there may be some problems that prove 
more intractable than currently anticipated.  

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------   -------------------------------------------

The financial statements of the Registrant are set forth in Item 
14.

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
-------  --------------------------------------------------

As a partnership, the Registrant has no directors or executive 
officers.  Technology Funding Ltd., a California limited 
partnership ("TFL"), and Technology Funding Inc., a California 
corporation ("TFI"), and wholly owned subsidiary of TFL, are the 
General Partners of the Partnership.  TFI is the Managing 
General Partner.  Information concerning the ownership of TFL 
and the business experience of the key officers of TFI and the 
partners of TFL is incorporated by reference from the sections 
entitled "Management of the Partnership - The General Partners" 
and "Management of the Partnership - Key Personnel" in the 
Prospectus, which are incorporated herein by reference.  Changes 
in this information that have occurred since the date of the 
Prospectus are included on pages 23 to 25 in the parallel 
sections of the Technology Funding Venture Capital Fund VI, LLC, 
Prospectus, revised June 4, 1998 (accession number 0000950133-
98-002220), forming a part of the December 5, 1997, Pre-
Effective Amendment No. 1 to the Form N-2 Registration Statement 
No. 333-23913, dated July 11, 1997, which is incorporated herein 
by reference.

Item 11. EXECUTIVE COMPENSATION
-------  ----------------------

As a partnership, the Registrant has no officers or directors.  
In 1998, the Partnership incurred $114,419 in management fees.  
The management fees are designed to compensate the General 
Partners for its General Partner Overhead incurred in performing 
management duties for the Partnership through December 31, 1998.  
General Partner Overhead includes the General Partners' share of 
rent and utilities, and certain salaries and benefits paid by 
the General Partners in performing their obligations to the 
Partnership.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------  --------------------------------------------------------------

Not applicable.  No Limited Partner beneficially holds more than 
5% of the aggregate number of Units held by all Limited 
Partners, and neither the General Partners nor any of their 
officers, directors or partners own any Units.  The General 
Partners control the affairs of the Partnership pursuant to the 
Partnership Agreement.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------  ----------------------------------------------

The Registrant, or its investee companies, have engaged in no 
transactions with the General Partners or their officers and 
partners other than as described above, in the notes to the 
financial statements, or in the Partnership Agreement.

                                    PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON 
-------  -------------------------------------------------------
FORM 8-K
--------

(a) List of Documents filed as part of this Annual Report on 
Form 10-K

(1) Financial Statements - the following financial 
statements are filed as a part of this Report:

Independent Auditors' Report
Balance Sheets as of December 31, 1998 and 1997
Statements of Operations for the years ended 
December 31, 1998, 1997 and 1996
Statements of Partners' Capital for the years ended
December 31, 1998, 1997 and 1996
Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
Notes to Financial Statements

(2) Financial Statement Schedules

All schedules have been omitted because they are not 
applicable or the required information is included in 
the financial statements or the notes thereto.

(3) Exhibits

Registrant's Amended and Restated Limited Partnership 
Agreement (incorporated by reference to Exhibit A to 
Registrant's Prospectus dated March 8, 1988, included in 
Registration Statement No. 33-12566 filed pursuant to 
Rule 424(b) of the General Rules and Regulations under 
the Securities Act of 1933).

(b) Reports on Form 8-K

No reports on Form 8-K were filed by the Registrant during 
the year ended December 31, 1998.

(c) Financial Data Schedule for the year ended and as of 
December 31, 1998 (Exhibit 27).


<PAGE>
                     INDEPENDENT AUDITORS' REPORT
                     ----------------------------




The Partners
Technology Funding Secured Investors II:


We have audited the accompanying balance sheets of Technology Funding 
Secured Investors II (a California limited partnership) as of December 
31, 1998 and 1997, and the related statements of operations, partners' 
capital, and cash flows for each of the years in the three-year period 
ended December 31, 1998.  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 in accordance with generally accepted auditing 
standards.  Those standards 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.  Our procedures included confirmation of certain loans and 
securities owned, by correspondence with the individual borrowing and 
investee companies, and a physical examination of securities held by a 
safeguarding agent as of December 31, 1998 and 1997.  An audit also 
includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation.  We believe that our audits provide a reasonable 
basis for our opinion.

In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of Technology 
Funding Secured Investors II as of December 31, 1998 and 1997, and the 
results of its operations and its cash flows for each of the years in the 
three-year period ended December 31, 1998, in conformity with generally 
accepted accounting principles.



Albuquerque, New Mexico                                     /S/KPMG LLP
March 26, 1999




<PAGE>
BALANCE SHEETS
--------------

</TABLE>
<TABLE>
<CAPTION>                                         December 31,
                                        ----------------------------
                                          1998                1997
                                        --------            --------
<S>                                   <C>                 <C>
ASSETS

Investments:
 Notes receivable, net (cost basis of
 $4,057,307 in 1998 and 1997)             $3,937,307           1,792,307
 Equity investments (cost basis of
  $3,042,246 and $4,143,319 in 1998 and
  1997, respectively)                      1,861,859           3,477,307
                                           ---------           ---------
     Total investments                     5,799,166           5,269,614

Cash and cash equivalents                     28,836             669,856
Restricted cash                               16,500             264,074
Due from related parties                          --              52,126
Other assets                                  55,272              18,556
                                           ---------           ---------
     Total assets                         $5,899,774           6,274,226
                                           =========           =========

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses     $   73,424              57,675
Due to related parties                        11,678                  --
Other liabilities                             10,852              11,301
                                           ---------           ---------
     Total liabilities                        95,954              68,976

Commitments, contingencies, and subsequent
 event (Notes 2, 4, and 10)

Partners' capital:
  Limited Partners
  (Units outstanding of 150,570 in 
   1998 and 1997)                          7,278,331           9,290,065
  General Partners                          (174,124)           (153,803)
  Net unrealized fair value decrease
   from cost:
    Notes receivable                        (120,000)         (2,265,000)
    Equity investments                    (1,180,387)           (666,012)
                                           ---------           ---------
     Total partners' capital               5,803,820           6,205,250
                                           ---------           ---------
     Total liabilities and partners'
      capital                             $5,899,774           6,274,226
                                           =========           =========
</TABLE>
 See accompanying notes to financial statements.

<PAGE>
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
                                        For the Years Ended December 31,
                                      -----------------------------------
                                        1998         1997          1996
                                       ------       ------        -----
<S>                               <C>           <C>           <C>
Income:
 Secured notes receivable
  interest                         $       --       22,462      138,770
 Short-term investment interest         8,703       88,889      185,854
 Other income                              --           --        4,241
                                    ---------      -------    ---------
     Total income                       8,703      111,351      328,865
                                    ---------      -------    ---------
Costs and expenses:
 Management fees                      114,419      131,578      165,379
 Other investment expenses                 --      174,274      201,820
 Operating expenses:
  Lending operations and
   investment management              151,543      132,357      138,446
  Administrative and investor 
   services                           396,994      291,379      252,509
  Computer services                    47,035       65,590       83,418
  Professional fees                    73,052       47,721       47,859
                                    ---------      -------    ---------
     Total operating expenses         668,624      537,047      522,232
                                    ---------      -------    ---------

     Total costs and expenses         783,043      842,899      889,431
                                    ---------      -------    ---------
Net operating loss                   (774,340)    (731,548)    (560,566)

 Net realized (loss) gain from
  sales of equity investments         (67,034)     267,869       48,824
 Realized losses from
  investment write-downs           (1,284,518)          --     (125,104)
 Recoveries from investments
  previously written off               93,837        7,387      113,214
                                    ---------      -------    ---------
Net realized loss                  (2,032,055)    (456,292)    (523,632)

Change in net unrealized 
 fair value:
  Equity investments                 (514,375)      95,677   (1,033,488)
  Notes receivable                  2,145,000      (15,000)     (67,000)
                                    ---------      -------    ---------
Net loss                           $ (401,430)    (375,615)  (1,624,120)
                                    =========      =======    =========
Net realized loss
 per Unit                          $      (13)          (3)          (3)
                               =========      =======    ==========
</TABLE>
See accompanying notes to financial statements.

<PAGE>

STATEMENTS OF PARTNERS' CAPITAL
-------------------------------

<TABLE>
<CAPTION>
For the years ended December 31, 1998, 1997, and 1996:

                                                         Net Unrealized Fair
                                                           Value Increase
                                                        (Decrease) From Cost
                                                      ------------------------
                                 Limited   General      Equity        Notes
                                 Partners  Partners   Investments   Receivable    Total
                                 --------  --------   -----------   ----------    -----
<S>                           <C>          <C>        <C>          <C>         <C>
Partners' capital,
 December 31, 1995             $10,592,289 (144,004)     271,799   (2,183,000)  8,537,084

Repurchase of limited 
 partnership interests            (112,216)      --           --           --    (112,216)

Net realized loss                 (518,396)  (5,236)          --           --    (523,632)

Change in net unrealized fair 
 value:
  Equity investments                    --       --   (1,033,488)          --  (1,033,488)
  Notes receivable                      --       --           --      (67,000)    (67,000)
                                ----------  -------    ---------    ---------   ---------

Partners' capital,
 December 31, 1996               9,961,677 (149,240)    (761,689)  (2,250,000)  6,800,748

Repurchase of limited 
 partnership interests            (219,883)      --           --           --    (219,883)

Net realized loss                 (451,729)  (4,563)          --           --    (456,292)


Change in net unrealized fair 
 value:
  Equity investments                    --       --       95,677           --      95,677
  Notes receivable                      --       --           --      (15,000)    (15,000)
                                ----------  -------    ---------    ---------   ---------

Partners' capital,
 December 31, 1997               9,290,065 (153,803)    (666,012)  (2,265,000)  6,205,250

Net realized loss               (2,011,734) (20,321)          --           --  (2,032,055)

Change in net unrealized fair 
 value:
  Equity investments                    --       --     (514,375)          --    (514,375)
  Notes receivable                      --       --           --    2,145,000   2,145,000
                                ----------  -------    ---------    ---------   ---------

Partners' capital,
 December 31, 1998             $ 7,278,331 (174,124)  (1,180,387)    (120,000)  5,803,820

                                ==========  =======    =========    =========   =========

</TABLE>
See accompanying notes to financial statements.

<PAGE>
STATEMENTS OF CASH FLOWS
------------------------

<TABLE>
<CAPTION>
                                        For the Years Ended December 31, 
                                      -----------------------------------
                                       1998          1997           1996
                                      ------        ------         ------
<S>                               <C>            <C>        <C> 
Cash flows from operating
  activities:
 Interest received                 $    8,703      111,351        323,252
 Other income received                     --           --          4,241
 Cash paid to vendors                (126,602)    (570,993)      (377,998)
 Cash paid to related parties        (614,053)    (631,756)    (1,458,213)
 Cash paid to affiliated
  partnerships                             --           --         (2,047)
 Reimbursement for collection
  expenses received from
  portfolio companies                      --        3,572         41,542
                                    ---------    ---------      ---------
  Net cash used by operating
   activities                        (731,952)   (1,087,826)   (1,469,223)
                                    ---------     ---------     ---------
Cash flows from investing
  activities:
 Notes receivable issued                   --      (181,413)     (168,002)
 Repayments of secured notes 
  receivable                               --         4,989       823,522
 Purchase of equity investments      (445,246)   (1,864,753)           --
 Proceeds from sales of 
  equity investments                  194,767       388,827        57,574
 Recoveries from investments 
  previously written off               93,837         7,387       113,214
 Payments from (deposits to)
  restricted cash                     247,574       378,620      (592,694)
                                    ---------     ---------     ---------
  Net cash provided (used) by 
   investing activities                90,932    (1,266,343)      233,614
                                    ---------     ---------     ---------
Cash flows from financing 
  activities:
 Distributions to Limited and 
  General Partners                         --            --      (466,804)
 Repurchase of Limited Partnership
  interests                                --      (219,883)     (112,216)
                                    ---------     ---------     ---------
  Net cash used by financing
   activities                              --      (219,883)     (579,020)
                                    ---------     ---------     ---------
Net decrease in cash
 and cash equivalents                (641,020)   (2,574,052)   (1,814,629)

<PAGE>
STATEMENTS OF CASH FLOWS
------------------------


</TABLE>
<TABLE>
<CAPTION>
                                        For the Years Ended December 31, 
                                      -----------------------------------
                                       1998          1997           1996
                                      ------        ------         ------
<S>                               <C>            <C>        <C> 
Cash and cash equivalents
 at beginning of year                 669,856     3,243,908     5,058,537
                                    ---------     ---------     ---------
Cash and cash equivalents
 at end of year                    $   28,836       669,856     3,243,908
                                    =========     =========     =========
Reconciliation of net loss 
 to net cash used by operating
 activities:

Net loss                           $ (401,430)     (375,615)   (1,624,120)

Adjustments to reconcile net 
 loss to net cash used by 
 operating activities:
  Net realized loss (gain) from
   sales of equity investments         67,034      (267,869)      (48,824)
  Realized losses from investment
   write-downs                      1,284,518            --       125,104
  Recoveries from investments
   previously written off             (93,837)       (7,387)     (113,214)
  Amortization of discount
   related to warrants                     --            --        (5,678)
  Change in net unrealized 
   fair value:
    Equity investments                514,375       (95,677)    1,033,488
    Notes receivable               (2,145,000)       15,000        67,000
Changes in:
  Accounts payable and accrued 
   expenses                            15,749      (252,140)      (30,316)
  Due to/from related parties          63,804       (94,995)     (829,953)
  Other                               (37,165)       (9,143)      (42,710)
                                    ---------     ---------     ---------
Net cash used by operating
  activities:                      $ (731,952)   (1,087,826)   (1,469,223)
                                    =========     =========     =========
Non-cash investing activities:

Non-cash exercise of 
 warrants                          $       --         5,196         8,497
                                    =========     =========     =========

</TABLE>
See accompanying notes to financial statements.

<PAGE>

NOTES TO FINANCIAL STATEMENTS
-----------------------------

1.     Summary of Significant Accounting Policies
       ------------------------------------------

Organization
------------

Technology Funding Secured Investors II (the "Partnership") is a limited 
partnership organized under the laws of the State of California on 
August 31, 1984.  The purpose of the Partnership is to provide secured 
equipment financing to new and developing companies and to acquire, hold, 
sell, trade, exchange or otherwise dispose of warrants and/or capital stock 
acquired by the Partnership in conjunction with these loans.  The General 
Partners are Technology Funding Ltd. ("TFL") and Technology Funding Inc. 
("TFI"), a wholly owned subsidiary of TFL.  TFI is the Managing General 
Partner.  

On September 17, 1987, the minimum number of units of limited partnership 
interest ("Units") required to form the Partnership (4,800) were sold.  On 
March 31, 1989, the offering terminated after 160,000 Units had been sold, 
generating $40,000,000 in cash from Limited Partners and $40,041 from the 
General Partners.  The Partnership Agreement provided that the Partnership 
would continue until December 31, 1996, unless further extended.  In 
September of 1996, the General Partners exercised their right and extended 
the term of the Partnership to December 31, 1998.  In April 1998, the 
General Partner's further extended the term of the Partnership to December 
31, 2000, unless dissolved earlier.

Preparation of Financial Statements and Use of Estimates
--------------------------------------------------------

The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the amounts reported in the financial statements 
and accompanying notes. Actual results could differ from those estimates.  
Estimates are used when accounting for investments, change in unrealized 
fair value of investments, liabilities and contingencies.  Because of the 
inherent uncertainty of valuation, the estimated fair value of investments 
may differ significantly from the values that would have been used had a 
ready market for investments existed, and the differences could be 
material.  

Investments
-----------

    Notes Receivable, Net
    ---------------------

The Partnership's method of accounting for secured and unsecured notes 
receivable, in accordance with generally accepted accounting principles, is 
the fair value basis used for investment companies.  

The fair value of notes receivable is their initial cost basis adjusted for 
unrealized gains and losses.  The cost basis is comprised of note principal 
plus accrued interest, less any discount related to warrants.  The net 
unrealized gain or loss is reviewed quarterly by the Managing General 
Partner and is adjusted upward or downward to reflect the change in the 
fair market value of the notes.  Fair value may change due to an increase 
or decrease in the allowance for loan losses, or when the current expected 
loan proceeds exceed the cost basis.  Adjustments to fair value are 
reflected as "Change in net unrealized fair value of notes receivable".  
Notes receivable are placed on nonaccrual status when, in the opinion of 
the Managing General Partner, the future collectibility of interest or 
principal is in doubt.

Where, in the opinion of the Managing General Partner, events indicate 
there has been an other than temporary decline in value below the cost 
basis of the note, an appropriate reduction in the cost basis is recognized 
as "Realized losses from investment write-downs" on the Statements of 
Operations. "Recoveries from investments previously written off" represent 
realized gains when payment is received on such notes.  

In conjunction with certain secured notes, upon note issuance or 
restructure, the Partnership has received warrants to purchase certain 
types of capital stock or capital stock of the borrowing company.  The cost 
basis of such warrants and the resulting discount has generally been 
estimated by the Managing General Partner to be 1% of the principal balance 
of the original notes made to the borrowing company.  The cost basis of 
capital stock and the resulting discount are generally based on the 
valuation set at the latest round of financing.  The discount is amortized 
to interest income on a straight-line basis over the term of the loan.  
These warrants and capital stock are included in the equity investment 
portfolio.

    Equity Investments
    ------------------

The Partnership's method of accounting for investments, in accordance with 
generally accepted accounting principles, is the fair value basis used for 
investment companies.  The fair value of Partnership equity investments is 
their initial cost basis with changes as noted below:

The fair value for publicly traded equity investments (marketable equity 
securities) is based upon the five-day-average closing sales price or 
bid/ask price that is available on a national securities exchange or over-
the-counter market.  Certain publicly traded equity investments may not be 
marketable due to selling restrictions and for those securities, an 
illiquidity discount of up to 33% is applied when determining the fair 
value; the actual discount percentage is based on the type and length of 
the restrictions.  Equity investments valued under this method were $0 and 
$708,864 at December 31, 1998 and 1997, respectively.

All investments which are not publicly traded are valued at fair market 
value as determined by the Managing General Partner in the absence of 
readily ascertainable market values. Equity investments valued under this 
method were $1,861,859 and $2,768,443 at December 31, 1998 and 1997, 
respectively.  Generally, investments in privately held companies are 
valued at original cost unless there is clear evidence of a change in fair 
value, such as a recent round of third-party financings, or events that, in 
the opinion of the Managing General Partners, indicate a change in value. 
Convertible and subordinated notes receivable are stated at cost plus 
accrued interest, which is equivalent to fair value, and are included in 
equity investments as repayment of these notes generally occurs through 
conversion into equity investments.

Where, in the opinion of the Managing General Partner, events indicate that 
the fair value of equity investments and convertible and subordinated notes 
receivable may not be recoverable, a write-down to estimated fair value is 
recorded.  Temporary changes in fair value result in increases or decreases 
to the unrealized fair value of equity investments. Adjustments to fair 
value basis are reflected as "Change in net unrealized fair value of equity 
investments."  In the case of an other than temporary decline in value 
below cost basis, an appropriate reduction in the cost basis is recognized 
as a realized loss with the fair value being adjusted to match the new cost 
basis. Cost basis adjustments are reflected as "Realized losses from 
investment write-downs" on the Statements of Operations. 

Sales of equity investments are recorded on the trade date.  The basis on 
which cost is determined in computing realized gains or losses is specific 
identification.

Cash and Cash Equivalents
-------------------------

Cash and cash equivalents are principally comprised of cash invested in 
demand accounts, money market instruments, and commercial paper and are 
stated at cost plus accrued interest.  The Partnership considers all money 
market and short-term investments with an original maturity of three months 
or less to be cash equivalents.

Net Realized Income (Loss) Per Unit
-----------------------------------

Net realized income (loss) per Unit is calculated by dividing the weighted 
average number of Units outstanding for 1998, 1997, and 1996 of 150,570, 
155,221, and 157,128, respectively, into total net realized income (loss) 
allocated to the Limited Partners.  The General Partners contributed an 
amount equal to 0.1% of total Limited Partner Capital Contribution and did 
not receive Partnership Units.

Provision for Income Taxes
--------------------------

No provision for income taxes has been made by the Partnership, as the 
Partnership is not directly subject to taxation.  The partners are to 
report their respective shares of Partnership income or loss on their 
individual tax returns.

The accompanying financial statements are prepared using generally accepted 
accounting principles which may not equate to tax accounting.  The 
Partnership's total tax basis in investments was higher than the reported 
total cost basis of $7,099,553 by $2,005,676 as of December 31, 1998.

Distributions
-------------

Distributions made to the Limited Partners are made among such partners in 
the proportion their respective capital accounts bear to the total of all 
capital accounts of the group.  After a reasonable amount of time, 
unnegotiated distribution checks, if any, are recorded as other liabilities 
on the Balance Sheets.

2.     Related Party Transactions
       --------------------------

Included in costs and expenses are related party costs as follows:
<TABLE>
<CAPTION>
                                      For the Years Ended December 31,
                                    -----------------------------------
                                     1998         1997            1996
                                    ------       ------          ------

<S>                             <C>            <C>               <C>
Management fees                   $114,419      131,578         165,379
Reimbursable operating expenses:
 Lending operations and
  investment management            141,932      134,418         159,570
 Administrative and investor
  services                         374,471      212,469         219,893
 Computer services                  47,035       58,296          83,418
</TABLE>

Management fees, payable quarterly, are equal to one half of one percent of 
the Partnership's assets under management.  Management fees compensate the 
General Partners solely for General Partner Overhead (as defined in the 
Partnership Agreement) incurred in supervising the operation, management, 
and progress of Partnership loans to borrowing companies and its portfolio 
of warrants and capital stock of borrowing companies, as well as for 
general administration of the Partnership.  Management fees are only paid 
to the extent that the aggregate amount of all proceeds received by the 
Partnership (including warrants exercised without cash) from the sale or 
other disposition of borrowing company equities, plus the aggregate fair 
market value of any equity securities distributed to the partners, exceeds 
the total management fee payable.  Management fees payable at December 31, 
1998 were $10,033.  All management fees had been paid at December 31, 1997.

The Partnership reimburses the Managing General Partner and affiliates for 
operating expenses incurred in connection with the business of the 
Partnership.  Reimbursable operating expenses include expenses (other than 
Organizational and Offering and General Partner Overhead) such as 
investment operations, administrative and investor services, and computer 
services. At December 31, 1998, amounts due to related parties totaled 
$1,645, and at December 31, 1997, amounts due from related parties totaled 
$52,126.

The Managing General Partner allocates operating expenses incurred in 
connection with the business of the Partnership based on employee hours 
incurred.  In 1998, operating cost allocations to the Partnership were re-
evaluated.  The Managing General Partner determined that they had not fully 
recovered allocable operating expenses, primarily salary, benefits, and 
professional fees, as permitted by the Partnership Agreement.  As a result, 
the Partnership was charged additional operating expenses of $154,704, 
consisting of $17,151, $25,002, and $112,551 for 1997, 1996, and prior 
years, respectively.  Had the additional expenses been recorded in prior 
years, operating expenses would have been $513,920, 554,198, and $547,234 
for 1998, 1997 and 1996, respectively.

During 1997 and 1996, the Partnership received reimbursements of $3,572 and 
$41,542, respectively, from portfolio companies primarily for legal, 
consulting, and other costs incurred in prior periods in the defense of the 
Partnership's secured note rights through bankruptcy court.  The 
reimbursements were recorded as a reduction to lending operations and 
investment management expense.

Effective November 1, 1997, TFL assigned its California office lease to 
Technology Funding Property Management LLC (TFPM), an entity that is 
affiliated to the Managing General Partner.  Under the terms of a rent 
agreement, TFPM charges the Partnership for its share of office rent and 
related overhead costs.  These amounts are included in administrative and 
investor service costs.

Under the terms of a computer service agreement, Technology Administrative 
Management, a division of TFI, charges the Partnership for its share of 
computer support costs.  These amounts are included in computer services 
expenses.

Within the normal course of business, the Partnership participates in 
secured notes receivable issued to non-affiliated borrowing companies by 
affiliated partnerships which are also managed by the Managing General 
Partner.  The Partnership may also reparticipate such secured notes 
receivable amongst affiliated partnerships to meet business needs.

An affiliated partnership owns approximately 80% of MARCorp, a portfolio 
company.  In addition, the Partnership and affiliated partnerships have 
secured notes receivable from MARCorp.

The Partnership together with affiliated entities own a 66% interest in 
Cyclean, Inc., a portfolio company.  In addition, the Partnership and 
affiliated partnerships wholly own Cyclean of Los Angeles, LLC ("CLA"), a 
portfolio company.  The Partnership also owns 33% of CLB, LLC ("CLB"), a 
portfolio company, and together with an affiliated partnership wholly own 
CLB.  The Partnership and other affiliated partnerships have notes 
receivable from Cyclean, Inc., CLA, and CLB.  Additionally, the General 
Partners have charged CLB for certain management services provided during 
1998 and 1997.

In 1996, a portfolio company of the Partnership and affiliated partnerships 
entered into a joint venture with the General Partners to perform 
investment recovery efforts in order to increase the future investment 
returns to the Partnership.  The General Partners have agreed to waive any 
"post-conversion" profit interest in the Partnership attributable to any 
such recoveries for a share of the joint venture net profits.  The post-
conversion profit is pursuant to, and as defined in, the profit and loss 
provisions of the Partnership's Partnership Agreement.  Through December 
31, 1998, the Partnership realized recoveries of $91,337 and the General 
Partners had not realized any profit from the joint venture.

3.     Allocation of Profits and Losses
       --------------------------------

Net realized profit of the Partnership is allocated based on the beginning-
of-year partners' capital balances as follows:

(a)  first, to those partners with deficit capital account balances 
in proportion to such deficits until such deficits have been 
eliminated.

(b)  second, to the partners as necessary to offset net realized 
loss previously allocated to such partners and sales 
commissions charged to their capital accounts until each 
partner has been allocated cumulative net realized profit equal 
to cumulative net realized loss previously allocated to such 
partner and its share of sales commissions not already offset.

(c)  third, 99% to the Limited Partners and 1% to the General 
Partners until the Limited Partners have been allocated an 
amount of cumulative net realized profit that would, if 
distributed at the end of the taxable period, result in a 
cumulative, compounded annual return to the Limited Partners of 
8% of their adjusted capital contributions.

(d)  fourth,

(i)  80% to the Limited Partners
(ii) 20% to the General Partners.

In no event are the General Partners to be allocated less than 
1% of the net realized profit of the Partnership.

Net realized loss of the Partnership is allocated as follows:

(a)  to the partners as necessary to offset net realized profit 
previously allocated to such partners pursuant to (d) above 
until each partner has been allocated cumulative net realized 
loss equal to the cumulative net realized profit previously 
allocated to such partners.

(b)  99% to the Limited Partners and 1% to the General Partners.

Losses in excess of Limited Partner capital accounts are allocated to the 
General Partners.

4.     Notes Receivable, Net
       ---------------------

At December 31, 1998 and 1997, notes receivable consisted of:

<TABLE>
<CAPTION>
                                                      December 31, 1998        December 31, 1997
                                                     -------------------       -----------------
                    Investment                        Cost        Fair         Cost        Fair
Industry/Company       Date        Position           Basis       Value        Basis       Value
----------------    ----------     --------           -----       -----        -----       -----
<S>                  <C>         <C>               <C>          <C>         <C>        <C>

Industrial/Business Automation
------------------------------
Cyclean, Inc. and    09/87-      Secured notes
 Cyclean of          09/94       receivable, plus
 Los Angeles, LLC                interest, totaling
                                 $2,435,426        $  925,653   1,272,634      925,653    413,653
CLB, LLC             04/97       Unsecured note
                                 receivable, plus
                                 interest, totaling
                                 $160,600             132,000     132,000      132,000    132,000 

Computers and Computer Equipment
--------------------------------
MARCorp              12/89-      Secured notes
                     02/93       receivable, plus
                                 interest, totaling
                                 $13,718,448        2,999,654   2,532,673    2,999,654  1,246,654
                                                    ---------   ---------    ---------  ---------
Total notes receivable                             $4,057,307   3,937,307    4,057,307  1,792,307
                                                    =========   =========    =========  =========

Cyclean, Inc. and Cyclean of Los Angeles, LLC.
----------------------------------------------

The Partnership has valued its secured notes receivable investment in these 
companies at its estimated share of proceeds that could result from a 
current sale or liquidation.  Because both companies are on going 
operations and not currently pursuing sale or liquidation, there are 
inherent uncertainties involved in estimating these proceeds.  The 
estimated fair value of $1,272,634 at December 31, 1998, may differ 
significantly from a value that would have been used had the ultimate 
realization of the investment been known, and the differences could be 
material.

MARCorp
-------

In 1998, the Company entered into an agreement to sell the majority of its 
assets to the management of one of its subsidiaries.  The Partnership has 
valued its secured notes receivable investment in the company at its 
expected share of the proceeds from this sale.  The fair market value of 
these proceeds at December 31, 1998 was $2,532,673.  In February 1999, the 
Partnership received $678,037 of these proceeds, the remainder of which are 
due to be received no later than August 2000.

Resonex Holding Corporation
---------------------------

In 1998, the Partnership realized recoveries of $91,337 on notes receivable 
written off in prior years. (See Note 2.)

Changes in the net unrealized fair value of notes receivable were as 
follows:


</TABLE>
<TABLE>
<CAPTION>
                                            1998      1997        1996
                                           ------    ------      ------ 
<S>                                            <C>             <C>
Net unrealized fair value decrease
 from cost at beginning of year     $(2,265,000) (2,250,000)   (2,183,000)

Change in net unrealized fair value
 of notes receivable                  2,145,000     (15,000)      (67,000)
                                      ---------   ---------     ---------
Net unrealized fair value increase
 decrease from cost at end of year  $  (120,000) (2,265,000)   (2,250,000)
                                      =========   =========     =========
</TABLE>

The secured notes are collateralized by specific assets of the borrowing 
companies, and interest rates on secured and unsecured notes at December 
31, 1998, ranged from 12% to 13%.  Scheduled principal repayments are 
$1,311,939 and $2,999,655 for 1999 and 2000, respectively.  Notes 
receivable which are due on demand are included as principal repayments in 
1999.  In addition, the Managing General Partner may at times need to 
restructure notes by either extending maturity dates or converting notes 
into equity investments to increase the ultimate collectibility of the 
Partnership's investments.

The notes receivable portfolio at December 31, 1998 and 1997, was on 
nonaccrual status due to uncertainty of the borrowers' financial 
conditions.  The Managing General Partner continues to monitor the progress 
of these companies and intends to manage these investments to maximize the 
Partnership's net realizable value.

5.     Equity Investments
       ------------------

At December 31, 1998 and December 31, 1997, equity investments consisted of:

<TABLE>

                                                      December 31, 1998        December 31, 1997
                                                     -------------------       -----------------
                    Investment                       Cost          Fair        Cost        Fair
Industry/Company       Date        Position          Basis         Value       Basis       Value
----------------    ----------     --------          -----         -----       -----       -----
<S>                  <C>         <C>             <C>          <C>         <C>         <C>
WARRANTS
--------

Computer Software and Systems
-----------------------------
Wasatch Education    06/95       Common share 
 Systems                         warrant for 959,546 
 Corporation                     shares at  $0.50;
                                 expiring 06/00     $     0           0       5,000           0

Industrial/Business Automation
------------------------------
Cyclean, Inc.        08/88-      Common share
                     01/95       warrants for
                                 168,191 shares (1)       0           0           0           0

                                                    -------     -------     -------     -------
     Total warrants                                       0           0       5,000           0
                                                    -------     -------     -------     -------

                                                      December 31, 1998        December 31, 1997
                                                     -------------------       -----------------
                    Investment                       Cost          Fair        Cost        Fair
Industry/Company       Date        Position          Basis         Value       Basis       Value
----------------    ----------     --------          -----         -----       -----       -----
<S>                  <C>         <C>             <C>          <C>         <C>         <C>
STOCKS:
Computers and Computer Equipment
--------------------------------
Censtor Corporation  05/95       4,538 Common
                                 shares                   0           0       2,395           0
MARCorp              12/89-      406,693 Series A
                     02/93       Preferred shares         0           0           0           0
MARCorp              05/92       Convertible 
                                 subordinated
                                 debenture,
                                 $1,936,104   
                                 principal amount         0           0           0           0

Computer Software and Systems
-----------------------------
Wasatch Education    06/95       1,741,550
 Systems                         Series C
 Corporation                     Preferred
                                 shares             464,427     464,427   1,741,550     870,775

Industrial/Business Automation
------------------------------
Arix Computer        04/92       34,286 Common
 Corporation                     shares                   0           0           0           0
Cyclean, Inc.        09/94-      225,088 Series D
                     04/96       Preferred shares   242,989           0     242,989           0
Cyclean of           03/95       Class A LLC Unit 
 Los Angeles, LLC                45% ownership       11,091           0      11,091           0
CLB, LLC             04/97-      2,309,999
                     06/98       LLC Units        2,309,999   1,396,333   1,864,753   1,864,753

                                                      December 31, 1998        December 31, 1997
                                                     -------------------       -----------------
                    Investment                       Cost          Fair        Cost        Fair
Industry/Company       Date        Position          Basis         Value       Basis       Value
----------------    ----------     --------          -----         -----       -----       -----
<S>                  <C>         <C>             <C>          <C>         <C>         <C>

Medical
-------
HemoCleanse, Inc.    03/95-      15,907 Common
                     01/97       shares              10,269           0      10,269      31,812
Resonex Holding      02/94       11,402 Common
 Corporation                     shares                   0           0           0           0

Microelectronics
----------------
Celeritek, Inc.      05/94       47,219 Common
                                 shares                  --          --     253,426     657,761

Telecommunications
------------------
All Post, Inc.       10/94       4,394 Common
                                 shares               3,471       1,099       3,471       1,099
3Com Corporation     06/95       1,490 Common
                                 shares                  --          --       8,375      51,107
                                                  ---------   ---------   ---------   ---------
Total stocks                                      3,042,246   1,861,859   4,138,319   3,477,307
                                                  ---------   ---------   ---------   ---------
Total equity investments                         $3,042,246   1,861,859   4,143,319   3,477,307
                                                  =========   =========   =========   =========

--  No investment held at end of period.
 0  Investment active with a carrying value or fair value of zero.
(1)  Cyclean, Inc. common share warrants are exercisable at prices ranging from $2.74 to $4.00
    per share and expire on dates ranging from 03/99 to 07/02.
</TABLE>


Marketable Equity Securities
----------------------------

At December 31, 1997, marketable equity securities had aggregate costs of 
$261,804 and aggregate fair values of $708,864.  The net unrealized gains 
at December 31, 1997, did not include any gross losses.  All of the 
Partnership's marketable equity securities were sold in 1998.

3Com Corporation
----------------

In September 1998, the Partnership sold its investment in the company for 
total proceeds of $47,213 and realized a gain of $38,838.

Celeritek, Inc.
---------------

In September 1998, the Partnership sold its investment in the company for 
total proceeds of $147,554 and realized a loss of $105,872.

CLB, LLC
--------

In 1998, the Partnership purchased 445,246 LLC Units for $445,246.  The 
Partnership, together with an affiliated partnership, own 100% of the 
company.

The Partnership has valued its investment in the company at its estimated 
share of proceeds that could result from a current sale or liquidation of 
the company.  Because the company is an on going operation and not 
currently pursuing a sale or liquidation, there are inherent 
uncertainties involved in estimating these proceeds.  The estimated fair 
value of $1,396,333 at December 31, 1998 may differ significantly from a 
value that would have been used had the ultimate realization of the 
investment been known, and the differences could be material.

Wasatch Education Systems Corporation
-------------------------------------

In February 1997, the company sold its education market net assets to 
Wasatch Interactive Learning Company ("WILC"), an entity formed by the 
company's former management team, for $1.5 million in cash and future 
royalties over a five-year period, while retaining ownership of the 
majority of its technology.

Currently, the company's operations have been limited to pursuit of 
additional markets for its technology, debt service and the receipt of 
royalty income.  At December 31, 1998, the company had net current assets 
of $505,000(unaudited) and is expected to receive future royalties from 
WILC of approximately $900,000(unaudited).  The Partnership has valued 
its investment in the company at its share of net current assets and 
expected future royalty payments.  Because of the highly competitive 
educational software marketplace, no value has been assigned to the 
company's capitalized technology costs.  Based on this valuation, the 
Partnership recorded a write-down of the cost basis and fair market value 
of its investment to $464,427, at December 31, 1998, resulting in a 
realized loss of $1,282,123.  Because of the inherent uncertainties 
involved in estimating these future proceeds, the estimated fair value of 
$464,427 may differ significantly from a value that would have been used 
had a ready market existed, and the differences could be material.

6.     Change in Net Unrealized Fair Value of Equity Investments
       ---------------------------------------------------------

In accordance with the Partnership's accounting policy as stated in Note 
1, the Statements of Operations include a line item entitled "Change in 
net unrealized fair value of equity investments."  The table below 
discloses details of the changes:

<TABLE>
<CAPTION>
                                       For the Years Ended December 31,
                                      ---------------------------------
                                       1998          1997         1996
                                     --------      --------     --------
<S>                               <C>            <C>           <C>
Increase in fair 
  value from cost of marketable
  equity securities                $       --       447,060      327,887

Decrease in fair value
  from cost of non-marketable 
  equity securities                (1,180,387)   (1,113,072)  (1,089,576)
                                    ---------     ---------    ---------

Net unrealized fair value
 decrease from cost
 at end of year                    (1,180,387)     (666,012)    (761,689)

Net unrealized fair value
 (decrease) increase from cost
  at beginning of year               (666,012)     (761,689)     271,799
                                    ---------     ---------    ---------

Change in net unrealized
  fair value of equity
  investments                      $ (514,375)       95,677   (1,033,488)
                                    =========     =========    =========

7.     Cash and Cash Equivalents
       -------------------------

At December 31, 1998 and 1997, cash and cash equivalents consisted of:

</TABLE>
<TABLE>
<CAPTION>

                                               1998             1997
                                             --------         --------
<S>                                             <C>           <C>
Demand accounts                             $  27,472           38,563
Money-market accounts                           1,364          631,293
                                             --------          -------
     Total                                  $  28,836          669,856
                                             ========          =======
</TABLE>

8.     Litigation and Other Investment Expenses
       ----------------------------------------

Other investment expenses in 1997 and 1996 of $174,274 and $201,820, 
respectively, reflect the cost of the following legal actions.

In 1992, the Partnership and a portfolio company in the retail/consumer 
products industry filed a lawsuit against Quebecor in the Superior Court 
of Guilford County, North Carolina, claiming that the Partnership had the 
right to take possession of collateral upon foreclosure on the portfolio 
company, the price paid was fair and did not interfere with Quebecor's 
legal rights.  Quebecor filed a counter suit claiming otherwise and 
sought relief for $2.6 million, including accrued interest, legal costs 
and punitive damages.  In March 1997, the Partnership and the portfolio 
company obtained a favorable judgment in their appeal of a prior trial 
court ruling that declared the assets of the portfolio company, for a sum 
not certain, were available to satisfy certain claims of Quebecor.  
Quebecor's subsequent appeal to the North Carolina Supreme Court was 
denied in July 1997.  Quebecor's request for a rehearing was denied, and 
all suits have been terminated.  The Partnership is seeking to recover 
certain costs of this litigation.

In March 1996, the Partnership filed a lawsuit in the United States 
District Court, Northern District of California, against Cyclean, Inc. 
("Cyclean"), Ecopave, L.P. ("Ecopave"), Ecopave Corp. and Stephen M. 
Vance ("Vance") to protect its interest in certain assets which were a 
security interest on a secured loan extended by the Partnership to 
Cyclean.  In January 1997, a counterclaim was filed by Ecopave Corp. and 
Vance. 

As a result of a settlement conference, these lawsuits were resolved 
effective April 1, 1997.  The Partnership indirectly purchased Ecopave 
Corp. and Vance's interest in Ecopave for $5.5 million, of which 
$3,685,000 was participated by an affiliated partnership.  In addition, 
an escrow account for $750,000 was established as collateral for a note 
payable by Ecopave to Ecopave Corp.  The Partnership's share of this 
deposit was $247,500. As discussed in Note 10, the Partnership's escrowed 
funds were released in June 1998.
9.     Repurchase of Limited Partnership Interests
       -------------------------------------------

Each June, subject to the limitations of the Partnership agreement, 
Limited Partners may tender their Units for repurchase by the 
Partnership.  The price paid for any units tendered is based on the June 
30 estimates of fair value for the Partnership.  Units repurchased and 
the amounts paid were 101 Units for $219,883 in 1997 and 2,158 Units for 
$112,216 in 1996.  The Partnership did not repurchase Units in 1998.

10.     Commitments and Contingencies
        -----------------------------

The Partnership is a party to financial instruments with off-balance-
sheet risk in the normal course of its business.  Generally, these 
instruments are equipment financing commitments or accounts receivable 
lines of credit that are outstanding but not currently fully utilized by 
a borrowing company.  As they do not represent current outstanding 
balances, these unfunded commitments are properly not recognized in the 
financial statements. At December 31, 1998, the Partnership had no 
unfunded commitments for investments.

In April 1997, the Partnership together with an affiliated partnership 
deposited $750,000 into an escrow account as collateral for a $750,000 
note payable of Ecopave.  At December 31, 1997, the Partnership's share 
of the deposit was $247,500.  In June 1998, certain assets of CLB, LLC, a 
portfolio company, were pledged as collateral for the Ecopave note 
payable, resulting in the release of the Partnership's escrowed funds.  
The Partnership, however, remains a guarantor for the note payable.

In December 1997, the Partnership together with an affiliated partnership 
guaranteed $50,000 of equipment financing for a portfolio company by 
depositing $50,000 in an escrow account with the lending institution.  
The Partnership funded $16,500 of this deposit.  If the portfolio company 
fails to repay the line of credit, the Partnership may forego the 
escrowed funds.


<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.

                         TECHNOLOGY FUNDING SECURED INVESTORS II

                         By:  TECHNOLOGY FUNDING INC.
                              Managing General Partner




Date:  March 29, 1999    By:       /s/Michael Brenner
                              --------------------------------------
                                      Michael Brenner
                                      Controller

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 and on the dates indicated:

       Signature              Capacity                   Date
       ---------              --------                   ----

 /s/Charles R. Kokesh         President, Chief       March 29, 1999
------------------------      Executive Officer,
    Charles R. Kokesh         Chief Financial
                              Officer and Chairman of
                              Technology Funding Inc.
                              and Managing General
                              Partner of Technology
                              Funding Ltd.



The above represents the Board of Directors of Technology Funding Inc. 
and the General Partners of Technology Funding Ltd.