SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 --------------  

                                    FORM 10-K

(Mark One)

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

For the fiscal year ended         December 31, 1998
                          -----------------------------------------------------

                                       OR

  X   TRANSITION  REPORT  PURSUANT  TO SECTION 13  OR 15(d) OF  THE  SECURITIES
----- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from                        to
                                ---------------------    ----------------------

                         Commission file number  0-14360
                                               ------------

                        NOONEY INCOME FUND LTD. II, L.P.
-------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

          Missouri                                          43-1357693
----------------------------------                          -------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)


500 N. Broadway, St. Louis, Missouri                          63102
------------------------------------------                  -------------------
(Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code    (314) 206-4600
                                                   ----------------------------
-------------------------------------------------------------------------------

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class              Name of each exchange on which registered
     -------------------              -----------------------------------------

            None                                Not Applicable
-------------------------------        ----------------------------------------

Securities registered pursuant to Section 12(g) of the Act:

                          Limited Partnership Interests
                          -----------------------------
                                (Title of Class)

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


<PAGE>

  X   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.

As of February 1, 1999, the aggregate market value of the Registrant's  units of
limited  partnership  interest (which constitute voting securities under certain
circumstances)  held by non-affiliates  of the Registrant was $19,221,000.  (The
aggregate market value was computed on the basis of the initial selling price of
$1,000 per unit of limited partnership  interest,  using the number of units not
beneficially  owned on February 1, 1999,  by the General  Partners or holders of
10% or more of the  Registrant's  limited  partnership  interests.  The  initial
selling  price of $1,000  per unit is not the  current  market  value.  Accurate
pricing  information is not available  because the value of the units of limited
partnership  interests  is not  determinable  since no active  secondary  market
exists.  The  characterization  of the  General  Partners  and  10%  holders  as
affiliates  is for the  purpose  of this  computation  only  and  should  not be
construed  as an  admission  for any purpose that any such persons are, or other
persons not so characterized are not, in fact, affiliates of the Registrant).

Documents incorporated by reference:

Portions of the  Prospectus  of the  Registrant  dated  February  15,  1985,  as
supplemented  and filed  pursuant to Rule 424(c) of the  Securities Act of 1933,
are incorporated by reference in Part III of this Annual Report on Form 10-K.


                                      -2-
<PAGE>
                                     PART I
ITEM 1:  BUSINESS

It should  be noted  that this 10-K  contains  forward-looking  information  (as
defined in the Private  Securities  Litigation Reform Act of 1995) that involves
risk and  uncertainty,  including trends in the real estate  investment  market,
projected leasing and sales, and the future prospects for the Registrant. Actual
results could differ materially from those contemplated by such statements.

Nooney Income Fund Ltd. II, L.P.  (the  "Registrant")  is a limited  partnership
formed under the Missouri Uniform Limited  Partnership Law on February 12, 1985,
to invest,  on an all-cash  basis, in  income-producing  real properties such as
shopping  centers,  office  buildings,  office/warehouse  properties  and  other
commercial   properties.   The  Registrant  originally  invested  in  five  real
properties  described  in Item 2  below.  The  Registrant  continues  to own and
operate its five original properties.

The Registrant's  primary investment  objectives are to preserve and protect the
Limited Partners'  capital,  provide the maximum possible cash  distributions to
the Partners,  and provide for capital growth through  appreciation in the value
of the Registrant's properties. The term of the Registrant is until December 31,
2085. It was originally  anticipated  that the Registrant  would sell or finance
its properties within  approximately  five to ten years after their acquisition.
The depression of real estate values  experienced  nationwide  from 1988 to 1993
lengthened this time frame in order to achieve the goal of capital appreciation.

The real estate  investment  market began to improve in 1994, and is expected to
further  continue  its  improvement  over the  next  several  years.  Management
believes this trend should increase the value of the Registrant's  properties in
the future. The Registrant is intended to be self-liquidating  and proceeds from
the sale or financing of the Registrant's real property  investments will not be
invested in new  properties  but will be  distributed to the Partners or, at the
discretion of the General Partners,  applied to capital  improvements to, or the
payment of  indebtedness  with respect to, existing  properties,  the payment of
other  expenses or the  establishment  of  reserves.  (See Item 7:  Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
Liquidity  and  Capital   Resources  -  for  a  discussion  of  possible  future
acquisitions and possible sales of properties.)

The  business  in which the  Registrant  is engaged is highly  competitive.  The
Registrant's  investment properties are located in or near major urban areas and
are subject to competition from other similar types of properties in such areas.
The Registrant  competes for tenants for its properties with numerous other real
estate limited  partnerships,  as well as with individuals,  corporations,  real
estate  investment  trusts and other entities engaged in real estate  investment
activities.  Such  competition  is  based  on such  factors  as  location,  rent
schedules and services and amenities provided.

The  Registrant  has  no  employees.   Property   management  services  for  the
Registrant's investment properties are provided by Nooney, Inc., an affiliate of
the General Partners.


                                      -3-
<PAGE>

Throughout the 10-K,  references are made to the following  companies  listed in
Column A below. Please note that on January 28,1998, the names of said companies
were changed to the names listed in Column B below.


       Column A                           Column B
       --------                           -------- 
       Nooney Company                     Brooklyn Street Properties, Inc.
       Nooney Krombach Company            Hanley Brokers, Inc.

ITEM 2:  PROPERTIES

On February  20,  1985,  the  Registrant  acquired a 24% interest as a tenant in
common in Leawood  Fountain  Plaza, a three building  office complex in Leawood,
Kansas.  Constructed  in two  phases in 1982 and  1983,  the  buildings  contain
approximately  30,000,  29,000 and 26,000 net rentable square feet respectively,
or an  aggregate  of  approximately  85,000 net  rentable  square feet of office
space. The buildings are located on a 7.9 acre site which provides paved parking
for 403  cars.  The  purchase  price of the  complex  was  $9,626,576,  of which
$2,310,379 was paid by the  Registrant  for its 24% interest.  The remaining 76%
interest was  purchased by Nooney  Income Fund Ltd.,  L.P.,  an affiliate of the
Registrant,  as the other tenant in common. All costs and revenues  attributable
to the operation of the complex are shared by the  Registrant  and Nooney Income
Fund Ltd.,  L.P. in proportion to their  respective  percentage  interests.  The
complex  was 97%  leased  by 41  tenants  at  December  31,  1998.  (See Item 7:
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations - Liquidity and Capital Resources.)

On March 20, 1986, the Registrant  acquired the Tower  Industrial  Building,  an
office warehouse located at 750-760 Tower Road in Mundelein,  Illinois, a suburb
of Chicago.  The purchase  price of the building was  $1,235,820.  The one-story
concrete block building contains  approximately  42,000 net rentable square feet
and is  situated  on a 3 acre site  which  provides  parking  for 140 cars.  The
building is  currently  100% leased by Baxter  International  Inc.  (See Item 7:
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations - Liquidity and Capital Resources.)

On December  16,  1986,  the  Registrant  acquired a 50% interest as a tenant in
common in Countryside  Executive  Center, a single story office building located
at 1210-1270 W. Northwest  Highway in Palatine,  Illinois,  a suburb of Chicago.
The  building  contains  approximately  91,000 net  rentable  square feet and is
situated on an 8.6 acre site which provides parking spaces for 467 cars, some of
which spaces are shared with adjoining  properties pursuant to a mutual easement
agreement  which also  provides for the sharing of certain  expenses.  The total
purchase price of the building was $9,853,660,  of which  $4,926,830 was paid by
the Registrant for its 50% interest. The remaining 50% interest was purchased by
Nooney Income Fund Ltd. III,  L.P., an affiliate of the  Registrant,  and during
1993 was transferred to a subsidiary of the mortgage lender.  As of December 29,
1995,  the  Registrant  acquired the mortgage  lender's  interest in Countryside
Executive  Center for  $1,250,000.  Prior to December  29,  1995,  all costs and
revenues  attributable  to the  operation  of the  building  were  shared by the
Registrant  and a  subsidiary  of the  mortgage  lender in  proportion  to their
respective  percentage  interests.  Effective  October 1998,  the  property  was


                                      -4-

<PAGE>

renamed  Countryside  Office Park.  The building was 77% leased by 34 tenants at
December  31,  1998.  (See  Item 7:  Management's  Discussion  and  Analysis  of
Financial   Condition   and  Results  of  Operations  -  Liquidity  and  Capital
Resources.)

On December  29,  1986,  the  Registrant  acquired a 45% interest as a tenant in
common   in   Wards   Corner   Business   Center   A  &  B,   a   two   building
office/warehouse/showroom  facility  located at  420-422  Wards  Corner  Road in
Loveland, Ohio, a suburb of Cincinnati.  Effective January 1, 1996, the property
known  as  Wards  Corner  was  renamed  Northeast   Commerce  Center.   The  two
single-story  buildings  contain  50,000 net  rentable  square feet each,  or an
aggregate of  approximately  100,000 net rentable square feet. The buildings are
situated  on a 7.5 acre site  which  provides  parking  for 278 cars.  The total
purchase price of the buildings was $6,630,395,  of which $2,983,678 was paid by
the Registrant for its 45% interest. The remaining 55% interest was purchased by
Nooney Income Fund Ltd. III,  L.P., an affiliate of the  Registrant,  and during
1993 was transferred to a subsidiary of the mortgage lender.  As of December 29,
1995,  the  Registrant  acquired  the  mortgage  lender's  interest in Northeast
Commerce  Center for  $1,980,000.  Prior to  December  29,  1995,  all costs and
revenues  attributable  to the  operation  of the  buildings  were shared by the
Registrant  and a  subsidiary  of the  mortgage  lender in  proportion  to their
respective percentage  interests.  The buildings were 50% leased by 3 tenants at
December  31,  1998.  (See  Item 7:  Management's  Discussion  and  Analysis  of
Financial   Condition   and  Results  of  Operations  -  Liquidity  and  Capital
Resources.)

On December  29,  1986,  the  Registrant  acquired a 45% interest as a tenant in
common in NorthCreek  Office Park, a three building  office  complex  located at
8220, 8240 and 8260 NorthCreek Drive in Cincinnati,  Ohio. Constructed in phases
in 1984 and 1986, the three-story  buildings  contain 19,500,  24,000 and 48,000
net rentable square feet respectively,  or an aggregate of approximately  91,500
net rentable  square feet.  The  buildings  are located on a 8.4 acre site which
provides  paved  parking  for 366 cars.  The  purchase  price of the complex was
$11,063,260,  of which  approximately  $4,978,467 was paid by the Registrant for
its 45% interest. The remaining 55% interest was purchased by Nooney Income Fund
Ltd. III, L.P., an affiliate of the Registrant,  and during 1993 was transferred
to a subsidiary of the mortgage lender.  As of December 29, 1995, the Registrant
acquired  the  mortgage   lender's   interest  in  NorthCreek  Office  Park  for
$3,960,000.  Prior to December 29, 1995, all costs and revenues  attributable to
the operation of the complex were shared by the  Registrant  and a subsidiary of
the mortgage lender in proportion to their respective percentage interests.  The
complex  was 100%  leased by 34  tenants  at  December  31,  1998.  (See Item 7:
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations - Liquidity and Capital Resources.)

Reference is made to Note 6 of Notes to Financial  Statements  for a description
of revenues derived from major tenants.

Reference is made to Note 3 of Notes to Financial  Statements  filed herewith as
Exhibit 99.3 in response to Item 8 for a description of the indebtedness secured
by the Registrant's real property investments.


                                      -5-
<PAGE>

The  following  table sets forth  certain  information  as of December 31, 1998,
relating to the properties owned by the Registrant.

<TABLE>
<CAPTION>
===================================================================================================================================
                                                        AVERAGE
                                                        ANNUALIZED
                                       TOTAL            EFFECTIVE                    PRINCIPAL TENANTS
                           SQUARE      ANNUALIZED       BASE RENT PER   PERCENT      OVER 10% OF PROPERTY           LEASE
PROPERTY                   FEET        BASE RENT*       SQUARE FOOT     LEASED       SQUARE FOOTAGE                 EXPIRATION
-----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>         <C>                <C>             <C>        <C>                               <C>     
Tower Industrial                                                                     Baxter International Inc.
Building                    42,000     $   157,300         $3.73          100%       (100%)                            2000
-----------------------------------------------------------------------------------------------------------------------------------
Leawood Fountain                                                                     Midwest Mechanical (14%)          2001  
Plaza                       85,000     $ 1,375,000        $16.74           97%       Family Medical Care of Kansas                 
                                                                                     City (10%)                        1999
-----------------------------------------------------------------------------------------------------------------------------------
Northeast                                                                                   
Commerce Center            100,000     $   251,300        $ 5.07           50%       Hill Top Research (23%)           2003
                                                                                     Aerospace International     
                                                                                     (19%)                             1999
-----------------------------------------------------------------------------------------------------------------------------------
Countryside 
Executive Center            91,000     $ 1,127,000        $15.91           77%       Dietzgen Corporation 
                                                                                     (14%)                             2005
-----------------------------------------------------------------------------------------------------------------------------------
NorthCreek Office                                                                    Cincinnati Group Health
Park                        91,500     $ 1,298,174        $14.26          100%       Associates (26%), (7%)            2003, 2003
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Represents 100% of Base Rent.  Registrant has 24% ownership in Leawood Fountain Plaza.
</FN>
===================================================================================================================================
</TABLE>

ITEM 3:  LEGAL PROCEEDINGS

The Registrant is not a party to any material pending legal proceedings.

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

                                      NONE

                                     PART II

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

As of  February  1, 1999 there were 1,335  record  holders of  Interests  in the
Registrant.  There  is no  public  market  for  the  Interests  and  it  is  not
anticipated that a public market will develop.

              Cash Distributions Paid Per Limited Partnership Unit

           First Quarter   Second Quarter   Third Quarter   Fourth Quarter

1997            -0-            $6.25           $6.25                -0-

1998            $12.50         -0-             $6.25                -0-


                                      -6-
<PAGE>
<TABLE>

ITEM 6:  SELECTED FINANCIAL DATA
<CAPTION>
                                                                                Year Ended December 31,
                                                     ------------------------------------------------------------------------------
                                                            1998            1997           1996          1995 (1)         1994
                                                                     (Not covered by independent auditors' report)
<S>                                                      <C>             <C>            <C>            <C>             <C>
Rental and other income                                  $ 3,680,649     $ 3,355,159    $ 3,502,080    $ 1,754,750     $ 1,729,872

Net income                                                   364,096          63,587         83,571        209,517         254,046

Data per limited partnership unit:

  Net income                                                   17.83            2.66           3.69          10.17           12.16

  Cash distributions - Investment income                       17.83            2.66           3.69          10.17           12.16

  Cash distributions - Return of capital                        0.92            9.84           8.81           2.33            6.59

Weighted average limited partnership
  units outstanding                                           19,221          19,221         19,221         19,221          19,221

At year-end:

  Total assets                                            16,129,995      16,563,704     16,473,106     16,803,566       9,118,452

  Investment property, net                                14,372,757      14,744,540     14,798,098     15,166,737       7,803,472

  Mortgage note payable                                    6,995,876       7,096,532      7,190,000      7,190,000             -

  Partners' equity                                         8,262,543       8,280,887      8,472,267      8,643,642       8,689,086

<FN>
See Item 7:  Management's Discussion and Analysis for discussion of comparability of items.

(1) Balance  sheet  information  includes  the effects of an  acquisition  which occurred on December 29, 1995.
</FN>

                                                                   -7-
</TABLE>

<PAGE>

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

Liquidity and Capital Resources

Cash on hand as of December 31, 1998, is $1,249,605, a decrease of $128,533 from
the  year  ended  December  31,  1997.   The  Registrant   expects  the  capital
expenditures  during 1999 will be adequately funded by current cash reserves and
the properties' operating cash flow. The anticipated capital expenditures are as
follows:

                                       Other        Leasing
                                      Capital       Capital        Total

   NorthCreek Office Park                    0       $83,861       $83,861
   Tower Industrial Building           252,000             0       252,000
   Northeast Commerce Center            28,400         8,500        36,900
   Countryside Executive Center         38,711       210,511       249,222
   Leawood Fountain Plaza (24%)         21,022        53,133        74,155
                                  ----------------------------------------
                                      $340,133      $356,005      $696,138
                                      ====================================

At  NorthCreek   Office  Park,   leasing   capital  is  anticipated  for  tenant
improvements and lease commissions on new and renewal deals.

At Tower  Industrial  Building,  other  capital has been budgeted for a complete
re-roofing of the building.

At Northeast  Commerce  Center,  other capital has been budgeted for parking lot
overlay and  striping,  and leasing  capital has been  budgeted  for  separating
utilities to accommodate  one of our existing  tenants who is downsizing and the
Registrant has entered into a new lease for part of their space. At December 31,
1998, one of the major tenants vacated 50% of the property, which was one of the
two buildings at Northeast  Commerce  Center.  The  Registrant is working with a
local  brokerage firm to try to re-lease the building to two tenants who wish to
use it on an office/warehouse  type basis, or the Registrant would be willing to
consider  selling the one building to a user who would like to occupy the entire
50,000 square feet that is vacant.  Any deals  brought to the  Registrant by the
brokerage firm will be evaluated  throughout the year. Due to the uncertainty of
re-leasing and the  requirements  that any potential tenant may have, no capital
has been budgeted for this  re-leasing,  although the Registrant will have funds
available from current cash reserves and operating results of its properties.

At  Countryside  Office Park,  other  capital has been  budgeted for updating of
bathroom  counters,  additional  light  fixtures,  and a new HVAC unit.  Leasing
capital has been budgeted for tenant  improvements and lease commissions for new
and renewal tenants.

At  Leawood  Fountain  Plaza,  leasing  capital  has been  budgeted  for  tenant
improvements and lease  commissions for new and renewal  tenants.  Other capital
budgeted  is for  recarpeting  hallways  in  one  building,  replacing  exterior
lighting throughout the property, and overlay of the parking lot.

                                      -8-
<PAGE>

Effective  October 1998,  Countryside  Executive Center was renamed  Countryside
Office  Park.  The  Registrant  has hired a different  local  brokerage  firm to
attempt to get better  results in leasing up the property  during  1999.  During
1998  occupancy  increased  from  72% at the  beginning  of the  year  to 77% at
year-end.

The future  liquidity  of the  Registrant  is  dependent  on its ability to fund
future  capital  expenditures  and mortgage  payments from  operations  and cash
reserves,  maintain  occupancy  and  sell  Countryside  Office  Park  at a price
sufficient to satisfy required  obligations.  Until such time as the real estate
market fully recovers,  the Registrant will continue to manage the properties to
achieve its investment objectives.
Results of Operations

The results of operations  for the  Registrant's  properties for the years ended
December 31, 1998, 1997 and 1996 are detailed in the schedule below. Expenses of
the Registrant are excluded.

<TABLE>
<CAPTION>
                           NorthCreek           Tower         Northeast        Countryside        Leawood
                           Office Park       Industrial       Commerce         Office Park       Fountain
                              (100%)           (100%)          (100%)             (100%)        Plaza (24%)
                           -----------       ----------       ---------        -----------      -----------
<S>                        <C>                <C>             <C>              <C>                 <C>

1998
----
Revenues                   $1,377,291         $202,221        $692,068         $1,025,373          $307,888
Expenses                    1,199,133          108,696         723,378            988,862           264,297
                           --------------------------------------------------------------------------------

Net Income (Loss)          $  178,158         $ 93,525        $(31,310)        $   36,511          $ 43,591

1997
----
Revenues                   $1,303,843         $196,947        $676,065         $  905,834          $283,881
Expenses                    1,222,155          106,565         625,690            975,298           263,850
                           --------------------------------------------------------------------------------

Net Income (Loss)          $   81,688         $ 90,382        $ 50,375         $ (69,464)          $ 20,031

1996
----
Revenues                   $1,387,766         $199,099        $582,345         $ 1,068,983         $286,674
Expenses                    1,171,977          109,090         671,080           1,087,519          278,219
                          ---------------------------------------------------------------------------------

Net Income (Loss)          $  215,789         $ 90,009        $(88,735)        $   (18,536)        $  8,455

</TABLE>

                                       -9-
<PAGE>

1998 Property Comparisons

At NorthCreek  Office Park,  revenues  increased  $73,448 when comparing 1998 to
1997.  The  increase  in  income is due to an  increase  in base  rental  income
($57,197)  and  an  increase  in  escalation  income  ($14,784).  Expenses  were
relatively stable, decreasing $23,022 when comparing the two years. The decrease
in expenses was due to decreases in interest  ($6,252),  depreciation  ($8,588),
and amortization ($6,348).

The  operations  at Tower  Industrial  Building  remain  stable as the  building
continues  to be  occupied  by a single  tenant  which has an annual base rental
increase equal to 50% of the CPI in the greater Chicago area.

Operating results at Northeast  Commerce Center decreased when comparing 1998 to
1997. Revenues were relatively stable,  increasing  ($16,003) due to an increase
in  miscellaneous  non-rental  income  ($9,629),  and an increase in base rental
income ($7,357).  Expenses at Northeast  Commerce Center increased  $97,688 when
comparing  1998 to 1997.  The increase in expenses is due to an increase in real
estate taxes  ($55,325) due to a decrease in the real estate tax accrual  caused
by a lower  assessment in the prior year. In addition,  parking lot  landscaping
expenses  increased  ($7,710)  and fire and  crime  prevention  costs  increased
($7,619). Amortization expenses increased ($20,178).

At Countryside  Office Park,  revenues  increased $119,539 due to an increase in
base rental  income  ($197,868),  an  increase in real estate tax  reimbursement
income ($11,678),  partially offset by a decrease in miscellaneous rental income
($93,781). In 1997, the Registrant had received significant miscellaneous rental
income for a tenant who paid hold over rent for  approximately six months during
that  year.  Expenses  at  Countryside  Office  Park  increased  ($13,564)  when
comparing year-end results for 1998 to the prior year. Significant  fluctuations
occurred in  amortization  which  increased  ($79,731),  repair and  maintenance
expense which  increased  $28,703,  and real estate tax expense which  decreased
($100,428).  Amortization  increased in 1998 due to tenant alterations and lease
commissions  incurred in the fourth quarter of 1997. The decrease in real estate
tax expense is a result of a tax consultant fee which was paid in 1997 which was
not incurred  again in 1998. As a result of the increase in income and expenses,
net income increased $105,976 when comparing 1998 to 1997.

At Leawood  Fountain  Plaza,  revenues  increased  ($24,007) when comparing 1998
year-end results to the prior year. The increase in revenue can be attributed to
an increase in base rental income ($35,794),  partially offset by an decrease in
escalation  income  ($12,953).  The increase in base rental income is due to the
higher  occupancy level the property  maintained  throughout 1998 as compared to
1997.  Expenses  during 1998 were  relatively  stable when compared to the prior
year. The result of the stable expense level when combined with the  significant
increase in base rental income resulted in net income  ($23,560) higher than the
prior year.

The Registrant  has a first mortgage with a floating  interest rate of 3/4% over
the then published prime rate of the lender. The properties which are collateral
for this loan are NorthCreek Office Park,  Countryside Office Park and Northeast
Commerce Center. The balance of the loan as of December 31, 1998, is $6,995,876.

                                      -10-
<PAGE>

The interest rate at year end was 8.5%. The mortgage note agreement provides for
a 3.25%  interest rate on  outstanding  principal if a  compensating  balance is
maintained during the immediately  preceding month.  During 1998 the Partnership
decreased  interest  expense  by  approximately  $64,000  from the  compensating
balance clause.

The  occupancy  levels at the  Registrant's  properties as of December 31, 1998,
1997 and 1996 are detailed in the schedule  below.
 
                                    Occupancy  rates at December 31,
                                        1998      1997     1996
                                       -------------------------

       NorthCreek Office Park           100%       89%      98%
       Tower Industrial                 100%      100%     100%
       Northeast Commerce Center         50%       94%      87%
       Countryside Executive Center      77%       72%      61%
       Leawood Fountain Plaza            97%       89%      92%

For the quarter ended  December 31, 1998,  occupancy at  NorthCreek  Office Park
increased  from 96% at the  beginning  of the  quarter to 100% at the end of the
quarter.  During the  quarter,  two tenants  signed new leases for 2,933  square
feet,  two tenants  renewed  their leases for 3,479 square feet,  and no tenants
vacated.  For the year,  six tenants  signed new leases for 14,506  square feet,
eleven  tenants  renewed their leases for 15,289 square feet,  and three tenants
vacated  5,067  square feet.  NorthCreek  Office Park has one major tenant which
occupies space under two leases which,  together,  comprise 33% of the available
space. These leases both expire in December 2003.

Tower  Industrial  Building is leased by a single  tenant whose lease expires on
April 30,  2000.  The  Registrant  is  currently  working on a renewal with this
tenant.

At Northeast  Commerce  Center,  one tenant signed a new lease for an additional
5,878 square feet and renewed its lease for 17,122  square feet,  and one tenant
vacated  50,000 square feet.  The leasing  activity which occurred in the fourth
quarter was all of the leasing  activity at the property for 1998. As previously
discussed,  the Registrant is working with a local Cincinnati  brokerage firm to
find  replacement  tenant(s)  or to  sell  the one  building  which  is  vacant.
Northeast  Commerce Center has two major tenants which occupy 23% and 19% of the
space with lease  expirations of 2003 and 1999. The tenant  occupying 19% of the
space has notified the Registrant that they will be vacating.  The  Registrant's
brokerage company is working on re-leasing the space.

During the fourth quarter at Countryside  Office Park,  three tenants signed new
leases for 2,529 square feet, two tenants  renewed their leases for 3,905 square
feet, and one tenant vacated 937 square feet.  During 1998,  nine tenants signed
new leases for 16,563 square feet,  seven tenants renewed their leases for 5,417
square feet, and eight tenants  vacated  11,871 square feet.  There is one major
tenant at  Countryside  who occupies 14% of the space with a lease which expires
in 2005.

During the fourth quarter at Leawood  Fountain Plaza,  occupancy  increased from
95% to 97%.  During the quarter,  two tenants signed new leases for 2,567 square
feet,  three tenants renewed their leases for 13,164 square feet, and one tenant
vacated 560 square feet.  During the year, the Registrant signed new leases with

                                      -11-

<PAGE>

seven tenants for 6,743678 square feet, renewed seven tenants' leases for 19,155
square feet,  and three tenants  vacated 2,626 square feet. The property has two
major  tenants,  one who occupies 14% of the space with a lease which expires in
October 2001 and the other major  tenant  occupies 10% of the space with a lease
which expires in July 1999,  respectively.  The Registrant is currently  working
with the tenant whose leases expires duirng 1999 for a long-term renewal.

The  Registrant  reviews  long-lived  assets for impairment  whenever  events or
changes in circumstances indicate that the carrying amount of a property may not
be  recoverable.  The  Registrant  considers a history of operating  losses or a
change in  occupancy  to be primary  indicators  of  potential  impairment.  The
Registrant  deems the  Property to be  impaired  if a forecast  of  undiscounted
future operating cash flows directly related to the Property, including disposal
value, if any, is less than its carrying  amount.  If the Property is determined
to be impaired,  the loss is measured as the amount by which the carrying amount
of the  Property  exceeds its fair value.  Fair value is based on quoted  market
prices  in  active  markets,  if  available.  If quoted  market  prices  are not
available, an estimate of fair value is based on the best information available,
including prices for similar  properties or the results of valuation  techniques
such  as  discounting  estimated  future  cash  flows.  Considerable  management
judgment is necessary to estimate fair value. Accordingly,  actual results could
vary significantly from such estimates.

Year 2000 issues

Information Technology Systems

The Registrant  utilizes  computer  software for its corporate and real property
accounting  records  and to prepare  its  financial  statements,  as well as for
internal  accounting  purposes.  The  vendor of the  Registrant's  software  has
informed the Registrant that it is Year 2000 compliant.  The Registrant believes
after reasonable  investigation that its information technology hardware is Year
2000  compliant.  However,  in the event that such  systems  should  fail,  as a
contingency plan, the Registrant could prepare all required  accounting  entries
manually, without incurring material additional operating expenses.

Non-Information Technology Systems

At the request of the  Registrant,  its property  managers have completed  their
review of the major  date-sensitive  non-information  technology systems such as
the elevators,  heating,  ventilating,  air  conditioning  and cooling  ("HVAC")
systems,  locks, and other like systems in the Registrant's  properties and have
determined that such systems are materially Year 2000 compliant.  In some of the
Registrant's  properties,  its property  managers  have utilized the services of
third-party consultants in making this determination, while in other properties,
the property managers have internally made such  determinations.  The Registrant
does not separately track the internal costs incurred for its Year 2000 project.
The Registrant  does not believe that the Year 2000 issue will pose  significant
problems to the Registrant's  Information technology systems and non-Information
technology systems, or that resolution of any potential problems with respect to
such systems will have a material effect on the Registrant's financial condition
or results of operations.

                                      -12-
<PAGE>

Material Third Parties' Systems Failures

The most reasonably likely worst case scenario facing the Registrant as a result
of the Year 2000 problem  would be the inability of its tenants to pay rent as a
result of a breakdown in such tenants' (or their financial  service  providers')
computer systems or the refusal of such tenants to pay their rent as a result of
the Registrant's inability to provide services due to non-Information technology
systems failure. Failure in a tenant's computer systems may cause delays in such
tenant's  ability to process  its  accounting  records  and to make  timely rent
payments.  However, any such delays in rent payments,  whether caused by systems
failure of tenant, property manager or a combination of the two, should not have
a  materially  adverse  effect  on  the  Registrant's  business  or  results  of
operations.

Risks

While  delays  caused by  failure  of the  tenants'  or the  property  managers'
accounting or supply systems would likely not adversely  affect the Registrant's
business or results of operations, non-Information technology systems failure in
the Registrant's  properties could lead to tenants  attempting to withhold their
rent  payments,   which  could  materially  adversely  effect  the  Registrant's
business, results of operations and financial condition as a result of increased
legal costs.  The  Registrant  believes that such  material  effect is primarily
limited  to  items  of a  utility  nature  furnished  by  third  parties  to the
Registrant  and a wide universe of other  customers.  Included are items such as
electricity,  natural  gas,  telephone  service and water,  all of which are not
readily  susceptible to alternate  sources and which in all likelihood should be
available in some form. The Registrant has been unable to obtain assurances from
such  utility  companies as to their Year 2000  compliance,  and does not expect
that such assurances will be forthcoming.

Such  non-Information  technology systems failure could force tenants to use the
stairs in such  properties,  rather  than the  elevators.  However,  none of the
properties  owned  by the  Registrant  is a  high-rise  building  where  such an
elevator  failure could cause a material adverse effect to the operations of its
tenants, although such failure could make it impossible for any disabled tenants
or any disabled  customers to access such  properties.  Moreover,  as previously
discussed,  the  Registrant  may  suffer  adverse  effects  in  its  results  of
operations and financial condition as a result of utility or HVAC failures,  for
example.  Such events could lead the tenants of the Registrant to withhold rent,
in the event that the Registrant's  properties are not usable for their intended
purposes.  The Registrant does not believe that rent abatement would be a lawful
tenant  remedy for  short-term  obligations  unless such  failures  extend for a
period of 30 consecutive days. The Registrant intends to pursue its remedies for
any such breach of its rent  obligations  by a Tenant  expeditiously  and to the
full extend permitted by law.

1998 Comparisons

For the year ended December 31, 1998,  the  Registrant's  consolidated  revenues
were  $3,680,649  compared to $3,356,773  for the year ended  December 31, 1997.
Revenues increased $323,876 or 10% when comparing the two years. The increase in
revenue  is due  to an  increase  in  base  rental  income  at the  Registrant's
properties as previously described.

For the year ended  December 31, 1998,  consolidated  expenses  were  $3,316,553
compared  to  $3,293,186  for the year ended  December  31,  1997.  Thus,  total
expenses increased $23,367. The increase in expenses was a result of an increase

                                      -13-

<PAGE>

in  depreciation  and  amortization   ($84,450),   an  increase  in  repair  and
maintenance  ($41,342),  and an increase in other operating expenses  ($48,189),
offset  by a  decrease  in  real  estate  taxes  ($63,257),  and a  decrease  in
professional services ($89,196).  Net income was $364,096 as compared to $63,587
for the prior year.  Net cash provided by operating  activities was $643,655 for
the  year  ended  December  31,  1998.  The cash  was  used to  provide  capital
improvements  to the properties of $289,092,  pay  distributions  to partners of
$382,440 and decrease the outstanding balance of the mortgage loan by $100,656.

1997 Comparisons

For the year ended December 31, 1997,  the  Registrant's  consolidated  revenues
were  $3,356,773  compared to $3,509,669  for the year ended  December 31, 1996.
Thus, revenues decreased $152,896 when comparing the two years. This decrease in
revenue is due to a decrease  in base  rental  income at  Countryside  Executive
Center and NorthCreek Office Park.

For the year ended December 31, 1997,  consolidated  expenses were $3,293,186 as
compared to  $3,426,098  for the year ended 1996.  Expenses  decreased  due to a
decrease in real estate tax expense  ($156,800) due to the decreased real estate
tax assessment , a decrease in other  operating  expenses  ($45,874),  partially
offset by an increase in  professional  services  ($92,379).  Net income for the
year ended 1997 was  $63,587 as  compared  to $83,571  for the year ended  1996.
During 1997, net cash provided by operating  activities was $954,807.  This cash
was used to provide  capital  improvements  to the properties of $551,260,  cash
distributions  to partners  were paid in the amount of $254,967,  and  principal
payments on the mortgage loan were made in the amount of $93,468.

Inflation

The effects of inflation  did not have a material  impact upon the  Registrant's
operations  in  fiscal  1998  and are not  expected  to  materially  affect  the
Registrant's operation in l999.

Interest Rates

Interest rates on floating rate debt went down in 1997 and fluctuated throughout
1998,  ending the year lower than the prior year end.  Future  increases  in the
prime interest rate can adversely affect the operations of the Registrant.

                                     -14-

<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Registrant  considered the provision of Financial  Reporting  Release No. 48
"Disclosure of Accounting  Policies for  Derivative  Financial  Instruments  and
Derivative Commodity Instruments, and Disclosure of Quantitative and Qualitative
Information  about Market Risk  Inherent in  Derivative  Financial  Instruments,
Other  Financial   Instruments  and  Derivative  Commodity   Instruments".   The
Registrant had no holdings of derivative  financial or commodity  instruments at
December 31, 1998. A review of the Registrant's other financial  instruments and
risk  exposures at that date revealed that the  Registrant had minor exposure to
interest rate risk due to the floating rate first  mortgage debt of  $6,995,876.
The Registrant utilized  sensitivity  analyses to assess the potential effect of
this risk and  concluded  that  near-term  changes in interest  rates should not
materially  adversely affect the  Registrant's  financial  position,  results of
operations or cash flows.


ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial  Statements of the  Registrant  are filed herewith as Exhibit 99.3 and
are  incorporated  herein by reference (see Item  14(a)(1)).  The  supplementary
financial information specified by Item 302 of Regulation S-K is not applicable.

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

                                      None

                                    PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


The  Registrant has two General  Partners.  The background and experience of the
General Partners are as follows:



The  General  Partner  of the  Registrant  responsible  for all  aspects  of the
Registrant's  operations  is Nooney  Income  Investments  Two,  Inc., a Missouri
corporation. Nooney Income Investments Two, Inc. was formed in November 1984 for
the purpose of being a general  and/or  limited  partner in the  Registrant  and
other limited partnerships.

John J. Nooney is a Special General Partner of the Partnership and as such, does
not exercise control of the affairs of the Partnership.

                                      -15-

<PAGE>

The General  Partners  will  continue to serve as General  Partners  until their
withdrawal or their removal from office by the Limited Partners.

Certain of the  General  Partners  act as general  partners of limited
partnerships  and hold  directorships  of companies  with a class of  securities
registered  pursuant to Section 12(g) of the Securities  Exchange Act of 1934 or
subject  to the  requirements  of  Section  15(d)  of the  Act.  A list  of such
directorships, and the limited partnerships for which the General Partners serve
as general partners,  is filed herewith as Exhibit 99.1 and incorporated  herein
by reference.


ITEM 11: EXECUTIVE COMPENSATION

The General  Partners  are entitled to a share of  distributions  and a share of
profits and losses as more fully described under the headings  "Compensation  to
General  Partners and Affiliates" on pages 26-27 and "Profits and Losses for Tax
Purposes; Distributions; and Expenses of General Partners" on pages A-17 to A-22
of the Prospectus of the Registrant dated February 15, 1985, as supplemented and
filed pursuant to Rule 424(c) of the Securities Act of 1933 (the  "Prospectus"),
which are incorporated herein by reference.

During 1998, cash  distributions of $22,046 were paid to the General Partners by
the Registrant.

See Item 13 below for a discussion of  transactions  between the  Registrant and
certain affiliates of the General Partners.



ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners.

On or about November 20, 1997, a Schedule 13D ("Schedule 13D") setting forth the
following  information  was filed  with the SEC by  Everest  Properties  II, LLC
("Everest"),  Millenium  Investors,  LLC ("Millenium")  and KM Investments,  LLC
("KM").  The Schedule 13D indicates that Everest is the beneficial  owner of 929
Interests,  or approximately 4.8% of the total outstanding  Interests,  and that
Everest has sole voting power and sole dispositive  power with respect to all of
such Interests.  The Schedule 13D also indicates that KM is the beneficial owner
of 929 Interests, or approximately 4.8% of the total outstanding Interests,  and
that KM has sole voting power and sole dispositive  power with respect to all of
such  Interests.  The  Schedule  13D further  indicates  that  Millenium  is the
beneficial  owner  of  121  Interests,   or  approximately  0.6%  of  the  total
outstanding Interests, and has sole voting power and sole dispositive power with
respect to all of such  Interests.  The Schedule 13D reports that Everest serves
as the manager of each of  Millenium  and KM and that  because it serves in such
capacity for KM and because it owns a majority  interest in the majority  member
of KM, it may be deemed to beneficially own the Interests  directly owned by KM.
[The Schedule 13D indicates that although each of Everest, Millenium and KM deny
that they are  members of a "group" as that term  is used in Section 13(d)(3) of
the  Securities  Exchange Act of 1934,  as amended  (the  "Exchange  Act"),  the

                                      -16-
<PAGE>

Schedule  13D was  filed as a  precaution  because  the  individuals  performing
management services for Everest Properties,  LLC, which owns a majority interest
in Everest, and Everest are substantially the same and such entities have agreed
to  submit  a joint  proposal  for the sale of their  Interests  to the  General
Partner and to share  information  regarding such proposal.  Section 13(d)(3) of
the Exchange Act  provides  that when two or more persons act as a  partnership,
limited  partnership,  syndicate  or other group for the  purpose of  acquiring,
holding,  or disposing of securities of an issuer, such syndicate or group shall
be deemed a  "person"  for  purposes  of filing  Schedule  13D].  The  principal
business  address of each of each of Everest,  Millenium and KM is 199 South Los
Robles Avenue, Suite 440, Pasadena, California 91101.

(b)  Security Ownership of Management.

None of the General  Partners is known to the  Registrant  to be the  beneficial
owner, either directly or indirectly, of any Interests in the Registrant.


(c)  Changes in Control.

There are no arrangements known to the Registrant, the operation of which may at
a subsequent date result in a change in control of the Registrant.


ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)  Transactions with Management and Others.

Certain  affiliates  of the General  Partners  are  entitled to certain fees and
other payments from the Registrant in connection  with certain  transactions  of
the  Registrant  as more fully  described  under the headings  "Compensation  to
General  Partners and Affiliates" on pages 26-27 and "Management" on pages 23-25
of the Prospectus, which are incorporated herein by reference.

Nooney,  Inc.,  the manager of the  Registrant's  properties,  is a wholly-owned
subsidiary  of CGS Real Estate  Company,  an affiliate  of the General  Partner.
Nooney, Inc. is entitled to receive monthly compensation from the Registrant for
property management and leasing services, plus administrative  expenses.  During
fiscal 1998 the Registrant paid property  management fees of $215,198 to Nooney,
Inc. and $40,000 as reimbursement  for indirect  expenses incurred in connection
with management of the Registrant.

See Item 11 above for a  discussion  of cash  distributions  paid to the General
Partners during the year ended December 31, 1998.

                                      -17-
<PAGE>

(b)  Certain Business Relationships.

The  relationship  of  certain  of the  General  Partners  to  certain  of their
affiliates  is set forth in Item 13(a)  above.  Also see Item 13(a)  above for a
discussion of amounts paid by the  Registrant  to the General  Partners or their
affiliates  during the year ended  December 31, 1998 in connection  with various
transactions.

(c) Indebtedness of Management.

Not Applicable.

(d) Transactions with promoters.

Not Applicable.

                                       -18-
<PAGE>

                                     PART IV


ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
         AND REPORTS ON FORM 8-K

(a)      The following documents are filed as a part of this report:

           1.   Financial Statements (filed herewith as Exhibit 99.3):

                Independent auditors' report
                Balance sheets
                Statements of operations
                Statements of partners' equity (deficit)
                Statements of cash flows
                Notes to financial statements

           2.   Financial Statement Schedules (filed herewith as Exhibit 99.3):

                Schedule - Reconciliation of partners' equity (deficit)
                Schedule III - Real estate and accumulated depreciation

                All other  schedules  are  omitted  because  they are
                inapplicable or not required under the instructions.

           3.   Exhibits:

                See Exhibit Index on Page 21.

(b)      Reports on Form 8-K

         During  the last  quarter of the period  covered  by this  report,  the
         Registrant filed no reports on Form 8-K.

(c)      Exhibits:

         See Exhibit Index on Page 21.

(d)      Not applicable.

                                      -19-
<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.

                                         NOONEY INCOME FUND LTD. II, L.P.



Date:         March 31, 1999             Nooney Income Investments Two, Inc.
      -----------------------------      General Partner                        


                                         By:/s/ William J. Carden   
                                            William J. Carden - Director
                                            Chairman of the Board and
                                            Chief Executive Officer



                                         By:/s/ Gregory J. Nooney, Jr.      
                                            Gregory J. Nooney, Jr. - Director
                                            Vice Chairman

                                         BEING A MAJORITY OF THE DIRECTORS
                                         OF NOONEY INCOME INVESTMENTS TWO, INC.

                                      -20-

<PAGE>


                                  EXHIBIT INDEX


Exhibit
Number                             Description

 3          Amended and Restated Agreement and Certificate of Limited
            Partnership dated February 3, 1986, is incorporated by
            reference to the Registrant's Annual Report on Form 10-K
            for the fiscal year ended October 31, 1986, as filed
            pursuant to Rule 13a-1 of the Securities Exchange Act of
            1934 (File No. 0-14360).

10          Management Contract between Nooney Income Fund Ltd. II
            and Nooney Management Company (now Nooney, Inc.)
            dated March 12, 1985, is incorporated by reference to the
            Registrant's Annual Report on Form 10-K for the fiscal year
            ended October 31, 1985, as filed pursuant to Rule 15d-1 of
            the Securities Exchange Act of 1934 (File No. 2-94533).

99.1        List of Directorships filed in response to Item 10.

99.2        Pages 23-27 and A-17 - A-22 of the Prospectus of the
            Registrant dated February 15, 1985, as supplemented and
            filed pursuant to Rule 424(c) of the Securities Act of
            1933 are incorporated by reference.

99.3        Financial Statements and Schedules.

                                      -21-