UNITED STATES
                                           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
                  ACT OF 1934 [FEE REQUIRED]

                  For the fiscal year ended       December 31, 1998

                                                           OR

 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                0-16817

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

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


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

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

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

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

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

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

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

Documents incorporated by reference: See Part IV, Item 14

The exhibit index is located on pages 9-12.


<PAGE>



                                                            -13-



                                                       PART I

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


ITEM 1.  BUSINESS

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

   The Partnership's  investments in PIMs on multi-family residential properties
consist of a MBS (the "insured  mortgage")  guaranteed as to principal and basic
interest.  These  insured  mortgages  were  issued  or  originated  under  or in
connection with the housing  programs of Fannie Mae and the Government  National
Mortgage  Association  ("GNMA").  PIMs  provide  the  Partnership  with  monthly
payments of  principal  and basic  interest  and also  provide  for  Partnership
participation  in the current revenue stream and in residual value, if any, from
a sale or other  realization of the underlying  property.  The borrower  conveys
these  rights to the  Partnership  through a  subordinated  promissory  note and
mortgage. The participation features are neither insured nor guaranteed.

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

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

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

   The requirements for compliance with federal,  state and local regulations to
date have not had an  adverse  effect on the  Partnership's  operations,  and no
adverse effect is anticipated in the future.

   As of December 31, 1998,  there were no  personnel  directly  employed by the
Partnership.


<PAGE>



ITEM 2.  PROPERTIES

   None

ITEM 3.  LEGAL PROCEEDINGS

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

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

   None.

                                                       PART II

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

   There currently is no established trading market for the Units.

   The  number  of  investors   holding  Units  as  of  December  31,  1998  was
approximately  15,000.  One of the  objectives of the  Partnership is to provide
quarterly  distributions of cash flow generated by its investments in mortgages.
The  Partnership  anticipates  that future  operations will continue to generate
cash available for  distribution.  Adjustments  may be made to the  distribution
rate in the future due to realization and payout of the existing mortgages.

   During 1998, the Partnership made special distributions  consisting primarily
of principal  proceeds from the Walden Village,  Longwood Villas,  Harbor House,
Westbrook  Manor,  Fallwood and Greenbrier PIM  prepayments and the repayment of
the Brookside and Lily Flagg multi-family MBS's.

   During 1997, the Partnership made special distributions  consisting primarily
of  principal  proceeds  from the  Lakeside,  Colonial  Park and Pine  Ridge PIM
prepayments,  The  Partnership may make special  distributions  in the future if
PIMS  prepay  or a  sufficient  amount  of cash is  available  from  MBS and PIM
principal collections.

   The Partnership made the following distributions,  to its Partners during the
two years ended December 31, 1998 and 1997:

<TABLE>
<CAPTION>
                                                      1998                          1997
                                             ---------------------         -------------
                                                Amount    Per Unit            Amount    Per Unit

Distributions:
  <S>                                          <C>             <C>             <C>                <C>  
   Limited Partners                            $16,414,173     $1.12           $16,414,173        $1.12
   General Partners                                385,355                         436,626
                                               -----------                     -----------

                                               $16,799,528                     $16,850,799
                                               -----------                     -----------

Special Distributions:
      Limited Partners                          56,716,830     $3.87            24,767,815        $1.69
                                               -----------                     -----------

Total Distributions                            $73,516,358                     $41,618,614
                                               ===========                     ===========

</TABLE>


ITEM 6.  SELECTED FINANCIAL DATA

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



<PAGE>



<TABLE>
<CAPTION>
                                       1998                 1997                 1996               1995                  1994
                                       ----                 ----                 ----               ----                  ----

<S>                                  <C>                  <C>                   <C>                   <C>               <C>        
Total revenues                       $15,335,618          $ 16,672,558          $ 15,855,280          $ 16,366,468      $18,874,538

Net income                            12,017,670            12,972,600            12,331,212            12,656,200       14,147,772

Net income allocated to:

   Limited Partners                   11,657,140            12,583,422            11,961,276            12,276,514       13,723,339
   Average per Unit                        .80                   .86                   .82                   .84                .94

  General Partners                       360,530               389,178               369,936               379,686          424,433

  Total assets at
   December 31                       117,626,762          180,126,977            207,552,419           212,789,466      215,697,082

Distributions to:
   Limited Partners                   16,414,173            16,414,173            16,414,171            16,414,173       21,738,336
   Average per Unit                       1.12                  1.12                  1.12                  1.12               1.48

    Special                           56,716,830            24,767,815                  -                   -            17,293,504

    Average per Unit                      3.87                  1.69                    -                   -                 1.18

   General Partners                      385,355               436,626               432,214               430,359          476,952

</TABLE>

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

    Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  contains  forward-looking   statements  including  those  concerning
Management's  expectations regarding the future financial performance and future
events.   These   forward-looking   statements  involve   significant  risk  and
uncertainties,  including  those  described  herein.  Actual  results may differ
materially from those anticipated by such forward-looking statements.

    The General  Partners of the Partnership have conducted an assessment of the
Partnership's core internal and external computer  information  systems and have
taken the further  necessary  steps to  understand  the nature and extent of the
work  required to make its systems Year 2000 ready in those  situations in which
it is required to do so. The Year 2000 readiness issue concerns the inability of
computerized  information systems to accurately  calculate,  store or use a date
after 1999.  This could result in a system  failure or  miscalculations  causing
disruptions of operations.  The Year 2000 issue effects  virtually all companies
and all organizations.

  In this regard,  the General Partners of the  Partnership,  along with certain
affiliates,  began a computer systems project in 1997 to  significantly  upgrade
its existing hardware and software.  The General Partners  completed the testing
and conversion of the financial  accounting  operating systems in February 1998.
As a result,  the General  Partners have generated  operating  efficiencies  and
believe their financial  accounting  operating  systems are Year 2000 ready. The
General  Partners  of  the  Partnership  incurred  hardware  costs  as  well  as
consulting  and other  expenses  related to the  infrastructure  and  facilities
enhancements  necessary  to complete  the upgrade and prepare for the Year 2000.
There are no other significant internal systems or software that the Partnership
is using at the present time.

   The General  Partners of the Partnership are in the process of evaluating the
   potential  adverse  impact  that could  result  from the  failure of material
   third-party  service  providers  (including  but not limited to its banks and
   telecommunications  providers) and significant vendors to be Year 2000 ready.
   The Trust is in the process of  surveying  these third  party  providers  and
   assessing  their  readiness with year 2000. To date,  the  Partnership is not
   aware of any problems that would materially impact its results of operations,
   liquidity or capital resources. However, the Partnership has not yet obtained
   all written assurances that these providers would be Year 2000, ready.

   The Partnership  currently does not have a contingency plan in the event of a
  particular  provider  or system not being Year 2000  ready.  Such plan will be
  developed  if it becomes  clear that a  provider  is not going to achieve  its
  scheduled readiness objectives by June 30, 1999. The inability of one of these
  providers  to  complete  its Year 2000  resolution  process  could  impact the
  Partnership.  In addition,  the Partnership is also subject to external forces
  that might  generally  affect  industry  and  commerce,  such as  utility  and
  transportation  company  Year 2000  readiness  failures  and  related  service
  interruptions.  To date, the  Partnership has not incurred any cost associated
  with  being  Year 2000  ready.  All costs have been  incurred  by the  General
  Partners and it is estimated that any future Year 2000 readiness costs will be
  borne by the General Partners.

    Liquidity and Capital Resources

    The most significant demands on the Partnership's  liquidity are the regular
    quarterly  distributions paid to investors,  approximately $4.2 million each
    quarter.  Funds  for  the  investor  distributions  come  from  the  monthly
    principal and basic interest  payments received on the PIMs and the MBS, the
    principal  prepayments  of the PIMs  and MBS,  and  interest  earned  on the
    Partnership's  cash and cash equivalents.  In general,  the General Partners
    try  to  set  a  distribution   rate  that  provides  for  level   quarterly
    distributions  of  cash  available  for  distribution.  To the  extent  that
    quarterly  distributions  do  not  fully  utilize  the  cash  available  for
    distribution and cash balances increase, the General Partners may adjust the
    distribution  rate or distribute such funds through a special  distribution.
    The  portion of  distributions  attributable  to the  principal  collections
    reduces the capital  resources of the Partnership.  As the capital resources
    decrease,  the total cash flows to the  Partnership  also will  decrease and
    over time will result in periodic  adjustments to the distributions  paid to
    investors. The General Partners periodically review the distribution rate to
    determine  whether an adjustment is necessary based on projected future cash
    flows.  At  this  time  the  General   Partners  have  determined  that  the
    Partnership can maintain its current distribution rate of $1.12 per Unit per
    year.

    During 1998, the Partnership made six special  distributions  and during the
    first  quarter  of 1999 the  Partnership  anticipates  making an  additional
    special  distribution  due  to  PIM  prepayments  and  an  insured  mortgage
    prepayment.  The Partnership  made special  distributions of $.94, $1.63 and
    $1.30 per Unit in March 1998, July 1998 and December 1998, respectively. The
    March 1998 special  distribution  consisted of the prepayment  proceeds from
    the  Fallwood,  Greenbrier  and  Westbrooks  PIMs.  The  July  1998  special
    distributions  consisted of the prepayment proceeds from the Longwood Villas
    and Harbor House PIMs and the prepayment proceeds from the Brookside insured
    mortgage.   The  December  1998  special  distributions   consisted  of  the
    prepayment  proceeds from the Walden  Village PIM and the Lily Flagg insured
    mortgage.  The  Partnership  anticipates  making a $1.97  per  Unit  special
    distribution  during the first quarter of 1999 with the prepayment  proceeds
    of the Carlyle,  Hillside,  Stanford and Waterford  Court PIMs.  The General
    Partners expect that there will be more prepayments  during 1999. The owners
    of Country  Meadows and Saratoga have both notified the General  Partners of
    their  intentions to refinance  their  properties  if favorable  refinancing
    conditions persist. The General Partners also expect the Greenhouse PIM will
    be  prepaid  during the  fourth  quarter  1999.  The first  mortgage  lender
    foreclosed on the property  during  January 1999 as a result of a continuing
    default.  The first mortgage lender expects to sell the property by year-end
    when the Partnership will receive the entire principal  balance remaining on
    the PIM but will not receive any participation  income.  The Partnership has
    received its full principal and basic interest payments due on the PIM while
    the  underlying  first  mortgage  loan has  been in  default  because  those
    payments are guaranteed by GNMA.In the event of further PIM prepayments, the
    General Partners may determine that an adjustment to the  distribution  rate
    will be  necessary  to  reflect  the  reduced  future  cash  flows  from the
    remaining mortgage investments.

    In addition to providing  insured or guaranteed  monthly principal and basic
    interest  payments,  the  Partnership's  PIM  investments  also may  provide
    additional  income  through  its  participation  feature  in the  underlying
    properties if they operate successfully. The Partnership may receive a share
    in any operating cash flow that exceeds debt service obligations and capital
    needs or a share in any  appreciation  in value when the properties are sold
    or  refinanced.  However,  this  participation  is  neither  guaranteed  nor
    insured,  and  it is  dependent  upon  whether  property  operations  or its
    terminal value meet certain criteria.  During 1998, the Partnership received
    a total of $1,361,968 in participation  income from operating cash flow that
    exceeded  the  established  thresholds  from  eight of its PIM  investments:
    Carlyle Court, Longwood Villas,  Stanford Court, Walden Village,  Westbrook,
    Fallwood,  Greenbrier and Waterford  Court.  The Partnership also received a
    total of $2,390,707 in prepayment penalties and participation income related
    to sale or refinance value from Carlyle Court, Fallwood,  Greenbrier, Harbor
    House,  Hillside Court,  Longwood  Villas,  Stanford Court,  Walden Village,
    Westbrook and Waterford Court PIM's and the Lily Flagg and Brookside MBS.

    Most of the  properties  had stable  operating  results  during  1998.  High
    occupancy  rates were  maintained at most of the properties due to stable or
    improving markets. However, as many of the properties have aged, rental rate
    increases  have not kept  pace  with the  increasing  costs of  maintenance,
    repairs and replacements.  Consequently,  the General Partners do not expect
    that the Partnership will receive significant  participation income from the
    operations of the properties that remain in the portfolio.

    During the first five years,  owners are prohibited from prepaying the first
    mortgage loans underlying the PIMs. During the second five years, owners may
    prepay the loans by incurring a prepayment penalty.  The Partnership has the
    option to call certain PIMs by  accelerating  their maturity if they are not
    prepaid by the tenth year after permanent funding. The General Partners will
    determine the merits of exercising  the call option for each PIM as economic
    conditions warrant. Such factors as the condition of the asset, local market
    conditions, the interest rate environment and availability of financing will
    affect those decisions.

    Assessment of Credit Risk

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

    Fannie Mae is a federally  chartered  private  corporation  that  guarantees
    obligations  originated under its programs.  FHLMC is a federally  chartered
    corporation that guarantees obligations originated under its programs and is
    wholly-owned  by the twelve Federal Home Loan Banks.  These  obligations are
    not  guaranteed by the U.S.  Government or the Federal Home Loan Bank Board.
    GNMA  guarantees  the timely  payment of principal and basic interest on the
    securities it issues,  which represents interest in pooled mortgages insured
    by HUD.  Obligations insured by HUD, an agency of the U.S.  Government,  are
    backed by the full faith and credit of the U.S. Government.

    Operations

    The following  discussion  relates to the operation of the  Partnership 
    during the years ended  December 31, 1998,  1997 and 1996.

<TABLE>
<CAPTION>
                                                                      (Amounts in thousands)
                                                                1998            1997               1996
         Interest income on PIMs:
         <S>                                               <C>                  <C>                 <C>    
         Basic interest                                    $7,417               $11,090             $12,070
         Participation income                               3,753                 1,816                  32
         Interest income on MBS
          and insured mortgages                             3,083                 3,099               3,366
         Other interest income                              1,083                   668                 387
         Partnership expenses                              (1,287)               (1,793)             (1,778)
         Amortization of prepaid fees and
          expenses                                         (2,031)               (1,907)             (1,746)
                                                           -------              -------             -------

              Net Income                                  $12,018               $12,973             $12,331
                                                          =======               =======             =======
</TABLE>

Net income decreased by approximately  $955,000 during 1998 as compared to 1997.
This decrease was due primarily to significantly lower basic interest on PIMs of
approximately   $3,673,000.   This  was   partially   offset  by   increases  in
participation  income of  approximately  $1,937,000,  other  interest  income of
approximately  $415,000 and a decrease in Partnership  expenses of approximately
$506,000.  The significant  decrease in basic interest on PIMs was caused by the
prepayments of the Westbrook Manor, Fallwood,  Greenhouse,  Harbor House, Walden
Village and Longwood  Villas PIMs during 1998 and  Lakeside,  Colonial  Park and
Pine Ridge PIMs during 1997. The Partnership  realized a significant increase in
participation  income due primarily to Shared Appreciation Income and prepayment
premiums  realized from the 1998 PIM prepayments of the Harbor House,  Westbrook
Manor, Fallwood,  Greenbrier, Walden Village and Longwood Villas Apartment PIMs,
and the  Brookside  and Lily  Flagg MBS as  compared  to the 1997  Lakeside  PIM
prepayment.  The  Partnership  also  realized  Shared  Income  Interest from the
Fallwood,  Greenbrier,  Westbrook Manor, Stanford, Carlyle, Waterford and Walden
Village  Apartment  PIMs  which  exceeded  the  amount of  participation  income
realized  during  the same  period  of 1997.  Interest  income  on cash and cash
equivalents  increased due to the Partnership  having higher average  short-term
investment balances as a result of the prepayments mentioned above. The decrease
in  Partnership  expenses was due to a decrease in asset  management  fees which
were a result of the 1998 PIM prepayments mentioned above that reduced the asset
base. Also, the Partnership received a rebate for expense reimbursements related
to 1997  during the second  quarter  of 1998.  Interest  income on MBS and basic
interest income on PIMs will continue to decline as principal collections reduce
the outstanding  balance of these  investments.  As the Partnership  distributes
principal   collections   on  MBS  and  PIMs   through   quarterly   or  special
distributions,  the invested assets of the Partnership will decline which should
result in a continuing decline in net income.

Net income increased during 1997 as compared to 1996 by approximately  $642,000.
This increase was primarily due to higher participation income, offset partially
by lower basic interest and higher amortization  expense directly related to the
prepayments  of the  Lakeside,  Colonial and Pine Ridge  Apartment  PIMs.  Basic
interest income on PIMs decreased by approximately  $980,000 in 1997 as compared
to 1996 as a result of prepayments on three PIMs and a general  reduction in the
invested  assets in the  Partnership  attributed  to the  receipt  of  principal
payments.  Subsequently,  special  distributions  were made from the Partnership
using the prepayment proceeds. An increase in participation income of $1,784,000
was primarily a result of receiving Shared Appreciation  Interest and prepayment
penalities  totaling  $603,000,  Shared  Income  Interest of  $507,000  from the
prepayments of the Lakeside,  Colonial Park and Pine Ridge  Apartments  PIMs and
Shared  Income  Interest of $706,000 from seven of the  Partnership's  remaining
PIMs.


ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    See Appendix A to this report.


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

    None.

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

                                                        Position with
                    Name and Age                     Krupp Plus Corporation

                   Douglas Krupp (52)              President, Co-Chairman of 
                                                   the Board and Director
                   George Krupp (54)       Co-Chairman of the Board and Director
                   Peter F. Donovan (45)            Senior Vice President
                   Ronald Halpern (57)              Senior Vice President
                   Carol Mills (49)                 Vice President
                   Robert A. Barrows (41)           Vice President and Treasurer

      Douglas Krupp  co-founded  and serves as Co-Chairman  and Chief  Executive
Officer of The Berkshire  Group,  an integrated real estate  financial  services
firm  engaged in real  estate  acquisition  and  property  management,  mortgage
banking and  financial  management.  The  Berkshire  Group's  interests  include
ownership of a mortgage company  specializing in commercial  mortgage  financing
with a portfolio of approximately $6.0 billion. In addition, The Berkshire Group
has  a  significant   ownership  interest  in  Berkshire  Realty  Company,  Inc.
(NYSE-BRI),   a  real  estate   investment   trust   specializing  in  apartment
investments.  Mr. Krupp has held the position of Co-Chairman since The Berkshire
Group was  established  as The Krupp  Companies in 1969 and he has served as the
Chief  Executive  Officer since 1992.  Mr. Krupp serves as Chairman of the Board
and Director of  Berkshire  Realty  Company,  Inc.  (NYSE-BRI)  and he is also a
member of the Board of Trustees at Brigham & Women's Hospital.  He is a graduate
of Bryant  College  where he received an honorary  Doctor of Science in Business
Administration in 1989 and was elected trustee in 1990. Mr. Krupp also serves as
Chairman of the Board and  Trustee of Krupp  Government  Income  Trust and Krupp
Government Income Trust II.

      George Krupp is the Co-Founder and Co-Chairman of The Berkshire  Group, an
integrated  real  estate   financial   services  firm  engaged  in  real  estate
acquisition, mortgage banking, investment sponsorship, venture capital investing
and financial  management.  Mr. Krupp has held the position of Co-Chairman since
The Berkshire  Group was  established as The Krupp  Companies in 1969. Mr. Krupp
has been an  instructor  of history at the New Jewish  High  School in  Waltham,
Massachusetts  since  September of 1997.  Mr. Krupp  attended the  University of
Pennsylvania and Harvard  University and holds a Master's Degree in History from
Brown University.

      Peter F. Donovan is Chief Executive Officer of Berkshire  Mortgage Finance
which  position  he has held  since  January  of 1998 and in this  capacity,  he
oversees the  strategic  growth plans of this mortgage  banking firm.  Berkshire
Mortgage Finance is the 16th largest in the United States based on servicing and
asset  management  of a $6.0 billion  loan  portfolio.  Previously  he served as
President of Berkshire  Mortgage Finance from January of 1993 to January of 1998
and in that  capacity he directed the  production,  underwriting,  servicing and
asset  management  activities  of the firm.  Prior to that,  he was Senior  Vice
President  of  Berkshire   Mortgage   Finance  and  was   responsible   for  all
participating  mortgage  originations.  Before  joining the firm in 1984, he was
Second Vice  President,  Real Estate Finance for Continental  Illinois  National
Bank & Trust,  where he managed a $300 million  construction  loan  portfolio of
commercial  properties.  Mr. Donovan received a B.A. from Trinity College and an
M.B.A.
degree from Northwestern University.

      Ronald  Halpern  (age  57) is  President  and  COO of  Berkshire  Mortgage
Finance.  He has  served in these  positions  since  January of 1998 and in this
capacity, he is responsible for the overall operations of the Company.  Prior to
January of 1998, he was Executive  Vice  President,  managing the  underwriting,
closing,  portfolio management and servicing  departments for Berkshire Mortgage
Finance.  Before joining the firm in 1987, he held senior  management  positions
with the  Department of Housing and Urban  Development  in  Washington  D.C. and
several HUD regional  offices.  Mr.  Halpern has over 30 years of  experience in
real estate finance. He is currently a member of the Advisory Council for Fannie
Mae and  Freddie  Mac and was  prior  Chairman  of the MBA  Multifamily  Housing
Committee.  He holds a B.A.  degree from the  University of the City of New York
and J.D. degree from Brooklyn Law School.

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

      Carol J.C. Mills is Senior Vice President for Loan Management of Berkshire
Mortgage  Finance and in this capacity,  she is responsible  for the Loan  
Servicing and Asset Management functions of the Boston,  Bethesda and Seattle  
offices of Berkshire Mortgage Finance. She manages the estimated $6 billion  
portfolio of loans. Ms.Mills joined Berkshire in December 1997 as Vice President
and was promoted to Senior Vice  President in January 1999.  From January 1989 
through November 1997, Ms. Mills was Vice  President of First  Winthrop  
Corporation and Winthrop Financial  Associates, in Cambridge, MA. Ms. Mills 
earned a B.A.degree from Mount Holyoke College and a Master of  Architecture  
degree from Harvard  University.  Ms. Mills is a member of the Real Estate
Finance Association, New England Women in Real Estate and the Mortgage Bankers 
Association.

ITEM 11.      EXECUTIVE COMPENSATION

          The Partnership has no directors or executive officers.

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          As of December 31, 1998, no person owned of record or was known by the
      General  Partners to own  beneficially  more than 5% of the  Partnership's
      14,655,512 outstanding Units. The only interests held by management or its
      affiliates  consist of its General  Partner and Corporate  Limited Partner
      Interests.

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Information  required  under this Item is  contained  in Note F to the
      Partnership's  Notes To  Financial  Statements  presented in Appendix A to
      this report.

                                     PART IV

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

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

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

(b)  Exhibits:

     Number and Description
     Under Regulation S-K

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

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

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


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

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

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

     (10)   Material Contracts:

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


            Le Coeur du Monde Apartments

            (10.2)      Prospectus  for GNMA Pools No.  257721 (CS) and 257722 
                       (PN).  [Exhibit  19.10 to  Registrant's  Report on
                       Form 10-Q for the quarter ended June 30, 1988 (File No. 
                       0-16817)].*

            (10.3)      Subordinated   Multi-Family   Open-End   Deed  of  Trust
                        (including  Subordinated  Promissory Note) dated May 11,
                        1988 between Le Coeur du Monde Limited  Partnership  and
                        Krupp  Insured  Plus-II  Limited  Partnership.  [Exhibit
                        19.11  to  Registrant's  Report  on  Form  10-Q  for the
                        quarter ended June 30, 1988 (File No.
                        0-16817)].*

            Country Meadows Apartments

            (10.4)      Prospectus  for GNMA Pools No.  260733 (CL) and 260734 
                       (PN).  [Exhibit  19.18 to  Registrant's  Report on
                        Form 10-Q for the quarter ended September 30, 1988 
                       (File No. 0-16817)].*

            (10.5)      Subordinated   Multifamily   Deed  of  Trust  (including
                        Subordinated   Promissory  Note)  dated  June  15,  1988
                        between Country  Meadows  Limited  Partnership and Krupp
                        Insured Plus-II Limited  Partnership.  [Exhibit 19.19 to
                        Registrant's  Report on Form 10-Q for the quarter  ended
                        September 30, 1988 (File No. 0-16817)].*

            Denrich Apartments

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

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


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

            The Greenhouse

            (10.9)      Prospectus  for GNMA Pools No.  259233(CS) and
                        259234(PN)  [Exhibit 19.1 to  Registrant's  Report on 
                        Form 10-Q for the quarter ended March 31, 1989 (File No.
                        0-16817)].*

            (10.10)     Subordinated   Multifamily   Deed  of  Trust  (including
                        Subordinated  Promissory  Note)  dated  January  5, 1989
                        between Farnam Associates Limited  Partnership and Krupp
                        Insured  Plus-II Limited  Partnership.  [Exhibit 19.2 to
                        Registrant's  Report on Form 10-Q for the quarter  ended
                        March 31, 1989 (File No. 0-16817)].*

            Richmond Park Apartments

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

            (10.12)     Subordinated  Multifamily Open-Ended Mortgage (including
                        Subordinated   Promissory  Note)  dated  July  14,  1989
                        between Carl Milstein,  Trustee,  Irwin  Obstgarten,  Al
                        Simon and Krupp  Insured  Plus-II  Limited  Partnership.
                        [Exhibit  2 to  Registrant's  Report  on Form 8-K  dated
                        August 30, 1989 (File No. 0-16817)]*

            (10.13)     Participation  Agreement  dated July 31, 1989 between  
                        Krupp Insured  Mortgage  Limited  Partnership  and
                        Krupp Insured Plus-II  Limited  Partnership.  [Exhibit 
                        3 to Registrant's  Report on Form 8-K dated August
                        30, 1989 (File No. 0-16817)].*

            Saratoga Apartments

            (10.14)     Prospectus for GNMA Pool No. 280643 (Pl) [Exhibit 4 to 
                        Registrant's  Report on Form 8-K dated August 30,
                        1989 (File No. 0-16817)].*

            (10.15)     Subordinated     Multifamily     Mortgage     (including
                        Subordinated   Promissory  Note)  dated  July  27,  1989
                        between  American  National  Bank and Trust  Company  of
                        Chicago,  as Trustee and Krupp Insured  Mortgage Limited
                        Partnership.  [Exhibit 5 to Registrant's  Report on Form
                        8-K dated August 30, 1989 (File No. 0-16817)].*

            (10.16)     Participation  Agreement dated July 31, 1989 between 
                        Krupp Insured Plus-II Limited  Partnership and Krupp
                        Insured  Mortgage  Limited  Partnership.  [Exhibit 6 to
                        Registrant's  Report on Form 8-K dated August 30,
                        1989 (File No. 0-16817)].*

            Carlyle Court

            (10.17)     Prospectus for FNMA Pool No. MX-073004 [Exhibit 10.50 to
                        Registrant's  Annual  Report on Form 10-K for the fiscal
                        year ended December 31, 1989 (file No. 0-16817)].*

            (10.18)     Subordinated     Multifamily     Mortgage     (including
                        Subordinated  Promissory  Note) dated September 26, 1989
                        between Carlyle-XI,  L.P. an Indiana limited partnership
                        and Krupp Insured Plus-II Limited  Partnership  [Exhibit
                        10.51 to Registrant's Annual Report on Form 10-K for the
                        fiscal   year  ended   December   31,   1989  (File  No.
                        0-16817)].*

            Hillside Court

            (10.19)     Prospectus for FNMA Pool No. MX-073003 [Exhibit 10.52 to
                        Registrant's  Annual  Report on Form 10-K for the fiscal
                        year ended December 31, 1989 (File No. 0-16817)].*

            (10.20)     Subordinated     Multifamily     Mortgage     (including
                        Subordinated  Promissory  Note) dated September 16, 1989
                        between  Hillside  Limited  Partnership-IX,  an  Indiana
                        limited  partnership  and Krupp Insured  Plus-II Limited
                        Partnership [Exhibit 10.53 to Registrant's Annual Report
                        on Form 10-K for the fiscal year ended December 31, 1989
                        (File No. 0-16817)].*

            Stanford Court

            (10.21)     Prospectus for FNMA Pool No. MX-073002 [Exhibit 10.54 to
                        Registrant's  Annual  Report on Form 10-K for the fiscal
                        year ended December 31, 1989 (File No. 0-16817)].*

            (10.22)     Subordinated     Multifamily     Mortgage     (including
                        Subordinated  Promissory  Note) dated September 26, 1989
                        between  Hillside  Limited  Partnership-IX,  an  Indiana
                        limited  partnership  and Krupp Insured  Plus-II Limited
                        Partnership [Exhibit 10.55 to Registrant's Annual Report
                        on Form 10-K for the fiscal year ended December 31, 1989
                        (File No. 0-16817)].*

            Waterford Court

            (10.23)     Prospectus for FNMA Pool No. MX-073005 [Exhibit 10.56 to
                        Registrant's  Annual  Report on Form 10-K for the fiscal
                        year ended December 31, 1989 (File No. 0-16817)].*

            (10.24)     Subordinated     Multifamily     Mortgage     (including
                        Subordinated  Promissory  Note) dated September 26, 1989
                        between  Waterford-VIII,  an Indiana limited partnership
                        and Krupp Insured Plus-II Limited  Partnership  [Exhibit
                        10.57 to Registrant's Annual Report on Form 10-K for the
                        fiscal   year  ended   December   31,   1989  (File  No.
                        0-16817)].*

      * Incorporated by reference.

(c)  Reports on Form 8-K

            During the last quarter of the year ended  December  31,  1998,  the
Partnership did not file any reports on Form 8-K.


<PAGE>


                                                     SIGNATURES

     Pursuant  to the  requirements  of Section  13 or 15 (d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto  duly  authorized,  on the 5th day of
February, 1999.

                                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                           By: Krupp Plus Corporation,
                               a General Partner



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


     Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated, on the 5th day of February, 1999.

            Signatures  Title(s)


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

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

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


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


<PAGE>



                                                           F-19





                                         APPENDIX A

                         KRUPP INSURED PLUS-II LIMITED PARTNERSHIP







                              FINANCIAL STATEMENTS AND SCHEDULE
                                      ITEM 8 of FORM 10-K

                       ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                                For the Year Ended December 31, 1998


<PAGE>



                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULE




              Report of Independent Accountants                             F-3

              Balance Sheets at December 31, 1998 and 1997                  F-4

              Statements of Income and Comprehensive Income for
              the Years Ended December 31, 1998, 1997 and 1996              F-5

              Statements of Changes in Partners' Equity for the Years
              Ended December 31, 1998, 1997 and 1996                        F-6

              Statements of Cash Flows for the Years Ended December 31, 1998,
              1997 and 1996                                                 F-7

              Notes to Financial Statements                          F-8 - F-16

              Schedule IV - Mortgage Loans on Real Estate           F-17 - F-19


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





<PAGE>





                                          REPORT OF INDEPENDENT ACCOUNTANTS





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

In our opinion,  the accompanying  Financial  Statements  listed on the index on
Page F-2 of this  Form  10-K  present  fairly,  in all  material  respects,  the
financial position of Krupp Insured Plus-II Limited  Partnership 
(the "Partnership")at December  31, 1998 and 1997 and the  results of its  
operations  and its cash flows for each of the three  years in the  period  
ended  December  31,  1998 in conformity  with  generally  accepted  accounting
principles.  These financial statements  are  the  responsibility  of  the  
Partnership's management; our responsibility  is to express an opinion on these 
financial statements based on our audits.  We conducted  our audits of these  
statements in accordance with generally accepted auditing standards which 
require that we plan and perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material  misstatement.  An audit 
includes examining, on a test basis, evidence supporting the amounts and 
disclosures  in the financial  statements,assessing the  accounting  principles 
used and  significant estimates made by management, and evaluating the overall 
financial  statement  presentation.  
We believe that our audits provide a reasonable basis for the  opinion  express
above.









                                                PricewaterhouseCoopers LLP

  Boston, Massachusetts
  March 12, 1999,



<PAGE>





<TABLE>
<CAPTION>
                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                                 BALANCE SHEETS

                           December 31, 1998 and 1997


                                     ASSETS
                                                                   1998                  1997
                                                                   ----                  ----
Participating Insured Mortgages ("PIMs")
<S>                                                            <C>                  <C>         
(Notes B, C, H and I)                                          $ 82,258,207         $122,048,053
Mortgage-Backed Securities and multi-family insured
 mortgages("MBS") (Notes B, D and H)                             24,792,352           44,727,693
                                                               ------------         ------------

      Total mortgage investments                                107,050,559          166,775,746

Cash and cash equivalents (Notes B, H and I)                      8,758,737            9,052,480
Interest receivable and other assets                                730,829            1,180,660
Prepaid acquisition fees and expenses, net of
 accumulated amortization of $6,024,495 and $8,293,080
 respectively (Note B)                                              889,863            2,481,160
Prepaid participation servicing fees, net of
 accumulated amortization of $1,876,746 and $2,707,314,
 respectively (Note B)                                              196,774              636,931
                                                               ------------         ------------

      Total assets                                             $117,626,762         $180,126,977
                                                               ============         ============
</TABLE>


<TABLE>
                        LIABILITIES AND PARTNERS' EQUITY


<S>                                                           <C>                   <C>         
Liabilities                                                   $    252,769          $     25,588
                                                              ------------          ------------

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

  Limited Partners                                             117,123,621           178,597,484
   (14,655,512 Units outstanding)
  General Partners                                                (290,140)             (265,315)
    Accumulated comprehensive income(Note B)                       540,512             1,769,220
                                                               ------------          -----------

    Total Partners' equity                                     117,373,993           180,101,389
                                                              ------------          ------------

      Total liabilities and Partners' equity                  $117,626,762          $180,126,977
                                                              ============          ============

</TABLE>
    

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


<PAGE>


<TABLE>
<CAPTION>
                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

              For the Years Ended December 31, 1998, 1997 and 1996


                                                                           1998                    1997                   1996
                                                                           ----                    ----                   ----

      Revenues:
      Interest income - PIMs:
      <S>                                                                    <C>                  <C>                  <C>        
      Basic interest                                                         $ 7,416,814          $11,089,440          $12,070,443
      Participation interest                                                   3,752,675            1,816,364               31,948
      Interest income - MBS                                                    3,083,259            3,098,699            3,366,026
         Other interest income                                                 1,082,870              668,055              386,863
                                                                             -----------          -----------          -----------

                Total revenues                                                15,335,618           16,672,558           15,855,280
                                                                             -----------          -----------          -----------

      Expenses:
         Asset management fee to an affiliate
         (Note F)                                                                981,223            1,365,013            1,458,207
         Expense reimbursement to affiliates
          (Note F)                                                                57,448              162,269              155,091
         Amortization of prepaid expenses and
          fees (Note B)                                                        2,031,454            1,907,062            1,746,476
         General and administrative                                              247,823              265,614              164,294
                                                                             -----------          -----------          -----------

                Total expenses                                                 3,317,948            3,699,958            3,524,068
                                                                             -----------          -----------          -----------

      Net income (Notes E and G)                                              12,017,670           12,972,600           12,331,212

      Other Comprehensive Income:

      Net change in unrealized gain/(loss)
              on MBS                                                          (1,228,708)           1,213,884             (726,014)
                                                                             -----------            ---------          -----------

       Total Comprehensive Income                                           $ 10,788,962         $ 14,186,484         $ 11,605,198
                                                                             ============         ============        ============


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

         Limited Partners                                                    $11,657,140          $12,583,422          $11,961,276
                                                                             ===========          ===========          ===========

         Average net income per Limited Partner
          interest                                                           $       .80          $       .86          $       .82
                                                                              ===========         ===========           ===========
          (14,655,512 Limited Partner
          interests outstanding)

         General Partners                                                    $   360,530          $   389,178          $   369,936
                                                                             ===========          ===========          ===========

</TABLE>


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


<PAGE>



<TABLE>
<CAPTION>
                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY

              For the Years Ended December 31, 1998, 1997 and 1996



                                                                                    Accumulated               Total
                                                Limited            General         Comprehensive            Partners'
                                               Partners            Partners            Income                Equity

<S>                                             <C>                   <C>               <C>                <C>          
Balance at December 31, 1995                    $211,648,945          $ (155,589)       $ 1,281,350        $ 212,774,706

Net income                                        11,961,276             369,936              -               12,331,212

Distributions                                    (16,414,171)           (432,214)             -              (16,846,385)

Change in unrealized gain                             -                     -              (726,014)            (726,014)
                                               -------------           ---------         ----------           ----------

Balance at December 31, 1996                     207,196,050            (217,867)           555,336          207,533,519

Net income                                        12,583,422             389,178              -               12,972,600

Distributions                                    (16,414,173)           (436,626)             -              (16,850,799)

Special distributions                            (24,767,815)             -                   -              (24,767,815)

Change in unrealized gain                             -                     -             1,213,884            1,213,884
                                                ------------           ---------         ----------         ------------

Balance at December 31, 1997                     178,597,484            (265,315)         1,769,220          180,101,389

Net income                                        11,657,140             360,530             -                12,017,670

Distributions                                    (16,414,173)           (385,355)            -               (16,799,528)

Special distributions                            (56,716,830)             -                  -               (56,716,830)

Change in unrealized gain                             -                    -             (1,228,708)          (1,228,708)
                                                ------------           ---------        -----------         ------------

Balance at December 31, 1998                    $117,123,621           $(290,140)        $  540,512         $117,373,993
                                                ============           ==========        ==========         ============

</TABLE>

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


<PAGE>



<TABLE>
<CAPTION>
                    KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                                                   STATEMENTS OF CASH FLOWS

                                     For the Years Ended December 31, 1998, 1997 and 1996


                                                                          1998            1997                    1996
                                                                         -----           -----                   -----

Operating activities:
<S>                                                              <C>                       <C>                 <C>         
 Net income                                                      $ 12,017,670              $ 12,972,600        $ 12,331,212
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Amortization of premiums                                             -                       231,706               -
Amortization of short-term investment
    discount                                                            -                         -                 (13,630)
   Amortization of prepaid expenses and
    fees                                                            2,031,454                 1,907,062           1,746,476
   Shared Appreciation Income and prepayment
    penalties                                                      (2,390,707)                 (602,856)              -
   Changes in assets and liabilities:
         Decrease in interest receivable
          and other assets                                            449,831                   423,641             425,062
         Increase in liabilities                                      227,181                     6,688               4,140
                                                                 ------------               -----------        ------------

            Net cash provided by operating
              activities                                           12,335,429                14,938,841          14,493,260
                                                                 ------------              ------------        ------------

Investing activities:
    Short-term investment                                              -                          -                (488,210)
   Principal collections on
      PIMs including Shared Appreciation Income
      and prepayment premiums of $2,255,077 in
      1998 and $602,856 in 1997, respectively                      42,044,923                18,422,260           1,211,435
   Principal collections on MBS including
    prepayment premiums of $135,630 in 1998                        18,842,263                 9,388,723           2,587,489
   Proceeds from sale of investment                                    -                          -               1,000,000
                                                                 ------------              ------------        ------------

            Net cash provided by investing
             activities                                            60,887,186                27,810,983           4,310,714
                                                           ------------------              ------------        ------------

Financing activities:
  Distributions                                                   (16,799,528)              (16,850,799)        (16,846,385)
   Special distributions                                          (56,716,830)              (24,767,815)               -
                                                           -------------------             ------------           ------

    Net cash used for financing
             activities                                           (73,516,358)              (41,618,614)        (16,846,385)
                                                           ------------------              ------------        ------------

Net increase (decrease) in cash
 and cash equivalents                                                (293,743)                1,131,210           1,957,589

Cash and cash equivalents, beginning of year                        9,052,480                 7,921,270           5,963,681
                                                                  ------------              ------------        ------------

Cash and cash equivalents, end of year                      $       8,758,737              $  9,052,480        $  7,921,270
                                                            =================              ============        ============

Supplemental disclosure of non-cash investing
   activities:
   Reclassification of investment in a PIM to a MBS         $          -                   $ 11,850,469        $      -      


</TABLE>



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


<PAGE>


                                      KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                                            NOTES TO FINANCIAL STATEMENTS

A. Organization

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

        The  Partnership  commenced the public offering of Units on May 29, 1987
        and  completed  its public  offering  having sold  14,655,412  Units for
        $292,176,381  net of purchase volume discounts of $931,859 as of May 27,
        1988.

B. Significant Accounting Policies

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

            MBS

            The Partnership,  in accordance with Financial  Accounting Standards
            Board's Statement 115,  "Accounting for Certain  Investments in Debt
            and Equity Securities" ("FAS 115"),  classifies its MBS portfolio as
            available-for-sale.  As such the Partnership carries its MBS at fair
            market  value  and  reflects  any  unrealized  gains  (losses)  as a
            separate  component of Partners' Equity.  The Partnership  amortizes
            purchase  premiums  or  discounts  over the  life of the  underlying
            mortgages using the effective interest method.

     Effective January 1, 1998 the Partnership adopted the, Statement of
     Financial  Accounting  Standards No. 130, 'Reporting  Comprehensive
     Income' (FAS 130). FAS 130 was issued establishing  standards for reporting
     and displaying  comprehensive  income and its  components.  FAS 130
     requires  comprehensive  income and its  components,  as recognized
     under  accounting  standards,   to  be  displayed  in  a  financial
     statement with the same prominence as other  financial  statements,
     if  material.   Accordingly,   unrealized  gains  (losses)  on  the
     Partnership's  available-for  sale securities have been included in
     other comprehensive income.

            The Federal Housing  Administration MBS is carried at amortized cost
            unless the General Partner of the  Partnership  believes there is an
            impairment in value,  in which case a valuation  allowance  would be
            established in accordance  with Financial  Accounting  Standards No.
            114,  "Accounting  by  Creditors  for  impairment  of a  Loan,"  and
            Financial  Accounting Standard No. 118, "Accounting by Creditors for
            Impairment  of a Loan - Income  Recognition  and  Disclosures."  The
            Partnership also has insured non-participating  mortgage loans. Such
            loans are carried at amortized cost.

            PIMs

            The  Partnership  accounts  for  the  MBS  portion  of  its  PIM  in
            accordance  with  FAS  115  under  the  classification  of  held  to
            maturity.  The Partnership  carries the Government National Mortgage
            Association ("GNMA") or Fannie Mae MBS at amortized cost.

                                    Continued

                                      KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                                            NOTES TO FINANCIAL STATEMENTS


B. Significant Accounting Policies, continued

             Basic  interest on PIMs is  recognized  based on the stated  coupon
             rate  of the  GNMA or  Fannie  Mae  MBS.  Participation  income  is
             recognized   as  earned  and  when   deemed   collectible   by  the
             Partnership.

            Cash and Cash Equivalents

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

            Prepaid Expenses and Fees

            Prepaid  expenses and fees consist of acquisition  fees and expenses
            and  participation  servicing  fees  paid  for the  acquisition  and
            servicing of PIMs. The  Partnership  amortizes  prepaid  acquisition
            fees and expenses  using a method that  approximates  the  effective
            interest  method  over  a  period  of  ten to  twelve  years,  which
            represents  the  actual  maturity  or  anticipated   payoff  of  the
            underlying mortgage.

            The Partnership amortizes prepaid participation servicing fees using
            a method that  approximates  the  effective  interest  method over a
            ten-year period beginning at final endorsement of the loan if a GNMA
            loan and at closing if a Fannie Mae loan.

            Income Taxes

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

            Estimates and Assumptions

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

C. PIMs

        At December 31, 1998, the  Partnership  has investments in ten PIMs. The
        Partnership's  PIMs consist of a GNMA or Fannie Mae MBS representing the
        securitized first mortgage loan on the underlying property (collectively
        the "insured  mortgages"),  and  participation  interests in the revenue
        stream and appreciation of the underlying  property above specified base
        levels.  The  borrower  conveys  these  participation  features  to  the
        Partnership  generally  through  a  subordinated   promissory  note  and
        mortgage (the "Agreement").  The Partnership receives guaranteed monthly
        payments of principal and basic  interest on the GNMA and Fannie Mae MBS
        and HUD insures the first mortgage loan underlying the GNMA MBS.

                                    Continued

                                      KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                                            NOTES TO FINANCIAL STATEMENTS


C. PIMs, continued

        The borrower  usually  cannot prepay the first  mortgage loan during the
        first  five  years  and  usually  may  prepay  the first  mortgage  loan
        thereafter subject to a 9% prepayment penalty in years six through nine,
        a  1%  prepayment   penalty  in  year  ten  and  no  prepayment  penalty
        thereafter.   The   Partnership   may  receive  income  related  to  its
        participation  interests  in the  underlying  property,  however,  these
        amounts are neither insured nor guaranteed.

        Generally,  the  participation  features  consist of the following:  (i)
        "Minimum  Additional  Interest" rates ranging from .5% to .75% per annum
        calculated on the unpaid principal  balance of the first mortgage on the
        underlying  property , (ii) "Shared Income Interest" ranging from 25% to
        30% of the monthly  gross  rental  income  generated  by the  underlying
        property in excess of a specified  base,  but only to the extent that it
        exceeds the amount of Minimum  Additional  Interest received during such
        month, (iii) "Shared  Appreciation  Interest" ranging from 25% to 30% of
        any  increase  in the value of the  underlying  property  in excess of a
        specified base. Payment of Minimum Additional Interest and Shared Income
        Interest  will be from the  operations of the property and is limited to
        50% of net  revenue  or  surplus  cash as  defined by Fannie Mae or HUD,
        respectively.

        The total amount of Minimum Additional Interest,  Shared Income Interest
        and Shared  Appreciation  interest  payable by the  underlying  borrower
        usually  can not exceed 50% of any  increase  in value of the  property.
        However,  generally any net proceeds from a sale or refinancing  will be
        available  to satisfy any accrued  but unpaid  Shared  Income or Minimum
        Additional Interest.

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

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

        On October 19, 1998, the Partnership received a prepayment on the Walden
        Village Apartment's PIM of $6,990,486.  Also, the Partnership received a
        prepayment  penalty of $165,599.  On December 4, 1998,  the  Partnership
        made a special distribution to the investors of $.49 per Limited Partner
        interest.

        During the second quarter of 1998, the Partnership  received prepayments
        of the Harbor House and Longwood Villas Apartments PIMs. The Partnership
        received  the  outstanding   principal  balance  of  $12,146,408  and  a
        prepayment  penalty  of  $750,000  from  the  Harbor  House  PIM and the
        outstanding  principal  balance of $6,261,587  from the Longwood  Villas
        PIM. During the first


                                                     Continued


                           KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

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

C. PIMs, continued

        quarter  of 1998,  the  Partnership  received  a  prepayment  penalty of
        $62,616 from the Longwood  Villas PIM.  The  Partnership  made a special
        distribution  of $.43  per  Limited  Partner  interest  relating  to the
        Longwood  Villas   Apartments  PIM  on  July  17,  1998  and  a  special
        distribution of $.88 per Limited  Partner  interest for the Harbor House
        Apartment PIM prepayment was made on July 24, 1998.

        During the first quarter of 1998, the Partnership  received  prepayments
        of the Westbrook  Manor,  Fallwood and Greenbrier  Apartment PIMs in the
        amounts of $4,841,446,  $6,505,922,  and  $2,196,031,  respectively.  In
        addition to the prepayments, the Partnership received $416,810 of Shared
        Appreciation  Interest and $632,002 of Minimum  Additional  Interest and
        Shared  Income  Interest.  On March 27,  1998,  the  Partnership  made a
        special  distribution  to the  investors  of $.94  per  Limited  Partner
        interest.

        In  November  1997,  the Pine  Ridge  Apartments  PIM was  repaid by the
        borrower.  In  addition  to the  outstanding  balance  due on the  first
        mortgage of $4,161,080,  the Partnership received approximately $243,000
        of Shared Appreciation  Interest and $284,000 of Shared Income Interest.
        On December 19, 1997, the  Partnership  made a special  distribution  of
        $.30 per Unit to the Limited Partners with proceeds from the outstanding
        principal proceeds and the Share Appreciation Interest.

        During the third quarter of 1997,  the  Partnership  received a $437,963
        payment for all additional  interest earned on the Lily Flagg Apartments
        PIM through the date of release of participation rights. The Partnership
        then  converted  the  investment in the PIM to an  multi-family  insured
        mortgage.

        On June 17, 1997, the Partnership  received a prepayment of the Lakeside
        Apartments  PIM.  The  Partnership  received the  outstanding  principal
        balance  of  $9,935,167,   a  prepayment  penalty  of  $99,000,   Shared
        Appreciation  Income of $235,000 and Shared Income Interest of $335,000.
        On June 27, 1997, the  Partnership  made a special  distribution of $.71
        per Unit to the Limited  Partners with the proceeds from the outstanding
        principal  proceeds,the  prepayment penalty and the Shared  Appreciation
        Interest.

        During the fourth  quarter of 1996,  the borrower of the  Colonial  Park
        Apartments  PIM sold the  property  to a buyer  that  assumed  the first
        mortgage  loan and future  obligations  arising  from the  participation
        features. The Partnership received $35,000 as a discounted payoff of the
        accumulated  participation interest then due from the original borrower.
        On October  15,  1997,  the  Partnership  received a  prepayment  of The
        Colonial Park Apartments  PIM. The Partnership  received the outstanding
        first  mortgage   principal  balance  of  $2,520,805.   The  Partnership
        collected  a  prepayment  penalty of  approximately  $25,000  and Shared
        Income  Interest  of  $14,000  during the  fourth  quarter  of 1997.  On
        November 21, 1997, the Partnership  made a special  distribution of $.17
        per unit to the Limited  Partners with the proceeds from the outstanding
        principal proceeds and the prepayment penalty.

        At  December   31,  1998  and  1997  there  were  no  loans  within  the
        Partnership's   portfolio  that  were  delinquent  as  to  principal  or
        interest.



                                                         Continued


                               KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

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

 C.   PIMs, continued

        Listed in the chart is a summary of the  Partnership's  PIM investments.
        The  Partnership's  PIMs consisted of the following at December 31, 1998
        and 1997:

<TABLE>
<CAPTION>
             Aggregate           Number            Permanent
             Original           of PIMs            Interest           Maturity                 Investment
Basis
Issuer       Principal         at 12/31/98         Rate Range         Date Range             at December 31,
------     ------------        -----------         ----------         -----------       --------------------
                                                                                                 1998                1997
                                                                                                 ----                ----
<S>             <C>                    <C>        <C>   <C>           <C>     <C>              <C>                <C>        
GNMA            $ 57,350,100           6          6.75%-8.5%          12/23 - 10/30            $54,290,923        $86,756,622
                                      (a)            (b)(c)
Fannie
   Mae            30,015,000           4          7.25%-7.75%              10/99                27,967,284         28,271,601

FHA                7,220,800          (d)                -                  -                    -                  7,019,830
          ------------------          --                                                 ----------------- ------------------

                $ 94,585,900          10                                                       $82,258,207       $122,048,053
                ============          ==                                                       ===========       ============

</TABLE>

      (a)     Includes  two PIMs -  Richmond  Park and  Saratoga  - in which the
              Partnership  holds a 62% and 50% interest,  respectively,  and the
              remaining portion is held by an affiliate of the Partnership.
      (b)     In May 1993,  the  Partnership  agreed to  temporarily  reduce the
              basic  interest rate of the LeCouer du Monde PIM,  retroactive  to
              October 1, 1992. The reduction  lasted for  thirty-six  months and
              ranged from 6.375% to 8.125% per annum. The current basic interest
              rate is 8.25% per annum. Any unpaid basic interest is payable from
              the net proceeds from a sale or  refinancing  of the property.  As
              consideration  for this reduction,  the Partnership  increased its
              Shared  Appreciation  Interest  rate from 30% to 35% and decreased
              the base  value  used for this  calculation  from  $10,795,260  to
              $9,814,200.
      (c)     On June 28, 1995, the Partnership  entered into a temporary  basic
              interest rate reduction agreement on the Denrich  Apartments  PIM.
              Beginning July 1, 1995, the basic interest rate decreased from 8%
              per annum to 6.25%  per  annum for  thirty  months,  then  will 
              increase  to 6.75% per annum for the following  thirty-six  month 
              period and then increase to the original  interest rate of 8% per
              annum. The difference between basic interest at the original rate
              and the reduced rates will accumulate and be payable from surplus
              cash or from the net proceeds of a sale or refinancing.  These
              accumulated  amounts will be due and payable  prior to any  
              distributions to the borrower or payment of participation income 
              to the Partnership. Also under the agreement, the base level for
              calculating Shared Appreciation Interest decreased from 
              $4,025,000 to $3,500,000.
      (d)     The  Partnership  had one FHA PIM as of December 31, 1997.  During
              1998 the  Parnership  received a prepayment of the Walden  Village
              Apartments PIM.

              The  underlying  mortgages  of  the  PIMs  are  collateralized  by
              multi-family   apartment   complexes  located  in  7  states.  The
              apartment complexes range in size from 91 to 736 units.





                                                     Continued


                                     KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

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

D. MBS

      On October 15,  1998,  the  Partnership  received a repayment  on the Lily
      Flagg MBS of approximately  $11,721,863.  A prepayment penalty of $117,330
      was received on September 17, 1998. On December 2, 1998,  the  Partnership
      made a special  distribution  to  investors  of $.81 per  Limited  Partner
      interest.

      On June 19, 1998, the  Partnership  received a prepayment of the Brookside
      insured mortgage in the amount of $4,605,549, representing the outstanding
      principal balance,  and a prepayment  penalty of $18,300.  The Partnership
      made a special  distribution of $.32 per limited partner  interest on July
      24, 1998.

      During the third and  fourth  quarter of 1997,  the  Partnership  received
      prepayments  on  three  multi-family  MBS in the  amounts  of  $2,318,901,
      $2,425,094 and $2,824,583.  The Partnership  made special  distribution of
      $.33 per unit per Limited  Partner for the first two MBS  prepayments  and
      $.19 per unit per Limited Partner interest for the third MBS prepayment.

      At December 31, 1998,  the  Partnership's  MBS  portfolio has an amortized
      cost of $12,380,666 and unrealized  gains of  approximately  $540,512.  At
      December 31, 1997, the  Partnership's  MBS portfolio had an amortized cost
      of  $14,760,303 and unrealized  gains of  approximately  $1,769,220.  The
      Partnership's  MBS have maturities  ranging from 2007 to 2033. At December
      31, 1998 and 1997 the  Partnership's  Insured  Mortgage  Portfolio  had an
      amortized cost of $11,871,174 and $28,198,170,respectively.

E.    Partners' Equity

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

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

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

      During 1998, 1997 and 1996, the Partnership  made quarterly  distributions
      totaling $1.12 per Unit. The  partnership  made special  distributions  of
      $3.87 and $1.69 per Unit in 1998 and 1997, respectively.

                                                     Continued


                                   KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

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

E.    Partners' Equity, continued

      As of December 31, 1997, the following  cumulative  partner  contributions
      and allocations have been made since the inception of the Partnership:

<TABLE>
<CAPTION>
                                           Corporate
                                           Limited             General              Unrealized
                     Unitholders            Partner            Partners                Gain                  Total

<S>                       <C>               <C>             <C>                   <C>                   <C>         
Capital                   $292,176,381      $  2,000        $    3,000            $    -                $292,181,381
contributions

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

Quarterly
Distributions             (226,888,098)       (1,584)       (5,514,741)                                 (232,404,423)

Special
Distributions             (101,415,450)         (692)              -                   -                (101,416,142)

Net income                 168,830,618         1,180         5,221,601                                   174,053,399

Unrealized
gain on MBS                     -                 -               -                   540,512                540,512
                          ------------         -------        ----------           -----------           ------------

Total at
December 31
1998                      $117,122,717      $    904        $ (290,140)             $ 540,512           $117,373,993
                          ============       ========        ==========             =========           ============

</TABLE>


F.     Related Party Transactions

       Under the terms of the  Partnership  Agreement,  the General  Partners or
       their  affiliates  are  entitled  to an  asset  management  fee  for  the
       management of the Partnership's business,  equal to .75% per annum of the
       value of the Partnership's actual and committed mortgage assets,  payable
       quarterly.  The General Partners may also receive an incentive management
       fee in an  amount  equal  to .3% per  annum  on the  Partnership's  total
       invested assets  provided the  Unitholders  have received their specified
       non-cumulative  annual  return  on their  Invested  Capital.  Total  fees
       payable to the General Partners for management  services shall not exceed
       10% of cash available for distribution  over the life of the Partnership.
       Additionally,  the  Partnership  reimburses  affiliates  of  the  General
       Partners for certain costs incurred in connection  with  maintaining  the
       books and records of the  Partnership  and the preparation and mailing of
       financial reports, tax information and other communications to investors.

G.     Federal Income Taxes

       The  reconciliation of the income reported in the accompanying  financial
       statements  with the income  reported in the  Partnership's  1998 federal
       income tax return is as follows:




                                                     Continued



<PAGE>


                                KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

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

  G.   Federal Income Taxes, continued

    Net income per statement of income                     $ 12,017,670

    Less:Book to tax difference for amortization of
                        prepaid expenses and fees            (1,777,218)

            Net income for federal income tax purposes     $ 10,240,452
                                                           ============

       The  allocation of the 1998 net income for federal income tax purposes is
as follows:

                                                   Portfolio
                                                    Income

              Unitholders                       $ 10,004,891
              Corporate Limited Partner                   68
              General Partners                       235,493
                                                 -----------
                                                $ 10,240,452

      For the years ended December 31, 1998,  1997 and 1996 the average per unit
      income to the  Unitholders  for federal income tax purposes was $.68, $.86
      and $.95 respectively.

      The basis of the Partnership's  assets for financial reporting purposes is
      less than its tax basis by  approximately  $2,344,000  and  $2,892,000  at
      December 31, 1998 and 1997,  respectively.  The basis of the Partnership?s
      liabilities for financial reporting purposes are the same as its tax basis
      at December 31, 1998 and 1997, respectively.


H. Fair Value Disclosures of Financial Instruments

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

      Cash and Cash Equivalents

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

      MBS

      The  Partnership  estimates  the fair value of MBS based on quoted  market
      prices. Insured Mortgage loans are valued in a manner consistent with PIMs
      as described below:


      PIMs

      There is no  active  trading  market  for  these  investments.  Management
      estimates  the fair value of the PIMs using  quoted  market  prices of MBS
      having the same  stated  coupon  rate.  Management  does not  include  any
      participation  income in the  Partnership's  estimated  fair value arising
      from the  properties,  because  Management does not believe it can predict
      the time of realization  of the feature with any  certainty.  Based on the
      estimated fair value determined  using these methods and assumptions,  the
      Trust's  investments in PIMs had gross  unrealized  gains of approximately
      $2,099,000

                                                        Continued


                               KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

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

 H.    Fair Value Disclosures of Financial Instruments, continued

      at December 31, 1998 and gross unrealized gains of approximately  $822,000
at December 31, 1997.


              At December 31, 1998 and 1997,  the  estimated  fair values of the
              Partnership's financial instruments are as follows:

                               1998                             1997
                      ----                             ----
                      Fair            Carrying         Fair           Carrying
                     Value             Value          Value            Value

Cash and cash 
equivalents         $  8,759          $  8,759        $  9,052         $  9,052

MBS                   24,792            24,792          44,728           44,728

PIMs                  84,357            82,258         122,870          122,048
                    --------          --------        --------         --------
                    $117,908           115,809        $176,650         $175,828
                    ========           =======        ========         ========

I. Subsequent Events

     On January 25, 1999, the Partnership  received proceeds from the prepayment
     of the Waterford  Apartments PIM. The Partnership  received the outstanding
     principal  balance of $9,394,386 plus Minimum and Shared Income Interest of
     $262,429,  and  Shared  Appreciation  Interest  and  prepayment  penalty of
     $226,291.  The Partnership  plans on distributing  $.66 per Limited Partner
     Interest in  February,  1999 from the  principal  proceeds  and  prepayment
     penalty income received on this loan.

     On January 25, 1999, the Partnership  received proceeds from the prepayment
     of the Carlyle  Apartments  PIM. The  Partnership  received the outstanding
     principal  balance of $7,696,897 plus Minimum and Shared Income Interest of
     $145,448,  and  Shared  Appreciation  Interest  and  prepayment  penalty of
     $525,000.  The Partnership  plans on distributing  $.56 per Limited Partner
     Interest in  February,  1999 from the  principal  proceeds  and  prepayment
     penalty income received on this loan.

     On January 25, 1999, the Partnership  received proceeds from the prepayment
     of  the  Stanford  Court  Apartments  PIM.  The  Partnership  received  the
     outstanding  principal balance of $6,609,242 plus Minimum and Shared Income
     Interest of $25,000 and a prepayment  penalty of $66,093.  The  Partnership
     plans on distributing  $.46 per Limited Partner Interest in February,  1999
     from the principal  proceeds and prepayment penalty income received on this
     loan.

     On January 25, 1999, the Partnership  received proceeds from the prepayment
     of the Hillside  Apartments PIM. The  Partnership  received the outstanding
     principal balance of $4,266,759 plus a prepayment  penalty of $42,668.  The
     Partnership  plans on  distributing  $.29 per Limited  Partner  Interest in
     February,  1999 from the principal  proceeds and prepayment  penalty income
     received on this loan.


<PAGE>



<TABLE>
<CAPTION>
                   KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
                                December 31, 1998


                                                   Normal
                                                   Monthly                                                      Carrying
                Interest        Maturity           Payment         Original               Current               Amount at
PIMs (a)        Rate (b)        Date (j)             (k)          Face Amount            Face Amount           12/31/98(o)
--------        --------        --------           -------        -----------            -----------           -----------
GNMA
<S>             <C>              <C>                <C>            <C>                   <C>                  <C>        
Country Meadows 8.25%            10/15/30           89,100         $12,475,000           $12,040,163          $12,040,163
 Apts           (c)(e)(h)
Savage, MD

Denrich Aparts  6.75%            12/15/23           24,900           3,500,000             3,233,836            3,233,836
Philadelphia, PA (c)(e)
                 (h)(n)

Le Coeur du 
Monde           8.25%            10/15/30           70,100           9,814,200             9,467,257            9,467,257
 Apts           (c)(f)
St. Louis, MO   (l)


Richmond Park   7.50%             8/15/24          107,900          16,000,000            14,787,106           14,787,106
Richmond Heights,(c)(e)(h)
 OH

Saratoga Apts.  7.875%            8/15/24           47,300           6,750,000             6,274,105            6,274,105
 Rolling Meadows,(c)(e)(h)
 IL

The Greehouse   8.50%             2/15/30           64,600           8,810,900             8,488,456            8,488,456
                                                                   -----------           -----------         ------------
Omaha, NE       (d)(e)(h)
                                                                    57,350,100            54,290,923           54,290,923
                                                                    ----------           -----------          -----------
FNMA

Carlyle Court   7.25%             10/1/99           54,600           8,280,000             7,696,897            7,696,897
Indianapolis, IN(c)(e)(h)                              (m)

Hillside Court  7.25%             10/1/99           30,000           4,590,000             4,266,759            4,266,759
Centerville, OH (c)(e)(h)                              (m)

Stanford Court  7.25%             10/1/99           46,700           7,110,000             6,609,242            6,609,242
Speedway, IN    (c)(e)(h)                              (m)


Waterford Court 7.75%             10/1/99           69,500           10,035,000            9,394,386            9,394,386
                                                                     -----------          ------------        ------------
Lafayette, IN   (c)(g)(i)                             (m)

                                                                     30,015,000           27,967,284           27,967,284
                                                                    -----------          ------------        ------------

                                                                    $87,365,100          $82,258,207          $82,258,207
                                                                    ===========          ===========          ===========


</TABLE>



                                                          Continued


<PAGE>


                            KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

                  SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE, continued
                                        December 31, 1998
                                           -----------------


(a)       The  Participating  Insured  Mortgages  ("PIMs")  consist  of either a
          mortgage-backed   security   guaranteed  by  the  Fannie  Mae  or  the
          Government National Mortgage  Association  ("GNMA") and a subordinated
          promissory  note  and  mortgage  or  shared  income  and  appreciation
          agreement  with the  underlying  Borrower  that conveys  participation
          interests in the revenue  stream and  appreciation  of the  underlying
          property above certain specified base levels.

(b)       Represents the permanent  interest rate of the GNMA or Fannie Mae MBS.
          In addition,  the Partnership  receives additional interest consisting
          of (i) Minimum Additional Interest based on a percentage of the unpaid
          principal  balance of the first mortgage on the property,  (ii) Shared
          Income  Interest  based  on  a  percentage  of  monthly  gross  income
          generated  by the  underlying  property in excess of a specified  base
          amount  (but  only to the  extent it  exceeds  the  amount of  Minimum
          Additional   Interest  received  during  such  month),   (iii)  Shared
          Appreciation  Interest  based on a  percentage  of any increase in the
          value of the underlying property in excess of a specified base value.

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

(d)  Minimum  Additional  Interest is at a rate of .75% per annum calculated on 
     the unpaid principal balance of the first mortgage note.

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

(f) Shared Income Interest is based on 30% of monthly gross rental income over a
specified base amount.

(g)        Shared Income Interest is based on 35% of monthly gross rental income
 over a specified base amount.

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

(i) Shared Appreciation Interest is based on 35% of any increase in the value of
  the project over the specified base value.

(j) The Partnership's GNMA MBS have call provisions,which allow the Partnership
 to accelerate their respective maturity date.

(k) The normal monthly payment  consisting of principal and basic interest
    is payable monthly at level amounts over the term of the GNMA MBS. The
    GNMA MBS and Fannie Mae MBS  generally  may not be prepaid  during the
    first five years and may be prepaid subject to a 9% prepayment penalty
    in years six through nine, a 1% prepayment  penalty in year ten and no
    prepayment   penalty  after  year  ten.  The  normal  monthly  payment
    consisting  of  principal  and basic  interest for a Fannie Mae MBS is
    payable at level amounts based on a 35-year  amortization.  All unpaid
    principal and accrued basic interest is due at the end of year ten.


                                                     Continued

<PAGE>


                      KRUPP INSURED PLUS-II LIMITED PARTNERSHIP

            NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE, Continued
                                                   -------------

(l)       The Partnership  agreed to temporarily reduce the interest rate on the
          Le Couer du Monde PIM. The  reduction  was  retroactive  to October 1,
          1992,  and ranged from 6.375% to 8.125% per annum  through  October 1,
          1995 and thereafter is at 8.25% per annum. As  consideration  for this
          reduction,  the Partnership increased its Shared Appreciation Interest
          rate  from  30% to 35% and  decreased  the  Base  Value  used for this
          calculation from $10,795,620 to $9,814,200.

(m)  The   approximate   principal   balance  due  at  maturity  for  each  PIM,
respectively, is as follows:

              PIM                                         Amount

          Carlyle Court                                   $7,620,000
          Hillside Court                                  $4,224,000
          Stanford Court                                  $6,543,000
          Waterford Court                                 $9,308,000


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

 (o) The aggregate cost of PIMs for federal income tax purposes is $82,258,207.

 A  reconciliation  of the carrying value of PIMs for each of the three years in
the period ended December 31, 1998 is as follows:

<TABLE>
<CAPTION>
                                                         1998                   1997                    1996
                                                         ----                   ----                    ----

<S>                                                 <C>                    <C>                      <C>         
Balance at beginning of period                      $122,048,053           $151,717,926             $152,929,361

Deductions during period:
   Reclassification                                       -                 (11,850,469)                   -
   Prepayments and
    principal collections                             39,789,846            (17,819,404)              (1,211,435)
                                                    ------------           -------------            ------------
Balance at end of period                            $ 82,258,207           $122,048,053             $151,717,926
                                                    ============           ============             ============


</TABLE>


<PAGE>






                                    Unaudited
Distributable Cash Flow and Net Cash Proceeds from Capital Transactions

Shown below is the calculation of Distributable  Cash Flow and Net Cash Proceeds
from  Capital  Transactions,  as  defined  by  Section  17  of  the  Partnership
Agreement,  and the source of cash distributions for the year ended December 31,
1998 and the period  from  inception  through  December  31,  1998.  The General
Partners  provide certain of the information  below to meet  requirements of the
Partnership  Agreement  and  because  they  believe  that  it is an  appropriate
supplemental measure of operating performance.  However, Distributable Cash Flow
and Net Cash Proceeds from Capital  Transactions should not be considered by the
reader as a  substitute  to net  income  as an  indicator  of the  Partnership's
operating performance or to cash flows as a measure of liquidity.


<TABLE>
<CAPTION>
                                (Amounts in thousands, except per Unit amounts)
                                                                                                     Inception
                                                                                 Year Ended           Through
                                                                                 12/31/98             12/31/98
Distributable Cash Flow:

<S>                                                                             <C>                   <C>     
Income for tax purposes                                                         $10,240               $176,938

Items not requiring (not providing) the use of operating funds:
   Amortization of prepaid expenses and fees                                      3,809                 13,851
   Acquisition expenses paid from offering
    proceeds charged to operations                                                   -                     690
   Shared appreciation income/prepayment penalties                               (2,391)                (4,995)
   Gain on sale of MBS                                                               -                    (377)
                                                                                 -------               --------

Total Distributable Cash Flow ("DCF")                                           $11,658               $186,107
                                                                                =======               ========

Limited Partners Share of DCF                                                   $11,308               $180,524
                                                                                =======               ========

Limited Partners Share of DCF per Unit                                          $   .77               $  12.32
                                                                                =======               ========

General Partners Share of DCF                                                   $   350               $  5,583
                                                                                =======               ========


Net Proceeds from Capital Transactions:

Principal collections on PIMs and PIM sale proceeds
 including Shared Appreciation Income/Prepayment
 Penalties                                                                      $42,045               $108,380
Principal collections on MBS and MBS sale proceeds                               18,842                 90,330
Reinvestment of MBS and PIM principal collections
 and sale proceeds                                                                  -                  (41,966)
Gain on sale of MBS                                                                 -                      377
                                                                                -------               --------

Total Net Proceeds from Capital Transactions                                    $60,887               $157,121
                                                                                =======               ========

Cash available for distribution

(DCF plus proceeds from Capital Transactions)                                   $72,545               $343,228
                                                                                =======               ========

Distributions:

   Limited Partners                                                             $73,131(a)            $332,409(b)
                                                                                -------               --------

   Limited Partners Average per Unit                                            $  4.99(a)            $  22.68(b)(c)
                                                                                =======               ========

   General Partners                                                             $   355(a)            $  5,583(b)
                                                                                =======               ========

           Total Distributions                                                  $73,486               $337,992
                                                                                =======               ========
</TABLE>

(a)      Represents  all  distributions  paid in 1998 except the  February  1998
         distribution and includes an estimate of the distribution to be paid in
         February 1999.
(b) Includes an estimate of the distribution to be paid in February 1999.
(c)      Limited Partners average per Unit return of capital as of February 1999
         is $10.36 [$22.68 - $12.32] Return of capital  represents  that portion
         of distributions which is not funded from DCF such as proceeds from the
         sale of  assets  and  substantially  all of the  principal  collections
         received from MBS and PIMs.