UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               -------------------
                                    FORM 10-Q




     [X]          Quarterly Report Pursuant to Section 13 or 15(d) of the 
                  Securities Exchange Act of 1934
                  For the fiscal quarter ended June 30, 1998

     [  ]         Transition Report Pursuant to Section 13 or 15(d) of the 
                  Securities Exchange Act of 1934
                  For the transition period from              to


                         Commission file number 1-10553
                             -----------------------


                          PLM EQUIPMENT GROWTH FUND II
             (Exact name of registrant as specified in its charter)


California                                                94-3041013
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                         Identification No.)

One Market, Steuart Street Tower
Suite 800, San Francisco, CA                               94105-1301
(Address of principal                                      (Zip code)
executive offices)



        Registrant's telephone number, including area code (415) 974-1399
                             -----------------------


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



<PAGE>




                          PLM EQUIPMENT GROWTH FUND II
                             A Limited Partnership
                                 BALANCE SHEETS
               (in thousands of dollars, except per unit amounts)

<TABLE>
<CAPTION>





                                                                                  June 30,      December 31,

                                                                                    1998            1997
                                                                               -------------------------------
<S>                                                                             <C>              <C>       
Assets

Equipment held for operating lease, at cost                                     $    38,955      $   50,707
Less accumulated depreciation                                                       (28,664)        (38,170)
                                                                               -------------------------------
                                                                                     10,291          12,537
Equipment held for sale                                                                  --             788
     Net equipment                                                                   10,291          13,325

Cash and cash equivalents                                                             2,744             556
Restricted cash                                                                          --             395
Accounts receivable, less allowance for doubtful
    accounts of $83 in 1998 and $1,146 in 1997                                        1,129           1,626
Investments in unconsolidated special-purpose entities                                  670           2,680
Prepaid expenses and other assets                                                        18              49

      Total assets                                                              $    14,852      $   18,631
                                                                               ===============================


                        Liabilities and partners' capital


Liabilities

Accounts payable and accrued expenses                                           $       542      $      365
Due to affiliates                                                                        82             195
Lessee deposits and reserve for repairs                                                 787           1,846
Notes payable                                                                            --           2,500
                                                                               -------------------------------
    Total liabilities                                                                 1,411           4,906
                                                                               -------------------------------

Partners' capital:
Limited partners (7,381,805 depositary units as of
    June 30, 1998 and December 31, 1997)                                             13,441          13,725
General Partner                                                                          --              --
                                                                               -------------------------------
    Total partners' capital                                                          13,441          13,725
                                                                               -------------------------------

      Total liabilities and partners' capital                                   $    14,852      $   18,631
                                                                               ===============================
</TABLE>












                       See accompanying notes to financial
                                  statements.





<PAGE>



                          PLM EQUIPMENT GROWTH FUND II
                             A Limited Partnership
                              STATEMENTS OF INCOME
        (in thousands of dollars, except weighted-average unit amounts)

<TABLE>
<CAPTION>


                                                       For the Three Months                   For the Six Months
                                                          Ended June 30,                        Ended June 30,

                                                        1998           1997                 1998             1997
                                                   -------------------------------------------------------------------
<S>                                                  <C>            <C>                  <C>              <C>      
Revenues:

Lease revenue                                        $   1,821      $   2,468            $   3,697        $   5,506
Interest and other income                                   54             63                  126              144
Net gain on disposition of equipment                     1,363            859                5,608            1,027
                                                   -------------------------------------------------------------------
    Total revenues                                       3,238          3,390                9,431            6,677
                                                   -------------------------------------------------------------------

Expenses:

Depreciation and amortization                              612          1,150                1,326            2,373
Repairs and maintenance                                    551            429                  996              805
Interest expense                                            --            193                   47              426
Insurance expense to affiliate                              24             --                   24               --
Other insurance expense                                     18             43                   40               73
Management fees to affiliate                                90            128                  188              256
General and administrative expenses
      to affiliates                                        121            158                  244              372
Other general and administrative expenses                  196            240                  454              492
Provision for (recovery of) bad debt                        15            (98 )                (73)             228
                                                   -------------------------------------------------------------------
    Total expenses                                       1,627          2,243                3,246            5,025
                                                   -------------------------------------------------------------------

Equity in net loss of unconsolidated
      special-purpose entities                            (141)          (925 )               (253)          (1,041)
                                                   -------------------------------------------------------------------

Net income                                           $   1,470      $     222            $   5,932        $     611
                                                   ===================================================================

Partners' share of net income:

Limited partners                                     $   1,217      $      79            $   5,621        $     334
General Partner                                            253            143                  311              277
                                                   -------------------------------------------------------------------

Total                                                $   1,470      $     222            $   5,932        $     611
                                                   ===================================================================

Net   income per  weighted-average  depositary unit 
      (7,381,805 units,  including
      1,150 units held in the Treasury, as of 
      June 30, 1998 and 1997, respectively)          $    0.16      $    0.01            $    0.76        $    0.05
                                                   ===================================================================

Cash distributions                                   $   1,166      $   1,942            $   2,331        $   3,885
                                                   ===================================================================
Cash distributions per weighted-average
      depositary unit                                $    0.15      $    0.25            $    0.30        $    0.50
                                                   ===================================================================

Special cash distributions                           $   3,885      $      --            $   3,885        $      --
                                                   ===================================================================

Special cash distributions per weighted-
  average depositary unit                            $    0.50      $      --            $    0.50        $      --
                                                   ===================================================================

Total cash distributions per weighted-average
  depositary unit                                    $    0.65      $    0.25            $    0.80        $    0.50
                                                   ===================================================================

</TABLE>

                       See accompanying notes to financial
                                  statements.


<PAGE>




                          PLM EQUIPMENT GROWTH FUND II
                             A Limited Partnership
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the period from December 31, 1996
                   to June 30, 1998 (in thousands of dollars)

<TABLE>
<CAPTION>


                                                                 Limited             General
                                                                Partners             Partner              Total
                                                             -------------------------------------------------------

<S>                                                            <C>                  <C>                 <C>       
Partners' capital (deficit) as of December 31, 1996            $   17,434           $    (188 )         $   17,246

Net income                                                          2,196                 499                2,695

Cash distributions                                                 (5,905 )              (311 )             (6,216)

  Partners' capital as of December 31, 1997                        13,725                  --               13,725

Net income                                                          5,621                 311                5,932

Cash distributions                                                 (2,214 )              (117 )             (2,331)

Special cash distributions                                         (3,691 )              (194 )             (3,885)

  Partners' capital as of June 30, 1998                        $   13,441           $      --           $   13,441
                                                             ========================================================

</TABLE>


































                       See accompanying notes to financial
                                  statements.


<PAGE>




                          PLM EQUIPMENT GROWTH FUND II
                             A Limited Partnership
  STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, (in thousands of
                                    dollars)

<TABLE>
<CAPTION>



                                                                                      1998                  1997
                                                                                ---------------------------------------
<S>                                                                               <C>                    <C>       
Operating activities
Net income                                                                        $    5,932             $      611
Adjustments to reconcile net income to net cash provided
    by operating activities:
  Net gain on disposition of equipment                                                (5,608 )               (1,027 )
  Depreciation and amortization                                                        1,326                  2,373
  Equity in net loss from unconsolidated special-purpose entities                        253                  1,041
  Changes in operating assets and liabilities:
    Restricted cash                                                                      395                     --
    Accounts receivable, net                                                             577                   (853 )
    Prepaid expenses and other assets                                                     31                     35
    Accounts payable and accrued expenses                                                177                      6
    Due to affiliates                                                                   (113 )                   20
    Lessee deposits and reserve for repairs                                           (1,059 )                   63
                                                                                ---------------------------------------
      Net cash provided by operating activities                                        1,911                  2,269
                                                                                ---------------------------------------

Investing activities
Proceeds from disposition of equipment                                                 7,236                  2,739
Liquidation distributions from unconsolidated special-purpose entities                 1,425                     --
Reimbursements of capital improvements                                                    --                     18
Distributions from (additional investments in) unconsolidated
    special-purpose entities                                                             332                   (148 )
                                                                                ---------------------------------------
      Net cash provided by investing activities                                        8,993                  2,609
                                                                                ---------------------------------------

Financing activities
Principal payments on notes payable                                                   (2,500 )               (5,500 )
Cash distribution paid to limited partners                                            (5,905 )               (3,691 )
Cash distribution paid to General Partner                                               (311 )                 (194 )
                                                                                ---------------------------------------
      Net cash used in financing activities                                           (8,716 )               (9,385 )
                                                                                ---------------------------------------

Net increase (decrease) in cash and cash equivalents                                   2,188                 (4,507 )

Cash and cash equivalents at beginning of period                                         556                  7,962
                                                                                ---------------------------------------
      Cash and cash equivalents at end of period                                  $    2,744             $    3,455
                                                                                =======================================

Supplemental information
Interest paid                                                                     $       47             $      426
                                                                                =======================================
Sale proceeds included in accounts receivable                                     $       80             $       --
                                                                                =======================================

</TABLE>









                       See accompanying notes to financial
                                  statements.

 

<PAGE>




                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 1998

1.   Opinion of Management

     In the opinion of the  management  of PLM  Financial  Services,  Inc.  (the
     General Partner),  the accompanying  unaudited financial statements contain
     all  adjustments  necessary,   consisting  primarily  of  normal  recurring
     accruals,  to present fairly the financial position of PLM Equipment Growth
     Fund II (the  Partnership)  as of June 30, 1998 and December 31, 1997,  the
     statements  of income for the three and six months  ended June 30, 1998 and
     1997,  the  statements of changes in partners'  capital for the period from
     December 31, 1996 to June 30, 1998,  and the  statements  of cash flows for
     the six  months  ended  June 30,  1998 and 1997.  Certain  information  and
     footnote  disclosures normally included in financial statements prepared in
     accordance  with  generally  accepted   accounting   principles  have  been
     condensed  or  omitted  from the  accompanying  financial  statements.  For
     further  information,  reference should be made to the financial statements
     and notes thereto included in the  Partnership's  Annual Report on Form 1 K
     for the  year  ended  December  31,  1997,  on file at the  Securities  and
     Exchange Commission.

2.   Cash Distributions

     Cash distributions are recorded when paid and totaled $6.2 million and $3.9
     million for the six months ended June 30, 1998 and 1997,  respectively  and
     $5.1  million and $1.9 million for the three months ended June 30, 1998 and
     1997,  respectively.  In addition,  a $3.9 million special distribution was
     paid to the partners  during the six months  ended June 30, 1998,  from the
     proceeds  realized  on the  sale  of  equipment  in  1998  and  1997.  Cash
     distributions to limited partners in excess of net income are considered to
     represent a return of capital.  Cash  distributions  to limited partners of
     $0.3  million and $3.4  million for the six months  ended June 30, 1998 and
     1997,   respectively,   were  deemed  to  be  a  return  of  capital.  Cash
     distributions  related to the  results  from the second  quarter of 1998 of
     $1.1 million, are payable during August 1998.

3.   Transactions with General Partner and Affiliates

     Partnership  management  fees of $0.1 million and $0.2 million were payable
as of June 30, 1998 and December 31, 1997, respectively.

     The   Partnership's   proportional   share  of  the  data   processing  and
administrative expenses incurred by the unconsolidated  special-purpose entities
(USPEs)  was $4,000 and $3,000 for the six months  ended June 30, 1998 and 1997,
respectively  and $9,000 and $3,000 for the three months ended June 30, 1998 and
1997, respectively.

4.   Equipment

     Owned  equipment held for operating lease is stated at cost. The components
of owned  equipment  held for  operating  lease are as follows (in  thousands of
dollars):

<TABLE>
<CAPTION>

                                                June 30,           December 31,
                                                  1998                 1997
                                            -------------------------------------
<S>                                            <C>                   <C>        
Rail equipment                                 $    17,345           $    17,401
Trailers                                            14,197                17,144
Marine containers                                    7,413                 8,308
Aircraft                                                --                 7,854
                                            ----------------------------------------
                                                    38,955                50,707
Less accumulated depreciation                      (28,664)              (38,170)
                                                    10,291                12,537
Equipment held for sale                                 --                   788
      Net equipment                            $    10,291           $    13,325
                                            ========================================

</TABLE>


<PAGE>



                          PLM EQUIPMENT GROWTH FUND II
                              A Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 1998

4.   Equipment (continued)

     As of June 30,  1998,  all  equipment  was either on lease or  operating in
PLM-affiliated  short-term  trailer  rental  facilities,  except  for 129 marine
containers  and a rail  equipment  with an  aggregate  net  book  value  of $0.2
million. As of December 31, 1997, all equipment was either on lease or operating
in PLM-affiliated  short-term trailer rental  facilities,  except for 168 marine
containers  and 3 rail  equipment  with an  aggregate  net  book  value  of $0.4
million.

     During the six months ended June 30, 1998, the Partnership sold or disposed
an aircraft, marine containers,  trailers, and rail equipment, with an aggregate
net book value of $1.7 million, for proceeds of $7.3 million. For the six months
ended June 30, 1997,  the  Partnership  sold or disposed of an aircraft,  marine
containers,  trailers,  and rail equipment,  with an aggregate net book value of
$1.7 million, for proceeds of $2.7 million.

5.   Investments in Unconsolidated Special-Purpose Entities

     The net investments in USPEs included the following jointly-owned equipment
(and related assets and liabilities) (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                        June 30,         December 31,
                                                                          1998              1997
                                                                   ---------------------------------------


<S>                                                                     <C>                <C>     
50% interest in a Boeing 727-200 aircraft                               $    670           $  1,235
23% interest in a Boeing 727-200 aircraft                                     --              1,445
      Net investments                                                   $    670           $  2,680
                                                                    =======================================

</TABLE>

     During the six months  ended June 30,  1998,  the  General  Partner  sold a
Boeing  727-200  aircraft  in which the  Partnership  owned a 23%  interest,  at
approximately  its  net  book  value.  The  Partnership   received   liquidating
distributions  of $1.4 million from this USPE during the first  quarter of 1998.
The Partnership's 50% investment in a commercial  aircraft was off-lease at June
30, 1998 and December 31, 1997.

6.   Notes Payable

     During the six months ended June 30, 1998, the Partnership prepaid the $2.5
million remaining outstanding notes payable.



<PAGE>



ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

(I)      RESULTS OF OPERATIONS

Comparison of the PLM  Equipment  Growth Fund II's (the  Partnership)  Operating
Results for the Three Months Ended June 30, 1998 and 1997

(a)      Owned Equipment Operations

     Lease revenues less direct expenses  (defined as repair and maintenance and
asset-specific  insurance  expenses)  on owned  equipment  decreased  during the
second  quarter of 1998 when compared to the same quarter of 1997. The following
table presents lease revenues less direct  expenses by owned  equipment type (in
thousands of dollars):

<TABLE>
<CAPTION>


                                                                           For the Three Months
                                                                              Ended June 30,
                                                                          1998               1997
                                                                      -------------------------------
<S>                                                                     <C>               <C>      
Rail equipment                                                          $    688          $     875
Trailers                                                                     502                483
Aircraft                                                                      34                577
Marine containers                                                             33                 85

</TABLE>

Rail  equipment:  Rail equipment  lease  revenues and direct  expenses were $1.0
million and $0.3 million, respectively, for the second quarter of 1998, compared
to $1.1 million and $0.2 million, respectively, during the same quarter of 1997.
Rail equipment contribution decreased in the second quarter of 1998, compared to
the same  quarter of 1997,  due to the sale of rail  equipment in 1998 and 1997.
Rail equipment  expenses increased due to running repairs required on certain of
the rail  equipment  during  the second  quarter of 1998,  which were not needed
during 1997.

Trailers:  Trailer lease revenues and direct expenses were $0.7 million and $0.2
million,  respectively,  for the second  quarter of 1998 and 1997. The number of
trailers owned by the Partnership has been declining over the past twelve months
due to  sales  and  dispositions.  Although  the  number  of  trailers  has been
declining,  the Partnership had an increase in the trailer  contribution  due to
higher  utilization  for the remaining fleet when compared to the same period in
1997.

Aircraft:  Aircraft lease revenues and direct expenses were $50,000 and $16,000,
respectively,  for the second  quarter of 1998,  compared  to $0.6  million  and
$10,000,  respectively,  during the same quarter of 1997. Aircraft  contribution
decreased in the second  quarter of 1998,  compared to the same quarter of 1997,
due to the sale of the remaining aircraft fleet in 1998 and 1997.

Marine  containers:  Marine  containers  lease  revenues  were  $35,000 and $0.1
million during the second quarter of 1998 and 1997, respectively.  The number of
marine  containers  owned by the  Partnership  has been  declining over the past
twelve months due to sales and dispositions.  The result of this declining fleet
has been a decrease in marine container revenues.

(b) Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses of $1.1 million for the second quarter of 1998 decreased
from $1.8 million for the same quarter in 1997.  The  variances are explained as
follows:

(i) A $0.5 million decrease in depreciation  and amortization  expense from 1997
levels reflects the effect of asset sales in 1998 and 1997.

(ii) A $0.2 million  decrease in interest expense is due to the repayment of the
Partnership's outstanding debt.

(iii) A $0.1 million decrease in administrative expenses from 1997 levels due to
reduced office expenses and  professional  services  required by the Partnership
resulting primarily from asset sales.

(iv)  The  $0.1  million  increase  in bad  debt  expense  in 1998 is due to the
collection  of $0.1  million in 1997 for  outstanding  receivables  from certain
lessees that were previously reserved for as bad debts, a similar collection was
not received in 1998.

(c) Net Gain on Disposition of Owned Equipment

Net gain on disposition of equipment for the second quarter of 1998 totaled $1.4
million,  and resulted from the disposal or sale of an aircraft,  trailers,  and
marine  containers,  with an  aggregate  net  book  value of $0.6  million,  for
aggregate  proceeds  of $2.0  million.  For the same  quarter in 1997,  the $0.9
million net gain on disposition of equipment  resulted from the sale or disposal
of an  aircraft,  trailers,  marine  containers,  and  rail  equipment,  with an
aggregate  net book  value  of $1.3  million,  for  aggregate  proceeds  of $2.2
million.

(d)      Equity in Net Loss of Unconsolidated Special-Purpose Entities (USPEs)

Equity in net loss of unconsolidated special-purpose entities (USPEs) represents
net loss  generated  from the operation of  jointly-owned  assets  accounted for
under the equity method (see Note 5 to the financial statements).

As of June 30, 1998 and 1997, the Partnership  owned a 50% interest in an entity
which owns a commercial aircraft that was off lease during the second quarter of
1998 and 1997.  Expenses were $0.1 million and $0.9 million,  respectively,  for
the  second  quarter  of 1998 and  1997.  The  Partnership's  share of  expenses
decreased  in the second  quarter of 1998 due to repairs  required in the second
quarter of 1997 that were not needed in the second quarter of 1998.

(e)      Net Income

As a result of the foregoing,  the Partnership's net income was $1.5 million for
the second  quarter of 1998,  compared to net income of $0.2 million  during the
second  quarter of 1997.  The  Partnership's  ability to operate  and  liquidate
assets,  secure leases, and re-lease those assets whose leases expire is subject
to many factors, and the Partnership's performance in the second quarter of 1998
is not necessarily  indicative of future periods. In the second quarter of 1998,
the Partnership  distributed  regular cash  distributions of $1.1 million to the
limited partners,  or $0.15 per  weighted-average  depositary unit. In addition,
the  Partnership  distributed  a special  distribution  of $3.7  million  to the
limited partners, or $0.50 per weighted-average depositary unit.

Comparison of the Partnership's  Operating Results for the Six Months Ended June
30, 1998 and 1997

(a)      Owned Equipment Operations

Lease  revenues less direct  expenses  (defined as repair and  maintenance,  and
asset-specific  insurance  expenses) on owned equipment decreased during the six
months ended June 30, 1998,  compared to the same period of 1997.  The following
table presents lease revenues less direct  expenses by owned  equipment type (in
thousands of dollars):

<TABLE>
<CAPTION>


                                                                            For the Six Months
                                                                              Ended June 30,
                                                                          1998               1997
                                                                      -------------------------------
<S>                                                                     <C>               <C>     
Rail equipment                                                          $  1,461          $  1,800
Trailers                                                                   1,034             1,277
Marine containers                                                            130               384
Aircraft                                                                      49             1,197

</TABLE>

Rail  equipment:  Rail equipment  lease  revenues and direct  expenses were $2.1
million and $0.6 million,  respectively, for the six months ended June 30, 1998,
compared to $2.3 million and $0.5 million, respectively,  during the same period
of 1997. Lease revenues  decreased due to the sale of rail equipment in 1998 and
1997.  Rail  equipment  expenses  increased due to running  repairs  required on
certain of the rail equipment  during the six months ended June 30, 1998,  which
were not needed during 1997.

Trailers:  Trailer lease revenues and direct expenses were $1.4 million and $0.4
million,  respectively, for the six months ended June 30, 1998, compared to $1.6
million and $0.3  million,  respectively,  during the same  period of 1997.  The
decrease in net  contribution  was primarily due to the sale of trailers in 1998
and 1997.  Trailer expenses  increased due to repairs required on certain of the
trailers during the six months ended June 30, 1998, which were not needed during
1997.

Marine  containers:  Marine  container lease revenues were $0.1 million and $0.4
million  for the six months  ended  June 30,  1998 and 1997,  respectively.  The
number of marine containers owned by the Partnership has been declining over the
past twelve months due to sales and  dispositions.  The result of this declining
fleet has been a decrease in marine container revenue.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.1 million and
$35,000,  respectively, for the six months ended June 30, 1998, compared to $1.2
million and  $19,000,  respectively,  during the same  period of 1997.  Aircraft
contribution  decreased in the six months  ended June 30, 1998,  compared to the
same period in 1997, due to the sale of the remaining aircraft fleet in 1998 and
1997.

(b) Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $2.2 million for the six months ended June 30, 1998
decreased  from $4.1  million for the same  period of 1997.  The  variances  are
explained as follows:

(i) A $1.0 million decrease in depreciation  and amortization  expense from 1997
levels reflects the effect of asset sales in 1998 and 1997.

(ii) A $0.4 million  decrease in interest expense is due to the repayment of the
Partnership's outstanding debt.

(iii) A $0.2 million  decrease in  administrative  expenses from 1997 levels was
due to  reduced  office  expenses  and  professional  services  required  by the
Partnership resulting primarily from asset sales.

(iv) A $0.3 million  decrease in bad debt expense due to a $0.1 million decrease
in reserve  for a certain  lessee  resulting  from the  application  of security
deposits against uncollected outstanding receivable,  and the collection of $0.2
million  in 1998 of  outstanding  receivables  from  certain  lessees  that were
previously reserved for as bad debts in 1997.

(v) A $0.1 million decrease in management fees to affiliates  reflects the lower
levels of lease revenues in the six months ended June 30, 1998,  compared to the
same period in 1997.

(c)      Net Gain on Disposition of Owned Equipment

Net gain on  disposition  of  equipment  for the six months  ended June 30, 1998
totaled $5.6  million,  and  resulted  from the sale or disposal of an aircraft,
marine  containers,  trailers,  and rail  equipment,  with an aggregate net book
value of $1.7  million,  for  aggregate  proceeds of $7.3  million.  For the six
months  ended  June 30,  1997,  the $1.0  million  net  gain on  disposition  of
equipment resulted from the sale or disposal of an aircraft,  marine containers,
trailers, and rail equipment,  with an aggregate net book value of $1.7 million,
for aggregate proceeds of $2.7 million.

(d)      Equity in Net Loss of Unconsolidated Special-Purpose Entities

Equity in net loss of  unconsolidated  special-purpose  entities  represents net
loss generated from the operation of  jointly-owned  assets  accounted for under
the equity method.

As of June 30, 1998 and 1997, the Partnership  owned a 50% interest in an entity
which owns a commercial  aircraft that was off lease during the six months ended
June  30,  1998  and  1997.   Expenses  were  $0.2  million  and  $1.0  million,
respectively, for the six months ended June 30, 1998 and 1997. The Partnership's
share of  expenses  decreased  in the six  months  ended June 30,  1998,  due to
repairs  required  during  1997,  which were not required for the same period in
1998.   During  the  first  quarter  of  1998,  the  General  Partner  sold  for
approximately  its book value the Partnership's 23% investment in an entity that
owned an aircraft.


<PAGE>



(e)      Net Income

As a result of the foregoing,  the Partnership's net income was $5.9 million for
the six  months  ended June 30,  1998,  compared  to net income of $0.6  million
during  the same  period of 1997.  The  Partnership's  ability  to  operate  and
liquidate assets,  secure leases,  and re-lease those assets whose leases expire
is subject to many factors, and the Partnership's  performance in the six months
ended June 30, 1998 is not necessarily  indicative of future periods. In the six
months  ended  June  30,  1998,  the   Partnership   distributed   regular  cash
distributions of $2.2 million to the unitholders,  or $0.30 per weighted-average
depositary unit. In addition, the Partnership distributed a special distribution
of  $3.7  million  to  the  limited  partners,  or  $0.50  per  weighted-average
depositary unit.

 (II)         FINANCIAL CONDITION - CAPITAL RESOURCES AND LIQUIDITY

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering and permanent debt financing. No
further  capital  contributions  from original  partners are permitted under the
terms of the limited partnership agreement. As of June 30, 1998, the Partnership
has no outstanding  indebtedness.  The Partnership relies on operating cash flow
to meet its operating  obligations  and make cash  distributions  to the limited
partners.

In the six months  ended June 30,  1998,  the  Partnership  used $2.5 million in
proceeds from the sale of assets to prepay the outstanding debt.

For the six months ended June 30, 1998, the  Partnership  generated $2.2 million
in operating cash (net cash provided by operating  activities plus distributions
from unconsolidated special-purpose entities) to meet its operating obligations,
but used  undistributed  available cash from prior periods of approximately $0.1
million to  maintain  the level of  regular  cash  distributions  (total of $2.3
million in the six months ended June 30, 1998) to the  partners.  During the six
months ended June 30, 1998, the General  Partner sold owned  equipment on behalf
of the Partnership and realized proceeds of approximately  $7.3 million of which
the Partnership  received $7.2 million.  A special  distribution of $3.9 million
($0.50 per weighted-average depositary unit) was paid on May 21, 1998.

During the six months ended June 30, 1998, the  Partnership  sold or disposed of
aircraft, marine containers, trailers, and rail equipment, with an aggregate net
book value of $1.7 million, for proceeds of $7.3 million.

 (III) YEAR 2000 COMPLIANCE

The General  Partner is currently  addressing  the Year 2000  computer  software
issue.  The General Partner is creating a timetable for carrying out any program
modifications that may be required. The General Partner does not anticipate that
the cost of these modifications allocable to the Partnership will be material.

(IV)  ACCOUNTING PRONOUNCEMENTS

In  June  1997,  the  Financial   Accounting  Standards  Board  issued  two  new
statements:  SFAS No. 130,  "Reporting  Comprehensive  Income,"  which  requires
enterprises to report,  by major  component and in total,  all changes in equity
from  nonowner  sources;  and SFAS No. 131,  "Disclosures  about  Segments of an
Enterprise  and  Related  Information,"  which  establishes  annual and  interim
reporting  standards  for a public  company's  operating  segments  and  related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the  Partnership's  fiscal year ended December
31, 1998, with earlier  application  permitted.  The effect of adoption of these
statements  will  be  limited  to the  form  and  content  of the  Partnership's
disclosures and will not impact the  Partnership's  results of operations,  cash
flow, or financial position.

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting   for  Derivative   Instruments  and  Hedging   Activities",   which
standardizes  the  accounting  for  derivative  instruments,  including  certain
derivative instruments embedded in other contracts,  by requiring that an entity
recognize  those items as assets or  liabilities  in the  statement of financial
position and measure  them at fair value.  This  statement is effective  for all
quarters of fiscal years beginning after June 15, 1999. As of June 30, 1998, the
General  Partner  is  reviewing  the  effect  this  standard  will  have  on the
Partnership's consolidated financial statements.


<PAGE>



(V)      OUTLOOK FOR THE FUTURE

Since the Partnership is in its orderly  liquidation  phase, the General Partner
will be seeking to  selectively  re-lease or sell assets as the existing  leases
expire.  Sale decisions will cause the operating  performance of the Partnership
to decline over the remainder of its life. The General  Partner  anticipates the
liquidation of Partnership assets will be completed by the scheduled termination
of the Partnership at the end of the year 2000.

Several factors may affect the Partnership's  operating  performance in 1998 and
beyond,  including  changes in the markets for the  Partnership's  equipment and
changes in the regulatory environment in which that equipment operates.

The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is  intended  to reduce its  exposure  to  volatility  in  individual
equipment sectors.

The  ability  of the  Partnership  to  realize  acceptable  lease  rates  on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and  government  or other  regulations.  The  unpredictability  of some of these
factors,  or of their occurrence,  makes it difficult for the General Partner to
clearly  define  trends or  influences  that may impact the  performance  of the
Partnership's  equipment.  The General  Partner  continuously  monitors both the
equipment  markets and the performance of the  Partnership's  equipment in these
markets.  The General Partner may make an evaluation to reduce the Partnership's
exposure to  equipment  markets in which it  determines  that it cannot  operate
equipment and achieve acceptable rates of return.

The  Partnership  intends  to use cash  flow  from  operations  to  satisfy  its
operating requirements and pay cash distributions to the investors.

(VI)     FORWARD-LOOKING INFORMATION

Except for historical  information contained herein, the discussion in this Form
10-Q contains  forward-looking  statements that involve risks and uncertainties,
such as statements of the Partnership's  plans,  objectives,  expectations,  and
intentions.  The cautionary  statements made in this Form 10-Q should be read as
being applicable to all related forward-looking  statements wherever they appear
in this Form 10-Q. The Partnership's actual results could differ materially from
those discussed here.

 
<PAGE>



                          PART II -- OTHER INFORMATION



Item 6.       Exhibits and Reports on Form 8-K

              (a)     Exhibits

                  None.

              (b)     Reports on Form 8-K

                  None.

                                                      -11-



<PAGE>


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



                                     PLM EQUIPMENT GROWTH FUND II
                                     By:  PLM Financial Services, Inc.
                                          General Partner




Date:  August 3, 1998                By:  /s/ Richard Brock
                                          -----------------
                                          Richard Brock
                                          Vice President and
                                          Corporate Controller


<PAGE>