TEXTAINER FINANCIAL SERVICES CORPORATION
                        650 California Street, 16th Floor
                             San Francisco, CA 94108


August 13, 1999


Securities and Exchange Commission
Washington, DC  20549

Gentlemen:

Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  we are
submitting  herewith for filing on behalf of Textainer Equipment Income Fund II,
L.P. (the "Company") the Company's  Quarterly Report on Form 10-Q for the Second
Quarter ended June 30, 1999.

This filing is being effected by direct  transmission to the Commission's  EDGAR
System.

Sincerely,

Nadine Forsman
Controller

<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                               Washington DC 20549



                                    FORM 10-Q



                 QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                  For the quarterly period ended June 30, 1999


                         Commission file number 0-19145


                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                     A California Limited Partnership (Exact
                 name of Registrant as specified in its charter)


           California                                            94-3097644
  (State or other jurisdiction                                 (IRS Employer
of incorporation or organization)                            Identification No.)

 650 California Street, 16th Floor
        San Francisco, CA                                           94108
(Address of Principal Executive Offices)                          (ZIP Code)

                                 (415) 434-0551
              (Registrant's telephone number, including area code)


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

                                 Yes [X] No [ ]





<PAGE>



<TABLE>
<CAPTION>

TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)

Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1999

Table of Contents
-------------------------------------------------------------------------------------------------------------------



                                                                                                               Page

<S>                                                                                                           <C>
Item 1.   Financial Statements

          Balance Sheets - June 30, 1999 (unaudited)
          and December 31, 1998.............................................................................    3


          Statements of Operations for the three and six months
          ended June 30, 1999 and 1998 (unaudited)..........................................................    4


          Statements of Partners' Capital for the six months
          ended June 30, 1999 and 1998 (unaudited)..........................................................    5


          Statements of Cash Flows for the six months
          ended June 30, 1999 and 1998 (unaudited)..........................................................    6


          Notes to Financial Statements (unaudited).........................................................    8


Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations.........................................................................   13


</TABLE>


<PAGE>

<TABLE>
<CAPTION>


TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)

Balance Sheets

June 30, 1999 and December 31, 1998
(Amounts in thousands)
------------------------------------------------------------------------------------------------------------------


                                                                                1999                   1998
                                                                           ----------------       ----------------
                                                                             (unaudited)
<S>                                                                     <C>                    <C>
Assets
Container rental equipment, net of accumulated
    depreciation of $20,646 (1998:  $21,059) (note 5)                    $          31,446      $          33,685
Cash                                                                                 1,347                  1,752
Net investment in direct financing leases (note 4)                                     391                    467
Accounts receivable, net of allowance for doubtful
     accounts of $383 (1998:  $315)                                                  1,990                  2,191
Due from affiliates, net (note 2)                                                      551                    533
Prepaid expenses                                                                         5                     16
                                                                           ----------------       ----------------


                                                                         $          35,730      $          38,644
                                                                           ================       ================
Liabilities and Partners' Capital
Liabilities:
   Accounts payable                                                      $             276      $             264
   Accrued liabilities                                                                  71                     89
   Accrued recovery costs                                                               63                     48
   Accrued damage protection plan costs                                                271                    222
   Warranty claims                                                                     279                    385
   Deferred quarterly distributions                                                     68                     68
                                                                           ----------------       ----------------

      Total liabilities                                                              1,028                  1,076
                                                                           ----------------       ----------------

Partners' capital:
   General partners                                                                      -                      -
   Limited partners                                                                 34,702                 37,568
                                                                           ----------------       ----------------

      Total partners' capital                                                       34,702                 37,568
                                                                           ----------------       ----------------


                                                                         $          35,730      $          38,644
                                                                           ================       ================


See accompanying notes to financial statements


</TABLE>


<PAGE>

<TABLE>
<CAPTION>


TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)

Statements of Operations

For the three and six months ended June 30, 1999 and 1998
(Amounts in thousands except for unit and per unit amounts)
(unaudited)
------------------------------------------------------------------------------------------------------------------------------------

                                                            Three months      Three months        Six months         Six months
                                                                Ended             Ended              Ended              Ended
                                                            June 30, 1999     June 30, 1998      June 30, 1999      June 30, 1998
                                                            -------------     -------------      -------------      -------------
<S>                                                        <C>               <C>                <C>                <C>
Rental income                                               $       1,961     $       2,533      $       4,064      $       5,089
                                                            -------------     -------------      -------------      -------------

Costs and expenses:
   Direct container expenses                                          633               558              1,143              1,089
   Bad debt expense (benefit)                                          21               (54)                80                (75)
   Depreciation                                                       786               865              1,586              1,732
   Write-down of containers (note 5)                                  195                 -                256                  -
   Professional fees                                                   11                11                 22                 17
   Management fees to affiliates (note 2)                             200               240                410                449
   General and administrative costs to affiliates (note 2)            110               141                244                307
   Other general and administrative costs                              24                13                 48                 45
                                                            -------------     -------------      -------------      -------------
                                                                    1,980             1,774              3,789              3,564
                                                            -------------     -------------      -------------      -------------
   (Loss) income from operations                                      (19)              759                275              1,525
                                                            -------------     -------------      -------------      -------------

Other (expense) income:
   Interest income                                                     27                23                 51                 40
   (Loss) gain on sale of containers (note 5)                        (125)              (47)              (174)                90
                                                            -------------     -------------      -------------      -------------
                                                                      (98)              (24)              (123)               130
                                                            -------------     -------------      -------------      -------------

   Net (loss) earnings                                      $        (117)    $         735      $         152      $       1,655
                                                            =============     =============      =============      =============

Allocation of net (loss) earnings (note 2):
   General partners                                         $          15     $          16      $          31      $          31
   Limited partners                                                  (132)              719                121              1,624
                                                            -------------     -------------      -------------      -------------
                                                            $        (117)    $         735      $         152      $       1,655
                                                            =============     =============      =============      =============

Limited partners' per unit share
   of net (loss) earnings                                   $       (0.04)    $        0.19      $        0.03      $        0.44
                                                            =============     =============      =============      =============

Limited partners' per unit share
   of distributions                                         $        0.40     $        0.40      $        0.80      $        0.80
                                                            =============     =============      =============      =============

Weighted average number of limited
   partnership units outstanding                                3,712,528         3,726,977          3,712,528          3,726,977
                                                            =============     =============      =============      =============


See accompanying notes to financial statements


</TABLE>

<PAGE>

<TABLE>
<CAPTION>

TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)

Statements of Partners' Capital

For the six months ended June 30, 1999 and 1998
(Amounts in thousands)
(unaudited)
--------------------------------------------------------------------------------------------------------------

                                                                        Partners' Capital
                                                    ----------------------------------------------------------
                                                      General               Limited                Total
                                                    -------------       -----------------      ---------------
<S>                                              <C>                 <C>                    <C>
Balances at January 1, 1998                       $          (90)     $           41,305     $         41,215

Distributions                                                (31)                 (2,982)              (3,013)

Net earnings                                                  31                   1,624                1,655
                                                    -------------       -----------------      ---------------
Balances at June 30, 1998                         $          (90)     $           39,947     $         39,857
                                                    =============       =================      ===============

Balances at January 1, 1999                       $            -      $           37,568     $         37,568

Distributions                                                (31)                 (2,970)              (3,001)

Redemptions (note 6)                                           -                     (17)                 (17)

Net earnings                                                  31                     121                  152
                                                    -------------       -----------------      ---------------
Balances at June 30, 1999                         $            -      $           34,702     $         34,702
                                                    =============       =================      ===============


See accompanying notes to financial statements


</TABLE>

<PAGE>

<TABLE>
<CAPTION>

TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)

Statements of Cash Flows

For the six months ended June 30, 1999 and 1998
(Amounts in thousands)
(unaudited)
-----------------------------------------------------------------------------------------------------------------------

                                                                                           1999              1998
                                                                                       --------------   ---------------
<S>                                                                                 <C>              <C>
Cash flows from operating activities:
   Net earnings                                                                      $           152  $          1,655
   Adjustments to reconcile net earnings to
     net cash provided by operating activities:
        Depreciation                                                                           1,586             1,732
        Write-down of containers (note 5)                                                        256                 -
        Increase (decrease) in allowance for doubtful accounts,
            excluding write off (note 7)                                                          68              (131)
        Loss (gain) on sale of containers                                                        174               (90)
        (Increase) decrease in assets:
           Proceeds from principal payments on direct financing leases                           116               109
           Accounts receivable, excluding write off (note 7)                                     133               575
           Due from affiliates, net                                                              (48)             (339)
           Prepaid expenses                                                                       11                32
         Increase (decrease) in liabilities:
           Accounts payable and accrued liabilities                                               (6)               71
           Accrued recovery costs                                                                 15               (36)
           Accrued damage protection plan costs                                                   49                 6
           Warranty claims                                                                      (106)             (107)
                                                                                       --------------   ---------------
              Net cash provided by operating activities                                        2,400             3,477
                                                                                       --------------   ---------------

Cash flows from investing activities:
   Proceeds from sale of containers                                                            1,495             1,784
   Container purchases                                                                        (1,282)           (1,615)
                                                                                       --------------   ---------------
              Net cash provided by investing activities                                          213               169
                                                                                       --------------   ---------------

Cash flows from financing activities:
   Redemptions of limited partnership units                                                      (17)                -
   Distributions to partners                                                                  (3,001)           (3,016)
                                                                                       --------------   ---------------
              Net cash used in financing activities                                           (3,018)           (3,016)
                                                                                       --------------   ---------------

Net (decrease) increase in cash                                                                 (405)              630

Cash at beginning of period                                                                    1,752               981
                                                                                       --------------   ---------------
Cash at end of period                                                                $         1,347  $          1,611
                                                                                       ==============   ===============


See accompanying notes to financial statements

</TABLE>

<PAGE>





TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)


Statements Of Cash Flows--Continued

For the six months ended June 30, 1999 and 1998
(Amounts in thousands)
(unaudited)
--------------------------------------------------------------------------------

Supplemental Disclosures:

Supplemental schedule of non-cash investing and financing activities:

The following table summarizes the amounts of container purchases, distributions
to partners,  and proceeds  from sale of  containers  which had not been paid or
received as of June 30, 1999 and 1998, and December 31, 1998 and 1997, resulting
in differences in amounts  recorded and amounts of cash disbursed or received by
the  Partnership,  as shown in the  Statements  of Cash Flows for the  six-month
periods ended June 30, 1999 and 1998.

<TABLE>
<CAPTION>
                                                                June 30        Dec. 31          June 30       Dec. 31
                                                                   1999           1998             1998          1997
                                                             -----------    -----------    -------------    ----------
<S>                                                         <C>            <C>            <C>              <C>
Container purchases included in:
     Due to affiliates..............................                $ 1           $ 34             $ 50         $ (3)
     Container purchases payable....................                  -              -              247           342

Distributions to partners included in:
     Due to affiliates..............................                  6              6                5             6
     Deferred quarterly distributions...............                 68             68               75            77

Proceeds from sale of containers included in:
     Due from affiliates............................                426            489              396           566

The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers recorded by the Partnership and
the amounts  paid or received as shown in the  Statements  of Cash Flows for the
six-month periods ended June 30, 1999 and 1998.

                                                                                                   1999           1998
                                                                                                   ----           ----

Container purchases recorded......................................................               $1,249        $1,573
Container purchases paid..........................................................                1,282         1,615

Distributions to partners declared................................................                3,001         3,013
Distributions to partners paid....................................................                3,001         3,016

Proceeds from sale of containers recorded.........................................                1,432         1,614
Proceeds from sale of containers received.........................................                1,495         1,784


See accompanying notes to financial statements



</TABLE>

<PAGE>



TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)

Notes To Financial Statements

For the three and six months ended June 30, 1999 and 1998
(Amounts in thousands except for unit and per unit amounts)
(unaudited)
--------------------------------------------------------------------------------

Note 1.   General

      Textainer  Equipment Income Fund II, L.P. (the Partnership),  a California
      limited  partnership  with a maximum life of 20 years, was formed in 1989.
      The Partnership owns a fleet of intermodal marine cargo containers,  which
      are leased to international shipping lines.

      All adjustments (which were only normal and recurring adjustments),  which
      are,  in the  opinion  of  management,  necessary  to fairly  present  the
      financial position of the Partnership as of June 30, 1999 and December 31,
      1998, and the results of its operations,  changes in partners' capital and
      cash flows for the six-month  periods  ended June 30, 1999 and 1998,  have
      been made.

      The financial  information  presented herein should be read in conjunction
      with the audited financial  statements and the accompanying notes included
      in the Partnership's audited financial statements as of December 31, 1998,
      in the Annual Report filed on Form 10-K.

      Certain   estimates  and  assumptions  were  made  by  the   Partnership's
      management that affect the reported  amounts of assets and liabilities and
      disclosures  of  contingent  assets  and  liabilities  at the  date of the
      financial  statements  and the  reported  amounts of revenue and  expenses
      during the  reporting  period.  Actual  results  could  differ  from those
      estimates.

      Certain  reclassifications,  not affecting net earnings, have been made to
      prior year  amounts in order to  conform to the 1999  financial  statement
      presentation.

Note 2.   Transactions with Affiliates

      Textainer  Financial  Services  Corporation  (TFS) is the managing general
      partner of the Partnership  and is a wholly-owned  subsidiary of Textainer
      Capital Corporation (TCC).  Textainer  Equipment  Management Limited (TEM)
      and  Textainer   Limited  (TL)  are  associate  general  partners  of  the
      Partnership.  The  managing  general  partner  and the  associate  general
      partners  are  collectively  referred to as the General  Partners  and are
      commonly  owned by Textainer  Group Holdings  Limited  (TGH).  The General
      Partners also act in this capacity for other limited  partnerships.  Prior
      to its liquidation in October 1998, Textainer Acquisition Services Limited
      (TAS),  a former  affiliate of the General  Partners,  performed  services
      related to the  acquisition  of  containers  outside the United  States on
      behalf of the  Partnership.  Effective  November 1998,  these services are
      being  performed  by TEM.  The  General  Partners  manage and  control the
      affairs of the Partnership.

      In accordance with the Partnership Agreement,  sections 3.10 through 3.12,
      net earnings or losses and distributions are generally allocated 1% to the
      General  Partners and 99% to the Limited  Partners.  If the  allocation of
      distributions exceeds the allocation of net earnings and creates a deficit
      in the  General  Partners'  aggregate  capital  account,  the  Partnership
      Agreement  provides for a special  allocation of gross income equal to the
      amount of the deficit.

      As part of the operation of the Partnership,  the Partnership is to pay to
      the General Partners, or TAS prior to its liquidation, an acquisition fee,
      an equipment  management fee, an incentive management fee and an equipment
      liquidation  fee.  These  fees  are  for  various  services   provided  in
      connection with the administration and management of the Partnership.  The
      Partnership  capitalized  $59  and  $74 of  acquisition  fees  as  part of
      container rental  equipment costs during the six-month  periods ended June
      30, 1999 and 1998, respectively.  The Partnership incurred $62 and $124 of
      incentive  management  fees during the three and  six-month  periods ended
      June 30,  1999 and $63 and $126 for the  comparable  periods  in 1998.  No
      equipment liquidation fees were incurred during these periods.

      The  Partnership's  container  fleet  is  managed  by TEM.  In its role as
      manager,  TEM has  authority to acquire,  hold,  manage,  lease,  sell and
      dispose of the  Partnership's  containers.  TEM holds,  for the payment of
      direct operating expenses,  a reserve of cash that has been collected from
      leasing operations;  such cash is included in due from affiliates,  net at
      June 30, 1999 and December 31, 1998.

      Subject to certain reductions, TEM receives a monthly equipment management
      fee equal to 7% of gross lease revenues  attributable to operating  leases
      and 2% of gross  lease  revenues  attributable  to full payout net leases.
      These fees totaled $138 and $286 for the three and six-month periods ended
      June 30, 1999 and $177 and $323 for the  comparable  periods in 1998.  The
      Partnership's  container  fleet is leased by TEM to third party lessees on
      operating  master  leases,  spot  leases,  term leases and direct  finance
      leases.  The majority of the  container  fleet is leased  under  operating
      master leases with limited terms and no purchase option.

      Certain  indirect  general  and  administrative  costs  such as  salaries,
      employee  benefits,   taxes  and  insurance  are  incurred  in  performing
      administrative  services  necessary to the  operation of the  Partnership.
      These  costs  are  incurred   and  paid  by  TFS  and  TEM.   General  and
      administrative  costs  allocated  to the  Partnership  for the  three  and
      six-month periods ended June 30, 1999 and 1998 were as follows:


                                      Three months                 Six months
                                      ended June 30,              ended June 30,
                                     ---------------             ---------------
                                     1999       1998             1999       1998
                                     ----       ----             ----       ----

      Salaries                      $  59      $  73             $130       $153
      Other                            51         68              114        154
                                     ----       ----             ----       ----
      Total general and
        administrative costs         $110       $141             $244       $307
                                     ====       ====             ====       ====

      TEM allocates these general and administrative costs based on the ratio of
      the  Partnership's  interest  in  the  managed  containers  to  the  total
      container  fleet  managed by TEM during the period.  TFS  allocates  these
      costs  based on the  ratio of the  Partnership's  containers  to the total
      container  fleet of all limited  partnerships  managed by TFS. The General
      Partners allocated the following general and  administrative  costs to the
      Partnership  for the three and  six-month  periods ended June 30, 1999 and
      1998:


                                     Three months                   Six months
                                     ended June 30,               ended June 30,
                                    ----------------             ---------------
                                    1999        1998             1999       1998
                                    ----        ----             ----       ----

      TEM                          $  98       $ 127            $ 218      $ 277
      TFS                             12          14               26         30
                                    ----        ----             ----       ----
      Total general and
        administrative costs       $ 110       $ 141            $ 244      $ 307
                                    ====        ====             ====       ====

      The General  Partners  may acquire  containers  in their own name and hold
      title on a temporary basis for the purpose of facilitating the acquisition
      of such containers for the Partnership.  The containers may then be resold
      to the  Partnership  on an  all-cash  basis at a price equal to the actual
      cost, as defined in the Partnership  Agreement.  In addition,  the General
      Partners are entitled to an acquisition  fee for any containers  resold to
      the Partnership.

      At June 30,  1999 and  December  31,  1998,  due from  affiliates,  net is
      comprised of:

                                                           1999            1998
                                                           ----            ----
      Due from affiliates:
        Due from TEM...................................  $  581          $  560
                                                           ----            ----

      Due to affiliates:
        Due to TFS.....................................      24              21
        Due to TL......................................       1               1
        Due to TCC.....................................       5               5
                                                           ----            ----
                                                             30              27
                                                           ----            ----

      Due from affiliates, net                           $  551          $  533
                                                           ====            ====

      These amounts  receivable  from and payable to affiliates were incurred in
      the ordinary course of business between the Partnership and its affiliates
      and represent timing differences in the accrual and remittance of expenses
      and fees  described  above and in the accrual and remittance of net rental
      revenues and sales proceeds from TEM.

Note 3.   Rentals Under Long-Term Operating Leases

      The following are the future  minimum rent  receivables  under  cancelable
      long-term  operating  leases at June 30,  1999.  Although  the  leases are
      generally  cancelable  with a  penalty  at the  end of  each  twelve-month
      period,  the  following  schedule  assumes  that  the  leases  will not be
      terminated.

             Year ending June 30:

             2000.............................................             $394
             2001.............................................               91
             2002.............................................               70
             2003.............................................               64
             2004.............................................               29
                                                                           ----

             Total minimum future rentals receivable..........             $648
                                                                           ====

Note 4.   Direct Financing Leases

      The  components of the net investment in direct  financing  leases at June
      30, 1999 and December 31, 1998 are as follows:

                                                            1999           1998
                                                            ----           ----

      Future minimum lease payments receivable............ $ 454          $ 568
      Residual value......................................     3              2
      Less:  unearned income..............................   (66)          (103)
                                                            ----           ----

      Net investment in direct financing leases........... $ 391          $ 467
                                                            ====           ====

      The following is a schedule by year of minimum lease  payments  receivable
      under the twenty-seven direct financing leases as of June 30, 1999:

         Year ending June 30:

         2000...............................................           $ 321
         2001...............................................             107
         2002...............................................              12
         2003...............................................               8
         2004...............................................               6
                                                                        ----
         Total minimum lease payments receivable............           $ 454
                                                                        ====

      Rental income for the three and six-month  periods ended June 30, 1999 and
      1998  includes $21 and $46 and $38 and $70,  respectively,  of income from
      direct financing leases.

Note 5. Container Rental Equipment Write-Down

      New container  prices have been declining  since 1995, and the cost of new
      containers  at  year-end  1998  and  during  the  first  half of 1999  was
      significantly  less than the cost of containers  purchased in prior years.
      The  Partnership  evaluated the  recoverability  of the recorded amount of
      container  rental  equipment at June 30, 1999 and  December 31, 1998,  and
      determined  that a reduction to the carrying value of the containers  held
      for  continued  use was not  required,  but that a write-down  in value of
      certain containers identified for sale was required. During the year ended
      December  31,  1998 and the  six-month  period  ended June 30,  1999,  the
      Partnership  wrote-down the value of these  containers to their  estimated
      fair value, which was based on recent sales prices.

      At December 31, 1998, the  Partnership  recorded  additional  depreciation
      expense of $232 to write down the value of 954  containers  identified for
      sale in low demand  locations.  During the six-month period ended June 30,
      1999, the Partnership sold 647 of these previously written down containers
      for a loss of $58 and recorded an additional  depreciation expense of $256
      to  write  down  the  value  of  757  additional  containers  subsequently
      identified for sale in these locations. The Partnership incurred losses on
      the sale of containers  previously written down as the actual sales prices
      received during 1999 were lower than the estimates used for the write-down
      recorded in 1998, due to unexpected declines in container sales prices.

      If more containers in these or other low demand locations are subsequently
      identified as available for sale or if container  sales prices continue to
      decline,  the Partnership may incur  additional  write-downs on containers
      and/or may incur losses on the sale of containers.

Note 6.   Redemptions

      The following  redemptions were consummated by the Partnership  during the
      six-month period ended June 30, 1999:
<TABLE>
<CAPTION>
                                                              Units              Average
                                                             Redeemed        Redemption Price             Amount Paid
                                                             --------        ----------------             -----------

<S>                                                         <C>             <C>                          <C>
        Inception through December 31, 1998                    35,472             $10.86                      $  385
        Quarter ended:
              March 31, 1999....................                2,000            $  8.66                          17
                                                               ------                                           ----

        Partnership to date.....................               37,472             $10.73                      $  402
                                                               ======                                           ====
</TABLE>

      There were no redemptions during the six-month period ended June 30, 1998.
      The redemption price is fixed by formula.

Note 7.   Accounts Receivable Write-Off

      During  March  1998,   the   Partnership   wrote-off  $516  of  delinquent
      receivables  from two lessees against which reserves were recorded in 1994
      and 1995.

Note 8.   Readiness for Year 2000

      Many computer  systems may experience  difficulty  processing dates beyond
      the year 1999; as a  consequence,  some computer  hardware and software at
      many companies will need to be modified or replaced prior to the year 2000
      in order to remain functional. The Partnership relies on the financial and
      operating systems provided by the General Partners;  these systems include
      both information technology systems as well as non-information  technology
      systems.  There can be no assurance  that issues  related to the Year 2000
      will not have a material  impact on the  financial  condition,  results of
      operations or cash flows of the Partnership.

<PAGE>


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

(Amounts in thousands except for unit and per unit amounts)
--------------------------------------------------------------------------------

The Financial  Statements contain  information,  which will assist in evaluating
the financial condition of the Partnership as of and for the three and six-month
periods ended June 30, 1999 and 1998.  Please refer to the Financial  Statements
and Notes thereto in connection with the following discussion.

Liquidity and Capital Resources

From November 8, 1989 until January 15, 1991, the  Partnership  offered  limited
partnership  interests  to the  public.  The  Partnership  received  its minimum
subscription amount of $1,000 on December 19, 1989, and on January 15, 1991, the
Partnership had received its maximum subscription amount of $75,000.

From time to time,  the  Partnership  redeems units from limited  partners for a
specified  redemption  value,  which  is  set  by  formula.  Up  to  2%  of  the
Partnership's outstanding units may be redeemed each year, although the 2% limit
may be exceeded at the managing general  partner's  discretion.  All redemptions
are subject to the managing  general  partner's  good faith  determination  that
payment for the redeemed units will not (i) cause the Partnership to be taxed as
a  corporation,  (ii) impair the capital or  operations of the  Partnership,  or
(iii) impair the ability of the Partnership to pay  distributions  in accordance
with its distribution  policy.  During the six-month period ended June 30, 1999,
the  Partnership  redeemed  2,000 units for a total  dollar  amount of $17.  The
Partnership used excess cash to pay for the redeemed units.

The Partnership  invests working capital and cash flow from operations  prior to
its  distribution  to  the  partners  in  short-term,  liquid  investments.  The
Partnership's  cash is  affected  by  cash  provided  by or  used in  operating,
investing and financing  activities.  These  activities  are discussed in detail
below.

Limited  Partners  are  currently  receiving  monthly cash  distributions  in an
annualized amount equal to 8% of their original investment. During the six-month
period ended June 30, 1999,  the  Partnership  declared  cash  distributions  to
limited partners pertaining to the period from December 1998 through May 1999 in
the amount of $2,970.  On a cash basis,  $2,400 of these  distributions was from
operating  activities  and the  remainder was from excess cash. On a GAAP basis,
$2,849 of these  distributions  was a return of capital and the balance was from
net income.

At June 30, 1999 the Partnership had no commitments to purchase containers.

Net cash provided by operating  activities for the six-month  periods ended June
30, 1999 and 1998, was $2,400 and $3,477, respectively.  The decrease of $1,077,
or 31%, was primarily  attributable to the decrease in net earnings adjusted for
non-cash  transactions  and the  fluctuation in accounts  receivable,  excluding
write-offs,  offset by the fluctuation in due from affiliates, net. Net earnings
adjusted for non-cash  transactions  decreased  primarily  due to the decline in
rental  income,  which is discussed more fully in "Results of  Operations".  The
decrease in accounts  receivable of $133 for the six-month period ended June 30,
1999 was primarily due to the decline in rental income. For the six-month period
ended June 30, 1998, accounts receivable,  excluding  write-off,  decreased $575
primarily  due to a  decrease  in the  average  collection  period  of  accounts
receivable.  The fluctuations in due from  affiliates,  net resulted from timing
differences in the payment of expenses and fees and the remittance of net rental
revenues.

For the  six-month  periods  ended June 30, 1999 and 1998,  net cash provided by
investing  activities  (the purchase and sale of containers)  was $213 and $169,
respectively.  The increase of $44, or 26%, was primarily due to the decrease in
container  purchases,  offset by a decrease in sales  proceeds.  The decrease in
sales proceeds  resulted from lower average  container  sales prices received on
container  sales in 1999 offset by the  Partnership  having sold more containers
for the six-month  period ended June 30, 1999 compared to the equivalent  period
in 1998.  The increase in container  sales during 1999 was  primarily due to the
Partnership  having sold containers located in low demand locations as discussed
below in "Results of Operations". The Partnership also sells containers when (i)
a container  reaches  the end of its useful life and (ii) an analysis  indicates
that  the  sale  is  warranted  based  on  existing  market  conditions  and the
container's age, location and condition.  Until market conditions  improve,  the
Partnership plans to continue to sell certain  containers  located in low demand
locations and proceeds from container  sales will fluctuate  based on the number
of containers  sold and the actual sales price received on the sale of these and
other containers.

Consistent with its investment  objectives,  the Partnership intends to continue
to reinvest  available cash from  operations and all or a significant  amount of
the proceeds from container sales in additional containers.  However, the number
of additional  containers  purchased may not equal the number of containers sold
as new container  prices are likely to be greater than  proceeds from  container
sales.  Market  conditions have also had an adverse effect on the average amount
of sales proceeds  recently realized from container sales.  Additionally,  these
market  conditions  are  expected to  continue to have an adverse  effect on the
amount of cash provided by operations that is available for additional container
purchases,  which has also resulted in lower than  anticipated  reinvestment  in
containers.  Market  conditions  are  discussed  more fully  under  "Results  of
Operations".

Results of Operations

The  Partnership's  income (loss) from operations,  which consists  primarily of
rental income,  container  depreciation,  direct container expenses,  management
fees, and reimbursement of  administrative  expenses was directly related to the
size of the container fleet during the six-month periods ended June 30, 1999 and
1998, as well as certain other  factors as discussed  below.  The following is a
summary of the  container  fleet (in units)  available  for lease  during  those
periods:

                                                               1999        1998
                                                               ----        ----

                 Beginning container fleet...............     16,281      17,697
                 Ending container fleet..................     15,592      17,066
                 Average container fleet.................     15,937      17,382

The decline in the average container fleet of 8% from the six-month period ended
June 30,  1998 to the  comparable  period  ended  June  30,  1999 was due to the
Partnership  having sold more  containers than it purchased since June 30, 1998.
Although some of the sales proceeds were used to purchase additional containers,
fewer containers were bought than sold,  resulting in a net decrease in the size
of the container fleet. As noted above,  when containers are sold in the future,
sales  proceeds are not likely to be sufficient to replace all of the containers
sold.  This trend,  which is expected to continue,  has  contributed to a slower
rate of  reinvestment  than had been  expected  by the General  Partners.  Other
factors  related to this trend are  discussed  above in  "Liquidity  and Capital
Resources."

Rental income and direct container expenses are also affected by the utilization
of the container  fleet,  which was 72% and 80% on average during the six months
ended June 30, 1999 and 1998, respectively.  This decline in utilization, caused
by lower demand, had a significant  adverse effect on rental income as discussed
below. In addition,  rental income is affected by daily rental rates and leasing
incentives.

The  following is a comparative  analysis of the results of  operations  for the
six-month periods ended June 30, 1999 and 1998.

The  Partnership's  income from operations for the six-month periods ending June
30, 1999 and 1998 was $275 and $1,525,  respectively  on rental income of $4,064
and $5,089, respectively.  The decrease in rental income of $1,025, or 20%, from
the six-month  period ended June 30, 1998 to the  comparable  period in 1999 was
attributable  to decreases in container  rental income and other rental  income.
Income from container rentals,  the major component of total revenue,  decreased
$869, or 20%, primarily due to the decreases in the average on-hire  utilization
of 10%,  average  container  fleet of 8% and average  rental rates of 3%. Rental
income was also  adversely  affected  by the  increase  in  leasing  incentives;
however,  the decline in  utilization,  which is discussed  below,  had the most
significant adverse effect on rental income.

The decline in average utilization from the six-month period ended June 30, 1998
to the  equivalent  period in 1999 was  primarily due to lower demand for leased
containers.  Demand decreased  primarily due to (i) shipping lines continuing to
purchase  rather  than  lease  containers  as a result of  historically  low new
container  prices  and low  interest  rates  and (ii) the  growth  of the  trade
imbalance in Asia.  Rental rates have also declined as shipping lines  continued
to negotiate  lower rates as a result of this lower demand and the  historically
low container prices.

The trade  imbalance  has resulted in the  continuing  build-up of containers in
lower demand  locations.  The General  Partners have continued  their efforts to
reposition  newer  containers to higher demand locations in an effort to improve
utilization and alleviate container build-up. The Partnership continued to incur
increased direct container  expenses in 1999 as a result of this  repositioning.
For the near-term,  the General  Partners plan to monitor  market  conditions to
determine  whether  additional  repositioning  efforts  are  required.  However,
currently there are no significant repositioning efforts planned.

The  Partnership  also plans to continue to sell certain  containers  located in
lower demand  locations.  The decision to sell these  containers is based on the
current  expectation  that the economic  benefit of selling these containers and
using the  related  sales  proceeds to purchase  new  containers  in high demand
locations  is  greater  than the  economic  benefit of  continuing  to own these
containers.  The majority of the containers sold during 1998 and 1999 were older
containers  as  the  expected  economic  benefit  of  continuing  to  own  these
containers was significantly less than that of newer containers primarily due to
their shorter  remaining marine life and shipping lines'  preference for leasing
newer containers.

Because of the decision to sell  certain  containers  during 1998 and 1999,  the
Partnership wrote down the value of these specifically  identified containers to
their  estimated  fair value,  which was based on recent  sales  prices.  Due to
unanticipated  declines in  container  sales  prices,  the actual  sales  prices
received on these containers  during 1999 were lower than the estimates used for
the write-down recorded in 1998 and the first quarter of 1999,  resulting in the
Partnership incurring losses upon the sale of these containers.  The Partnership
recorded  additional  write-downs  during the second  quarter of 1999 on certain
containers,  which were identified as meeting the same criteria for sale.  Until
market conditions improve,  the Partnership may incur further write-downs and/or
losses on the sale of such  containers.  Should the decline in economic value of
continuing to own such containers turn out to be permanent,  the Partnership may
be required to increase its  depreciation  rate for or  write-down  the value of
container rental equipment.

For the near term,  the  General  Partners do not  foresee  material  changes in
existing  market  conditions and caution that both  utilization  and lease rates
could further decline, adversely affecting the Partnership's operating results.

Substantially  all of the  Partnership's  rental income was  generated  from the
leasing of the  Partnership's  containers under short-term  operating leases. At
June 30, 1999 and 1998, there were 236 and 211 containers under direct financing
leases, respectively.

The  balance of other  rental  income  consists  of other  lease-related  items,
primarily  income from charges to lessees for dropping off containers in surplus
locations less credits  granted to lessees for leasing  containers  from surplus
locations (location income), income from charges to lessees for handling related
to leasing and returning containers (handling income) and income from charges to
lessees for a Damage  Protection Plan (DPP). For the six-month period ended June
30, 1999,  the total of these other rental  income items was $506, a decrease of
$156 from the  equivalent  period in 1998.  The  decrease was  primarily  due to
decreases in location and handling income of $70 and $65, respectively. Location
income decreased  primarily due to a decrease in charges to lessees for dropping
off containers in certain  locations and an increase in credits given to lessees
for picking up containers from certain locations.  Handling income decreased due
to  decreases  in the  average  handling  price  charged  per  container  and in
container  movement during the six-month  period ended June 30, 1999 compared to
the equivalent period in 1998.

Direct container expenses increased $54, or 5%, from the six-month period ending
June 30, 1998 to the equivalent period in 1999,  primarily due to an increase in
storage  expense of $142,  offset by a decrease in  maintenance  expense of $74.
Storage expense increased due to the decrease in average utilization noted above
and due to an increase in the average  storage cost per  container.  Maintenance
expense decreased due to a decrease in the number of units requiring repair.

Bad debt expense  increased from a benefit of $75 for the six-month period ended
June 30, 1998 to an expense of $80 in the comparable  period in 1999. The effect
of insurance  proceeds received during the six-month period ended June 30, 1998,
relating to certain receivables against which reserves had been recorded in 1994
and 1995,  as well as the  resolution  of payment  issues with one lessee during
1998, were primarily responsible for the lower cost in 1998 and, therefore,  the
fluctuation in bad debt expense between the periods.

Depreciation expense decreased $146, or 8%, from the six-month period ended June
30, 1998 to the same period in 1999 primarily due to the decrease in fleet size.

New  container  prices  have  been  declining  since  1995,  and the cost of new
containers at year-end 1998 and during the first half of 1999, was significantly
less than the cost of  containers  purchased  in prior  years.  The  Partnership
evaluated  the  recoverability  of  the  recorded  amount  of  container  rental
equipment  at June  30,  1999 and  December  31,  1998,  and  determined  that a
reduction to the carrying value of the containers held for continued use was not
required,  but that a write-down in value of certain  containers  identified for
sale was  required.  During the year ended  December 31, 1998 and the  six-month
period  ended  June 30,  1999,  the  Partnership  wrote-down  the value of these
containers  to their  estimated  fair  value,  which was  based on recent  sales
prices.

At December 31, 1998, the Partnership  recorded additional  depreciation expense
of $232 to write  down the value of 954  containers  identified  for sale in low
demand  locations.  During  the  six-month  period  ended  June  30,  1999,  the
Partnership sold 647 of these  previously  written down containers for a loss of
$58 and recorded an  additional  depreciation  expense of $256 to write down the
value of 757  additional  containers  subsequently  identified for sale in these
locations.  The Partnership incurred losses on the sale of containers previously
written down as the actual sales prices received during 1999 were lower than the
estimates used for the write-down  recorded in 1998, due to unexpected  declines
in container sales prices.

If more  containers  in these or other low  demand  locations  are  subsequently
identified  as  available  for sale or if  container  sales  prices  continue to
decline,  the Partnership may incur additional  write-downs on containers and/or
may incur losses on the sale of containers.

Management  fees to affiliates  decreased $39, or 9%, from the six-month  period
ended June 30, 1998 to the comparable period in 1999 primarily due to a decrease
in equipment management fees. The decrease in equipment management fees resulted
primarily from the decrease in rental  income,  upon which the management fee is
primarily based,  and these fees were  approximately 7% of rental income for the
six-month  period  ended  June  30,  1999.  Equipment  management  fees  for the
six-month  period  ended June 30,  1998 were only 6% of rental  income due to an
adjustment resulting from the write-off of receivables for two leases. Incentive
management  fees,  which  are based on the  Partnership's  limited  and  general
partner  distributions and partners'  capital,  were comparable at $124 and $126
for the six-month periods ended June 30, 1999 and 1998, respectively.

General and administrative  costs to affiliates  decreased $63, or 21%, from the
six-month period ended June 30, 1998 to the comparable  period in 1999 primarily
due  to the  decrease  in the  allocation  of  overhead  costs  from  TEM as the
Partnership represented a smaller portion of the total fleet managed by TEM.

Other income  decreased from income of $130 for the six-month  period ended June
30, 1998 to an expense of $123 for the  equivalent  period in 1999. The decrease
was primarily due to the  fluctuation of gain/loss on sale of containers  from a
gain of $90 for the  six-month  period ended June 30, 1998 to a loss of $174 for
the equivalent  period in 1999. The loss on sale of containers  recorded in 1999
was due to the  Partnership  having sold  containers  with higher book values at
lower average sales prices per container than in the  comparable  period in 1998
and due to the loss recorded on the sale of containers  previously  written down
as discussed above.

Net earnings per limited partnership unit decreased from $0.44 to $0.03 from the
six-month period ending June 30, 1998 to the same period in 1999, reflecting the
decrease in net  earnings  allocated  to limited  partners  from $1,624 to $121,
respectively.  The allocation of net earnings  included a special  allocation of
gross  income  to the  General  Partners  in  accordance  with  the  Partnership
Agreement.


The  following is a comparative  analysis of the results of  operations  for the
three-month periods ended June 30, 1999 and 1998.

The  Partnership's  loss from operations for the three-month  period ending June
30, 1999 was $19 on rental income of $1,961,  compared to income from operations
of $759 on rental  income  of  $2,533  for the  comparable  period in 1998.  The
decrease in rental  income of $572, or 23%,  from the  three-month  period ended
June 30, 1998 to the comparable  period in 1999 was attributable to decreases in
container rental income and other rental income.  Income from container  rentals
decreased $476, or 21%, due to decreases in average on-hire  utilization of 10%,
average  container  fleet  of 8%,  and  average  rental  rates  of  3%.  Leasing
incentives  also  increased;  however,  the decline in utilization  had the most
significant adverse effect on rental income.

For the three-month  period ended June 30, 1999, other rental income was $215, a
decrease  of $96 from the  equivalent  period in 1998.  Other  income  decreased
primarily  due to  decreases  in location  and  handling  income of $57 and $27,
respectively.  Location income  decreased due to an increase in credits given to
lessees  for picking up  containers  from  certain  locations.  Handling  income
decreased due to a decrease in the average handling price charged per container,
offset by an increase in container  movement during the three-month period ended
June 30, 1999 compared to the equivalent period in 1998.

Direct  container  expenses  increased $75, or 13% from the  three-month  period
ending  June 30, 1998 to the  equivalent  period in 1999,  primarily  due to the
increases in DPP and storage expenses of $83 and $70, respectively,  offset by a
decrease in maintenance expense of $55. DPP expense increased primarily due to a
higher average DPP cost per container and a greater number of containers covered
by DPP during the  three-month  period ended June 30, 1999  compared to the same
period  in 1998.  Storage  expense  increased  due to the  decrease  in  average
utilization  noted above and due to an increase in the average  storage cost per
container.  Maintenance  expense  decreased  due to a decrease  in the number of
units requiring repair.

Bad debt  expense  increased  from a benefit of $54 for the  three-month  period
ended June 30, 1998 to an expense of $21 for the comparable  period in 1999. The
resolution of payment  issues with one lessee during 1998 and lower 1998 reserve
requirements  were  primarily  responsible  for the  lower  cost  in  1998  and,
therefore, the fluctuation in bad debt expense between the periods.

Depreciation  expense  decreased $79, or 9%, from the  three-month  period ended
June 30, 1998 to the comparable  period in 1999 primarily due to the decrease in
fleet size.

During the  three-month  period ended June 30, 1999,  the  Partnership  sold 344
previously  written down containers for a loss of $23 and recorded an additional
depreciation  expense  of  $195  to  write  down  the  value  of 253  additional
containers subsequently identified for sale in certain low demand locations.

Management fees to affiliates decreased $40, or 17%, from the three-month period
ended June 30,  1998 to the  comparable  period in 1999,  due to a  decrease  in
equipment  management  fees. The decrease in equipment  management fees resulted
from the  decrease in rental  income,  and these fees were  approximately  7% of
rental income for both periods.

General and administrative  costs to affiliates  decreased $31, or 22%, from the
three-month  period  ended  June  30,  1998  to the  comparable  period  in 1999
primarily due to a decrease in the allocation of overhead costs from TEM.

Other expense  increased $74 from the three-month  period ended June 30, 1998 to
the  comparable  period in 1999. The increase was due to the increase in loss on
sale of containers of $78 resulting  primarily from the Partnership  having sold
containers  with higher book values at lower average sales prices and due to the
loss recorded on the sale of containers previously written down.

Net earnings per limited  partnership  unit decreased from earnings of $0.19 for
the  three-month  period  ending  June  30,  1998  to a loss  of  $0.04  for the
equivalent  period in 1999. This decrease  reflects the decrease in net earnings
allocated to limited partners,  from earnings of $719 for the three-month period
ending June 30, 1998 to a loss of $132 for the  equivalent  period in 1999.  The
allocation of net earnings (loss) included a special  allocation of gross income
to the General Partners in accordance with the Partnership Agreement.

Although  substantially  all of the  Partnership's  income  from  operations  is
derived from assets employed in foreign operations, virtually all of this income
is  denominated  in United  States  dollars.  The  Partnership's  customers  are
international  shipping  lines,  which transport  goods on  international  trade
routes.  The  domicile  of the lessee is not  indicative  of where the lessee is
transporting  the  containers.  The  Partnership's  business risk in its foreign
operations lies with the  creditworthiness of the lessees, and the Partnership's
ability to keep its containers under lease,  rather than the geographic location
of the  containers or the domicile of the lessees.  The containers are generally
operated on the international high seas rather than on domestic  waterways.  The
containers are subject to the risk of war or other political, economic or social
occurrence  where  the  containers  are used,  which  may  result in the loss of
containers,  which,  in turn,  may have a material  impact on the  Partnership's
results of operations  and  financial  condition.  The General  Partners are not
aware of any  conditions as of June 30, 1999,  which would result in such a risk
materializing.

Other risks of the Partnership's  leasing  operations include  competition,  the
cost of  repositioning  containers  after  they come  off-lease,  the risk of an
uninsured  loss,  increases in maintenance  expenses or other costs of operating
the  containers,  and the effect of world trade,  industry trends and/or general
business and economic cycles on the Partnership's operations. See "Risk Factors"
in the Partnership's Prospectus, as supplemented,  for additional information on
risks of the Partnership's business.

Readiness for Year 2000

Many computer systems may experience difficulty processing dates beyond the year
1999; as a  consequence,  some computer  hardware and software at many companies
will need to be modified  or replaced  prior to the year 2000 in order to remain
functional.  The  Partnership  relies on the  financial  and  operating  systems
provided  by the  General  Partners;  these  systems  include  both  information
technology (IT) systems as well as non-information  technology (non-IT) systems.
For  IT  and   non-IT   systems   developed   by   independent   third   parties
(externally-developed)  the General Partners have obtained  representations from
their vendors and suppliers  that these systems are Year 2000 compliant and have
internally tested mission critical systems as operational.  The General Partners
have  reviewed  all  internally-developed  IT and non-IT  systems  for Year 2000
issues and  identified  certain of these systems which  required  revision.  The
General  Partners have  completed  the revision and testing of these  identified
systems, and these revised systems are now operational.

The cost of the revisions and testing  relating to these systems was incurred by
TEM and a  portion  of the  cost was  allocated  to the  Partnership  as part of
general and administrative costs allocated from TEM during 1998. While Year 2000
remediation costs were not specifically  identified,  it is estimated that total
Year 2000 related  expenses  included in allocated  overhead  from TEM were less
than $15. The Partnership and the General  Partners do not anticipate  incurring
significant additional remediation costs related to the Year 2000 issue in 1999.
There has been no material effect on the Partnership's  financial  condition and
results of operations as a result of TEM's delay in routine systems  projects as
a result of Year 2000 remediation.

As noted  above,  Year 2000  compliance  testing was  undertaken  by the General
Partners  on  both  externally-  and  internally-developed   systems.   Standard
transactions  were  processed  under  simulated  operating  conditions for dates
crossing  over  January  1, 2000 as well as for  other  critical  dates  such as
February 29, 2000. In the standard  business  scenarios  tested,  the identified
systems  appeared  to  function  correctly.   Under  nonstandard  conditions  or
unforeseen  scenarios,  the results may be  different.  Therefore,  these tests,
regardless of how  carefully  they were  conducted,  cannot  guarantee  that the
General  Partners'  systems  will  function  without  error in the Year 2000 and
beyond.  If these  systems  are not  operational  in the Year 2000,  the General
Partners have determined that they can operate manually for approximately two to
three months while correcting the system problems before  experiencing  material
adverse  effects on the  Partnership's  and the General  Partners'  business and
results of operations.  However,  shifting  portions of the daily  operations to
manual  processes  may result in time  delays and  increased  processing  costs.
Additionally,  the Partnership  and General  Partners may not be able to provide
lessees  with timely and  pertinent  information,  which may  negatively  affect
customer  relations and lead to the potential  loss of lessees,  even though the
immediate  monetary  consequences  of this  would  be  limited  by the  standard
Partnership lease agreements between the lessees and the Partnership.

The Partnership and the General Partners are also continuing their assessment of
Year 2000  issues  with third  parties,  comprised  of  lessees,  manufacturers,
depots,  and other  vendors and  suppliers,  with whom the  Partnership  and the
General  Partners  have  a  material  business   relationship  (Third  Parties).
Non-compliance  by other Third Parties is not expected to have a material effect
on the Partnership's results of operations and financial condition.  The General
Partners have sent letters to the Partnership's  lessees and other Third Parties
requesting  representations  on their Year 2000 readiness.  The General Partners
have received  responses to 90% of these letters with all but seven  respondents
representing that they are or will be Year 2000 compliant.  The General Partners
are continuing to follow up with  non-respondents  and will continue to identify
additional   Third  Parties  whose  Year  2000  readiness  should  be  assessed.
Non-compliance by these seven  respondents and by the remaining  non-respondents
is not  expected  to  have  a  material  adverse  effect  on  the  Partnership's
operations or financial condition.

Nevertheless,  the  Partnership and the General  Partners  believe that they are
likely to encounter Year 2000 problems with certain Third Parties,  particularly
those  with  significant  operations  within  countries  that  are not  actively
promoting  correction of Year 2000 issues.  Possible  consequences  of Year 2000
non-compliance  among Third Parties  include,  but are not limited to, (i) TEM's
inability  to  provide  service to certain  areas of the world,  (ii)  delays in
container  movement,  (iii)  payment  and  collection  difficulties,   and  (iv)
invoicing errors due to late reporting of transactions.  These types of problems
could  result in  additional  operating  costs and loss of lessee  business.  As
discussed  above,  the General  Partners are prepared to shift portions of their
daily operations to manual processes in the event of Third Party non-compliance.
With respect to manufacturers, vendors and other suppliers, the General Partners
would also  attempt  to find  alternate  sources  for goods and  services.  With
respect to depots and agents who handle,  inspect or repair  containers,  if the
majority of the  computer  systems  and  networks  of TEM are  operational,  the
General Partners believe that they will be able to compensate manually for these
Third  Parties'  failures  (e.g.,  one field  office  performing  data entry for
another,  communication  with  depots  conducted  without  computers),  by using
temporary  personnel at additional cost.  Although costs will be incurred to pay
for the temporary  personnel,  the Partnership  and the General  Partners do not
expect these costs to be material to the  Partnership.  With respect to lessees'
non-compliance,   the  General  Partners  would  compensate  for  communications
failures  manually.  If a  lessee's  noncompliance  is broad  enough to  disrupt
significantly  the  operations of its shipping  business,  the resulting loss of
revenue could result in the lessee renting fewer containers. The Partnership and
the  General  Partners  are unable to  estimate  the  financial  impact of these
problems,  but to the extent that lessees'  problems result in weakening  demand
for  containers,  the  Partnership's  results  of  operations  would  likely  be
adversely  affected.  If Year 2000  problems  result  in delays in  collections,
either  because of the additional  time required to communicate  with lessees or
because of  lessees'  loss of  revenues,  the  Partnership's  cash flow could be
affected and distributions to general and limited partners could be reduced. The
Partnership  and the General  Partners  believe that these risks are inherent in
the industry and are not specific to the Partnership or General Partners.

Forward Looking Statements and Other Risk Factors Relating to the Year 2000

The foregoing analysis of Year 2000 issues includes  forward-looking  statements
and  predictions  about  possible or future  events,  results of operations  and
financial condition. As such, this analysis may prove to be inaccurate,  because
of the  assumptions  made by the  Partnership  and the  General  Partners or the
actual development of future events. No assurance can be given that any of these
forward-looking  statements and predictions  will ultimately prove to be correct
or  even  substantially  correct.  Some  of the  risks  relating  to  Year  2000
compliance are described above. In addition,  in analyzing Year 2000 issues, the
Partnership and the General Partners have assumed that the infrastructure of the
United States and most other  countries,  including  ports and customs,  remains
intact.  If the  infrastructure  of one or  more  countries  were to  fail,  the
resulting  business  disruption  would  likely  have an  adverse  effect  on the
Partnership and the General  Partners.  The Partnership and General Partners are
unable to determine a reasonably  likely worst case  scenario in the event of an
infrastructure failure or failures.

Various  other risks and  uncertainties  could also affect the  Partnership  and
could affect the Year 2000 analysis, causing the effect on the Partnership to be
more severe than discussed above. These risks and uncertainties include, but are
not limited to, the following.  The Partnerships' and the General Partners' Year
2000 compliance testing cannot guarantee that all computer systems will function
without error beyond the Year 2000. Tests were only conducted of normal business
scenarios, and no independent verification or testing was used. Risks also exist
with respect to Year 2000 compliance by Third Parties,  such as the risk that an
external  party,  who may have no  relationship  to the  Partnership  or General
Partners, but who has a significant relationship with one or more Third Parties,
may have a system failure that adversely  affects the  Partnership's  ability to
conduct  its  business.  While the  Partnership  and the  General  Partners  are
attempting  to identify such  external  parties,  no assurance can be given that
they will be able to do so. Furthermore, Third Parties with direct relationships
with the  Partnership,  whose systems have been  identified as likely to be Year
2000 compliant,  may suffer a breakdown due to unforeseen  circumstances.  It is
also possible that the representations and warranties collected in good faith by
the General  Partners from these Third Parties  regarding their  compliance with
Year  2000  issues  may be  incorrect,  as the  information  collected  was  not
independently verified by the General Partners. Finally, it should be noted that
the  foregoing  discussion  of Year 2000 issues  assumes  that to the extent the
General Partners'  systems fail,  either because of unforeseen  complications or
because of Third Parties' failure, switching to manual operations will allow the
Partnership to continue to conduct its business.  While the  Partnership and the
General Partners  believe this assumption to be reasonable,  if it is incorrect,
the Partnership's results of operations would likely be adversely affected.


<PAGE>




                                   SIGNATURES


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


                                     TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                                     A California Limited Partnership

                                     By Textainer Financial Services Corporation
                                     The Managing General Partner



                                     By _______________________________
                                        John R. Rhodes
                                        Executive Vice President


Date:  August 13, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer  Financial
Services  Corporation,  the Managing  General Partner of the Registrant,  in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>

Signature                                Title                                          Date


<S>                                      <C>                                            <C>
________________________                 Executive Vice President,                      August 13, 1999
John R. Rhodes                           (Principal Financial and
                                         Accounting Officer) and
                                         Secretary




________________________                 President (Principal Executive                 August 13, 1999
John A. Maccarone                        Officer)



</TABLE>
<PAGE>



                                   SIGNATURES


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


                                     TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                                     A California Limited Partnership

                                     By Textainer Financial Services Corporation
                                     The Managing General Partner



                                     By /s/John R. Rhodes
                                        _______________________________
                                        John R. Rhodes
                                        Executive Vice President


Date: August 13, 1999


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer  Financial
Services  Corporation,  the Managing  General Partner of the Registrant,  in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>

Signature                                   Title                                             Date



<S>                                      <C>                                            <C>
/s/John R. Rhodes                        Executive Vice President,                      August 13, 1999
________________________                 (Principal Financial and
John R. Rhodes                           Accounting Officer) and
                                         Secretary



/s/John A. Maccarone                     President (Principal Executive                 August 13, 1999
________________________                 Officer)
John A. Maccarone


</TABLE>