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


August 13, 1998


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 10Q for the Second
Quarter ended June 30, 1998.

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 10Q



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


                  For the quarterly period ended June 30, 1998


                         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 10Q for the
Quarter Ended June 30, 1998

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

<S>                                                                                                           <C>
                                                                                                               Page


Item 1.   Financial Statements

          Balance Sheets - June 30, 1998 (unaudited) and December 31, 1997..................................    3


          Statements of Earnings for the three and six months
          ended June 30, 1998 and 1997 (unaudited)..........................................................    4


          Statements of Partners' Capital for the six months
          ended June 30, 1998 and 1997 (unaudited)..........................................................    5


          Statements of Cash Flows for the six months
          ended June 30, 1998 and 1997 (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, 1998 and December 31, 1997
(Amounts in thousands)
----------------------------------------------------------------------------------------------------------------


<S>                                                                           <C>                  <C>
                                                                                  1998                 1997
                                                                              --------------       -------------
                                                                               (unaudited)
Assets
Container rental equipment, net of accumulated
    depreciation of $21,608 (1997:  $22,257)                                $        36,465      $       38,315
Cash                                                                                  1,611                 981
Net investment in direct financing leases (note 7)                                      551                 493
Accounts receivable, net of allowance for doubtful
     accounts of $377 (1997:  $1,024) (note 8)                                        2,420               2,864
Due from affiliates, net (note 5)                                                       234                 117
Prepaid expenses                                                                         63                  95
                                                                              --------------       -------------
                                                                            $        41,344      $       42,865
                                                                              ==============       =============
Liabilities and Partners' Capital
Liabilities:
   Accounts payable                                                         $           306      $          254
   Accrued liabilities                                                                  135                 152
   Accrued damage protection plan costs (note 2)                                        232                 226
   Warranty claims (note 3)                                                             492                 599
   Container purchases payable                                                          247                 342
   Deferred quarterly distributions                                                      75                  77
                                                                              --------------       -------------
      Total liabilities                                                               1,487               1,650
                                                                              --------------       -------------

Partners' capital:
   General partners                                                                     (90)                (90)
   Limited partners                                                                  39,947              41,305
                                                                              --------------       -------------
      Total partners' capital                                                        39,857              41,215
                                                                              --------------       -------------
Commitments (note 10)
                                                                            $        41,344      $       42,865
                                                                              ==============       =============

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND II, L.P.
(a California Limited Partnership)

Statements of Earnings

For the three and six months ended June 30, 1998 and 1997  (Amounts in thousands
except for unit and per unit amounts) (unaudited)
------------------------------------------------------------------------------------------------------------------------------------


<S>                                                            <C>               <C>               <C>                 <C>
                                                                 Three months      Three months       Six months          Six months
                                                                        Ended             Ended            Ended               Ended
                                                                June 30, 1998     June 30, 1997    June 30, 1998       June 30, 1997
                                                               --------------    --------------    -------------       -------------
Rental income                                                  $        2,533    $        2,548    $       5,176       $       5,072
                                                               --------------    --------------    -------------       -------------

Costs and expenses:
   Direct container expenses                                              558               553            1,176                 950
   Bad debt (benefit) expense                                             (54)               64              (75)                 52
   Depreciation                                                           865             1,277            1,732               2,284
   Professional fees                                                       11                 9               17                  16
   Management fees to affiliates (note 5)                                 240               242              449                 479
   General and administrative costs to affiliates (note 5)                141               173              307                 352
   Other general and administrative costs                                  13                30               45                  63
                                                               --------------    --------------    -------------       -------------
                                                                        1,774             2,348            3,651               4,196
                                                               --------------    --------------    -------------       -------------
   Income from operations                                                 759               200            1,525                 876
                                                               --------------    --------------    -------------       -------------

Other (expense) income:
   Interest income                                                         23                17               40                  42
   (Loss) gain on sale of containers                                      (47)               75               90                  81
                                                               --------------    --------------    -------------       -------------
                                                                          (24)               92              130                 123
                                                               --------------    --------------    -------------       -------------
   Net earnings                                                $          735    $          292    $       1,655       $         999
                                                               ==============    ==============    =============       =============

Allocation of net earnings (note 5):
   General partners                                            $           16    $           16    $          31       $          31
   Limited partners                                                       719               276            1,624                 968
                                                               --------------    --------------    -------------       -------------
                                                               $          735    $          292    $       1,655       $         999
                                                               ==============    ==============    =============       =============

Limited partners' per unit share
   of net earnings                                             $         0.19    $         0.07    $        0.44       $        0.26
                                                               ==============    ==============    =============       =============

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

Weighted average number of limited
   partnership units outstanding                                    3,726,977         3,726,977        3,726,977           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, 1998 and 1997
(Amounts in thousands)
(unaudited)
------------------------------------------------------------------------------------------------------------

                                                                       Partners' Capital
                                                    --------------------------------------------------------
                                                      General              Limited               Total
                                                    -------------       --------------       ---------------
<S>                                                 <C>                <C>                   <C>

Balances at January 1, 1997                       $          (90)     $        44,617      $         44,527

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

Redemptions (note 9)                                           -                   (1)                   (1)

Net earnings                                                  31                  968                   999
                                                    -------------       --------------       ---------------

Balances at June 30, 1997                         $          (90)     $        42,602      $         42,512
                                                    =============       ==============       ===============

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


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, 1998 and 1997
(Amounts in thousands)
(unaudited)
-----------------------------------------------------------------------------------------------------------------------

<S>                                                                                  <C>                  <C>
                                                                                         1998                 1997
                                                                                     -------------        -------------
Cash flows from operating activities:
   Net earnings                                                                    $        1,655       $          999
   Adjustments to reconcile net earnings to
     net cash provided by operating activities:
        Depreciation                                                                        1,732                2,284
        Decrease in allowance for doubtful accounts, excluding
            write-off (note 8)                                                               (131)                  (3)
        Gain on sale of containers                                                            (90)                 (81)
        Changes in assets and liabilities:
           Proceeds from principal payments of direct financing leases                        109                  143
           Decrease in accounts receivable, excluding write-off (note 8)                      575                   96
           (Increase) decrease in due from affiliates, net                                   (339)               1,461
           Decrease in prepaid expenses                                                        32                   13
           Increase in accounts payable and accrued liabilities                                35                   96
           Increase (decrease) in accrued damage protection plan costs                          6                  (51)
           Decrease in warranty claims                                                       (107)                (106)
                                                                                     -------------        -------------
              Net cash provided by operating activities                                     3,477                4,851
                                                                                     -------------        -------------

Cash flows from investing activities:
   Proceeds from sale of containers                                                         1,784                1,426
   Container purchases                                                                     (1,615)              (4,087)
                                                                                     -------------        -------------
              Net cash provided by (used in) investing activities                             169               (2,661)
                                                                                     -------------        -------------

Cash flows from financing activities:
   Redemptions of limited partnership units                                                     -                   (1)
   Distributions to partners                                                               (3,016)              (3,022)
                                                                                     -------------        -------------
              Net cash used in financing activities                                        (3,016)              (3,023)
                                                                                     -------------        -------------

Net increase (decrease) in cash                                                               630                 (833)

Cash at beginning of period                                                                   981                1,655
                                                                                     -------------        -------------
Cash at end of period                                                              $        1,611       $          822
                                                                                     =============        =============


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, 1998 and 1997
(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, 1998 and 1997, and December 31, 1997 and 1996, 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, 1998 and 1997. <TABLE> <CAPTION>

                                                                Jun. 30       Dec. 31          Jun. 30       Dec. 31
                                                                  1998           1997            1997           1996
                                                            -----------    -----------    ------------     ----------
<S>                                                         <C>            <C>            <C>              <C>
Container purchases included in:
     Due to affiliates..............................        $       50      $     (3)      $       15      $      27
     Container purchases payable....................               247            342             750            426

Distributions to partners included in:
     Due to affiliates..............................                 5              6               6             10
     Deferred quarterly distributions...............                75             77              72             77

Proceeds from sale of containers included in:
     Due from affiliates............................               396            566             639            498

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, 1998 and 1997.

                                                                                                 1998           1997
                                                                                                 ----           ----

Container purchases recorded......................................................           $  1,573       $  4,399
Container purchases paid..........................................................              1,615          4,087

Distributions to partners declared................................................              3,013          3,013
Distributions to partners paid....................................................              3,016          3,022

Proceeds from sale of containers recorded.........................................              1,614          1,567
Proceeds from sale of containers received.........................................              1,784          1,426


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, 1998 and 1997  (Amounts in thousands
except for 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  and  leases  a fleet of  intermodal  marine  cargo
      containers which are leased to international shipping lines.

      The accompanying  interim comparative  financial  statements have not been
      audited by an independent  public  accountant.  However,  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, 1998 and December  31,  1997,  and the
      results of its operations, changes in partners' capital and cash flows for
      the three- and six-month  periods ended June 30, 1998 and 1997,  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, 1997,
      in the Annual Report filed on Form 10K.

      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 to conform with 1998 financial statement presentation.

Note 2.   Damage Protection Plan

      The  Partnership  offers a Damage  Protection Plan (DPP) to lessees of its
      containers.  Under  the terms of DPP,  the  Partnership  earns  additional
      revenues  on a daily  basis  and,  in return,  has agreed to bear  certain
      repair costs.  It is the  Partnership's  policy to recognize  revenue when
      earned  and to  provide a reserve  sufficient  to cover the  Partnership's
      obligation for estimated future repair costs. DPP expenses are included in
      direct  container  expenses in the  Statements of Earnings and the related
      reserve  at June 30,  1998  and  December  31,  1997,  was $232 and  $226,
      respectively.

Note 3.   Warranty Claims

      During  1992,  1993 and 1995,  the  Partnership  settled  warranty  claims
      against an  equipment  manufacturer  relating to certain  containers.  The
      Partnership  is  amortizing  the  settlement  amounts  over the  remaining
      estimated useful life of these  containers  (between six and seven years),
      reducing maintenance and repair costs over that time. At June 30, 1998 and
      December 31, 1997, the  unamortized  portion of the settlement  amount was
      $492 and $599, respectively.

Note 4.   Acquisition of Containers

      During the six-month periods ended June 30, 1998 and 1997, the Partnership
      purchased containers with a cost of $1,573 and $4,399, respectively.

Note 5.   Transactions with Affiliates

      Textainer  Financial  Services  Corporation  (TFS) is the managing general
      partner of the Partnership.  TFS 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. The General
      Partners  also  act in  this  capacity  for  other  limited  partnerships.
      Textainer  Acquisition  Services  Limited  (TAS)  is an  affiliate  of the
      General  Partners which performs  services  relative to the acquisition of
      containers  outside the United States on behalf of the  Partnership.  TCC,
      TEM, TL and TAS are  subsidiaries  of  Textainer  Group  Holdings  Limited
      (TGH).  The  General  Partners  manage  and  control  the  affairs  of the
      Partnership.

      In accordance with the Partnership Agreement,  net earnings  or losses and
      partnership distributions are allocated 1% to the General Partners and 99%
      to the limited  partners, with the exception of gross income as defined in
      the  Partnership Agreement.  Gross  income  is  allocated  to the  General
      Partners  to the extent that their  partners' capital  accounts   deficits
      exceed the portion of syndication and offering costs allocated to them. On
      termination  of the  Partnership, the General  Partners shall be allocated
      gross income equal to their allocations of syndication and offering costs.

      As part of the operation of the Partnership,  the Partnership is to pay to
      the General Partners,  or TAS, an acquisition fee, an incentive management
      fee, an equipment  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  $74  and  $194  of  equipment  acquisition  fees  as  part of
      container rental  equipment costs during the six-month  periods ended June
      30, 1998 and 1997.  The  Partnership  incurred  $63 and $126 of  incentive
      management  fees during the three- and  six-month  periods  ended June 30,
      1998 and 1997. No equipment  liquidation  fees were incurred during either
      period.

      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
      container leasing operations; such cash is included in the amount due from
      affiliates, net at June 30, 1998 and December 31, 1997.

      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  $177 and $323 for the three-  and  six-month  periods
      ended June 30, 1998 and $179 and $353 for the comparable  periods in 1997.
      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.  For the  three-  and
      six-month  periods ended June 30, 1998,  total general and  administrative
      costs  allocated to the  Partnership  were $141 and $307, of which $60 and
      $128 were for salaries.  Total general and administrative  costs allocated
      to the Partnership were $173 and $352 for the three- and six-month periods
      ended June 30, 1997, of which $95 and $187 were for salaries.

      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.  General and
      administrative  costs  allocated to the  Partnership  by TEM were $127 and
      $277 for the three- and  six-month  periods  ended June 30,  1998 and were
      $148 and $305 for the  comparable  periods in 1997.  TFS allocated $14 and
      $30 of general  and  administrative  costs to the  Partnership  during the
      three- and six-month periods ended June 30, 1998 and allocated $25 and $47
      for the comparable periods in 1997.

      The General  Partners or TAS 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  or TAS  are  entitled  to an  acquisition  fee  for any
      containers resold to the Partnership.

      At June 30,  1998 and  December  31,  1997,  due from  affiliates,  net is
      comprised of:

                                                            1998            1997
                                                            ----            ----
      Due from affiliates:
          Due from TEM................................... $  316          $  152
                                                           -----           -----

      Due to affiliates:
          Due to TFS.....................................     20              25
          Due to TL......................................      1               1
          Due to TAS.....................................     46               -
          Due to TCC.....................................     15               9
                                                           ------          -----
                                                              82              35
                                                           ------          -----
      Due from affiliates, net                            $  234          $  117
                                                           ======          =====

      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 or in the accrual and  remittance of net rental
      revenues from TEM.

      It is the policy of the  Partnership  and the  General  Partners to charge
      interest on amounts due to the General  Partners which are outstanding for
      more than one  month,  to the  extent  such  balances  relate to loans for
      container  purchases.  Interest is charged at a rate not greater  than the
      General Partners' or affiliates' own cost of funds.  There was no interest
      expense incurred on amounts due to the General Partners for the three- and
      six-month periods ended June 30, 1998 or 1997.

Note 6.   Rentals Under Operating Leases

      The following are the future  minimum rent  receivables  under  cancelable
      long-term  operating  leases at June 30,  1998.  Although  the  leases are
      generally  cancelable  at  the  end of  each  twelve-month  period  with a
      penalty,  the  following  schedule  assumes  that the  leases  will not be
      terminated.

              Year ending June 30:

              1999.............................................           $  397
              2000.............................................               38
              2001.............................................                7
              2002.............................................                2
              2003.............................................                1
                                                                            ----

              Total minimum future rentals receivable..........           $  445
                                                                            ====

Note 7.   Direct Financing Leases

      The  components of the net investment in direct  financing  leases at June
      30, 1998 and December 31, 1997 are as follows:

                                                                 1998       1997
                                                                 ----       ----

      Future minimum lease payments receivable............      $ 711     $ 650
      Less:  unearned income..............................       (160)     (157)
                                                                 ----      -----

      Net investment in direct financing leases...........      $ 551     $ 493
                                                                 ====      =====

      The following is a schedule by year of minimum lease  payments  receivable
      under the sixteen direct financing leases as of June 30, 1998:

             Year ending June 30:

             1999...............................................          $  343
             2000...............................................             305
             2001...............................................              63
                                                                            ----

             Total minimum lease payments receivable............          $  711
                                                                            ====

      Rental income for the three- and six-month periods ended June 30, 1998 and
      1997  includes $38 and $70 and $30 and $61,  respectively,  of income from
      direct financing leases.


Note 8.   Accounts Receivable Write-Off

      During  the  six-month  period  ending  June  30,  1998,  the  Partnership
      wrote-off $516 of delinquent  receivables  from two lessees  against which
      reserves were recorded in 1994 and 1995.

Note 9.   Redemptions

      The following  redemption  offerings were  consummated by the  Partnership
      during the six-month period ended June 30, 1997:
<TABLE>
<CAPTION>

                                                 Units                   Average
                                                Redeemed            Redemption Price           Amount Paid
<S>                                           <C>                      <C>                    <C>
      Balance at December 31, 1996.......        22,897                   $11.56                 $ 265

      Quarter ended:
        March 31, 1997...................           126                    $8.71                     -
                                                 ------                                           ----
                                                      1

        Partnership to date..............        23,023                   $11.55                $  266
                                                 ======                                           ====
</TABLE>


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

Note 10.  Commitments

     At June  30,  1998,  the  Partnership  has  committed  to  purchase  61 new
     containers at an  approximate  total  purchase price of $202 which includes
     acquisition  fees of $10. These  commitments were made to TAS which, as the
     contracting  party,  has in turn committed to purchase these  containers on
     behalf 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  for the three- and  six-month  periods
ended June 30, 1998 and 1997. 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, 1998,
the Partnership did not redeem any 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.

During the six-month  period ended June 30, 1998, the Partnership  declared cash
distributions  to limited  partners  pertaining to the period from December 1997
through May 1998 in the amount of $2,982. These distributions represent a return
of 8% on original capital  (measured on an annualized  basis) on each unit. On a
cash basis, all of these  distributions  were from operations.  On a GAAP basis,
$1,358 of these  distributions  was a return of capital and the balance was from
net income.

At June 30, 1998, the Partnership had committed to purchase 61 new containers at
an approximate  total purchase price of $202 which includes  acquisition fees of
$10. At June 30, 1998 the  Partnership had sufficient cash on hand to meet these
commitments.  In  the  event  the  Partnership  decides  not to  purchase  these
containers,  one of the General Partners or an affiliate of the General Partners
will acquire the containers for its own account.

Net cash provided by operating  activities for the six-month periods ending June
30, 1998 and 1997, was $3,477 and $4,851, respectively.  The decrease of $1,374,
or 28%, is primarily  attributable  to an increase in due from  affiliates,  net
offset by an increase in net earnings. Due from affiliates, net decreased $1,461
for the  six-month  period  ending June 30, 1997 compared to an increase of $339
for the  comparable  period  in  1998.  The  fluctuation  resulted  from  timing
differences  in payment of expenses and fees and or in  remittance of net rental
revenues.  The increase in net earnings of $656, or 66%, resulted primarily from
an increase in other rental revenue which is discussed more fully in "Results of
Operations."

For the six-month  period  ending June 30, 1998,  net cash provided by investing
activities  (the purchase and sale of containers)  was $169 compared to net cash
used in investing  activities of $2,661 for the  comparable  period in 1997. Net
cash  provided by investing  activities  increased  $2,830  primarily due to the
Partnership  having purchased more containers  during the six-month period ended
June 30,  1997 than in the  comparable  period  in 1998.  The  General  Partners
believe these  differences  reflect normal  fluctuations  in container sales and
purchases.  However,  recent container  purchases  (reinvestment)  are currently
lower than  anticipated  due to the adverse effect of market  conditions on cash
available for  reinvestment.  Market  conditions  are discussed more fully under
"Results  of  Operations".   Consistent  with  its  investment  objectives,  the
Partnership  intends to reinvest all or a  significant  amount of proceeds  from
future container sales in additional containers.  However, due to the difference
between  sales  proceeds and new  containers  prices,  the number of  additional
containers purchased may not equal the number of containers sold.

Results of Operations

The  Partnership's  income 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, 1998 and 1997, 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:

                                                               1998        1997

                   Opening container fleet.................   17,697      18,016
                   Closing container fleet.................   17,066      18,097
                   Average container fleet.................   17,382      18,057

The  decline in the  average  container  fleet of 4% from the  six-month  period
ending June 30, 1997 to the equivalent period in 1998 was due to the Partnership
having sold more  containers  than it purchased  since June 30,  1997.  Although
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. 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.

Rental income and direct container expenses are also affected by the utilization
of the container  fleet,  which was 80% and 74% on average  during the six-month
periods ended June 30, 1998 and 1997, respectively.  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, 1998 and 1997.

The  Partnership's  income from operations for the six-month periods ending June
30, 1998 and 1997 was $1,525 and $876, respectively,  on rental income of $5,176
and $5,072, respectively. The increase in rental income of $104, or 2%, from the
six-month  period  ended  June 30,  1997 to the  comparable  period  in 1998 was
primarily  attributable to an increase in other income and was partially  offset
by a decrease in income from container  rentals.  Income from container rentals,
the major component of total revenue, decreased $80, or 2%, primarily due to the
decrease in the average container fleet of 4% and the decrease in average rental
rates of 4%, and was offset by the  increase  in average  on-hire  (utilization)
percentage of 8% and the decrease in leasing incentives of 38%.

Container  utilization  and rental rates declined during 1996 and 1997 primarily
due to decreased  demand for leased  containers and increased  competition.  The
decrease in demand for leased  containers  resulted from changes in the business
of shipping line customers consisting  primarily of (i) over-capacity  resulting
from the 1995 and 1996 additions of new, larger ships to the existing  container
ship fleet at a rate in excess of the growth rate in containerized  cargo trade;
(ii) shipping  line  alliances and other  operational  consolidations  that have
allowed  shipping  lines to operate with fewer  containers;  and (iii)  shipping
lines  reducing  their ratio of leased  versus owned  containers  by  purchasing
containers.  This decreased demand,  along with the entry of new leasing company
competitors  offering low container rental rates to shipping lines,  resulted in
downward  pressure on rental rates, and caused leasing companies to offer higher
leasing incentives and other discounts to shipping lines. Rental rates were also
adversely  affected  by a drop in the  purchase  price of new  containers  which
resulted in additional downward pressure on rental rates.

Average utilization for the three- and six month-periods ended June 30, 1998 was
greater than the average utilization for the comparable periods in 1997. Despite
the improvement in average utilization from the prior year, utilization has been
slowly declining over the last six months. Rental rates have also been declining
and average rental rates for the six-month  period ended June 30, 1998 are lower
than average  rental  rates for the same period in 1997.  These  decreases  were
offset by decreased  leasing  incentives  during the six-month period ended June
30, 1998 as compared to the same period in 1997. The  improvement in utilization
over the  prior  year and the  overall  improvement  in  leasing  incentives  is
primarily  due to  increased  demand  in  Asia.  The  weakening  of  many  Asian
currencies  resulted in a  significant  increase in exports  from Asia which has
created a strong  demand for  containers  in  certain  locations.  However,  the
weakening of these  currencies  has also lowered demand in Asia for imports from
North  America and Europe  resulting in a lower demand for  containers  in these
areas.  For the near term, the General  Partners do not foresee material changes
in existing market conditions and caution that both utilization and rental rates
could  continue  declining,  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, 1998 and 1997,  there were 211 and 79 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 and
returning  containers and income from charges to lessees for a Damage Protection
Plan (DPP).  For the six months  ended June 30,  1998,  the total of these other
rental income items was $748, an increase of $184 from the equivalent  period in
1997. The primary  component of this increase was an increase in location income
of $179.  Location  income  increased  primarily due to the inclusion of certain
credits received during 1997 and 1998 which had been previously  applied against
repositioning  expense  and due to a decrease  in credits  given to lessees  for
picking up containers from certain locations.

Direct  container  expenses  increased  $226, or 24%, from the six-month  period
ending  June 30,  1997 to the  equivalent  period  in  1998.  The  increase  was
primarily due to increases in repositioning  and maintenance and repair expenses
of $211 and $95, offset by a decrease in storage expense of $118.  Repositioning
expense increased due to the removal of certain credits from repositioning costs
to  other  rental  income  as  discussed  above  and  due  to a  higher  average
repositioning  cost per container.  Maintenance and repair expense increased due
to an increase in the number of units requiring repair,  offset by a decrease in
the average repair cost per container,  and storage expense decreased due to the
8% increase in utilization.

Bad debt expense  decreased from an expense of $52 for the six months ended June
30, 1997 to a benefit of $75 for the comparable period ending June 30, 1998. The
write-off of certain  receivables that had reserves in excess of the receivable,
due to insurance proceeds received,  as well as the resolution of payment issues
with one lessee resulted in the benefit recorded in 1998.

Depreciation  expense  decreased  $552, or 24%, from the six-month  period ended
June  30,  1997  to the  same  period  in  1998  primarily  due to a  charge  to
depreciation  expense  of $343 to  write  down  the  value  of the  refrigerated
containers owned by the Partnership during the second quarter of 1997 and to due
to the decrease in average fleet size.

Management  fees to affiliates  decreased $30, or 6%, from the six-month  period
ended June 30, 1997 to the comparable period ending in 1998 due to a decrease in
equipment  management fees. The decrease in equipment management fees was due to
an adjustment  made to reduce fees  resulting  from the write-off of receivables
for two lessees and was offset by the  increase in gross  revenue upon which the
equipment management fees are primarily based.

General and administrative  costs to affiliates  decreased $45, or 13%, from the
six-month period ended June 30, 1997 to the comparable period ending in 1998 due
to the decrease in overhead costs allocated by TFS and TEM.

Other income provided $130 of additional  income for the six-month period ending
June 30,  1998,  an  increase  of $7 over the  equivalent  period  in 1997.  The
increase  was due to an increase in gain on sale of  equipment of $9 offset by a
decrease in interest income, net of $2.

Net earnings per limited partnership unit increased from $0.26 to $0.44 from the
six-month period ending June 30, 1997 to the same period in 1998, reflecting the
increase in net  earnings  allocated  to limited  partners  from $968 to $1,624,
respectively.

The  following is a comparative  analysis of the results of  operations  for the
three-month periods ended June 30, 1998 and 1997.

The Partnership's income from operations for the three-month periods ending June
30, 1998 and 1997 was $759 and $200,  respectively,  on rental  income of $2,533
and $2,548, respectively.  The decrease in rental income of $15 was due to an $8
decrease in other  rental  income and a $7  decrease  in income  from  container
rental.

Direct container  expenses for the three-month  period ending June 30, 1998 were
comparable to the  equivalent  period in 1997 due to increases in  repositioning
and maintenance  and repair  expenses  offset by a decrease in storage  expense.
Repositioning  expense increased due to an increase in the average repositioning
cost  per  container,   offset  by  a  decrease  in  the  number  of  containers
repositioned. Maintenance and repair expense increased due to an increase in the
number of units requiring repair offset by a decrease in the average repair cost
per container. Storage expense decreased due to the increase in utilization.

Bad debt expense  decreased  from an expense of $64 for the  three-month  period
ended June 30, 1997 to a benefit of $54 for the  comparable  period in 1998. The
benefit  recorded in 1998 was primarily due to the  resolution of payment issues
with one lessee and due to lower reserve requirements.

Depreciation  expense  decreased $412, or 32% from the three-month  period ended
June 30, 1997 to the  comparable  period in 1998 primarily due  to a  charge  of
$343 to depreciation expense  to  write  down  the  value  of  the  refrigerated
containers in the second quarter of 1997.

Management fees to affiliates were comparable from the three-month  period ended
June 30, 1997 to the same period in 1998.

General and administrative  costs to affiliates  decreased $32, or 19%, from the
three-month  period ended June 30, 1997 to the comparable  period in 1998 due to
the decrease in overhead costs allocated by TFS and TEM.

Other income decreased $117, to an expense of $24,  primarily due to an increase
in loss on sale of  containers of $123 from the  three-month  period ending June
30, 1997 to the equivalent period in 1998.

Net earnings per limited partnership unit increased from $0.07 to $0.19 from the
three-month  period ending June 30, 1997 to the same period in 1998,  reflecting
the  increase in net  earnings  allocated  limited  partners  from $276 to $719,
respectively.

Many computer systems may experience difficulty processing dates beyond the year
1999 and, as such, some computer  hardware and software will need to be modified
prior to the year 2000 to remain  functional.  Certain of the  Partnership's and
General  Partner's  core  internal  systems,  where Year 2000  issues  have been
identified,  are  currently  being  revised. Based on  its  initial  evaluation,
the Partnership and the  General  Partners  do not  believe  that  the  cost  of
remedial  actions relating  to  these  systems  will  have  a  material  adverse
effect  on  the Partnership's results of  operations  and  financial  condition.
Additionally,  the Partnership  and the General  Partners are  continuing  their
assessment of Year 2000  issues not related to  their  core  systems,  including
issues  surrounding systems that  interface  with external  third  parties.   If
external third party systems are not Year 2000 compliant,  those external  third
parties  may  have  difficulty  conducting  ordinary  operations,   which  could
adversely affect the General Partners and the Partnership.

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, 1998 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.



<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, 1998

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, 1998
John R. Rhodes                           (Principal Financial and
                                         Accounting Officer) and
                                         Secretary




________________________                 President (Principal Executive                 August 13, 1998
Philip K. Brewer                         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, 1998


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, 1998
-------------------------                (Principal Financial and
John R. Rhodes                           Accounting Officer) and
                                         Secretary



/s/Philip K. Brewer                      President (Principal Executive                 August 13, 1998
---------------------------              Officer)
Philip K. Brewer
</TABLE>